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Logging and people: The social dimension of forest utilization agreements

Richard D. Pardo

Richard D. Pardo is a specialist in forestry legislation and policy in the Forest Resources Branch of the Forestry Department, FAO, Rome.

FLOATING CHINESE LOGS TO MARKET can some benefits be returned to locale?

In the past, foreign logging companies often entered a forested area in a developing country, removed the timber and left. The local people got very little, if anything; in fact, they sometimes lost much of what they originally had. Now, however, governments are increasingly handling contracts with foreign and domestic logging firms in a way that will benefit local people. This article reviews relevant recent legislation in developing countries and outlines the elements that should be present in any logging agreement.

In many developing countries, especially those in which forest land is primarily owned or controlled by the government, forest harvesting is accomplished through utilization contracts in the form of concessions, logging permits and similar contractual agreements between the government and the logging company.

In the early stages of forest development, governments frequently disposed of timber on vast tracts of public lands through unsophisticated legal instruments that granted seemingly unlimited harvesting rights to foreign logging companies in return for revenues that were far lower than the value of the timber being logged, and with only minimal consideration of impacts on the rural people (Leslie, 1980). This was partly a result of colonialist exploitation policies and partly due to a lack of capital, expertise and experience on the part of the governments themselves.

Times are changing Governments are becoming more experienced and more sophisticated in the way in which they use forest utilization contracts. Many countries either have developed or are in the process of developing modern timber-concession laws, regulations and agreements that are positive instruments of social and economic development instead of merely being contracts to "mine" timber for what looks like a quick profit.

A common feature of most of these new measures is a recognition of the needs of the rural people living in or near concession areas - people who depend on the forest for products and services and whose very way of life may be intimately linked to the forest environment. In the past, their interests were often either ignored or treated superficially, on the theory that benefits would automatically flow to them from economic utilization of the timber. In too many cases, the actual economic benefits that did reach the people were far outweighed by the loss of more intangible benefits connected with customary rights of forest usage, traditional ways of life, and opportunities for local utilization of resources.

If forest harvesting policy is truly to enhance the lives of the rural population, five basic factors must be considered in the granting and supervision of concession agreements:

· The provision of such infrastructure for local populations as schools, roads, water supply and health facilities.

· Recognition and protection of customary rights of forest usage.

· Involvement of the rural people in forestry enterprises.

· Follow-up land-use programmes (agriculture, reforestation, grazing, etc.).

· Participation of the people in the planning of forest development schemes affecting their lives.

This article reviews some recent trends in legislation, regulations and practices in these five important areas of forestry concession and utilization.

Provision of infrastructure

Roads One of the most direct means of improving the conditions of people living in or near large concession areas is by providing services or facilities that may be lacking.

Often the area in question is un-roaded or served by a primitive and frequently impassable road system. Timber utilization requires a dependable road system capable of moving logs to the market. At the same time, these roads can provide access to markets previously beyond the reach of isolated villages and populations, enabling the people to develop new outlets for their crops and handicrafts and other forest products such as honey, mushrooms and fuelwood.

Roads may also improve opportunities for off-farm employment, thereby helping to alleviate growing problems of rural unemployment. For many rural families, even those with access to farmland, additional income is needed to maintain an adequate standard of living. Development planners now realize that the provision of non-farm employment in rural industries (including forestry enterprises) is a necessary component of rural development. Roads make access to such jobs possible for many people.

Whether or not the roads are intended primarily for use by the local people, they will be used by the people in any event. This fact should be incorporated in the planning for the road system design, and, to the extent feasible, the road network should be planned to serve the needs of the people as well as the needs of the logging contractor. For example, if two equally feasible alternative access routes to the concession area are possible, the one that best also serves the needs of the people should be selected, other things being equal.

Conditions under which roads are to be open to public use should be stipulated in the concession agreement, following consultation between the government, the grantee and the people involved. Active logging roads may have to be closed to public access for safety reasons during certain periods. Compliance with such closures will be more likely if the local people are consulted and know they are being considered in the road planning.

Provision can also be made to favour local road users. A typical concession agreement in Fiji, for example, provides that charges may be made for road use by heavy commercial vehicles "except those transporting any produce of the land within the concession area", thereby providing free use to local growers moving their products to the market.

Logging roads are notorious as attractive places for landless farmers and shifting cultivators to clear roadside plots for crops. This must be planned for in advance, and, before the concession is granted, decisions must be made about how to deal with the problem. If the land is reserved forest, encroachment is probably illegal under most existing forestry laws. But building the road creates an inviting opportunity of which land-hungry farmers will quickly take advantage, in spite of the law. In fact, it is not uncommon for land-seekers to follow forest road survey crews in order to scout out the best potential crop-land in advance. If serious encroachment is expected, then the need for land is obviously serious. In that case, it may be best to accept this need and accommodate it, even to the extent of allocating usage rights to predetermined areas suitable for agricultural crops rather than attempting to prohibit encroachment. This may require an amendment in the basic forest-reserve law.

Many countries are developing modern timber-concession laws that are positive instruments of social and economic development instead of merely being contracts to "mine" timber for what looks like a quick profit.

Man at work

Services A safe and adequate water supply is also a top priority for many rural villages, as are health facilities and schools. More and more countries are requiring the grantees of larger industrial concessions to provide these types of facilities as a condition of the concession agreement.

In some cases, the grantee itself is responsible for building the required facilities, with the services to be provided by the appropriate government agencies dealing with education, health, sanitation and so forth. In other cases, the grantee is required to pay a fee - usually based on the volume of timber involved which is then used by the national or local government to provide the facilities and services.

For example, a standard contract agreement used in Indonesia for large-scale concessions requires the grantee to establish a place for worship, provide communications facilities for use by the regional government, make electricity available to the community, participate in site development and low-cost housing construction, provide medical services for employees and make them available to others in the community at low cost, and provide educational facilities.

In the Republic of Cameroon, licences for logging must by law include a clause providing a contribution for social services and facilities. The fee is fixed annually by the finance law and accrues entirely to the area's local governing council. Use of the funds for other purposes is prohibited.

Equatorial Guinea also includes a requirement for the building of services and facilities. The Central African Republic requires grantees to build roads and set up schools and health facilities for the local populations.

No matter who builds the facilities, local officials and the rural people themselves should be involved in the planning, siting and construction of the facilities to ensure that what is provided is what the people need and will use.

Facilities may be built at existing village sites, or where populations are scattered. The siting of roads, water supply and schools can be used to establish a new village as a first step in concentrating scattered encroachments into an organized community. Community meeting halls for social and religious purposes, adult classes and similar purposes may also be included when a new village is established or if such facilities are needed in existing villages.

ALPINE LOGGING it could fill many local needs

The forest village concept has been widely used in Thailand as a means of stabilizing populations and improving farming practices while at the same time providing off-farm work in afforestation and reforestation programmes of the Forestry Department and the Forest Industry Organization. While these programmes are not directly related to the granting of timber-harvesting concessions, the concept of forming villages to improve living standards and reduce shifting forest encroachment can also be applied in the case of large timber concessions, since the ultimate object is the same: to provide services to the local people in an area where sustainable production of food and forest resources is the aim.

The forest village concept was first used in Thailand by the government-owned Forest Industry Organization, in conjunction with the establishment and maintenance of commercial forestry plantations. The idea was subsequently adopted by the Royal Forestry Department as a means of rehabilitating reserved forest areas that had been heavily encroached upon by landless farmers. Rather than being evicted, and driven to clear additional forest land illegally, the farmers are given the opportunity to join newly established villages. Land is allocated to each family for a house and a home garden and for food production. The remaining area is then rehabilitated as productive forest, villagers being employed in the reforestation programme.

The same concept may be applicable in the case of forest concessions where serious encroachment is anticipated. Lands appropriate for agriculture can be identified in advance, villages established and rural people made a part of the post-logging land use by design rather than by uncontrolled encroachment.

Protection of customary rights

In many cases, a forest concession will include areas in which local people have traditionally exercised certain customary usage rights, such as the right to collect fuelwood or to harvest domestic building materials, fodder and non-wood products for personal use, free of charge. These may be unwritten traditional rights or well-established written rights contained in the laws of the country.

Consideration of these rights and the protection of them, to the fullest extent compatible with timber-harvesting and management plans, should be a component of any basic forest-utilization legislation and a requirement of the concession agreement.

In many developing countries, ownership of the land itself is held under customary law, so that the people who occupy the land are also the landowners. Where this is the case, the basic forestry laws usually recognize and protect these rights as a matter of course, even though the administration of the land may be vested by the same law in the government, acting as trustee or agent for the customary owners.

In other cases, the ownership of the land is vested in the government, but people living in or near the forest may have been treating the forest as their own for the purposes of gathering fuelwood, cutting small poles for domestic use, grazing cattle, hunting, fishing or gathering non-wood produce and materials for tools, utensils, etc. Whether these rights are exercised as a right or simply because they have been tolerated, they are rights the loss of which could have serious negative impact on rural ways of living. If timber utilization is to benefit the local people, it must be managed in such a way as to allow the continuation and perhaps even the intensification of these rights. To simply extinguish them because a timber concession has been granted is to ignore one of the principal benefits of forest to the local people.

Therefore, before a concession is granted, the rights of usage must be identified in cooperation with the local people, and an acceptable plan for maintaining and protecting - even enhancing - these rights must be developed.

Enhancement can be accomplished by such means as providing easier access to the forest, furnishing information on minor forest products and improved production and, where opportunities exist, helping to set up marketing mechanisms for cash-income sales of suitable non-wood products.

Administration of usage rights should be a cooperative effort between the forestry department, the representatives of the local people and the grantee. The grantee's role would be relatively passive in the enforcement and supervision of the rights, but the grantee must be involved in the planning of the programme in order to be fully aware of its own responsibilities and the rights of the people, which must be respected during the logging operation. There should be no opportunity for the grantee to abuse the rights by claiming ignorance.

In the drafting of an agreement, the specific rights, the area in which they are allowed and the people to whom they apply should be clearly defined. Forest uses such as gathering fuelwood, fodder, wildlife and minor and non-wood products are often compatible with timber management programmes, and need not be restricted except where safety may require limited access to active logging areas. Eligibility to exercise the rights can be monitored through the issuing to eligible individuals of free identification cards or tags things that can be carried easily and spot-checked by those supervising the forestry operations. The objective is not to prohibit all unauthorized exercise of usage rights, which would be impractical if not impossible, but rather to give the local people a means of asserting their rights if a question arises.

If shifting cultivation has been practiced in an area that has been designated for reforestation or continued management of the secondary forest, these rights may have to be compensated for, either by assigning other suitable lands for cultivation or by awarding monetary compensation for the extinguished rights. Forest grazing is another commonly practiced customary right that may have to be limited or prohibited in an area designated for continued forest production. Here again, compensatory measures must be provided.

Current laws recognize customary rights in a number of ways:

· Cameroonian law provides that the holder of a forest exploitation licence may not prevent the exploitation of produce that is collected in the traditional manner.

· The forestry law of Peru provides that subsistence uses of the forest are generally admitted free of charge, while industrial and commercial uses are subject to a system of contracts and permits.

· In Indonesia, grantees must recognize traditional land rights and privileges, particularly people's right of entry to collect certain species for their own purposes and to exploit minor forest products.

Involvement in forest enterprises

The employment of local people in woods operations, in processing facilities and in various aspects of reforestation, such as nursery work and tree-planting, is a standard requirement in most concession agreements, along with a requirement for the training of nationals in at least basic skills to make them employable in the logging operations.

In Indonesia, for example, the standard concession agreement requires the grantee to employ nationals to the extent that qualified people are willing and available; and to conduct vigorous recruiting and training programmes for nationals.

These requirements need to be carefully assessed, in fairness to both the grantee and the potential employees. If the labour force is simply not available, or is limited or constrained by other commitments, such as family obligations or seasonal farm work, this should be determined before building unrealistic requirements into a concession agreement.

If these employment obligations impose a financial burden on the grantee that might not otherwise exist, this should be recognized and appropriate compensatory incentives provided to ease any substantial added costs imposed on the grantee.

Employment and training requirements are also often written into concession agreements where the building and operation of domestic processing facilities are a condition of the concession. Domestic processing agreements serve three purposes: they provide employment opportunities for nationals; they encourage the development of a sustainable domestic processing capability; and they increase the value the host country gains through log-processing rather than log export. Again, before the granting of the contract, a survey of personnel and training needs must be conducted by the government, the grantee and local people in order to determine accurately the requirements - or at least general principles - for employment and training in processing. It should not automatically be assumed that local people will be willing or able to take a new and unfamiliar job just because it is available.

Beyond these basic employment and training considerations, there is also a need to provide opportunities for local people and other nationals! to become involved themselves in forest utilization enterprises. This is being done in a number of ways, primarily through the setting aside of small areas for small-scale operations that can be worked by local loggers, but also by providing access to credit for the purchase of simple sawmilling and logging equipment.

In the Congo, harvesting contracts used in the case of nationals with limited financial means simply require that the operator have a mobile sawmill with which to process the timber.

In Equatorial Guinea, the Government designates "communal forests" within reserved forest areas, to be used under customary rights by forest-dwelling populations. The area reserved is limited to four hectares per person. Eight percent of the wood harvested for the communal forests must be used locally; the other 20 percent can be removed and used outside.

In Gabon, special permits are issued for harvesting for local consumption. Other small-scale permits are issued to families or reserved for nationals with financial means to develop the area. Larger concessions are issued for industrial logging, but 75 percent of the timber must be processed locally.

In encouraging such activities, care must be taken to avoid poor logging and sawmilling practices, leading to soil and timber damage or underutilization of timber.

To ensure that local processors have adequate supplies of desirable species, a number of countries place high export taxes on logs of certain high-value species in order to encourage domestic processing.

Local lumber needs can be met in another way. Concession agreements used by the Native Land Trust Board (NLTB) in Fiji, which operates as agent for the landowning units of nationals, require that up to 25 percent of the sawn lumber processed from a concession on lands owned by nationals be sold, if requested, to members of the landowning unit for domestic use. NLTB logging permits, used for small-scale harvesting operations, provide that a variable amount of sawnwood may have to be provided free of charge to landowners, although the amount is negotiable.

Another way in which timber-harvesting and forest-utilization agreements and arrangements can contribute to the development of rural areas is through the establishment of logging companies and processing plants in which the majority of the equity financing comes from the government and from private national investors.

Normally such operations will be relatively small-scale and devoted mainly to providing products for the domestic market, since large integrated operations normally require more capital than is available through government or private national financing.

Papua New Guinea has used this approach in establishing Forest Development Corporations in which 75 percent of the equity is held by the Government and nationals and the other 25 percent is held by an outside investor-management company which actually operates the timber-harvesting and processing.

In Fiji, the Fiji Pine Commission (FPC) operates as a Government-financed forest development corporation, growing and harvesting pine crops on land leased from customary local landowners. As the landowners begin to receive income from the processing of the timber, the hope is that they will gradually invest it in the purchase of FPC shares, so that eventually the corporation will be wholly owned by the landowners themselves.

Follow-up land use

Forest harvesting that is not followed up by planned land use of some sort, or that is not part of a comprehensive forest management plan, is little more than timber-mining. The negative impact is felt most directly in those cases where the forest is held under some form of customary or communal ownership for the benefit of local groups, who may find themselves left with nothing but a degraded forest. But, even where the land in question is totally under central or provincial government ownership, to fail to provide for adequate land management after harvesting is to deprive future generations of resource production and use.

If follow-up actions are to be effective, the planning must be done before the concession is let, for two reasons. First, if planning shows that follow-up activities are not likely to happen, for economic, political, social or other reasons, there is time to defer the harvesting until such time as reforestation or other land management techniques can be applied. Second, unless the planning is done before harvesting, it may never get done. After the timber has been cut and removed, it is difficult to bring much leverage to bear on the company or agency responsible for the follow-up activities. This can best be done, and commitments obtained, before the concession is granted. This is especially true where the government is negotiating a concession agreement with a large and experienced company. The government is frequently in a weaker bargaining position than the company (less expertise, less experience, political pressure to deal with, etc.). Being able to withhold permission to harvest while the all-important question of responsibilities for follow-up land treatment is worked out is one of the government's most effective negotiating tools.

HIMALAYAN VILLAGE IN PAKISTAN It owns 60 percent of the forest

Reforestation is one of the most obvious follow-up activities. Here one of the major questions is: Who will be responsible for reforestation - the grantee, or the government? Many early utilization contracts placed the responsibility on the grantee, usually because the forest department in many developing countries had neither the staffing levels nor the expertise to carry out reforestation. Trusting the grantees proved risky in many cases, and often resulted in a minimal effort at best or - in many cases - total failure. For this reason, the trend in more recent years has been to place the responsibility with government, either in a unit of the forestry department or, in a number of cases, in separately established government reforestation agencies, such as those in the Republic of Cameroon, the Congo and the Ivory Coast, to cite several recent examples.

Reforestation programmes are commonly funded by a specific reforestation tax levied on the concessionaire. The reforestation tax should be set on the basis of reforestation costs, rather than being tied to product prices, otherwise reforestation will be ignored or jeopardized when timber prices are low. Just how much of the anticipated cost of the new timber crop should be charged to the harvested timber is a difficult question. Certainly, at least the initial cost of growing the seedlings, preparing the site and planting the trees should be a direct cost against the harvested timber, or subsidized to the extent that there are sufficient funds to establish the new tree crop under favourable conditions for survival. Otherwise, the land is merely being mined.

Reforestation may not be the appropriate use for land following harvest. This will be revealed in land-use planning prior to granting the concession. Some areas may be best suited for agricultural uses, including settlement schemes or agroforestry and agrosilvipastoral programmes. Funding should be established for these activities, as well, before the concession is logged.

People's participation

People's participation has become a key component of most rural development programmes. Experience has shown that unless people are involved in planning new practices for introducting new technologies, they are seldom motivated to adapt new ways as their own in a way that will last. The results of failure to involve the local people from the beginning are often the waste of time and money on the part of the government and development agencies, and a rural population no better off than before.

Where timber utilization programmes are concerned, public participation takes on added significance. Failure to protect the interests of rural people likely to be affected by timber-harvesting can leave them worse off than before, create confrontation and mistrust between local people and concessionaires, and generally disrupt hopes of optimizing benefits for all concerned - government, concessionaires and local people (De'Ath, 1980).

The degree to which the interests of governments, concessionaires and local people can be harmonized will vary from case to case. But if the interests of the rural people are to be fully considered, mechanisms and procedures must be established to give representatives of the local people a voice in timber development planning from the earliest stages. This can be through village or tribal institutions or through special advisory committees established for each specific project. The exact method to be used will vary from country to country, depending on the particular social, political and legal structures of the country.

Whatever the procedure chosen, it should seek to provide a meeting ground for the government, the grantee and the local people to work together in the planning of the utilization programme. Otherwise, the most carefully worded concession agreement will have little real value as an instrument of rural development in its full sense.

AMAZON FOREST DWELLER a need to protect indigenous rights


In many developing countries, utilization agreements between government and private investors will continue to be one of the primary methods of timber-harvesting and processing. In many cases, timber development and forest management will have a direct impact on the lives of the rural people living in or near the forest areas. If these people are truly to benefit from the utilization of the forests, steps must be taken to consider their needs and interests in the execution of forest concessions. In this regard, many developing countries are modernizing their forestry legislation, regulations and agreements to provide for the provision of socioeconomic infrastructure, protection of traditional usage, involvement in forest enterprises, follow-up land use programmes and people's participation in project planning and administration.

Finally, it must be recognized that legislation and regulations are only one component of the complex rural development process. The rural development "landscape" is littered with the wreckage of projects that have failed to live up to expectations or to meet the needs of the people, for a variety of reasons.

Legislation must be backed by strong government institutions that have well-trained field personnel able to deliver technical services to the people when and where needed. Local organizations representing the target population to be served must be organized and assisted in their role in the political and social give-and-take of the development process. Planning systems must be developed that will integrate competing land-use demands and mitigate conflicts. Methods must be devised to balance short-term needs with long-term goals. And, not least of all, forestry must make a sustainable economic difference to the rural communities - either directly, through appropriate forestry enterprises, or by increasing the productivity of the land for food crops, livestock and other necessities.

Sustaining the people who depend on forests cannot be separated from sustaining the forest resource itself.


DE'ATH, C., 1980, The throwaway people: social impact of the Gogil Timber Project, Madang Province. Boroko, Papua New Guinea, Institute of Applied Social and Economic Research.

LESLIE, A.J. 1980, Logging concessions: how to stop losing money. Unasylva (FAO), 32 (129): 2-7.

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