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Session 3c: Wood and other products

Trends and outlook for forest product markets in Asia and the Pacific

Adrian Whiteman and Ragnar Jonsson1

The Asia–Pacific region accounts for a major share of global forest product production, consumption and trade and continues to be one of the most dynamic and rapidly developing regions in the world. This paper describes recent trends in forest product markets and the outlook for the next 25 years. It also describes some of the driving forces that have shaped these markets and will continue to do so in the future. Finally, the paper discusses some of the implications of the outlook for forest management and future development of the forest processing industry in the region.

Keywords: forest products, econometrics, supply, demand, markets


This paper describes recent trends in forest product markets in the Asia–Pacific region and presents a provisional outlook to the year 2030. This outlook is the latest in a long series of global and regional outlook studies that have been produced by the Food and Agriculture Organization of the United Nations (FAO) since the 1950s.

The paper starts by briefly describing the methodology used to analyse historical trends in forest product markets and to produce the projections of future forest product production and consumption. It then illustrates trends in production and consumption since 1980, including an analysis of the consumption of wood and fibre used to produce forest products in the region (the wood raw material balance). Subsequently, the same information is presented for the outlook to the year 2030. Finally, the paper discusses the implications of the outlook for forests and the forest industry in the region and presents some conclusions.


The projections of future forest product supply and demand presented here have been based on a statistical analysis of historical data about forest product production and consumption. The analytical approach chosen for this study was to divide consumption and production into several market segments (such as domestic demand, import demand, export demand) and construct separate models to explain the historical trends in each of these market segments as functions of economic variables such as gross domestic product (GDP) and product prices. For countries with significant levels of production, these models were created for each of the main forest product categories and each market segment in each individual country. For smaller countries, cross-sectional analysis was used (i.e. the models were constructed using data from groups of countries and, sometimes, using more aggregated products, for example total sawnwood rather than coniferous and non-coniferous sawnwood separately). Multiple linear regression analysis was used to test and estimate the model parameters that were used to produce the forecasts. A more detailed description of the modeling methodology used here can be found in Kangas and Baudin (2003).

The approach was used mainly for modeling supply and demand of processed forest products (i.e. sawnwood, wood-based panels, wood and non-wood pulp, paper and paperboard). In addition, the production and consumption of wood and fibre inputs (i.e. industrial roundwood, recovered paper and wood residues) were analysed using product conversion factors (i.e. how much wood or fibre is required to manufacture one unit of processed product) and with reference to estimates of current and future potential wood and fibre supply using a raw material balance analysis (for further explanation, see UN 2005).

It should be noted that the projections presented here are provisional. This analysis is part of a global analysis of forest product markets that FAO is currently completing. As the Asia–Pacific region is closely integrated into global forest product markets, the finalization of the global outlook may result in some changes to the projections presented here. In addition, the analysis of future potential wood and fibre supply is based on statistics collected by FAO in the 2000 Global Forest Resource Assessment (FRA). The 2005 FRA is now available (FAO 2006) and FAO is currently analysing these more recent forest resource statistics. The results of the analysis may present a different picture of future wood availability compared to that given here.

Historical trends in forest product markets

Figure 1 shows the historical trend in sawnwood production and consumption in the Asia– Pacific region from 1980 to 2005. Overall, consumption in 2005 was about the same as in 1980 — 90 million m3 — with production of just under 80 million m3. The trend shows some growth in production and consumption up until 1995, then a sharp decline to 2001, and more rapid growth thereafter. Also noticeable is the growing gap between production and consumption over the period, which has led to net imports of slightly more than 10 million m3 (or just over 10 percent of total consumption) by 2005.

The two largest subregions (in terms of the size of their economies) account for most of these trends. Production and consumption in China (in North Asia) increased rapidly in the mid1990s, possibly in anticipation of the ban on harvesting in natural forests implemented there. It then declined from 1996 to 2000, as domestic roundwood harvesting switched entirely to planted trees. This period also coincided with a reduction in the economic growth rate in China (and the recession in several other nearby countries due to the Asian financial crisis in the late 1990s). From 2000 onwards, domestic production and consumption increased again rapidly and will soon pass the peak reached in 1996.

The trend for the advanced industrialized economies (AIEs — Australia, Japan and New Zealand) shows a gradual decline in both production and consumption throughout the period. This is due to a combination of low economic growth in Japan over much of the period combined with gradual substitution of wood-based panels (and, more recently, engineered wood products) for sawnwood in major end uses such as construction.

Figure 1. Trends in sawnwood production and consumption, 1980–2005

Figure 2. Trends in wood-based panel production and consumption, 1980– 2005

Trends in wood-based panel production and consumption are shown in Figure 2. These show that both production and consumption have risen quite dramatically over the period, with production increasing from 20 million to 35 million m3 and consumption doubling from 15 million to over 30 million m3. All of the subregions display growth in this sector, with the exception of wood-based panel production in the AIEs. Again, a short downturn in this sector appears at the end of the 1990s due to the Asian financial crisis.

The region as a whole is a net exporter of wood-based panels, although this surplus of production over consumption has declined over the period. North Asia and the AIEs are significant net importers of wood-based panels, but Southeast Asia is an even greater net exporter of these products (particularly Indonesia and Malaysia, which export large volumes of plywood).

Most of the growth in this sector during the 1980s occurred in the plywood subsector, when Indonesia and Malaysia rapidly developed export-orientated plywood industries. China has also, more recently, developed a significant plywood industry (although production is mostly used domestically). In addition, other types of wood-based panel have gradually replaced sawnwood in some end uses, particularly in the AIEs.

Figure 3. Trends in fibre furnish production and consumption, 1980–2005

Fibre furnish includes the three main types of wood pulp (mechanical, chemical and semi-chemical), plus other fibre pulp and recovered paper (wastepaper); the trends in fibre furnish production and consumption are shown in Figure 3.

As in most other regions and the world as a whole, historical growth in pulp and paper production and consumption has been far higher than in other product sectors. In the Asia–Pacific region, consumption has increased fourfold since 1980 from 35 million to 130 million tonnes in 2005. Production has increased by almost as much, from 30 million to 95 million tonnes over the same period.

Much of the growth in this sector has occurred in North Asia, although growth in South and Southeast Asia has also started to increase over the last decade. In contrast, growth in the AIEs has been relatively slow since 1990. With the exception of the AIEs since 2000, all of the subregions have consistently consumed more fibre furnish than they have produced and the level of net imports has increased since 1995, particularly in North Asia.

Most of the fibre furnish produced and consumed in the region is chemical pulp and recovered paper. Chemical pulp consumption has increased threefold from 13 million to 36 million tonnes over the period, while recovered paper consumption has increased almost fivefold from 12 million to 53 million tonnes.

Figure 4. Trends in paper and paperboard production and consumption, 1980–2005

Figure 4 shows similar trends for paper and paperboard production and consumption in the region since 1980. Again, the region is a net importer of paper and paperboard, but this is mostly restricted to North and South Asia and production and consumption levels are very close in the other subregions.

Of the three main paper types, newsprint accounts for a very small share of total production and consumption (around 10 percent) and has grown very slowly since 1980. With the expansion of other types of media (e.g. television and the Internet), growth in newsprint consumption has slowed dramatically in the more developed countries in the region. Printing and writing paper is the second largest part of this market, with production and consumption in 2005 of around 30 million tonnes (equal to about 25 percent of total paper and paperboard). Other paper and paperboard account for the remaining 65 percent of the market, with production and consumption of 75 million and 80 million tonnes respectively in 2005. Production and consumption of both of these paper types has increased almost fourfold since 1980.

Historical trends in wood and fibre production and consumption

The two main sources of wood and fibre raw materials used to produce forest products are industrial roundwood and recovered paper. In addition, trade in wood pulp (a partly processed source of fibre) can add or subtract from the supply of raw materials to the industry (i.e. as imports or exports) and processing residues from the sawmilling and plywood industry may add to wood and fibre supply (although data about this resource are quite poor).

Figure 5. Trends in industrial roundwood production and consumption, 1980–2005

Figure 5 shows the historical trends in industrial roundwood production and consumption since 1980. Overall, production and consumption have not increased by very much over the period. Production increased by about 10 percent, from 250 million m3 in 1980 to 275 million m3 in 2005. Consumption increased by slightly more than this, from 275 million to 325 million m3.

At the subregional level, the trends since 1980 are quite different. Production and consumption in South Asia and the Pacific Islands are roughly the same and have not changed by very much over the period. Southeast Asia is the one subregion that is a net exporter of industrial roundwood, but net exports have declined over the period. North Asia and the AIEs are the two large net importers in the region, but the trends in these subregions are the opposite of each other. Net imports into the AIEs have declined significantly over the period while net imports into North Asia declined very slightly over the start of the period, but increased rapidly in the last decade.

In very simple terms, four main factors have probably contributed most to the complex pattern of trends in industrial roundwood production and consumption seen in the region since 1980: (1) In Southeast Asia, log export bans and the development of domestic processing industries in the early part of the period are the main reasons for the decline in net exports from the subregion; (2) in the AIEs, slow growth in the production of finished products in Japan combined with greater use of recovered paper has resulted in declining wood consumption and net imports (the trends in this subregion are entirely due to trends in Japan, which accounts for most of the production and consumption in this subregion); (3) in North Asia, the decline in production and increased imports over the last few years is due to the harvesting ban implemented in China’s natural forests combined with rapid growth in the forest processing industry there; (4) in Southeast Asia in the last decade, the Asian financial crisis resulted in falling production and consumption from 1995 to 2000, but both are starting to increase again.

Although these complex trends cannot easily be linked to changes in the availability of wood resources (except in the case of China’s harvesting ban), a decline in production from natural forests is undoubtedly occurring along with a gradual replacement of this source of wood supply by industrial roundwood from forest plantations. Countries in the region have had mixed results with the establishment of forest plantations, but it seems likely that almost all of the major producers will increasingly rely on these forests for future wood supply.

This information shows significant growth in the production and consumption of most finished wood products in the region since 1980 while, at the same time, production and consumption of industrial roundwood has grown very slowly. This has been possible due to the structure of growth in the sector and the different demands that are placed on wood and fibre supplies. In particular, most growth has occurred in the pulp and paper industry (which can use a variety of wood and fibre sources) and this growth has occurred alongside rapid increases in wastepaper recovery and utilization in many countries.

Figure 6 shows the trend in the derived demand for wood and fibre raw materials by the forest processing industry in the region since 1980. This has been calculated by converting the trends in the production of finished products to the amounts of wood and fibre raw materials that would be required to manufacture each of those products (including wood pulp, in the case of countries that are net exporters of wood pulp).

Figure 6. Trends in subsector wood and fibre raw material demand from 1980 to 2005

The results are expressed in terms of cubic metres of wood raw material equivalent (m3 WRME). Thus, for example, approximately 170 million m3 of industrial roundwood were required to produce 100 million m3 of sawnwood and plywood in 2005, with an average conversion factor of around 1.70: 1.00. (Individual conversion factors were applied to each product in each country for this calculation, but these conversion factors were not varied from year to year.)

Figure 6 shows that total wood and fibre raw material demand has roughly doubled over the period from 330 million to 650 million m3WRME. However, demand for other industrial roundwood, sawnwood and plywood production has remained approximately constant and almost all of this growth has occurred in the paper and paperboard industry. Thus, the demand for raw materials that must come from trees and forests has not increased by very much at all. Growth in the production of reconstituted panels and paper and paperboard still places some demand on forest and tree resources for wood and fibre raw materials, but these subsectors can also use alternative types of wood and fibre, such as recovered paper and wood residues from the sawnwood and plywood industries.

Figure 7. Trends in wood and fibre raw material consumption by type, 1980–2005

Figure 7 shows how this demand has been met by consumption of the different types of wood and fibre raw materials since 1980. For comparability, these figures have also been converted to m3WRME (i.e. in the cases of pulp and recovered paper). The top line shows the total demand (from Figure 6) and each bar shows consumption of each type of wood and fibre raw material. Gaps between the line and the tops of each bar can be attributed to consumption of other wood and fibre raw materials that are not reliably reported across the region (for example wood residues from the processing industry and recovered/recycled wood products). Comparisons between the bars and the line also highlight some uncertainties about the conversion factors used in these calculations and the reliability of the underlying statistics (for example where the bars are higher than the lines, suggesting that more wood and fibre raw materials were consumed than were needed in a year). For additional information, the two thin lines represent the total demand for other industrial roundwood, sawnwood and plywood production (the lower line) plus demand for reconstituted panel production (the higher line).

The figure shows that approximately two-thirds of the industrial roundwood consumed in the region is used to produce other industrial roundwood, sawnwood and plywood, while the remaining one-third is used to produce reconstituted panels, paper and paperboard. This distribution of consumption across the industries has not changed very much at all since 1980.

However, in comparison, the huge growth in wood and fibre raw material consumption by the paper and paperboard industry has been achieved by dramatic changes in the sources and types of fibre used by that industry. In 1980, pulpwood accounted for about half of the wood and fibre used by the paper and paperboard industry in the region, recovered paper accounted for about a quarter of consumption and other fibre pulp and net pulp imports accounted for the remainder. By 2005, recovered paper accounted for over half of all wood and fibre raw material consumption, pulpwood accounted for about a quarter and the other two sources accounted for the remainder. Thus, the relative importance of industrial roundwood in this subsector declined significantly over the period, to be replaced by much higher levels of wastepaper utilization.

Other comments on these historical trends

The above analysis has presented and explained some of the main changes that have occurred in forest product markets in the Asia–Pacific region since 1980. In addition, it is useful to compare these trends with previous projections for the region (Broadhead 2007) and with trends in other regions and at the global level. Some of the main results of this comparison are presented hereunder.

Growth in production and consumption of the different types of forest products over the last decade has varied from what was projected in the last Outlook Study. The reconstituted panels and pulp and paper sectors have grown at a higher rate than was expected while, conversely, the sawnwood and plywood sectors have not grown by as much. To some extent, the latter observation reflects more rapid substitution of reconstituted panels for other solid wood products than was expected. However, the main reason for higher than expected growth in the other sectors is likely to be a higher than expected increase in production and consumption in response to increased incomes (higher income elasticity).

At the subregional level, production and consumption in North Asia has grown much faster than expected while, conversely, production and consumption in the AIEs has grown much more slowly. These changes are largely due to economic growth rates in China and Japan that were higher/lower than expected and they have more or less balanced each other. In addition, the impact of the Asian financial crisis was more severe than expected, to the extent that production and consumption in several Southeast Asian countries is still below what was projected.

International trade has generally grown more rapidly than was expected both within and between countries in the region and at the global level as a whole. In addition, the region now accounts for a greater share of global trade in forest products than was expected (mostly due to the rapid expansion of trade with China in recent years). This increased “globalization” affected many economies and different sectors and was due to numerous socio-economic events in the early 1990s that were not well understood and would anyway have been very difficult to forecast.

Although the region has achieved great gains in efficiency (in terms of increasing the production of forest products without major increases in the consumption of industrial roundwood), there remains considerable scope for future improvements. For example, wastepaper recovery and utilization is still very low in many countries, substitution of reconstituted panels for sawnwood and plywood is still relatively low and the use of wood residues is not well developed. As the production and consumption of finished products continues to grow rapidly in the future and the production of industrial roundwood gradually moves towards more production from planted forests, it can be expected that improvements in efficiency will become more important to the sector.

The outlook for forest product markets

Figure 8 shows projections to 2030 for sawnwood production and consumption in the region along with the trends shown previously. For the region as a whole, production and consumption are expected to double from 2005 to 2030. Net imports are expected to remain roughly the same at about 20 million m3, with net imports of roughly 10 million m3 each in North Asia and the AIEs and balanced supply and demand in the other subregions.

Figure 8. Trends and projections for sawnwood production and consumption

Modest growth in production and consumption is expected in North Asia and the AIEs. The two subregions with the highest projected growth are Southeast and South Asia, with a doubling of production and consumption in Southeast Asia and a projected increase of around 150 percent in South Asia from now to 2030. The latter projection for South Asia seems optimistic considering the restricted availability of wood supplies there and it may be revised downwards when the global market forecasts and analysis of future industrial roundwood supply and demand are completed. It does, however, indicate that there is significant demand for sawnwood in this subregion, which is currently limited by the availability of raw materials.

Figure 9 shows the trends and projections of wood-based panel production and consumption in the region. The small differences between the trend figure for 2005 (actual production and consumption) and projection for 2005 are because the projections start from the mid-point of the period 2000 to 2005 and are based on a three-year average around that point (to reduce the effect of annual fluctuations).

The projections show that production and consumption are expected to continue to grow rapidly, with an increase of roughly 250 percent by 2030. Net exports from the region are also projected to increase to around 15 million m3with rapid growth in production, particularly from 2020.

Figure 9. Trends and projections for wood-based panel production and consumption

At the subregional level, a low level of growth is expected in the AIEs and the Pacific Islands (which are very small producers and consumers of wood-based panels). In addition, net imports into the AIEs are expected to decline by about half (from the current level of around 5 million m3per year). Production and consumption are expected to double both in North and South Asia by 2030, with a slight increase in net imports into these two subregions.

Production and consumption in Southeast Asia are expected to account for most of the growth of this sector in the region, with a threefold increase by 2030. This subregion is a major net exporter of wood-based panels, because it has developed a significant competitive advantage in this sector (particularly in Indonesia and Malaysia). Although, historically, the plywood industry has been the major component of this sector in the subregion, rapid growth in production and consumption is projected across all types of wood-based panels. However, as with the case of sawnwood in South Asia, these projected levels of growth may be constrained by future wood and fibre availability and this will have to be explored further.

Figure 10. Trends and projections for market penetration of reconstituted panels

The production and use of reconstituted panels has advantages in terms of wood and fibre supply because these products can be manufactured from smaller-sized wood, wood with lower strength properties (for example from fast-growing planted forests), wood residues and recovered wood products. Consequently, significant growth in production of these products in Europe and North America has been partly driven by changes in wood supply.

The projections show that market penetration in the Asia–Pacific region is improving, but it is slightly behind the current levels of market penetration in North America and a long way behind the situation in Europe. Future changes in wood and fibre quality and availability may encourage a more rapid expansion of this subsector than the projections suggest. The extent to which this may occur will depend on future changes in raw material supply, along with the ability of producers in the region to develop the skills, technology and industrial capacity to manufacture these types of products.

Figure 11 shows the trends and projections for fibre furnish production and consumption to 2030. Over the next 25 years, production and consumption in the region are expected to grow by slightly more than 300 percent to reach a production level of 340 million tonnes and consumption of 420 million tonnes in 2030. Net imports will increase from 35 million tonnes at present to around 70 million tonnes in 2020 and remain at this level until 2030. The difference between production and consumption is not expected to increase beyond 2020 due to gradually increasing rates of wastepaper recovery, which will rise from 45 percent in 2005 to about 52 percent in 2030.

Figure 11. Trends and projections for fibre furnish production and consumption

Figure 12. Trends and projections for paper production and consumption

At the subregional level, production and consumption in the AIEs will remain in balance and should continue to grow only slowly, resulting in a very slight increase by 2030. In contrast, production and consumption in North Asia will grow by slightly more than 300 percent and will increase fivefold in South and Southeast Asia (although from much lower levels of current production and consumption). All three of these subregions are net importers of fibre furnish and will remain so in the future. In the case of North Asia, these net imports are significant and are expected to increase to 2020 and then remain about the same (due to the projected increase in wastepaper recovery noted above). It is also worth noting that these three subregions will equal or exceed the AIEs in terms of total production and consumption by 2030.

Figure 12 presents the trends and projections for paper and paperboard production and consumption, which are very similar to those described above for fibre furnish. The main difference is that net imports of these products into the region are much smaller, although they are expected to increase slightly over the next 25 years.

Outlook for wood and fibre production and consumption

The trends and projections for wood and fibre raw material demand in the Asia–Pacific region are shown in Figure 13. As before, they have been calculated from the projections of finished product production, multiplied by conversion factors to arrive at required inputs measured in cubic metres of wood raw material equivalent.

Figure 13. Trends and projections for raw material demand by subsectors

Overall, raw material demand is expected to increase almost threefold by 2030 from 650 million m3WRME at present to slightly more than 1 800 million m3WRME in 2030. The projection of rapid growth in pulp and paper production accounts for the majority of this increase (from around 400 million m3WRME at present to 1 300 million m3WRME in 2030). However, demand for industrial roundwood to manufacture sawnwood and plywood is also projected to double, from around 200 million to 400 million m3WRME over the period.

Figure 14 presents the same information, but with the demand by subsector translated into projected consumption by the different types of wood and fibre. In this case, recovered paper is expected to continue increasing in importance as a source of fibre for paper manufacturing. However, this will not meet all of the growth in future fibre demand and net pulp imports are, therefore, also expected to increase significantly from around 60 million m3WRME at present to 250 million m3WRME in 2030 (the latter figure is equal to about 80 to 100 million tonnes of net pulp imports, depending on the proportions of chemical and mechanical pulp that are imported). Other fibre pulp consumption may also increase, although only by a small amount.

Industrial roundwood consumption is also expected to increase from 325 million to 525 million m3 over the period. Most of this increase in consumption will be to meet the growing demand for sawnwood and wood-based panel production. Pulpwood consumption (currently about one-third of all industrial roundwood consumption) may remain at about 100 million m3 until 2010, and then decline as recovered paper and net pulp imports increase in importance as sources of fibre raw materials for the paper industry. However, this projection for pulpwood consumption depends on the future availability of pulpwood from forests and the extent to which imported pulp is required to meet the expected growth in demand.

Figure 14. Trends and projections for raw material consumption by type

It is also expected that the recovery and use of wood residues from sawnwood and plywood production will increase slightly in the future and start to contribute more to wood supply for reconstituted panel, pulp and paper manufacturing. This is shown in Figure 14 by the slight but expanding gap shown between the total raw material demand (the grey line) and consumption of the major wood and fibre types (the top of each bar).

Figure 15 attempts to present the same information as Figure 14, but with the types of wood and fibre also divided into domestic demand (i.e. wood and fibre produced and consumed locally and shown by the bars under the solid black line) and import demand (the bars between the black and grey lines). As before, the gap between the top of each bar and the grey line represents the use of wood residues. International trade in residues is negligible, so it is reasonable to assume that almost all would continue to contribute to domestic demand.

Until the complete global supply and demand model is completed, these projections are provisional, but they are presented here to give a general indication of where future wood and fibre demands may be met in terms of local production and imports.

Net imports of wood and fibre raw materials currently amount to around 150 million m3WRME and account for slightly less than 25 percent of total raw material consumption. In terms of WRME, these net imports are split approximately equally between imports of industrial roundwood, wood pulp and recovered paper.

Figure 15. Trends and projections for raw material consumption by type and source

By 2030, these imports are expected to increase to almost 400 million m3WRME. Net imports of industrial roundwood will remain the same at around 50 million m3, net imports of recovered paper will grow slightly to around 100 million m3WRME and net pulp imports will expand significantly to about 250 million m3WRME. Furthermore, net imports of recovered paper are expected to increase at first — reaching about 135 million m3WRME in 2020 — and subsequently start to decline. This increase followed by some contraction is due to some countries reaching the technical limits on the utilization of recovered paper in paper manufacturing at about this time (which will start to constrain the total demand for recovered paper from 2020) combined with the expected continuation of growth in the wastepaper recovery rate (which will continue to increase domestic supply of wastepaper).

Implications of the market outlook for forests in the region

The projections presented suggest that there will be rapid growth in production and consumption across a broad range of forest products in the Asia–Pacific region. This is to be expected in the world’s most populous region and considering that the region includes many large and rapidly developing economies (for example China, India, Indonesia). In addition, the structure of growth across product sectors (comparatively high for wood-based panels and even more so in the case of pulp and paper) is a continuation of recent historical trends and is quite similar to projections for other regions and the world as whole. The one exception is the projection of rapid growth in sawnwood production and consumption, which is higher than the long-term historical trend (although it is similar to the trend in the last few years) and is quite high compared with projections for other more developed regions.

There are three major areas where these trends have interesting implications for the future of forests in the region. The first is the demands that these growing markets will place on the domestic forest resource — in terms of its ability to supply the required roundwood (potential roundwood supply) — and, as a consequence, the implications that this will have for forest management in the region. The second is the implications of these projections for trade with other regions and, related to this, the impact these demands may have on forest management outside the region. The third is the potential to meet some of these demands through increases and improvements in efficiency.

Table 1 shows the projected domestic demand for sawlogs and pulpwood and assesses how this demand may be satisfied by production from natural forests and forest plantations in the region. It also compares this with the last projections of potential roundwood production from forest plantation produced by FAO (Brown 2000).

Row 1 shows that sawlog demand will double over the next 25 years, from 172 million to 361 million m3. Due to the use of alternative fibre supplies (i.e. recovered paper and imported pulp), demand for pulpwood is much lower and will not grow by nearly as much.

Rows 2 and 3 show how this demand may be divided between production from natural forests and production from forest plantations. Statistics about current production are not divided in this way, but it is possible to make some reasonable assumptions about this based on the levels of total production in each country and their areas of natural forests and forest plantations. Thus, the majority of sawlogs used in the region probably come from natural forests and, conversely, natural forests are probably not a major component of pulpwood supply.

Given current policies and the current status of natural forests in the region (for example forest area, condition and stocking), it is reasonable to expect that production from natural forests will not increase in either category and may even decline in the future. The impact of this assumption in later years of the projection is shown by the rapidly increasing demand for sawlogs that will be placed on forest plantations in the region (rising from 45 million m3at present to 233 million m3in 2030).

Table 1. Comparison of projected industrial roundwood demand with potential supply

Source and type of roundwood










Sawlog and pulpwood demand























Production from natural forests























Production from forest plantations























Potential plantation supply: Scenario 1























Potential plantation supply: Scenario 2























Potential plantation supply: Scenario 3























Note: All figures are in millions of cubic metres.

Rows 4 to 6 show the projected availability of roundwood (potential roundwood supply) from forest plantations under three different scenarios. Scenario 1 assumes no expansion of forest plantations, Scenario 3 assumes a continuation of new planting at the rates prevailing in 1995 to 2000 followed by a gradual decline in new planting and Scenario 2 assumes rates of new planting somewhere between the other two scenarios (for further details, see Brown 2000).

The table shows that total roundwood demand in the future could be met with a very modest expansion in forest plantation area (slightly less than Scenario 2). However, if the species and management regimes of forest plantations (currently focused on fast growing species managed on short rotations) do not change, this resource will not be able to meet future sawlog demand and will, conversely, result in far more potential pulpwood production than is required. The implications of this are that these management regimes should be re-examined to take into account the structure of industrial roundwood demand in the future. In addition, industrial investment could be considered to utilize this resource for the production of reconstituted panels (which can be substituted for sawnwood in many end uses).

With respect to international trade, the projections do not indicate major changes in net trade of finished products except significant growth in net exports of wood-based panels. In terms of raw material trade, net imports will expand significantly, but imported wood pulp is expected to account for most of this growth. This latter result is interesting because it suggests that, despite the development of fast growing forest plantations in the region, domestic production of wood pulp will not keep up with the projected growth in demand. This result is due to economic factors (as captured in the projection models) rather than resource availability, so it suggests that although the region is developing a resource to supply this industry, it still has some way to go in terms of developing a globally competitive processing sector.

The two most likely sources of wood pulp imports are South America and the Russian Federation. The South American wood pulp industry is largely based on fast-growing forest plantations and Russian wood pulp production is far lower than the potential, given the vast area of underutilized forests. Thus, the current concerns about the impact of rapid development in this region on the rest of the world’s forests are likely to remain focused on a few specific issues in a few selected countries.

The efficiency of resource utilization can be measured in several ways. One indicator is the proportion of forest product production that is manufactured from recycled and recovered wood and fibre compared to the proportion that is produced from industrial roundwood. In Europe, for example, less than half of all production is now manufactured from industrial roundwood and the majority is produced from recovered paper, wood residues and recovered wood products (UN 2005). In the Asia–Pacific region, the use of wood residues is not well recorded but thought to be quite low outside of a few more developed countries and the use of recovered paper is quite low (around 35 percent of all wood and fibre consumption). However, the projections do suggest that this situation will improve considerably and it is expected that recovered paper and wood residues will account for around half of all wood and fibre raw material consumption by 2030.

An alternative measure of efficiency is the amount of wood and fibre used to manufacture one unit of output. Detailed statistics in this respect are not available for all countries and for a long period of time. Consequently, the conversion factors used in this analysis have been estimated from product production and raw material consumption statistics reported to FAO (FAOSTAT) and have been applied to every year in the historical time series and projections. Comparing these data with similar statistics for other regions, the forest processing industry in Asia and the Pacific still has scope to increase conversion efficiency through the introduction of new technology and manufacturing processes.

A similar measure is the efficiency of end uses, particularly with respect to the use of solid wood products. Reconstituted panels require at least 25 percent less wood and fibre per cubic metre of output compared to sawnwood and plywood and, as an additional benefit, can be manufactured from wood residues and recovered wood products. Markets for these products in the Asia– Pacific region have not been fully developed compared with Europe and North America. Considering the gradual change in raw material supply towards forest plantations and the region’s competitive advantage in wood-based panel production generally, there appears to be scope for more rapid development of this subsector.


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Brown, C. 2000. The global outlook for future wood supply from forest plantations. Global Forest Product Outlook Study Working Paper No: GFPOS/WP/03. Rome, FAO.

Food and Agriculture Organization (FAO).2006. Global Forest Resources Assessment 2005: progress towards sustainable forest management. FAO Forestry Paper 147. Rome, FAO.

Kangas, K. & Baudin, A. 2003. Modelling and projections of forest products demand, supply and trade in Europe. Geneva Timber and Forest Discussion Paper ECE/TIM/DP/30. Geneva, UN.

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1 Food and Agriculture Organization of the United Nations, Forestry Department, Forest Policy Service, Vialle delle Terme di Caracalla, 00153 Rome, Italy. E-mail:,

The future of non-wood forest production

B.K. Tiwari,1‹ C. Kumar2 and M.B. Lynser1Œ

Increasing synchronization of local economies with national and international markets has opened up several opportunities and has introduced unforeseen threats, which can have significant impact on the non-wood forest product (NWFP) sector. This paper analyzes the recent trends in production and trade related to NWFPs from selected sites in South Asia. It then attempts to extrapolate the same trends to predict the future of NWFP production and suggest some strategies for sustainable management of NWFPs in Asia and the Pacific. Experiences from across the region suggest that NWFP domestication is a viable option to address resource supply constraints. Open access forests are prone to unsustainable harvest by collectors for commercial purposes as they are often not concerned about continued supply of the product. The collection of high value NWFPs from open access forests results in overharvesting and severely affects regeneration due to unsustainable and faulty harvesting methods. Hence, increased commercialization is likely to lead to overharvesting, resource depletion, degradation of forests and depletion of biodiversity; it needs stricter enforcement of regulations. On the other hand domestication can reduce the incentives to conserve the ecosystems in which the NWFP species grow naturally. NWFP certification, intensive management, marketing support, popularization of sustainable harvesting techniques and ensuring economic and social equity can assure sustainable production of NWFPs. The review of the NWFP sector across the region suggests that collection of subsistence NWFPs is generally sustainable and does not warrant much concern. Cultivation or enrichment of natural forests with NWFPs (e.g. forest gardens) is generally sustainable. The cultivation of NWFPs on farmlands needs to be promoted to reduce pressure on forests and promote income to people through this sector. However, cultivation of NWFPs on erstwhile forest land or by clearing natural forests is a cause of concern as it depletes biodiversity and affects availability of forest goods and services. In general, the trend of NWFP production is moving away from the forest, except for the clandestine and illegal trade of high value low volume products that continues to deplete the biodiversity and productivity of forests.

Keywords: non-wood forest products, commercialization, cultivation


Non-wood forest products (NWFPs) include all goods of biological origin other than wood derived from forests, other wooded lands and trees outside forests. They are important in day-to-day life, as they are used for food, spices, edible oils and medicines; for fodder, forage, stall bedding and green manure; as construction material and household utensils; as fibre for cloth and rope; for basket and mat-making; and for ornamentation and religious purposes. NWFPs can be put both in subsistence and commercialized contexts; therefore people associate them with enormous value. For the majority of tribal and indigenous people living in regions rich in forest resources, NWFPs constitute a critical component of their food and livelihood security. NWFPs provide supplementary income sources to forest and forest-fringe dwellers. NWFP-based activities including collection, sale of raw materials, simple primary processing and local handicraft production fill seasonal food or income gaps. They also act as a “safety net” in times of hardship or emergency and generally improve household income security (Ruiz Perez and Arnold 1996). During the early years of scientific forestry, NWFPs were considered as minor forest produce and hidden harvest. But about a decade or two ago several studies highlighted the importance of NWFPs for sustainable forest management in general and poverty reduction in particular (Wollenberg and Ingles 1998; Sunderland and Ndoye 2004). Commercialization and expansion of trade in forest products have further enhanced their role by making harvesting and sale of these products important to the rural poor.

In Asia and the Pacific, NWFPs form an important subsistence and livelihood means for the majority of people living near forests. NWFPs like rubber, rattan, bamboo, aromatic oils and medicinal plants are traded or bartered within the Asia–Pacific region and in markets outside the region generating billions of US dollars per year as revenue. Countries like Malaysia, Indonesia, Viet Nam and China generate around US$50 million from rattan alone, thus occupying a lion’s share of the average annual world trade of US$88 million (Iqbal 1993). Growing population, rapid economic growth, reduction in poverty and expanding trade in the region have over the years changed the outlook towards forests and forest products. There is increasing shift from subsistence towards commercialization of these products. Increasing synchronization of local economies with national and international markets has opened up several opportunities and has brought in unforeseen threats, which can have significant impact on the NWFP sector. This paper analyzes the recent trends in production, trade and policies related to NWFPs, attempts to extrapolate the same trends with the objective of predicting the future of NWFP production and suggests the strategies for sustainable management of NWFPs in Asia and the Pacific.

Subsistence and commercial NWFPs

NWFPs can be broadly grouped into subsistence and commercial components. Subsistence NWFPs are collected in small quantities mainly for household use; for example, food (nuts, fruits, animals, insects, vegetables and mushrooms), fodder and roofing material. Commercial NWFPs are those that are collected or produced on a large scale mainly for trade; for example, bamboo, rattan, medicinal plants and spices. Rattan and bamboos, for instance, form important commercial NWFPs in several Asian countries making them the major international traders of these products (FAO 1997). The commercialization of tendu leaves (Diospyros melanoxylonRoxb.) has yielded huge economic benefits to local communities in Central India (Boaz 2004). In many cases, the development of socio-economic networks and infrastructure as well as markets B.K. Tiwari, C. Kumar and M.B. Lynser has led to the conversion of subsistence NWFPs to commercial varieties. Bamboo shoots, medicinal herbs, broom grass and mushrooms are some examples of such a shift. Evidence from many countries shows that extraction of NWFPs for subsistence use is generally sustainable, as it does not lead to depletion of the resource, while extraction of NWFPs from natural ecosystems for trade and commerce is generally not sustainable. Although subsistence NWFPs play a major role in the livelihoods of the forest-dependent poor in the region there is a glaring lack of reliable quantitative data on the subject. One of our recent studies conducted in the forest-rich state of Meghalaya has revealed that as many as 380 NWFPs are collected by the people. Bamboo, cane, broom grass (Thysanolaena maxima), bay leaf (Cinnamomom tamala), bark of Cinnamomum zeylanicum, Emblica officianalis, wild pepper (Piper longum), lichen (Usneasp.) and honey are major commercial NWFPs. Important subsistence NWFPs of the state include Phoenix spp., Luffa spp., cones and seeds of Pinus kesiya, mushrooms, torch wood, nuts of Castanopsis hysterix, fruits of Prunus nepalensis, Myrica nagi, Eleagnus khasianum, Flemengia vestita, Zanthozylum khasianum and ornamentals like orchids and rhododendrons. It is noted that the spectrum of species tapers as we move from household consumption to international trade NWFPs (Table 1). However, there is significant lack of information on quantity and methods used for the collection of these products.

Table 1. Important subsistence and commercial NWFPs of northeastern India

Subsistence   Commercial
Household consumption Local markets National markets Industrial raw material International trade
Bamboo, nuts, fruits, vegetables, medicinal plants, thatch grass, fodder, insects, snails, fish, crab, frogs, reptiles Bamboo, rattan, bay leaf, wild pepper, medicinal plants Bamboo, bay leaf, broom grass, wild pepper, medicinal lichen, resin, medicinal plants Bamboo, broom grass, plants Medicinal plants and aromatics

Distribution of NWFPs in forests across the management gradient

NWFPs are extracted from natural forests, forest gardens or home gardens and from tree plantations that are subjected to varying degrees of management. Mostly wild edible items like mushrooms, insects, worms, nuts and fruits as well as lianas, bamboo, rattan and medicinal plants are collected from natural forests. Some NWFPs sourced from natural forests have a complex life cycle and population dynamics and cannot be brought under cultivation. Such wild NWFPs are mainly extracted for subsistence use as their availability is limited to geographical distribution and seasonality. However, there are cases where such NWFPs are sought for commercial use and fetch cash income for the collectors or gatherers. An example of a commercialized wild NWFP is wood lichen (Usneasp.), which has a good national market but the harvest is not sustainable. In forest gardens efforts are made to promote and enrich the forests with NWFP species. Such NWFPs can be classed as semi-wild because they are also extracted from the wild. The wild collection is generally done by the landless and poorer sections of the society, while forest gardens are under the control of landowning communities. Examples of semi-wild NWFPs are Thysanolaena maxima (broom grass), Cinnamomom tamala (bay leaf) in Meghalaya, Aleuritesspp. in Mizoram and Livistona jenkinsiana in Arunachal Pradesh (Tiwari 2001). In the high ranges and Nelliampathy Hills in Kerela (India), cardamom is grown in managed forests. Some 90 percent of the households in the area are involved in production or processing of cardamom in some way or other, deriving most of their cash income from it (Nair and Kutty 2004). In Nepal, many medicinal and aromatic plants such as keshar (Crocus sativa), jatamansi (Nardostachys grandiflora), sugandhwal (Valeriana jatamansii), padamchal (Rheum australe), bojho (Acorus calamus), kutki (Neopicrorhiza scrophulariiflora), atis (Delphnium himalayai), chiraito (Swertia chiraita), hatkaudo (Podophyllum hexandrum) and nirbisi (Pernacia nubicola) are being cultivated in community forests (Bhandari et al. 2006). Most NWFPs are collected from natural forests and very few from plantations (Table 2).

Table 2. Important NWFPs found in forests under varying degrees of management

Natural forests Forest gardens Home gardens Plantations on forest lands
Bamboo, rattan, lichen, wild nuts, fruits, mushroom, vegetables, medicinal plants, insects, fish, snails, crab, frogs, reptiles Bamboo, rattan, bay leaf, wild pepper, medicinal plants Bamboo, bay leaf, wild pepper, medicinal plants Bamboo, broom grass

Economic, ecological and social values of NWFPs

NWFPs make a substantial contribution to the livelihoods of hundreds of millions of people living in or near forests. Around 200 million people in the Asia–Pacific region are dependent on NWFPs for at least some part of their income. Aside from the millions of people that benefit directly from NWFP-based activities, millions of others consume NWFPs to meet their nutritional requirements. Although NWFPs provide important benefits year-round, it is during periods of scarcity when collection, processing and trade of NWFPs are most critical to family survival; hence they represent an important safety net. The vast majority of upland farmers in the Asia– Pacific region (e.g. shifting cultivators) cannot produce sufficient food to satisfy their annual household nutritional requirements. Hence, they resort to NWFPs to supplement food and income deficiencies. Therefore, NWFPs can be considered to be one of the crucial alternatives available to supplement income and ensure minimal family subsistence needs.

There is a growing interest in NWFPs for their enormous economic value. A number of NWFPs contribute to the creation of economic benefits and cash income at the local and community level, e.g. forest foods and medicines sold in village markets. NWFPs generate local, national and international trade revenues that are worth billions of dollars annually.

NWFPs provide subsistence income and livelihood security to forest and forest-fringe dwellers, encouraging local communities to conserve the forests. Large tracts of community forests of northeastern India maintained for day-to-day NWFP requirements also conserve natural resources like soil, water and biodiversity and thus ensure ecological security. Tiwari (2005) found that medicinal aromatic plants contribute towards the conservation of biodiversity and save a fragile ecosystem from degradation. Hence, managing forests for their NWFP values helps in meeting the complex demands of both conservation and development.

One of the key characteristics of NWFP trade is that it provides employment to women who harvest, process and sell NWFPs. This has helped to improve their economic and political status in many cases. For example, collection and processing of lichen in Meghalaya is mainly done by women. Similarly, the mat-making industry of Tangmang village of Meghalaya is entirely in the hands of women. In Manipur State of India about 250 000 women are involved in collecting forest products (FAO 1992).

For forest-dwelling ethnic groups in Asia and the Pacific, forests are integral to culture and a source of physical, spiritual and psychological sustenance. One can see that cultural identity and traditional knowledge systems are intertwined with the forests mainly due to the use of NWFPs in various cultural activities and rituals. Thus, numerous NWFP species and forest habitats are valued as components of cultural identity and religious rituals for which they are mostly conserved. Many indigenous traditional knowledge (ITK) systems have evolved in relation to the dependence of remote traditional populations on forest resources to secure reliable and sustainable livelihoods.

Opportunities in the NWFP sector

Commercialization and domestication of any NWFP species is motivated by high market demand, adequate product availability and advantageous pricing, which generally provide the strongest incentives for harvesters, buyers and processors. Increasing commercialization of a particular NWFP may be attributed to: (1) the preferences of the consumers; and (2) easy and cheap access to harvest the product by the producers.

Many NWFPs that were harvested only for subsistence use some years ago have now been commercialized on a large scale (e.g. bamboo shoots in China). NWFP commercialization has been promoted by development programmes and driven by market forces or both have acted synergetically. Some scholars have argued that in tropical rain forest areas, NWFP commercialization is an effective way to simultaneously solve the problem of achieving species and ecosystem conservation and improving local livelihoods (Ruiz Perez and Arnold 1996; Wollenberg and Ingles 1998). But others challenge this view and have raised serious doubts about achieving the objective of conservation through commercialization of NWFPs (Belcher and Schreckenberg 2007).

The commercial success of any NWFP at a global scale has the potential to result in such high demand that this cannot be assured from supplies of natural NWFP stocks as the quantities available have already declined with continuous harvesting in many cases. However, this decline more often than not creates strong incentives for domestication and cultivation of NWFP species and can be an effective alternative for conserving biodiversity as well as generating income. Some examples of NWFP domestication are: the mulberry plant (Broussonetia papyrifera) in Sayaboury Province, Lao PDR; Moso bamboo (Phyllostachys heterocyclavar. pubescens) in Anji County, China; rattan (Calamus tetradactylus) in the buffer zone of Ke Go Natural Reserve Area, Cam Xuyen District, Viet Nam; and broom grass (Thysanoleama maxima) in Meghalaya, India.

Factors affecting the NWFP sector

Availability: For successful and sustainable development of commercial NWFPs the most important factor is resource availability. Many forest species that yield commercial NWFPs are usually remotely located and found in small volume. In the long run, these species are unlikely to remain important suppliers of commercially large quantities, as they can be quickly overharvested. For example, high market demand of rattan has caused serious depletion of the product in the forests of Arunachal Pradesh (India), so much so that now rattan is available only in inaccessible areas. This is also the case for lichens in Meghalaya.

Market and demand: NWFP exploitation is usually the first and easiest step taken when supply constraints appear due to high market demands generated by commercialization. Domesticating NWFP species is ultimately the most viable option to address resource supply constraints when trade demands occur. A case study in Paklay District of Sayaboury Province, Lao PDR, shows a steady increase in areas planted with paper mulberry as well as production between 1990 and 1999 under the influence of a strong Thai market demand (Aubertin 2004). The value of the products multiplies as they move away from the site of production. A good example of this is the marketing of broom grass in Meghalaya. There is a vast difference between the prices of raw broom grass in the local markets in the interior areas compared to the retail price in the regional markets. The main reason is there are a few traders who are organized in small groups and hence they monopolize the business (Tiwari et al. 1995).

Key stakeholders in the market chain, whether producers, traders, consumers or governments, have decisive roles to play. Traders can influence the output of raw materials by increasing prices paid to producers and they also control and decide the fate of a product. When NWFP profit margins decline, they often shift their investments to other products with better margins. Consumers influence markets by their preferences for products or processes (e.g. organic products or fair trade), while producers can expand or improve their gathering intensity or change their production systems in response to demand. For low value products, e.g. leafy vegetables, tubers and wild fruits where demand is likely to decline with economic prosperity, domestication and cultivation is unlikely to occur. A common picture in the northeastern region of India is that the major portion of the NWFP market is dominated by traders and intermediaries who earn most of the benefits while the participation of the local producer/collector is limited only to the collection and disposal to the intermediary forces (Tiwari 2000).

Pricing: A stable and/or growing demand with fair prices offered to producers gives strong incentives to private investors at all levels to increase commercialization and cultivation of NWFPs. The supply of traded NWFPs depends directly on the prices offered to gatherers or cultivators. For the NWFPs gathered from the forests, the price is often determined by the time spent in collection and not by the actual value of the NWFP. The women collectors of lichen in the Jaintia Hills of Meghalaya, India are paid Rs20–35 (<US$1) for a kilogram of lichen that after some processing is sold to the consumers at a price of more than Rs200 (US$5) per kilogram. The collector and the communities owning the NWFPs have very little or no say in this regard. The intermediaries, traders and larger processors benefit because they usually control the price of the product. A village survey in Pynursla community development block of Meghlaya revealed that in the absence of organized marketing, the price of broom grass had slumped from Rs1 700 (~US$41) for 100 kilograms in 1996 to Rs700 (~US$16) per 100 kilograms in 2000, causing significant loss to the growers and gatherers of this NWFP.

Certain policies can also negatively affect prices paid to producers; for instance in Indonesia, the restrictive trading policies on raw rattan depressed the domestic prices of rattan, which in turn had an adverse impact on the income of rattan farmers and collectors (FAO 1997). Prices also tend to be cyclical, as they depend more on economic, social or climatic factors outside the producers’ region or on the price fluctuations of their competing substitute(s).

High value NWFPs are more likely to be cultivated rather than their low value counterparts as they result in more economic benefits. High value NWFPs, even though traded in small quantities, generate higher returns generally. When higher prices are offered, producers intensify or expand their gathering or cultivating efforts over larger areas as appropriate to their means. When prices are down, they even forsake gathering or cultivating, as it may not compensate their time investment vis-à-vis other income-earning options. For example in Meghalaya, NWFPs such as broom grass, wild pepper and lichen (the rate exceeds Rs10/kg) are preferred to low value products like thatch grass, bay leaf and bamboo.

Extraction: Extraction of NWFPs for both subsistence and commercial uses is often done by children, herders and women. Generally, children are involved in collecting nuts, fruits and birds while the women collect inter alia tubers, leafy vegetables and fuelwood. The herders mostly collect wild animals, insects, vegetables and fish that are usually meant for consumption. NWFPs that are collected for commercial use are mostly seasonal. Hence, they generate seasonal income and employment involving villagers from all ages and gender groups. The mode of collection varies from place to place and time to time. In the commercial exploitation of NWFPs, most methods employed for collection from open access forests are not sustainable and the collectors are not concerned about their continued supply either.

Medicinal plants are collected by both common villagers and traditional herbal practitioners. Globally, the trade in medicinal plants is increasing at a very fast rate; it is mainly characterized by supply of products from poor countries to economically growing countries as well as developed countries. This has a positive income transfer effect. China and India are the two leading countries in the trade. Increasing global interest in medicinal plants has created a sustained demand, but at the same time increased illegal trade in plant materials resulting in indiscriminate harvest of wild varieties and serious damage to biodiversity. The overexploitation of several of these plant species and resultant decline in availability has led to their cultivation under field conditions. In many cases, medicinal and aromatic crops have better economic opportunities as opposed to traditional field crops. The price of these crops as raw material to pharmaceutical industries has increased substantially, fetching higher prices for the cultivators and collectors.

Ownership rights: For the domestication of NWFPs, individual ownership is more effective than community ownership. For instance, in 1983, the shift from commune-based management to individual management after the introduction of the Household Responsibility System (HRS) in Anji County in China generated more intensive cultivation of bamboo by the farmers. Since then, most bamboo cultivation has been contracted to individual farmers who currently manage 96 percent of the total bamboo area. The introduction of the HRS brought dynamism to a stagnant sector, greatly increasing culm and shoot production (Maoyi and Xiaosheng 2004). Similarly, in Meghalaya, tenurial security has promoted cultivation of broom grass on forest lands previously subject to shifting cultivation.

Issues relating to NWFP commercialization

Economic benefits: Commercialization and domestication of NWFPs has improved the economic conditions of poor forest dwellers by increasing their household incomes. For example, the rattan sector in the Philippines is generating significant amounts of foreign exchange and rural employment and constitutes up to 60 percent to a household’s cash income among the Batak tribal groups (Palis 2004). While subsistence NWFPs benefit the poorest of the poor, commercial NWFPs generate employment and supplement income for many people involved at various levels in the NWFP value chain, for example collection, production, harvesting, processing, value addition and sale of such products. In India, about 50 percent of 68 million tribal populations are dependent on NWFPs for their livelihood requirements. Tendu leaf (Diospyros melanoxylon), for instance, forms an important NWFP with an annual production of 350 000 tonnes (US$2 000 million) and employs about 30 to 40 million people in both collection and local cigarette making (Bhattacharya 2007). NWFPs also provide substantial income to households during seasons when other income is low. The people of Tangmang village, Meghalaya, are involved in making bamboo items like mats and baskets during slack seasons when there is little or no agricultural work. They sell these goods in the market, earning some income to meet household needs.

Domestication of commercial NWFPs: Domestication of commercial NWFPs can result in better-quality products, more control over the timing and quantity of production and higher efficiencies in producers’ time and resource inputs, while reducing production costs. Harvest can be facilitated by the proximity of planted stocks to settlements and product quality can be improved by using genetically superior planting material. The higher returns to labour from cultivated NWFPs tend to discourage forest collection, therefore possibly allowing natural stocks to regenerate. Cultivating an NWFP species can also significantly diversify areas of production compared to the limited occurrences of the same species in its natural habitat. If demand levels and prices remain stable over time, rewards for intensifying management will increase. For instance, broom grass has a high benefit–cost ratio and a very good market. As a result, broom grass cultivation is expanding rapidly and the farmers are obtaining good returns while the traders are assured a steady supply. In villages where farmers cultivated this crop, within ten to 15 years it had almost completely occupied all the lands previously used for shifting cultivation (Tiwari et al. 1995).

Policy initiatives: Governments in Nepal, Indonesia and the Philippines, among others, are attempting to revise forestry policies to support national sustainable management and conservation goals. Recently enacted laws and newly revisited legal interpretations in these countries now support the provision of resource rights to local forest communities (Republic of Philippines 1992). Policies related to collection of NWFPs are becoming more pro-poor in India. Section 14 of the Scheduled Tribes and other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (2 of 2007) of India states that the access, collection, use and disposal of all holders of forest rights shall be free of royalty. In about 100 000 Joint Forest Management villages of India, the forest dwellers have the right to collect NWFPs from government-controlled forests. Such policy initiatives are helping the rural poor who are dependent on the collection of NWFPs for their livelihoods.

The popular trends of the past two decades have been greater decentralization and devolution, privatization and the delegation of many social service/welfare functions from the state to civil society and NGOs. This has begun to influence forestry policy and practices also. Involvement of local communities in forest management and NWFP harvest and sale by scrapping restrictive policies can create strong incentives for local people to actively implement sustainable forest management (Ruiz Perez and Arnold 1996). This will directly benefit people by providing alternative livelihoods which in turn reduces pressures on the forest.

Weakening of traditional/customary management systems: In many countries, customary law and traditional management arrangements predominated long before forest resources came under the ownership, administration and/or regulation of governments. However, increased commercialization of NWFPs in response to growing market demand has weakened customary tenure and increased private property. As a result, many traditional arrangements and systems are under pressure and on the verge of breaking down. They either need to be strengthened or replaced with systems that can cope with the changes induced by markets and privatization of common resources.

Decline in traditional sustainable harvest practices: Decline in product availability due to commercialization has led to many traditional sustainable harvest practices being abandoned in favour of more destructive methods, even among some indigenous forest groups. Increase in demand and hence price of certain NWFPs has attracted outsiders to hitherto less valuable resources. This has often resulted in overharvesting or unsustainable and improper harvesting methods. Many NWFP collectors, mostly outsiders, have generally caused negative impacts on forest resources, fuelled escalating social tensions and prompted local collectors to “get what they can, while they can.” In India this has happened to Embilica officinalis (amla) fruit in Madhya Pradesh and Litsea citrata and Cinnamomum zeylanicum bark in Meghalaya. Commercial exploitation of NWFPs often leads to supply constraints because the resource is being harvested in uncontrolled and unlimited quantities and in an unsustainable manner. Such cases are usually in the context of free access systems where the resource is not subjected to any control. An example is the medicinal plant, Taxus baccata, in Meghalaya, where commercialization drastically reduced the availability of the species until it was depleted to the extent that the government was forced to impose a ban on the trade of the plant.

Decline in importance of wild products: Commercialization of NWFPs will favour only some products and make them more important while other products will remain important only in economic or ecological niches and are likely to be abandoned as better opportunities arise. Take for example the rattan species Calamus tetradactylus Hance (locally known as may) in Viet Nam. The farmers living in the buffer zone of Ke Go Natural Reserve Area in Cam Xuyen District previously harvested this rattan species from the wild. However, as availability of wild may has been decreasing owing to overharvesting, it is being replaced by a domesticated variety to meet commercial demands (Quang 2004). Similarly, domesticated NWFPs, like nuts and fruit species, will often be larger and of better quality. As a result, they can be supplied with more regularity. In combination, these “domesticated” attributes of NWFPs can result in their forest cousins completely losing their marketability. A number of fruits (Calamus, Myrica, Castonopsis, Prunussp.) collected from the forest have very high nutritive value yet they are not able to compete with the fruits available in the market. Also, in some cultures, fruit and vegetables collected from forests are considered to be inferior to those bought from the market (Tiwari and Rani 2004).

Socio-economic disparity: From the socio-economic point of view, an important long-term implication of promoting domestication is that it will benefit the farmers more than the gatherers and may even result in forest clearing to grow NWFPs. The promoters of NWFP commercialization often tend to ignore that many forest products are important because they are available to poor people. Development and conservation projects that make forests inaccessible — economically or legally — to poor people can have severe economic and social consequences, especially in times of financial distress. Unabated, these trends will lead to the demise of natural NWFP supplies, to the loss of critical livelihoods for forest-dependent people and to the further degradation of forest resources and ecosystems. Several examples have shown that NWFP commercialization has resulted in extremely low returns for women in comparison to the amount of work they have done. This is seen in Sarawak, eastern Malaysia, where women are involved in labour-intensive production of fine woven rattan mats and baskets for very low returns (Brosius 1995). The women collectors of lichen and mat weavers in Meghalaya also receive very low remuneration for their labour as reported by Tiwari (2000).

Ecological effects: Increased commercialization will lead to overharvesting, resource depletion, degradation of forest and depletion of biodiversity while domestication of NWFPs can reduce incentives to conserve the ecosystems in which the NWFP species grow naturally. Increasing demand for Thysanolaena maxima inflorescence for the production of broom in Meghalaya has resulted in large-scale conversion of erstwhile forest lands into pure plantations of the species, resulting in loss of ecological services provided by the forests in the mountainous regions (like water and soil conservation). Gathering NWFPs in forests is felt by some environmental conservation organizations to be more compatible with biodiversity conservation than timber extraction (Kuster et al. 2006). However, this very much depends on the type and way in which the product is harvested. Low density NWFP extraction from natural forests, as occurs for some fruits, leaves or nuts, can have minimal impact on local biodiversity at landscape and species levels. But as harvesting intensity increases, techniques become more destructive, such as uprooting or clear felling to harvest products. Hence, the exploitation of NWFPs can become as harmful to the long-term survival of a species and its related ecosystem as timber extraction. Intensively managed NWFP production systems can even completely displace natural vegetation, as in the case of bamboo shoot production in China.

Assuring sustainable production of NWFPs

Promote certification of NWFPs: Forest certification is evolving as a useful option to help protect the commercial viability of NWFP-based businesses against competition from similar products obtained through farming or synthetic substitutes. Proper forest management certification schemes offer promising frameworks for successful commercialization of certified NWFPs. Several certification schemes already exist, covering a range of products in agriculture, fishing and forestry, but NWFPs are only marginally involved in these schemes. Certification programmes relevant for NWFPs are forest management certification, organic certification, social certification and product quality certification (Walter 2006).Such schemes can help guarantee better prices for gatherers, social equity within the processing and marketing chains and ensure that attention is given to the sustainability of the resources providing NWFPs.

Encourage cultivation: Domestication of NWFPs that are in high demand will enable sustainable commercialization. For medicinal plants, increasing global interest in them has created a sustained demand, but at the same time illegal trade in plant materials results in indiscriminate harvest of wild varieties causing serious damage to biodiversity. The overexploitation of these plant species has led to their cultivation under field conditions. Medicinal and aromatic crops have better economic opportunities compared to traditional field crops. The price of these crops as raw material to pharmaceutical industries has increased substantially and fetches higher prices for cultivators and collectors. This is also encouraged by the increasing demand for these crops in the international market. In Nepal, medicinal plants such as atis, kesar and chiraitoare cultivated in community and private land in Karnali zone along with agricultural crops. Cultivation will reduce pressure on natural stock and thus help to conserve NWFP biodiversity in the forests.

Inventorying and research: An inventory of NWFP resources is important because it gives us an idea about their availability; harvest levels can then be calculated and devised, different sustainable harvesting techniques developed and, if needed, intensified management can be targeted. Sustainable traditional harvesting techniques and low-cost technology solutions for inventorying resources are useful for assuring sustainable non-wood forest production. At present, there are many NWFPs that are still harvested from natural systems where domestication has not yet been able to fill the gap in the supplies. Therefore, substantial research is needed to devise better and inexpensive technologies for managing non-wood forest production through improved silviculture and cultivation methods. Basic information about NWFPs, for example about their biology and population dynamics, or the socio-economic context of their use, including access and user rights is important because it helps to address the supply of NWFPs for trade; it gives an idea about regulating access to the resource, enhancing resource productivity through forest management and offering economic incentives. New tools and methods for forest management need to take into account the trade-offs of forest development — identifying the winners and losers.

Strengthen institutional support and policies for the NWFP sector: In many developing countries, institutional arrangements to monitor and regulate the flow of NWFPs from producers to consumers are not well-established. Even if formal institutional arrangements for management and conservation of NWFPs exist, they are based on coordinated multi-agency approaches and this fragmentation of competencies can result in poor management owing to poor communication and poorly coordinated action. Thus, communication/exchange of information among institutions within countries and synergies among international partners must be substantially improved. There should be more focus on programmes that will enable the promotion of fair NWFP trade. Policies generated outside forestry sectors may be as important as NWFP policy within the forestry sectors. They must be included in the development of institutional arrangements governing NWFPs. Any development assistance or change in policy should be framed so that it will benefit the rural poor. This requires strengthening user groups that have limited power and influence and their land and resource property rights. In most countries of the region, forest management is still oriented towards timber species and NWFPs are not included in the management plan. For example, in India, most working plans of government-managed forests do not include NWFP species.

Encourage traditional conservation and management practices: Traditional management practices are conservation-oriented and should be encouraged. In Meghalaya, different NWFPs are managed in forest gardens by people from the traditionally termed “War Areas” of Meghalaya. At least once or twice a year weeding and cutting of undesirable trees species to promote better growth of certain NWFPs like bay leaf is done. The harvesting of bay leaf is done mainly by skilled men and in a sustainable manner. The older branches that have attained a particular diameter are cut, while younger branches are left. Harvesting is conducted after a gap of one to two years, depending on the age of the tree and fertility of the soil. In this way, production can be maintained. Such traditional harvesting techniques need to be encouraged.

Better technology for processing NWFPs and develop more industries: Many NWFPs require postharvest processing either to make them viable for storage or to make them marketable. Most of these processes are simple such as grading, cleaning, purifying, or preservation through physical or chemical processes. Thus, it is evident that through the application of very basic and simple processes the value of NWFPs can be enhanced both in utility and the potential price they can fetch for both the collector and the producer. But there is a significant need for more knowledge, experience and information on the use of current technologies. Most of the collection, harvesting and processing of NWFPs and production of ancillary products are still carried out using inefficient equipment, obsolete technologies and traditional low productive methods. This sector also lacks proper infrastructure, finance, skilled personnel, and most importantly, cohesion or cooperation as most of the NWFP-related activities are carried out at microscales (families and individuals). Hence, they are unable to exploit the market and in most cases do not even have access to proper markets. Thus, to realize the actual potential of the NWFP sector these gaps need to be addressed urgently.

Improve economic and social equity of NWFP-dependent communities: Effective management to secure property rights and to ensure that management benefits are obtained by local managers, mainly rural communities who are dependent on the non-wood resources, is desirable. In cases where governments are the largest forest owners, they can play a key role in ensuring equitable distribution of benefits among all forest-user groups. However, significant attention to assisting weaker groups of society, such as indigenous forest-dependent communities who usually gather NWFPs, is needed. This can occur through licences or gathering permits with the objective of protecting both gatherers’ income and conserving the resource. The roles and impact of non-tariff, trade-related instruments such as certification schemes and best practice codes are important. More focus should be given to high value products. In the case of domestication, most forest-dependent people or socially disadvantaged groups may not have access to farmland or be able to compete with large-scale production on well-established farms and therefore they deserve some degree of protection.

Discussion and conclusion

Through commercialization and domestication, the future of non-wood forest production looks promising as it will benefit a wide spectrum of people involved in the production and trade of NWFPs. Subsistence non-wood forest production has generally been the main driving force for sustenance of rural households. However, commercialization, coupled with proper management for intensive cultivation (domestication), has brought brighter prospects for forest-dependent people. The contribution made by non-wood forest production towards alleviation of poverty is immense and can be seen through the improved income of rural households, employment and revenue generation. Although the adverse impact of overharvesting and resource depletion generated by commercialization cannot be discounted, to some extent domestication can fill this gap, with a slight risk of lowering the value of wild NWFPs. Conservationists and development managers need to address the challenge of balance between livelihood improvement through NWFP trade and conservation concerns. Regulation of markets for NWFPs collected from open access forests at national as well as international levels is desirable.

Commercial NWFP production can decline and if no intervention is made it can either lead to total collapse of the resource in the case of products with high global demand, or continue to decline in the case of “business as usual”. However, if external market, management, technology and policy interventions are made, resource availability can be stabilized, improved or enhanced (Figure 1). The review of the NWFP sector across the region suggests that the collection of subsistence NWFPs and enrichment of natural forests with NWFPs (e.g. forest gardens) are generally sustainable. Similarly cultivation of NWFPs on agricultural lands is not a concern but needs to be promoted to reduce pressure on forests and promote income to people in this sector. However, commercial NWFPs collected from open access forests are a cause of concern and warrant regulation and control. The cultivation of NWFPs on erstwhile forest land or by clearing natural forests is also a cause of concern as it depletes biodiversity and affects the availability of other forest goods and services. In general, the trend of NWFP production is moving away from forests except for clandestine and illegal trade of high value low volume products, which continues to deplete the biodiversity and productivity of forests.

Figure 1. Ensuring NWFP availability through external interventions


The authors are grateful to the Centre for International Forestry Research, Bogor, Indonesia for providing financial assistance for the research.


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1 Centre for Environmental Studies, North-Eastern Hill University, Shillong-793 022, India. Tel: 91-364-2721158. E-mail: ŒTel: 91-364-2721188. E-mail:
2 Center for International Forestry Research, India Office, New Delhi 110 012, India Tel: 91-11-25841906. E-mail:

Forestry and bioenergy in Asia and the Pacific

Chris J.K. Perley1

The major constraint for forest-based bioenergy in Asia and the Pacific is in the economic supply of wood and the quantities available relative to population projections. Economies of location are more important than economies of scale for those industrial bioenergy processes using wood. Therefore, small-scale and decentralized bioenergy plants that are integrated with existing wood-processing plants have the most economic potential. Supply is also limited by the practical unavailability of the significant levels of traditional fuelwood that remain necessary for cooking, declining roundwood production and forest areas in many Asia–Pacific countries and the likely future rise in demand for industrial wood as a low energy product. Increasing productivity through reforestation policies provides perhaps the best policy option for the future of forest-based bioenergy. Land for reforestation is constrained by increasing urbanization and the value of land is tied to rising population. There are potential pitfalls relating to forest expansion for bioenergy at the expense of other forest functions. This particularly relates to the increase in oil-producing tree crops on land that might otherwise support multifunctional forests. However, policy options are available that may avoid these potential risks.

Keywords: bioenergy, forestry, economic supply and demand, biomass, woodfuel

The Asia–Pacific energy context — rising fossil fuel demand

The rise over recent years in the interest in energy sourced from various types of biomass — bioenergy — is connected to two inter-related phenomena:

  1. Climate change, itself exacerbated by the rise in atmospheric gases that are sourced from the combustion of fossil fuels such as coal and oil; and
  2. The increase in the price of oil partly in response to peak oil projections. Fossil fuel combustion is the single largest human influence on climate, accounting for 80% of anthropogenic greenhouse gas emissions(Quadrelli and Peterson 2006).

The sources of greenhouse gas emissions are not limited to oil. Coal is proportionately the greatest contributor of climate change gases, passing oil in 2003 (IEA 2006). It is also the most polluting, providing a similar proportion of total world energy as gas with twice the CO2 emissions. In the Asia–Pacific region, the backdrop to this rising concern is the dramatic rise in the dependence on these polluting fossil fuels. Since 1971, the strongest trend has been the rise in fossil fuel use (coal, gas and oil) both in terms of the actual amount of energy these fuels provide to the economy and in the proportion of total energy. In most Asia–Pacific countries, especially those in Asia, the contribution to total energy provided by renewable energy sources has remained constant, although with a declining share of the total energy supply (IEA Energy Statistics).2

In most cases, the rises in fossil fuel use show a consistent trend line, with no sign of slowing. The IEA graphs for Thailand (Figure 1) provide a picture of a typical Asian nation. In 1971, the relative proportion of energy provided by renewables was high, but that proportion declined dramatically as total energy supply increased. Over the period, the actual amount of energy provided by renewables remains relatively constant, though there has been some increase in the absolute contribution provided by wood (Koopmans 2005). The increase in energy supply is almost exclusively related to the rise in oil, gas and coal use.

In contrast to the Asia–Pacific region, at the world scale the investment in renewables has experienced a dramatic increase since 1990. Relative to the annual rise in total primary energy supply of 1.8 percent since 1990, the annual rise in biofuels and biogas has been 8.1 percent. The rise in hydroelectricity and solid biomass for the production of power has risen at the same rate as total energy supply.

Figure 1. Evolution of total energy supply from 1971 to 2004: Thailand

Renewable energy sources include hydroelectricity, geothermal power, combustible biomass (including biogas and biofuels) and the “new renewables” of solar, wind and tidal power. They provide approximately 13 percent of the world’s total primary energy supply. Biomass, including that from wood, provides 10.4 percent of total primary energy (IEA 2007a). This is directed primarily at the provision of heat for cooking. Combustible biomass contributes 1.3 percent of the current total world production of electricity and 1 percent of current world road transport fuel (IEA 2007a), although this figure has increased rapidly to 14 percent in Brazil since the late 1970s.

The future for fossil fuel

These historical trends have major implications for Asia–Pacific countries to 2020 and beyond. The potential for a rising price in oil is a particular concern. The price of oil (Figure 2) and gas is the most important driver of the economics of any renewable energy alternatives. Recent analyses by the IEA suggest that oil supplies may already have reached a plateau (IEA 2007b), with the potential for supply to fall while demand continues to rise. This contributes to the considerable uncertainty associated with future energy supply patterns. Its Medium-Term Oil Market Report was released in June 2007. The IEA forecasts oil demand to increase from 81.6 million barrels a day in 2007 to 95.8 million barrels in 2012. At the same time, it predicts production will fall by up to 2.8 million barrels in 2009 (Litterick 2007) with the potential for a supply crunch after 2010. One IEA economist was reported as saying that in the medium term oil prices were not expected to fall significantly below the US$70 per barrel levels of June 2007. This change in a key IEA assumption effectively makes many of their previous scenario predictions to 2030 obsolete, although some analysts have claimed the normally conservative IEA is being alarmist (Lawler 2007).

Figure 2. Spot Oil Price — West Texas Intermediate 1946–2007

Source: Provided by the Federal Reserve Bank of St. Louis based on quotes reported in the Wall Street Journal on the Spot Oil Price: West Texas Intermediate.

The possible return of King Coal

Coal has considerable potential to increase its supply and to substitute for both oil and gas, but with considerable negative externalities that may not be socially acceptable in terms of air pollution, or the apocalyptic potential of climate change. Coal is not so restricted in future supply as oil, with estimates of economically recoverable coal reserves close to one trillion tonnes, representing about 200 years of production at current rates (IEA 2003). The changing supply situation relative to oil would suggest an increase in the share of energy supplied by coal if there were no policy changes, such as environmental legislation. In its 2006 Outlook study, the IEA projected coal to increase its contribution of energy supply — primarily as an increasingly important fuel for electricity generation — through to 2030, but for oil and gas to maintain their relative contributions in total energy supply through to that date. The IEA revised its forecasts in July 2007.

However, coal becomes more critical in any analysis of the future energy situation when regional differences are considered. Coal reserves are widely dispersed relative to oil and gas, although quality varies. The IEA growth projections for coal point to the most dramatic increases occurring in the Asia–Pacific region. China and India together are estimated to account for almost threequarters of the increase in coal demand in developing countries and two-thirds of the increase in world coal demand (expected to rise from 4 595 million tonnes in 2000 to 6 954 million tonnes in 2030). These coal-use projections are daunting from the perspective of climate change, and without the discouragement or channelling of energy investment through environmental regulations, or increased supplies of renewables, they suggest a future of increasing air pollution and greenhouse gas production in Asia.

The current state of biomass in Asia and the Pacific

Biomass, predominantly wood, now represents only 3 percent of primary energy consumption in industrialized countries compared with 35 percent in developing countries (ABS Energy Research). In Asia, the share of primary energy provided by wood varies from less than 10 percent to 90 percent (Figure 3), with the average for the 16 Asian countries analysed by Koopmans (2005) being 25 to 26 percent. Most of this energy is used in the traditional production of heat from fuelwood and charcoal.

Figure 3. Share of wood energy in total energy consumption

Source: FAO-RWEDP (2003).

Future scenarios and the place of bioenergy

Bioenergy is not necessarily a palliative for a business-as-usual current economic framework progressing into the future. This point is highlighted in the IEA’s Outlook for Energy 2006 (2006). It provides two scenarios for the world to 2030:

  1. Underinvested, vulnerable and dirty, or
  2. Clean, clever and competitive.

The latter will require what the IEA describes as strong government action to steer the energy system onto a more sustainable path. IEA (2006) projects that policies that encourage the more efficient production and use of energy will contribute almost 80 percent of the avoided CO2emissions, with the remainder coming from switching to low- and or zero-carbon fuels, such as biofuels.

This need for strong policy leadership to counter the financial incentive to continue increasing the use of fossil fuel is a key issue for governments because long-term global interests are in conflict with short-term, localized financial interests. The IEA is not alone in suggesting the need for a change in thinking. Any future sustainable energy system will require “some radically different thinking and doing” (Pretty 2007, p xiii), especially if associated with climate change. Bioenergy may be part of this new “thinking and doing”, but it will be part of a solution within a changed energy paradigm, including considerable efforts on managing the demand side of the energy systems, not a silver bullet to substitute for fossil fuel supply.

Energy from biomass

Bioenergy is energy converted from biofuels, which are themselves prepared from various forms of biomass. For example, a tree is a form of biomass, which can be cut and prepared into dry wood, a biofuel, which through combustion can be converted to heat, is a bioenergy.

Figure 4. Production chain of bioenergy (FAO 2004)

There are three forms of bioenergy: heat, power and transport. Wood has an existing and traditional role in the production of heat bioenergy. It has an existing and developing role in the production of electrical power through thermochemical processes such as combustion, gasificationand pyrolysis, often in association with heat (co-generation) or with both heat and cooling (tri-generation) (Sims 2002, p 197). Wood has perhaps the most potential in the emerging technologies relating to transport fuels, particularly ethanol, but also through the production of synthetic diesels from both trees and shrubs that produce oils and processes related to wood gasification and pyrolysis.

First generation biofuels

First generation bioenergy refers to biofuels made from sugar, starch and oils using existing technologies. The fuels derived are ethanol and lipid-derived biofuels (straight vegetable oil [SVO] and biodiesel).

Ethanol can be sourced from sugars, starches, celluloses(grasses and herbaceous crop residues) or lignocelluloses (wood). Conversion from sugar to ethanol is currently the most cost-effective procedure. It uses such biomass as sugar cane and sugar beet, a process of fermentation, followed by distillation to remove excess water. Litre for litre, the ethanol produced has approximately two-thirds of the energy of a litre of gasoline (Worldwatch Institute 2007).

Starch sources include the high-starch content seed from agricultural crops such as maize, wheat and cassava. Before fermentation, the reduction of starch to sugars is required through acid or enzymatic hydrolysis. Some emerging sources of cellulose are perennial herbaceous plants such as switchgrass (Panicum virgatum) and the elephant grass genus miscanthus (a genus of 15 species including M. sinensisand M. sacchariflorus), whose promise is linked to their better environmental and energy balance profile when compared to more energy-intensive annual and arable crops such as maize (Zea mays).

There are well-developed technologies for the production of ethanol from both sugars and herbaceous biomass starch. Brazil and the United States are particularly advanced in these technologies, with Brazil focusing on sugar fermentation and the United States on starch hydrolysis and fermentation. There are obvious climatic parallels between Brazil and many countries in the Asia–Pacific region, particularly in relation to the rainfall and temperatures required to grow sugar cane productively. Some Asia–Pacific countries have a well-developed and expanding sugar-cane resource.

First-generation lipid-derived biofuels include SVOs sourced from oilseed crops such as canola, sunflower, soybean and palm oil. They can potentially be used in diesel motors. The production of biodiesel involves chemically combining vegetable oils with an alcohol (ethanol or methanol) in a process called transesterification. The biodiesel that results is an alkyl ester of fatty acid. A litre of biodiesel contains between 88 and 95 percent of the energy of a litre of diesel, but has a similar fuel economy because of biodiesel’s lubricating property and its cetane value.

The economics of first generation biofuels

The relative resource availability, scale, technological development and process difficulty make it no surprise that the economics of ethanol production from sugars, starch and lignocelluloses is progressively more marginal. Sugar requires only fermentation, while starch and more particularly lignocelluloses require the additional step of hydrolysis. The relative costs of production are shown in Figure 5. In the Brazilian setting, the price competitiveness of sugarcane-sourced biofuel is better than gasoline when the oil price is above US$35 per barrel. Ethanol from maize in the United States is competitive at an oil price of US$55 per barrel and ethanol in the European Union requires an oil price of US$75 to US$100 per barrel (Worldwatch Institute 2007, p 20).

Relative cost efficiencies are highly dependent on the wholesale gasoline rate, land productivity and the scale and distribution infrastructure. The cost data in Figure 5 are from 2006, when oil prices were between US$59 and US$74 a barrel. Sugar cane is comparatively high yielding, able to produce sufficient sugar to ferment approximately 6 000 litres of ethanol per hectare. India has yields slightly lower than Brazil (5 500 compared with 6 500 litres per hectare respectively). Temperate-grown sugar beet ranks second at 5 000 litres per hectare and maize at 3 000 litres per hectare (Fulton et al. 2004). Grains are less productive. Cellulose produces high biomass levels, but its yield of ethanol is constrained to date by technology challenges.

In light of these data, the potential economic viability of agricultural-based bioenergy could be expected to be superior in subtropical and tropical countries compared to those temperate countries whose cost structures are higher and whose suitable feedstock options generate lower per hectare yields.

Figure 5. Cost range of ethanol and gasoline production, 2006 (per litre gasoline energy equivalent)

Source: Worldwatch Institute 2007, from various data sources.

Without doubt, those tropical countries with relatively good quality soil and available moisture could produce economically competitive sugar-sourced ethanol. However, in many of these countries, land availability and food security issues limit the potential of agriculturally-sourced ethanol. There are, however, some Asia–Pacific countries with very well-developed sugar industries, many producing over 20 million tonnes per annum. Those best able to take advantage of these resources for bioenergy are less densely populated countries such as Australia and Fiji. Warmer countries may also have a strong competitive advantage in the production and processing of lipid-derived biofuels. The temperate crops currently grown in Europe and North America to provide suitable oils are considerably lower yielding per hectare than those crops that can be grown in the tropics. Palm oil is particularly productive, yielding up to 5 000 litres of oil per hectare in Brazil and 6 000 litres in Malaysia (Fulton et al. 2004). Malaysia and Indonesia are the world’s highest producers of palm oil, having expanded rapidly since 1990 (Table 1). By comparison, temperate sunflower and rapeseed produce around 1 000 litres per hectare. The cost comparison of two lower yielding oils is related to diesel in Figure 6 at 2006 oil prices.

The success of palm oil is particularly relevant to the future use and or conversion of forests within the Asia–Pacific region. Claims of previous vegetation cover of areas planted in palm oil vary. One view is that almost all oil-palm expansion in at least Malaysia is pursued through the conversion of existing rubber, cocoa and coconut plantations or from logged-over forest areas that have been earmarked for agriculture. Another is that palm oil expansion comes at the expense of rain forest and the peat swamps that represent an underappreciated carbon reserve. Malaysia has an estimated 3.6 to 4.8 million hectares planted with palm oil (Mabee and Saddler 2007). Indonesia’s rapid palm oil expansion from 600 000 hectares to more than 6 million hectares in early 2007 is a particular target for concern (Butler 2007). In 2005, the Indonesian Government announced its intention to increase the palm oil estate by another 3 million hectares, partly by converting 1.8 million hectares of forests in Borneo (Pearce 2006).

Figure 6. Cost range of biodiesel and diesel production, 2006 (per litre diesel energy equivalent)

Source: Worldwatch Institute (2007), from various data sources.

Table 1. Asia–Pacific palm oil production (1 000 tonnes)











180 200 213 217 220 223 225



2 413 4 480 6 855 7 775 9 370 10 530 12 080



6 095 7 811 10 842 11 804 11 909 13 355 13 976

14 962

Papua NG

145 223 336 329 316 326 345



45 53 54 55 56 59 60


Solomon Is.

22 30 35 36 34 33 34



226 370 525 625 600 640 668


Source: FAOSTAT. FAO Statistics Division (2007).

Next generation transport bioenergy

Next generation bioenergy refers both to new sources of biomass feedstock and new technological developments by which energy can be converted from these sources.

Asia–Pacific countries do not limit themselves to being significant producers of palm oil. China and India are significant producers of castor oil (momona), considered the most promising oil for biofuels after palm oil. Cottonseed oil, peanut oil and coconut oil are also produced in significant volumes in India and China (for peanut and cottonseed oils), and Pakistan (for cottonseed).

The sources of lipid-derived biofuels that are emerging are those that do not compete for agricultural land or with food markets. All the oils mentioned above are also food sources and therefore subject to the demands of that global food market. India has taken the lead in the search for complementary oil-producing plants. It favours the jatropha tree (Jatropha curcas). This African species can grow on lower fertility and semi-arid areas, tolerates a wide range of climates and provides many of the multifunctional benefits of trees, including soil conservation. The oil produced can be used for other industrial and cottage industry uses (soaps, etc.) besides biofuels, giving the potential for diversifying rural economies. India is particularly focusing on the 63 million hectares it classifies as “wasteland”, often associated with rural communities. India estimates that 40 million hectares are suitable for cultivation by oil-bearing plants (Prasad 2007). China is also examining the potential of the tree. Jatropha is high yielding where climatic conditions are favourable, with production of up to 2 000 litres of oil per hectare. Arid climates result in lower yields. Jatropha may also be amenable to fuel use at the small-scale village level. The increasing interest in lipid-derived biofuels has led to the examination of a number of tree species that may have potential for next generation biofuels. Approximately 100 Brazilian species have been identified as potential producers of oil, most of them palm trees. India itself has 300 tree species that produce seeds. The other alternatives with potential being explored in the Asia– Pacific region are pongamia (Pongamia pinnata), neem (Melia azadirachta), mahua (Madhuca indica) and sal (Shorea robusta).

The one characteristic of both palm oil and other trees with potential as oil producers is their ability to compete on “waste” land. Trees are more constrained by soil depth than soil fertility and therefore the areas that have remained under forest tend not to be those more fertile soils required for food production. However, the rise in interest in such tree crops as palm oil and the developing interest in such oil-producing trees as jatropha and pongamia, have implications for forest areas.

The next generation suitable cellulosic biomasses include the herbaceous cellulose from tall grasses and the lignocellulosic materials available in trees and forestry residues. The principal difference between herbaceous biomass sources of sugar and starch, and wood as a biomass source, is the presence of lignin. Lignin binds the cellulose and hemicellulose components of wood and is difficult to process.

It is the development of biochemical technologies associated with breaking celluloses and hemicelluloses from lignin within wood that provide promise for the future. This is the principal “next generation” bioenergy process because of the potential represented by the large feedstock resource that can be provided by not just forest trees, but the cellulosic tall grasses, and the residues of those sugar, maize and grain crops currently harvested for their more readily available sugars and starches. Access to these feedstocks would considerably increase the biomass available for ethanol production and the potential for large-scale production plants.

Processing research up until recently was focused on a multiple-step process through initially the hydrolysis of wood to produce sugars, followed by fermentation of the sugars to ethanol. The hydrolysis process in the past was a chemical process of acid hydrolysis. It is an old technology and results in lower yields of fermentable sugars through the degradation of sugars by the acid. More recently, enzymes have been used for hydrolysis and selected strains of bacteria and yeast in the fermentation of sugars. The change in technique has generated enthusiasm because of the range of potential biological agents that can be tested.

More recently still, there has been a move from the two-stage process (hydrolysis or saccharification, followed by fermentation) to simultaneous saccharification and fermentation (SSF). These new technological approaches hold considerable promise, particularly as the cost of the microbes and enzymes can be reduced.

The general perspective is that these biochemical technologies will not be available for another ten to 15 years (Worldwatch Institute 2007, p 45), from which point the conversion of lignocellulosic ethanol should increase substantially. Their potential cost competitiveness is illustrated in Figure 7.

Figure 7. Cost range of ethanol and gasoline production after 2010 (per litre gasoline energy equivalent)

Source: Worldwatch Institute (2007), from Fulton et al. (2004).

The next generation advances relating to lipid-derived biofuels relate mainly to the potential for expanding the range of plant sources. Much of this potential will relate to the potential multiple benefits that any new crops, including those sourced from trees, can provide to communities. However, the future cost competitiveness of biodiesel is not likely to increase through any leap in technology. Projections by Fulton (2004) suggest that the relative competitiveness of soybean and rapeseed-sourced biodiesel will be similar to what it is today. The emphasis in next generation ethanol production is markedly different. There is the potential for new cellulosic and lignocellulosic feedstocks, as well as the potential technologies to make transport ethanol considerably more competitive than it already is, against the current historically high oil prices. These technologies have the potential to considerably increase the scale of production from high yielding cellulose and lignocellulose sources, as well as the utilization of residues from sugar and starch-sourced fermentation.

Thermochemical forms of industrial wood-sourced bioenergy

The attraction of wood as a source of energy is not limited to ethanol production for transport. Historically, wood has had a long history in the conversion of heat for cooking, and even in the production of power. The traditional conversions are simply combustion in air, or through first converting wood to the often more convenient charcoal form through burning in the absence of air before combustion for home or commercial use.

There are three major thermochemical industrial processes used for converting wood to heat, power, liquid transport fuels and even other economic by-products: combustion, gasification and pyrolysis. Gasification and pyrolysis are the two most favoured concepts because they can generate more outputs than simply heat and power. Depending on the heating processes employed, gasification and pyrolysis can provide quantities of gas and liquid products that can be further synthesized into either transport fuels or chemical products, and a quantity of char, the potential uses and functions of which are raising considerable research interest.

Although the supply of world electrical power sourced from wood through thermochemical conversion is currently low (1.3 percent), this status does not reflect the opportunity for such conversion in a future where fossil fuel use may be limited by price or emission standards. Nor does this low level of production reflect the potential for wood-sourced power production at localized scales within decentralized power networks. A number of Asian countries recognize the potential of decentralized wood-sourced power generation, while being realistic about the problems; particularly of decentralization versus large-scale, wood feedstock supply, set-up and operating cost, and constraints that are often localized (Prasertsan and Krukanont 2003).


Combustion is simply the conversion of wood to heat through burning in air using various items of process equipment; for example, stoves, furnaces, boilers, steam turbines, turbogenerators, etc. Combustion of biomass produces hot gases at temperatures of around 800–1 000oC (McKendry 2002b). This heat can be used to raise the temperature of water to convert it to steam, which is then used either in some heating or production process, or to drive a steam turbine to generate electricity.

The efficiency of combustion conversion is dependent on the quality of feedstock (density, moisture content, etc.), the plant scale and the availability of wood input. Plant scale ranges from very small to 3 000 MW. Financial viability relates to these efficiency factors as well as the economies of location and competing providers of power. After the rise in oil prices in the late 1970s, there was considerable interest in the development of wood combustion plants (also referred to as dendrothermal plants) in the Asia–Pacific region using wood from wood waste, old coconut trees in Pacific island nations such as Fiji and Vanuatu, and in the case of the Indian State of Gujarat and the Philippines, woodfuels sourced from surrounding forest estates. It was considered to suit many countries, especially those with a high reliance on imports to produce power (Durst 1986). Fiji still produces over 3 percent of its electricity needs through the combustion of bagasse (Biomass Workshop Fiji Country Report 2006). A major advantage of combustion is the less technically demanding requirements of fuel when compared with gasification or pyrolysis and the maturity of the technology.


Gasification involves the partial combustion of biomass in restricted supply of air or oxygen at elevated temperatures of 1 200oC to derive producer gas, containing mainly carbon monoxide, hydrogen and methane. The gasification process is particularly amenable to small-scale bioenergy systems producing outputs of between 10 kW and 10 MW (Sims 2002, p 246) and is equally applicable to both the developed world and rural areas of the developing world (McKendry 2002b). Such scales of operation are sufficient to provide heat, electricity and co-generation to villages, communities and for small industrial use.

The key constraint to such operations is the consistent supply, growth potential and quality of the biomass resources. This is the major cause of failure of national programmes to develop biomass-fuelled gasification plants in Asia (Knoef 2000) with the low-grade material causing frequent technical problems. However, small-scale gasifiers have operated without major problems, including those in Balong and Majalengka (Indonesia) and Onesua (Vanuatu). Knoef (2000) claims the small-scale plants represent “appropriate technology”, being cheaper, with spare parts more easily accessible, and repairs that can be carried out on site. Increasing local reliance on biomass supply, plant operation and repairs and maintenance appear to be important criteria for the success of gasifier plants. Larger plants place more demand on a more comprehensive and developed technical infrastructure being available. However, the profitability of the small-scale plants set up as commercial enterprises was marginal (at least in 2000 when Knoef did his research), and highly dependent on both energy prices and biomass input costs. A key advantage of using gasification on wood is that it can convert all the organic matter in biomass to gas and then to liquid. The lignin component in wood, so difficult for hydrolysis to separate, is readily gasified and made available as a fuel feedstock (Worldwatch Institute 2007). One potential further application of the producer gas derived from gasification is to further process the gas to liquid fuel using Fischer-Tropsch (F-T) synthesis. This was the process used by Germany and Japan to produce synthetic diesel and gasoline from coal gasification during the Second World War.

As an indication of potential, the period of high real oil prices in the early 1980s resulted in a number of gasification plants for the production of methanol from wood and wood waste being developed in France, Sweden and Finland. These were eventually undercut by lower oil prices (Faaij 2003). Their economic viability remains a promise for the future, dependent upon oil price relativities, resource availability, market development, the ability to gain economies of scale from large-scale gasification and technological advances in thorough gas cleaning (Hamelinck and Faaij 2006).


Pyrolysis is the conversion of biomass to liquid (termed bio-oil or biocrude), solid and gaseous fractions by heating the biomass in the absence of air to around 500oC (McKendry 2002a). Figure 8 provides the range of potential yields of char, gas and liquid products that can be produced through varying applications of temperature.

Figure 8. Energy products from pyrolysis

Source: McKendry (2002a).

Recently, the interest in the solid char (termed biochar) that results from pyrolysis has increased. The product has potential to provide a carbon store of 30.6 kg C sequestration for each GJ of energy produced (Lehmann et al. 2007). In addition, the char itself provides other functions if applied back to the land; for instance, improvement in soil water holding capacity, cation exchange capacity and soil structure (Lehmann 2007). However, the production of char uses slow pyrolysis techniques that reduce the yields of gas and bio-oil.

Each of these technologies creates different energy products through different pathways. Gasification has the most potential of the three for production of a fuel for transport (McKendry 2002a), but where fuel or heat for stationary turbines and power generators is required, pyrolysis and combustion may suit particular scales and resources. Both gasification and pyrolysis also demonstrate a promise for technological advances; the work of Knoef (2000) suggests that small-scale gasification plants demonstrate real potential as decentralized sources of heat, power and, potentially, transport fuels.

The critical position of fuelwood in the Asia–Pacific region

The two distinct wood-energy subsystems include: (1) the often highly localized (Mahapatra and Mitchell 1999) and well-established “traditional” wood-energy subsystem providing heat for cooking and small industry, mainly within both rural and increasingly urban areas of developing countries; and (2) the industrial wood-sourced bioenergy subsystem with its emerging potential for substitution for fossil fuel-sourced energy systems at scales either focused on decentralized local markets or national and international markets.

There are many issues that preclude the consideration of these systems as readily substitutable, particularly the substitution of traditional energy by centralized industrial energy. Whether this is a feasible option, let alone a desirable one, is highly debatable. Qualities of accessibility, convenience, amenability to locally available technology and reliability may be considerably more important than conversion “efficiency” — not to mention the other functions of trees and forests whose existence may be related to the use and management of forests for fuelwood supply. There are also logistical impracticalities relating to the economics of supply by disparate localized resources of wood biomass when feeding an industrial processing site, especially when a large percentage of the traditional woodfuel is from small patches of trees outside forests within agricultural settings.

The economics of wood supply

There are three main sources of lignocellulosic supply to any wood-sourced bioenergy plant:

  • Forest “arisings” from harvesting and forest thinning operations;
  • Plantations grown for single function biomass crops; and
  • Residues from ancillary wood-processing operations (e.g. offcuts, sawdust).

The key issue affecting the economics of industrial wood supply from forest sites relates to the nature of the material; in particular, the fact that it has a low energy density when contrasted with fossil fuels (Table 2).

Table 2. Comparison of biomass and fossil fuel energy densities

  Energy density (GJ/tonne)
Liquefied natural gas 56
Mineral oil 42
Coal (black) 27–28
Coal (lignite) 15–19
Freshly cut wood biomass (50% mc by weight) 8
Wood biomass oven dry 18–22
Agricultural residues (varying moisture) 10–17
Charcoal 30

Source: Compiled from IEA (1994), cited in McKendry (2002a) and papers/misc/energy_conv.htm

The effect of this low energy density of fleshly cut wood effectively defines the economies of location of any wood resource destined as biofuel. The low energy per tonne of any log delivered to a processing site will be reflected in the price of that log. The major variation to this value relates to density, which particularly relates to the moisture content of a log. Half the weight of a freshly cut log is typically made up of water.

In a market with sale options to forest owners, a bioenergy-processing site will tend to compete for lower grades of logs. Price offered then has a considerable bearing on the availability of supply, and if other markets are available, the price elasticity of supply will be considerable. It is therefore not always useful to consider theoretical physical supply when evaluating plant options. In many situations the economic availability of wood biomass for industrial energy production is much less than that often reported as physically available (Horgan 2002, Shi et al. 2007). In addition, the elasticity of supply is highly localized (Robertson and Manley 2006). The low value per unit weight effectively constrains the radius surrounding any given processing plant, a particular constraint for large-scale plants in other than highly forested areas. Some of the value per unit weight constraints may be overcome by drying, densifying and undertaking initial processing phases of logs within the forest.

Biomass plantations produce a low value commodity, with marginal economics, highly subject to location. At current levels of technology, single purpose lignocellulose crops are unlikely to be competitive with either agricultural crops or with those tree species producing oils.

Any timber-processing site yields waste arisings, including timber offcuts, sawdust and bark, with some plants also yielding black liquor. Such material is localized on site, and therefore not subject to significant transport costs associated with either forest arisings or dedicated wood biomass plantations.

There are considerable benefits to be had through the generation of more than one energy at such sites — e.g. power and heat — especially if this is supplied from what may be a waste biomass resource at an existing plant that would otherwise represent a cost. Co-generation plants produce both power for use by the plant, as well as heat and steam used in timber processing. There is even the potential in the tropics to generate a third energy — refrigeration though heat pump technology — with a range of potential applications especially associated with food (tri-generation).

Supply constraints

Although China, India, Bhutan and Viet Nam have all demonstrated a marked increase in forest area since 1990, most Asian countries have declining forest areas, with a number showing a reduction of over 1 percent annually based on their original 1990 areas. These trends in forest area reduction are often correlated with reductions in wood yield (Table 3). These wood yield reductions can be expected to continue into the future as annual roundwood production tends towards a representation of annual growth rather than an artificially high exploitative yield associated with liquidation and land cover conversion. This has serious implications for both the potential supply of wood for traditional fuel and for the wood available for timber processing, log exporting and industrial conversion to bioenergy.

Increasing the supply of wood available for both traditional fuelwood and industrial needs cannot depend alone upon improving the efficiency of wood harvest. It has limited scope for increasing supply.

Table 3. Change in Asia–Pacific forest production


Total roundwood (1 000 m3)


Total industrial roundwood (1 000 m3)

Woodfuel + (1 000 m3)

















20 758

24 302

30 375

30 529



19 560

24 042

27 413


3 545

4 742

6 333

3 116



28 383

28 519

28 459

27 944







27 742

27 940

27 836

27 662



3 904

3 934

4 355

4 679







3 855

3 889

4 221

4 546



11 795

12 027

10 298

9 334



1 040




11 228

10 987

10 119

9 221



278 090

303 704

285 443

284 083


89 677

99 769

94 560

93 200


18 8413

20 3935

19 0883

19 0883


Fiji Is.

















300 646

313 403

296 141

328 677


24 407

24 879

18 761

23 192


276 239

288 524

277 380

305 485



164 409

143 557

122 478

106 216


38 366

43 203

33 497

32 497


126 043

100 355

88 981

73 720



29 403

23 056

18 121

16 276


29 300

22 897

17 987

16 166








6 082

6 724

6 439

6 336







5 627

5 730

5 872

5 944



45 270

39 349

18 441

28 237


41 260

35 753

15 095

25 169


4 010

3 596

3 346

3 068



















21 298

21 104

38 083

42 548


3 653

2 809


4 262


17 645

18 295

34 471

38 286



12 967

13 101

14 023

13 952




1 260

1 260


12 397

12 481

12 763

12 692


New Zealand

11 997


19 279

19 143


11 947

16 861

19 279

19 143






DPR Korea

4 963

5 587

7 003

7 297




1 500

1 500


4 363

4 987

5 503

5 797



23 661

24 218

33 560

29 270



1 535

2 680

2 770


21 043

22 683

30 880

26 500


Papua New Guine;

8 188

8 772

7 717

7 241


2 655

3 239

2 184

1 708


5 533

5 533

5 533

5 533



20 104

17 173

44 029

15 819


4 928

2 814

3 079

2 869


15 176

14 359

40 950

12 950


Solomon Is.
















Sri Lanka

7 007


6 583

6 278







6 349

9 726

5 907

5 584


Rep. of Korea

3 873

3 796

4 041

4 877


1 139

1 366

1 592

2 412


2 734

2 430

2 449

2 465


Taiwan, P.O.C.

1 925

1 925

1 925

1 925


1 861

1 861

1 861

1 861








24 900

23 500

26 815

28 566


3 093

2 775

6 262

8 700


21 807

20 725

20 553

19 866


Viet Nam

31 203

31 595

30 869

31 587


4 669

4 802

4 183

5 237


26 534

26 793

26 686

26 350


Source: FAOSTAT ForeSTAT, FRA 2005.

Waste from log processing could potentially decrease rather than increase as total industrial roundwood production decreases and as prices potentially rise in response to timber’s energy cost advantages. The potential for wood-sourced industrial bioenergy, whether through biochemical or thermochemical processes, may not have at least a medium-term future for Indonesia, Malaysia, Philippines, Sri Lanka, Cambodia and Papua New Guinea, all of which have a declining industrial and fuelwood supply, compounded by a declining forest area that may be indicative of a continued reduction in future yield potential. Their potential for future wood energy proposals is, subsequently, significantly reduced.

A number of countries have increasing production of both industrial roundwood and fuelwood supply, or fuelwood, while forest land is decreasing. The implication is that future reductions in supply have yet to be manifested. These countries also have reduced potential for future wood energy proposals. Based on these data, Viet Nam, India, Nepal, China, Bhutan, Lao PDR, Republic of Korea, New Zealand, India and Australia have the greatest potential to develop an industrial wood energy system.

However, supply remains a significant constraint, made worse by the trend in increasing demand for non-wood forest products. The major constraint to any wood-energy system is the economically available supply (especially local supply) of wood. The only practical alternative is to increase the area of forests, and the productivity of these forests.

The potential to achieve these goals is constrained by competing interest in land, including, ironically, the demand for “wasteland” that has potential for both forests and oil-producing oil crops.

There is also the projected significant increase in population within the Asia–Pacific region, creating increasing demands for food-producing lands in potential competition with forestry interests and the diminishing availability of woodfuel potential per person.


The need for renewable energy, including wood-based bioenergy, is real, particularly as a replacement for the reliance on fossil fuels. This reliance is almost universal amongst Asia– Pacific countries, with the amount of energy provided by renewables generally remaining constant since 1970. Relatively cheap coal, and to a lesser extent gas, will be available in quantities for decades to come, but the greenhouse gas and pollution production from coal combustion has the potential to create considerable adverse, and potentially catastrophic, effects. To alleviate this threat will require strong government to address the market incentive to utilize these alternative fossil fuels.

The future technology developments relating to second generation biofuels and the use of thermomechanical processes such as pyrolysis and gasification, are promising. Especially promising is the development of biochemical conversion of wood to ethanol using new enzymes and one-step conversion processes.

The price of oil remains a significant factor in incentivising the development of new wood-conversion technologies, but also has the potential to create adverse effects such as the conversion of primary forest for more financially viable oilseed and agriculture-based biofuel crops.

Traditional fuelwood is not practically available as a source of supply for industrial wood-energy processes. It will remain a significant provider of heat for cooking and small-scale local industry.

Economic wood supply is a major constraint to wood-based bioenergy. The economies of location are more important than the economies of scale given the low energy density of wood, especially when freshly cut. This limits transport distances and favours intermediate-scale decentralized rather than large-scale centralized processes, which take advantage of timber-processing centres. It also suggests the development of options for drying or some form of initial processing within the forest before transportation.

The supply constraint facing wood-based bioenergy strongly suggests that more forest will be needed. However, increase is constrained by limited land availability and competition from food-producing land and, ironically, the demand for land suited to oil-producing tree species. Previous pulp plantations are already being converted to palm oil.

If the goal is to increase net forest values, then any new forest area ought to provide multiple values to local communities. This goal is potentially in conflict with the better financial returns from single function land uses.


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1 Chris Perley & Associates, PO Box 7116, Dunedin 9011, New Zealand. Tel: +64 3 453 4948. Mobile: +64 0274 880977. E-mail:

1IEA country statistics.

Role of agroforests and small-scale production forestry in employment generation and environmental conservation

P.P. Bhojvaid1

This paper analyses the potential role of agroforests and small-scale production forestry (trees outside forests) in wood production, employment generation and environmental conservation in Asia and the Pacific in the next 50 years. Information was derived from a case study that examined the evolution of agroforestry systems and their role in sustainable development, leading to increased farmers’ income, employment generation and opportunities for value addition by industries in the state of Haryana, India. Haryana, in northern India, is primarily an agricultural state; only 3.5 percent of its geographical area is covered by natural forests. Subsequent to the introduction of a network of irrigation canals and adoption of a progressive farming system,

Haryana farmers have achieved a significant increase in the productivity of wheat and paddy. The Haryana Forest Department introduced eucalyptus- and poplar-based agroforestry models in the 1970s, which have been well-received and adopted, initially by large and absentee farmers. The gradual establishment of backward and forward linkages has made agroforestry an economically viable activity leading to enormous development in the state. Consequently, even small and marginal farmers have recognized that it is a profitable venture. A facilitating legal policy environment and the availability of adequate infrastructure and microfinance resulted in the establishment of 300 veneer mills in the city of Yamunanagar in Haryana and another 300 units in the neighbouring states of Delhi, Uttar Pradesh, Uttranchal and Punjab. Today, the daily arrival of wood (grown in agroforests) in Yamunanagar alone is worth US$400 000, which after value addition in the form of plywood production rises to US$1.2 million. Further, a significant increase in tree cover (8 percent of the geographical area) has also been achieved in the state, leading to alleviation of pressure on the natural forests. This success story has been well-recognized by the Ministry of Environment and Forests, which considers this land-use system a means to achieving tree cover of 33 percent of the country’s geographical area by 2025, as mandated by the Forest Policy of India, 1988. Post2003, the system has been replicated in different states, including Punjab, Gujarat and Himachal Pradesh in northern India. Thousands of farmers have adopted agroforestry, which has been further diversified by the introduction of low-volume high-value crops (medicinal herbs and spices) as understorey species, leading to further income enhancement and conservation of valuable biodiversity in the natural forests. More recently, states have initiated a process for earning carbon credits as a Clean Development Mechanism (CDM) venture under “land use, land use change and forestry” (LULUCF), which involves reforestation and afforestation. This is leading to encashment of the environmental services provided by such forests. Finally it is argued that this model has potential for replication in Asia and Pacific countries, where recent development initiatives have resulted in a changed scenario of balance between the traditional forests and the trees outside forests.

Keywords: agroforests, eucalyptus, trade cycles, farmers’ income, employment opportunities, environmental services, biodiversity conservation


Demographic changes (shifts from rural to urban settlement), population increase and changes in lifestyles due to increased incomes greatly influence demand for wood and forest products and wood consumption patterns. The largest demand for wood in Asia and the Pacific is for fuelwood, but increases in income levels result in a shift towards industrial wood products (sawntimber, wood panels and paper). The largest demand for forest products occurs in regions that have witnessed large population growth and economic development, such as India, China and many countries in Southeast Asia. Historically, in Asia and the Pacific, most of the growth in demand for wood products has been met from natural forests. Furthermore, most of the nations in this region have been exporting quality hardwood to developed countries (to earn valuable foreign money) that have significant areas of forests locked in conservation areas. Consequently, many nations such as Thailand and the Philippines have exhausted their best natural forest areas for exports. Further, there has been increasing concern about the loss of natural biodiversity and the ecological importance of natural forests for watershed, soil and fertility services. As a result, the last two decades have been marked by a dramatic increase in the creation of plantation forests in these nations, largely driven by local policies and through ODA-funded projects. The main species planted in Asia and the Pacific are short rotation fast-growing eucalyptus, poplar and casuarina, as well as long-term species such as pine, rubber and teak.

Most of these plantations have been raised on agricultural land and other areas located outside the traditional (legally notified) forest reserves and have been termed trees outside forests (TOF). Further, wood produced from TOF and value-added products offer a great opportunity for employment generation, income generation and environmental benefits through CDM opportunities, and alleviate pressure on natural forests. The following sections describe the evolution of TOF in agroforestry and their role in substantial development.

Production forests (agroforests)

Agroforestry optimizes the production potential of land in more than one tier, that is, both the above- and belowground systems. Conceptually, it can be practised wherever agriculture is carried out and needs to be diffused to all areas with suitable crop–tree combination potential. Agroforestry combines tree cultivation with agricultural crops on a spatial and/or temporal scale. This practice is not new as kheti (agriculture) always used to be practised with bari (fenced tree groves) under traditional agriculture in India. With the advent of commercial agriculture and automation, bari was neglected, but the present effort is directed to re-establishing this aspect of tree cultivation by making it a means to supplement landowners’ income. Some states of India have devised various models that combine tree crops with traditional agricultural and horticultural crops in different agroclimatic zones. Some of these practices, which are in vogue in Haryana, Punjab, West Uttar Pradesh and Uttaranchal, have evolved in terms of higher production and income generation, and consequently have acquired national and international recognition as models to be emulated. The timber output generated from agroforestry substitutes the timber grown in natural forests, thereby alleviating pressure on natural forests, which are important for conserving valuable biodiversity and national ecological security. Further, the availability of suitable raw material on a sustained basis has led to the establishment of forest-based industries. Today, these on-farm forestry activities have added substantially to the income of small, medium and large farmers and have created significant employment opportunities along the value chain. Thus, agroforestry has been recognized as a proven strategy for poverty reduction and rural development.

The history of agroforestry in Haryana

Traditionally, in Haryana, tree species such as jand (Prosopis cineraria) were encouraged to grow in semi-arid sandy agricultural lands that were rainfed, probably for the conservation of soil moisture and increased soil fertility. Similarly, in rainfed clayey soils, babul (Acacia nitotica) was grown. Shisham or tali (Dalbergia sissoo) was grown in moist areas and also along the wide network of canals. These interventions served as a strategy for economic drought-proofing, as the landowners could survive by felling trees and selling timber and fuelwood in domestic (marriages, loan repayments, illness) and climatic (drought, crop failure, floods) emergencies. Some of these practices continue today with slight variations.

The evolution of systematic agroforestry in Haryana

The resurgence of eucalyptus

Conscious efforts were made by the Haryana Forest Department to introduce eucalyptus cultivation on field boundaries in the subdivision of Yamunanagar (then under Ambala District) in Haryana. Initially, the landowners were reluctant to plant trees, as they were apprehensive of land seizure by the forest department. However, subsequent harvesting and sale of the first crop resulted in very high returns to owners, which exceeded their expectations. The expansion of government plantations and large-scale private plantations by large progressive (absentee) farmers further strengthened the confidence of small and marginal farmers. However, as the seedlings were planted at very close spacing, the yields were significantly low during the initial phase of agroforestry development. Furthermore, a market existed only for pulp and paper, and returns to landowners were reduced, as mass felling of these large plantations resulted in a glut of raw material in the local markets. This led to panic harvesting by many farmers and a further glut resulted in the market between 1980 and 1990. However, a revival of interest in eucalyptus occurred subsequent to its adoption by the plywood industry due to research and consequent development of technology at the Forest Research Institute, Dehradun, India. Moreover, eucalyptus had a cost advantage, being a cheaper substitute for other costlier woods growing in natural forests. Consequently, at present about 20 million genetically superior eucalyptus seedlings are mass-produced annually and planted by farmers using different agroforestry models.

Trade cycles and stability

In a free-trading economy (especially in developing countries) trade cycles are common. In a predominantly agricultural economy like India, many cultivators follow the herd instinct — adopting those cultivation practices that bring the highest economic returns. This causes cyclic lows and highs in supply-and-demand chains, termed trade cycles. In agricultural crops, the period of adjustment (equilibrium) to counter such trade cycles is about twice the crop rotation period. However, the period of equilibrium in the case of tree crops is much longer due to a longer crop rotation. For example, for eucalyptus, with a rotation of ten years, a resurgence has occurred after 15 (10 x 1.5) years in Haryana. These long duration cycles were considered detrimental to the growth of agroforestry as a strategy for rural development in the recent past. However, it is pertinent that most agricultural crops are also susceptible to this factor — sugar cane is a classic example of this phenomenon. Bulk production has to be supported by bulk utilization; therefore, addressing “grow your markets before you grow your trees” has to be followed. However, eucalyptus in Haryana has shown that both markets and trees can grow together (in the presence of an enabling legal policy regime and development of backward and forward linkages); this is described in the following section.

Establishment of agroforestry-based industries

River-floated timber trees from the hill forests of the erstwhile Panjab state — deodar (Cedrus deodara), kail (Pinus wallichiana) and partal (Abes pindrowand Picea smithiana) — were collected and sold at Yamunanagar until the late 1960s. Consequently, a flourishing timber trade existed before 1970 in Yamunanagar. However, subsequent to the ban on felling above 1 000 metres above sea level in the hills (due to the moratorium on green felling by the Supreme Court of India), timber in the form of sleepers stopped arriving in the city of Yamunanagar. This led to a decline in the timber trade, similar to the decline that had already occurred in the northeastern states of India; hence, there was an unsustained supply of timber and capital, and technology and technical human resources disappeared. At this crucial time, the Indian Council of Forestry Research and Education (ICFRE), the Uttar Pradesh Forest Department and industries such as WIMCO Ltd substituted semal (Bombax ceiba) with eucalyptus for plywood manufacture via research and technological innovations. The lack of timber supply from the northeastern states, the availability of plantation-grown eucalyptus in Yamunanagar and the traditional occupational culture of Yamunanagar as a wood-trading city, along with the inherent expertise of locals in the timber trade combined to create a “Chota Assam”2 (mini-Assam) within a quarter of a century. To date, about 15 000 tonnes of timber per day are converted into plywood and panel boards in 600 factories located in five states — Haryana, Punjab, Uttar Pradesh, Uttaranchal and Delhi — mostly centred around Yamunanagar. Only Yamunanagar District transacts a turnover of up to US$0.4 million of raw material and three times this value in finished products, which is a testimony to this ever-expanding activity.

Increase in forest and tree cover

At present, forest covers just over 20 percent of India’s area (FSI 2003). By 2012, the Government of India proposes to bring another 13 percent of land under forest and tree cover (in total, 33 percent of the geographical area of the country). Haryana has 3.5 percent of its area under natural forest cover and another 4.5 percent under plantation tree cover. In other words, tree cover is about eight percent of the state’s area. It is proposed to bring 20 percent of the state’s area under tree cover by 2012. Haryana has thus set a unique example of having more plantation tree cover than forest cover. Further, since its inception in 1966, the state has added an additional one percent of its geographical area under tree cover on a seven-year cycle (Anonymous 2003). This has become possible because of a sustained free supply of seedlings. Every year, 25 to 50 million seedlings are supplied to the farming sector free of charge. As most of the agricultural systems utilize soil and aboveground space to not more than 0.5 metre below and 3.5 metres above ground, respectively, the introduction of trees has resulted in tapping soil resources below 0.5 metre and optimal utilization of aboveground space beyond 3.5 metres; this has resulted in synergy with the traditional agriculture system. This is precisely what has happened in the state of Haryana and needs to be extended to other states of India.

Additional income for the farmer

It is often asked how much difference in income exists between an agricultural crop system and an agroforestry system, when trees are introduced under agroforestry. The detailed economics of growing eucalyptus as boundary plantation under agroforestry are given in Table 1. On a well managed clonal eucalyptus agroforestry farm, most farmers in Haryana realize on a ten-year cycle an output of 20 m3/hectare/year. This equates to an additional income of US$475 from wood harvested per hectare per year.

Table 1. Comparison of net annual income realized from a hectare of land based on wheat–rice rotation with and without trees (costs in Rs; current exchange rate of Rs45/US$1)

Cropping system Expenditure per ha per crop Income per ha per crop Net per ha per crop Remarks
Without treesWheat 13 250 28 250 15 000 Wheat, 4 250 kg x @ Rs560 = 23 800; hay, 3 000 kg x @ Rs150= 4 500 Total = Rs28 300
Paddy 20 750 38 750 18 000 Paddy, 6 355 kg x @ Rs590 = 37 495; hay, 5 000 kg x @ Rs25 = 1 250 Total = Rs38 745
Annual income per ha 34 000 67 000 33 000  
With treesWheat 13 250 22 975 9 725 Wheat, 3 500 kg x @ Rs560 = 19 600; hay, 2 250 kg x @ Rs150 = 3 375 Total = Rs22 975
Paddy 20 750 27 487 6 737 Paddy, 4 500 kg x @ Rs590 = 26 550; hay, 3 750 kg x @ Rs25 = 937 Total = Rs27 487
Eucalyptus (clonal) 5 000 (seedling cost) 50 500 38 150 Total wood = Rs38 150*
Additional income from trees (eucalyptus) per ha. 33 000 54 612 21 612 = US$480/ha/year

Expansion of industry and output

About three decades ago, the peelings of eucalyptus logs were essentially used for making match-splints. Subsequent success came through the manufacturing of commercial board, for which the low cost of the raw material offered great opportunities. With the passage of time, International Standards Organization (ISO) certification and the establishment of in-house testing facilities, the quality of plywood products has been upgraded and the products are now comparable with the best available in India. At least ten out of some 400 manufacturers have upgraded their facilities to manufacture board to meet international standards. The day may not be too far away when large volumes of certified green label timber panel products from farm-grown timber are exported by the city of Yamunanagar.

An estimated 600 units are currently using about 15 000 tonnes per day of farm-grown veneer logs in Haryana, Punjab, Uttranchal, Uttar Pradesh and Delhi states. Around 400 units are concentrated in and around Yamunanagar and 25 units in Bahadurgarh of Jhajjar District adjacent to Delhi. Another 50 units are in Ludhiana, Jullundhur and Hoshiarpur districts of Punjab. About 50 units each have been set up in Uttaranchal and Uttar Pradesh and about 25 units are operating in Delhi. On average, the consumption of each unit is 25 tonnes of veneer logs per day.

There is horizontal and vertical integration in different timber-using industries, where an end product and/or waste product of one unit is an initial product of the other unit. The paper mills in the region mostly utilize veneer waste, debarked stumps and pulpwood of eucalyptus to meet 82 percent of their raw material requirements, with the remaining 18 percent being met from bamboo harvested from natural forests from northeastern India. The total estimated value of daily raw material requirement (15 000 tonnes of wood) that is bought by the 600 veneer-manufacturing units is Rs40 to 45 million.

Employment of loggers, intermediaries, transporters and skilled labour

Many people are engaged in logging and in the plywood manufacturing industry. The logging labourers have started operating in mobile teams even outside Haryana. Skill acquisition and its continuous upgrading have led to socially disadvantaged (landless) groups becoming economically self-reliant. It has been demonstrated that every tonne of harvested wood generates one person-day in logging operations. Thus, every day 15 000 person-days of work are generated in the aforesaid five states, primarily Haryana. The transport sector is likewise benefited, both at the time of carriage of raw material and during the delivery of finished goods. At the ongoing rate of Rs30 per 100 kg for the cost of transportation, the transport industry transacts Rs4.5 million (15 000 x 10 x 30) per day through raw material transportation alone. Six hundred factories provide jobs to approximately 60 000 (600 x 100) people in the five states who benefit from this industry. Furthermore, the plywood industry is machine-intensive; imported machines or machines manufactured in different places of India were used earlier. Now, more and more machines are being made in Yamunanagar itself, generating additional employment and income to investors.

Tax earning by the government

The sales tax earned by the Haryana Government in the past was approximately Rs60 million per annum from Yamunanagar District alone, mostly paid by the paper, sugar-cane, metal and plywood industries. After the government entered into an understanding with regard to the tax that was to be specifically paid by the plywood industry, there was a threefold increase in tax collection. While all other industries continued to function at the same level, almost all of the tax increase can be attributed to the plywood industry alone. Thus, overall tax collection has been boosted to Rs120 million from agroforestry-generated products.

Seedling supply for sustained agroforestry

Seedlings are the most important input to sustain agroforestry momentum. Every year 50 to 100 million seedlings are used in Haryana for plantations on government and private farmland; more than half the seedlings are used by the agroforestry sector. The cost of raising trees in forest areas is about four times greater (Rs20 per seedling) than that of raising the same trees on farms (Rs5 per seedling). The lower expenditure in agroforestry can be attributed to the higher fertility status of agricultural land and a farmer’s personal care. Furthermore, the growth rates of trees are superior on this land compared to forest land. The output from 150 000 hectares of Haryana Government forests is 400 000 m3 (only half is harvested) compared to agroforestry output from an estimated 200 000 hectares of about 1.6 million m3. Thus, there is a fourfold increase in production, with four times lower cost of seedlings under agroforestry systems (Table 2).

Table 2. Tree cover, growing stock and growth rates of trees in the classified forests and trees outside forests in the state of Haryana, India


Classified forests



Tree cover (km2)

1 57
1 415

2 932

% of total geographical area



Growing stock million m3



Per ha growing stock m3



Rotation age of tree species (years)



Mean annual increment m3/ha/year



Source: Based on State of the forests report(FSI 2003).

At present, there is a general feeling in the country that subsidies on seedlings should be discontinued, as they do not support economic efficiency and competitiveness. Such ideas, which stem from observations by international financial institutions, cannot be applied indiscriminately to agroforestry in India. It is argued that in the initial stages, the seedlings that are supplied free of charge to farmers encourage farmers to grow more trees on farmland and to create a raw material base for the industry. Once this linkage is established and stable markets are developed for agroforestry-grown produce, this should lead to an even greater interest by landowners in planting trees on their farms. Moreover, the seedlings that are supplied to farmers also have ecological and economic benefits, which more than compensate for their cost. The raw material generated from the agroforestry sector has provided a substitute for forest produce and reduced pressure on natural forests. At the same time, it sustains the plywood, paper, charcoal and rayon industries. The finished product is taxable so the government earns more in tax compared to expenditure incurred in supplying free seedlings. Thus, the tax receipt (through a deferred return) more than offsets the expenditure incurred in free supply of seedlings.

Environmental services from agroforests

Table 2 provides information on the status of tree cover in the classified forests (government lands declared as reserved and protected forests under the various provisions of the Indian Forest Act, 1927) and tree cover outside the notified forest lands. The data indicate that the trees growing outside government forests have a significantly higher volume (seven times higher) than those present in the notified forest areas. This higher volume is attributed to the higher productivity of soils, ensured water and nutrient inputs and better protection and postplanting care of seedlings. Consequently, growing stock in the TOF (108.5 million m3) is seven times higher than that of natural forest (15.3 million m3) in Haryana (Table 2). Moreover, the average rotation age of trees grown in TOF is significantly lower (seven years) as opposed to trees growing in natural forests (30 years). Therefore, the trees in the small-scale agroforests assimilate 20 times higher biomass each year; this offers a great opportunity for carbon sequestration. The Haryana Forest Department is building a case for carbon trading to earn certified carbon credits as part of the CDM under LULUCF. It is proposed to form a cooperative of committed farmers, who will adopt agroforestry on their lands to add additionality over the business as usual (baseline) scenario. The carbon credits so realized can be traded in the international market under CDM or voluntary credits.

Biodiversity conservation through agroforests

The Non-wood Forest Products Division of the Forest Research Institute, Dehradun, has established demonstration plots on farmers’ fields in the cities of Karnal and Yamunanagar. Medicinal plants of 12 species, with high market demand, have been planted under the canopies of tree species such as eucalyptus and poplar, planted as agroforests (Table 3). The main objectives of these models were to demonstrate the biological compatibility, physical possibility and financial viability of medicinal plant cultivation under agroforestry. The farmers have also been given on-site training on raising of seedlings in nurseries, soil working, planting, postplanting care, harvesting and postharvest operations. These models have facilitated the development of income-generation activities for farmers. Furthermore, production of herbs in farms has alleviated pressure on natural forests and the conservation of valuable biodiversity.

Table 3. Commercially important medicinal herbs being cultivated under the canopy of eucalyptus agroforests in Haryana, India

Local name Botanical name
Kasturibhindi Abelmoschus moschatus
Brahmi Bacopa monnie
Chitrak Plumbago zeylanica
Kalmegh Andrographis paniculata
Mandookparni Centella asiatica
Pipli Piper longum
Senna Cassia angustifolia
Serpgandha Rauwolfia serpentin
Shatavar Asparagus racemosus
Giloe Tinospora cordifolia
Akarkara Spilanthes acmella
Tulsi Ocimum sanctum


Agroforestry on agricultural land can be an inexhaustible source of raw material for paper and plywood industries. Every hectare of intensively cultivated land can produce more than 20 m3 of wood per year in agroforestry systems. Even rainfed and marginal agricultural land can produce at least 5 to 7 m3 of wood per year under intensive care and management and proper selection of suitable genotypes. By harnessing this agroforestry potential, ample timber and fuelwood supplies can be generated that far exceed the projected requirements of the country. The successful agroforestry models developed in Haryana are being gradually adopted in adjoining states. These efforts, however, seem to be very much dependent on the supply of good planting material, fair market policies and consistent R&D support. By being a multifunctional land-use system, agroforestry seems to be the way forward for the sustainable development of a country like India. The environmental and biodiversity value of agroforests has been realized by carbon sequestration and cultivation of economically important medicinal herbs as understorey crops.


Anonymous. 2003. Annual administrative report. Panchkula, Haryana, Haryana Forest Department.

Forest Survey of India (FSI). 2003.State of forest report 2001. Dehradun, FSI, Ministry of Environment & Forests.

Rawat, J.K. 1988. Economic considerations in eucalyptus farming. Indian Journal of Agricultural Economics, 43(3): 317.

Rawat, J.K. 1989. Economic behaviour of a wood producing firm. Indian Forester, 115(10): 689–95.

Rawat, J.K., Hooda, A.K. & Dange, R.P. 1994. A feedback on social forestry project from Ambala district (Haryana). Indian Forester,120(7): 591–6.

1 Senior Fellow, The Energy and Resources Institute (TERI) and Dean, Faculty of Applied Sciences, TERI School of Advanced Studies, India Habitat Centre, Lodhi Road, New Delhi, India 110003. Tel: India + 91 11 24682100. Fax: India + 91 11 24682144.

2Assam is located in the northeastern part of India and has been a traditional plywood production centre since British administration. The timber for plywood manufacture was harvested from tropical forests of seven hill states in Northeast India.

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