10. Institutional and policy support

Public education
Patterns of economic change and implications for policy
Better national accounting
Intellectual property rights
Direct support from national-level institutions
Support for NGOs
Regional and international support
For further reading

Although the topic appears last in this volume, the policy and institutional environment is often the most influential force shaping the potential for sustainable resource management. This chapter suggests how the institutional background which shapes local enterprises can promote improved management of non-wood forest resources. This is the area where rural producers have least control; however, by informing themselves, combining their resources and forming themselves into producer groups, they can sometimes influence policy changes.

This chapter describes actions that governments can take to promote better use of NWFPs. It examines (1) patterns in the growth of NWFP sector and their implications for policy interventions, (2) areas for direct institutional support and (3) areas for international support.

Public education

A first obstacle to the improving the prospects of NWFPs is a widespread negative view about traditional rural ways. Because many non-wood forest products are linked to customs that have conflicted with "modern" development, they are often considered "backward". This bias influences institutional responses at all levels: field foresters, government officials, credit institutions, politicians and development agencies.

Public-awareness campaigns, tailored for target audiences, can change these negative views. Radio and television spots can dramatize the environmentally "progressive", cultural and economic benefits of NWFPs to a society. Campaigns for consumer education can raise products' environmental value and foster wise resource management. Nutrition programmes should consider the role of local forest foods and promote their use to reduce reliance on foods which may not be available locally (FAO, 1995a). Programmes that provide credit and technical support for small enterprises should distribute posters and brochures, explaining the benefits of well-managed NWFP enterprises.

To give forest produce and traditional customs greater value in the eyes of the public, campaigns might employ traditional/cultural as well as audio-visual media to highlight the forest's values for sustenance, health, shelter, income, food security - in a new context of environmental awareness.

Patterns of economic change and implications for policy

Changes in local and urban markets
Boom-bust patterns in international and export markets
Implications for policy-making

In many countries, policies governing NWFPs are scattered over many sectors: agriculture, forestry, health and industry. Because these policies were often not formulated to address non-wood forest enterprises or rural livelihood, they often fail to provide adequate incentives and often provide disincentives, often conflicting in ways that cause stagnation.

If policies are harmonized and redefined with an aim of stabilizing rural economies and promoting rural enterprise, communities could become more self-reliant and generate surplus for export.

Policy reformulation to promote non-wood forest enterprise should be guided by the experiences of local groups and enterprises, and good market information (FAO, 1995b). The following paragraphs trace several common patterns of commercialization in NWFPs and their implications for policy adjustment.

Changes in local and urban markets

People's involvement in non-wood forest enterprises changes as economies grow and opportunity costs change (Arnold, 1995). Small processing enterprises predominate in conditions where:

factors favour local processing (e.g. widely-scattered raw materials, small markets or high transport costs);
economies of small scale exist, as in handicraft production;
subcontracting is preferable to integrated operations.

Rural markets for non-wood products are linked to the rate of agricultural change. These markets are large in aggregate, tending to grow slowly. A more significant source of growth in the NWFP sector is growing urban demand. Urban markets for these products in developing countries tends to grow quickly as rural people migrate to cities and bring preferences for customary products of their rural background (nostalgia markets) (Arnold, 1995).

Inequities. Unmanaged commercialization tends to work against small enterprises, disadvantaged groups, and women. As the value of trade grows, urban traders seek to gain more control over supplies through vertical integration, by-passing rural gatherers (Arnold, op. cit.). Likewise, men tend to take over trade from women as it becomes more commercialized. Small enterprises find themselves unable to obtain credit and other services, which often favour larger operations.

Growth in forest-product trade increases pressure on a resource and tends to restrict traditional rights of access to that resource. In some cases, however, communities have reinforced traditional common property systems in the face of intensifying pressure. Conditions that help community groups maintain collective control against mounting pressures include (Arnold, op. cit.):

• a legal system which is able to help the group enforce its rights;
• strong social institutions;
• well-defined rights of use;
• small homogeneous groups of users;
• rapid returns to investment in collective management.

Increased competition. Improvements in rural infrastructure are, for rural producers of NWFPs a double-edged sword. Roads and communication linkages improve the flow of their goods to urban markets, but also cause competition in local markets from urban manufacturers. Cheaper factory-made items begin to replace forest-based products in rural markets. In Indonesia, for example, Hadi (1986) found that mass-produced metal and synthetic products quickly displaced home-made bamboo umbrellas and wooden clogs which were once sold in rural markets. Commercialization also attracts new producers to compete in the market; crafts that require complex skills, such as wood-working, are less affected than sectors that use basic skills, such as mat-weaving (Arnold, op. cit.)

Types of change. In general, small enterprises gain importance in three types of economic change (Arnold, op. cit.):

where per capita income is effectively declining, people with fewer employable skills turn to low-return, labour-intensive tasks in cottage industries such as mat-making;

where per capita incomes are rising, small enterprises are likely to emerge in growth related, higher-return ventures; small enterprises in low-return activities are likely to decrease;

in times of growth and change, small enterprises play an important buffer role, providing income for facing natural or economic crises.

Disruption in resource supply. When harvest rates outstrip natural regeneration/replenishment rates to satisfy growing market demand, the supply in natural forest declines. Without coordination, timber harvests in natural forests will likely disrupt harvests of non-wood products. This disruption can be compounded by policies and enforcement that favour timber production, or by complicated license requirements. As a result, NWFP producers are likely to shift their harvesting operations to forest fallow and domesticated sources (Arnold, op. cit.).

Boom-bust patterns in international and export markets

Chapter 5 showed how NWFPs that attract international markets tend to experience a boom-bust pattern. This can have particularly damaging long-term effects. In the Amazon in the 1890s, for example, rubber from natural forests experienced a tremendous growth in trade before ultimately being replaced by domesticated sources elsewhere. This short-lived, unmanaged exploitation proved to benefit only urban-based traders. In the forest areas where rubber was native, landuse conflicts ravaged the resource and caused many deaths among Amazonia's indigenous population (FAO, 1995b). A sound policy framework could have promoted balanced rural and urban growth.

Effects of subsidies. When exports of forest products (both wood and non-wood) command high prices in international markets, government forest services often become producers to earn government revenue. This can interfere with local forest use. In effect, the forest service becomes a subsidized competitor of private producers; and this discourages private enterprise (Arnold, op. cit.).

In many developing countries, national policies promote industrial investment by providing subsidy incentives to companies that exploit natural resources. In doing this, they assume that the country's short-term competitive advantage is worth the risk of environmental damage that the subsidy may cause by supporting short-sighted production methods (Haeruman, op. cit.). Policymakers should question this underlying assumption, particularly for fragile ecosystems. Rather, taxes on exports of unprocessed raw materials can encourage local processing and provide investment funds for sustainable management (FAO, 1995b). Long-term subsidies for NWFP development programmes generally can not prove sustainable in a market situation.

Implications for policy-making

In view of the above, policy-makers committed to healthy and equitable economic growth in rural areas should:

enact clear tenure policies by which rural producers can secure access to the forest resource, so that they are not forced out of production as markets prosper;

ensure that producer groups receive information on resource and market conditions, and environmental guidelines; this should include support for problem-focused research;

promote flexible credit mechanisms for small producers and processors;

remove size-scale biases against small enterprises in credit programmes, licensing arrangements and other mechanisms (many of which result from the fact that agencies find it costly to support small enterprises on an individual basis);

avoid subsidizing low-return enterprises when opportunities for higher-return activities become available;

support formation of local producer groups, which increase the overall competitiveness of the sector;

foster transparent transactions in market chains, with better price and trade information throughout the chain and economic incentives like those used in agriculture;

correct gender discrimination where it displaces women's roles in production, harvesting, processing and marketing products;

recognize that policy responses to actual conditions and producers' needs are likely to be more effective than generalized approaches.

To ensure that the overall policy environment provides incentives for wise forest use, government offices should:

• ensure that tenure policies decentralize resource management and encourage people's participation in sustainable forest management;

• properly account for the contribution of NWFPs to the national economy;

• remove subsidies for wasteful enterprises, both large and small;

• fully recognize traditional rural knowledge and social and cultural practices, and secure appropriate rights for rural communities, that acknowledge and compensate this knowledge
(intellectual property);

• effectively put into practice mission statements and plans that explicitly strengthen their commitment to stewardship of non-wood forest resources and partnerships with local users of the resource.

Policy reform is only as good as its implementation. To be effective, policies must provide for regular monitoring and refinement of incentives, and leaders must show commitment to the goals embodied in those policies.

Better national accounting

Economic valuation of environmental functions

Improved definition and classification of NWFPs and incorporating them in the System of National Accounts mark early steps toward achieving the policy adjustments described above.

By clearly grouping the variety of non-wood products that originate from forest sources, officials and programme managers can:

• call attention to the collective importance of these items;
• highlight the need for policy coordination;
• generate the political and administrative support needed for more direct support for producers.


For international classification and accounting, FAO has recommended adoption of the definition of NWFPs given in Chapter 1: goods of biological origin other than wood, as well as services, derived from forests and allied land uses. For gaining recognition of these products' economic importance, it is hoped this definition can be generally followed.


A system of classification for NWFPs was proposed at the Expert Consultation on Non-Wood Forest Products held in Yogyakarta, Indonesia in January 1995, as a means to incorporate these products into the existing international systems of classification for economic activity and trade (Chandrasekharan, 1995). These systems include: the International Standard Industrial Classification of All Economic Activities (ISIC), the Standard International Trade Classification (SITC), the Harmonized Commodity Description and Coding System (HS) and the Provisional Central Product Classification (CPC) system. (The trade data in Tables 7.3 and 7.4 are based on HS classifications.) To create a clear economic identity for NWFPs, it is proposed that an annex be added to ISIC that will group together all forest products, wood and non-wood. A similar approach has helped unify coverage for the diverse components of the international tourism industry.

The classification system proposed would provide a basis for better statistical coverage of NWFPs, which in turn would improve the market and trade information available to producers and policy-makers (Padovani, 1995). Statistical coverage provides a foundation for a policy constituency that can bolster producer groups and researchers seeking support for sustainable forest management. It is to be ensured that statistical information is readily available and accessible.

National governments may choose other appropriate classification schemes that fit the specific nature of NWFP use in their country. For better international linkages, though, governments should aim to clarify how the customized national system correlates with an internationally accepted one, in order to facilitate comparisons and aggregations.

Economic classification alone cannot adequately recognize the non-economic values of non-wood products and services; complementary efforts need to better account for the "external" environmental functions (unquantifiable benefits) of forest resources.

Economic valuation of environmental functions

In many markets there is a sizable gap between a NWFP's financial value and its real economic value. Similarly, resource degradation does not appear in most governments' calculations of Gross National Product (GNP). These cause governments and the private sector to act on incorrect market signals. For example, the disastrous EXXON-Valdez oil spill in Alaska increased the US GNP calculation because billions were spent on clean-up but resource losses did not appear in the accounts (WRI-IUCN-UNEP, 1992).

Informed policies can reduce these distortions. Using improved methods for assigning value to resources, planners can compare benefits of conservation measures with costs suffered if no such measures are undertaken. National governments should incorporate values of biological resources and revise official cost-benefit formulas to recognize resource degradation. Economic values cannot reliably be assigned to all factors, but it is possible to estimate relative costs of species disappearance, soil loss and carbon emissions based on key ecosystem parameters (Vosti and Witcover, 1995).

For the public sector to value forests most effectively, it must first sort out the values attached to forests by the different groups with interests in the forest, and define the policy context for any proposed change in forest use (Gregersen et al., 1995). The relevant costs and benefits should then be assigned to different situations. The value for the case with the proposed change can then be compared with the values for the case without the change. The results should be adjusted to account for uncertainties in information on forest systems and future values; and this should form the basis for policy decisions.

Intellectual property rights

In recent years, intellectual property rights (IPR) have emerged as an important mechanism for securing an equitable share of benefits from forest activities to developing countries and communities. Particularly with the dramatic growth of forest-based medicines and biomedical research (see Chapter 4), securing intellectual property rights is a priority issue for some national governments.

The concept of intellectual property originated centuries ago in western legal systems to provide economic rewards for individual creativity. Patents reward new knowledge (inventions or discovered techniques) for a fixed period of time. There are difficulties in adapting IPR to reward long-standing traditional knowledge, but it contributes an important early step toward refining that recognition and providing rewards.

The patent protection offered by national governments varies widely. The United States grants patents on novel genetic sequences, plant parts, plant or animal varieties and biotechnological processes. On the other hand, European countries have only recently extended patent protection to plant varieties (Reid et al., 1993).

Another variable is that different stages of product development require different types of IPR. For example, where patenting is premature, trade secret protection may be applicable. In other cases, the relationship between traditional knowledge and the product may justify trademark protection (Grifo, 1994).

The International Convention on Biodiversity protects property rights of developing countries to native plants and other species. Signed by more than 160 countries, the Convention calls on national governments to create a framework for regulating biological resources, IPR and environmental protection. It also calls on governments to harmonize commercial laws with local goals and the equitable sharing of benefits from sustainable resource management (Sittenfeld and Lovejoy, 1994).

The 1994 Marrakesh agreement on international trade and the related TRIPs agreement are two other key conventions relating to IPR. TRIPs mandates patent or other IPR coverage for plant varieties in international trade and stipulates that the: procedures should be fair, equitable and effectively enforced. Developed countries are expected to adjust their laws and practices to conform with TRIPs within one year; developing countries and countries in transition have five years to make this adjustment; and least-developed countries have 11 years.

With this mandate, national governments can use case study experience to formulate mechanisms for ensuring IPR protection to local groups. One factor in determining appropriate compensation for traditional knowledge is the community's value system. For some traditional healers, compensation entails respect for the "sacred" or secret nature of the information provided. This spiritual value can be as crucial as financial compensation (Cox, 1995).

Intellectual property rights do not substitute for secure tenure over local resources. Developing non-wood forest resources still requires that (1) tenure policy be clear and consistently enforced, (2) communities participate in decisions governing local resource management, and (3) communities are able to weigh the trade-offs involved in economic development (Davis, 1993). Nor do IPR mechanisms replace technical or credit assistance that communities need to develop their traditional resources.

Text box 10.1: IPR, national policy and INBio's prospecting research

The INBio-Merck agreement, by which Costa Rica received several million dollars from the Merck pharmaceutical company to prospect for bioactive materials (Section 4.6), did not occur in a policy vacuum. Policy measures paved the way.

The Costa Rican government established a clearly defined National System of Conservation Areas, covering 27 percent of the country's area. It created INBio as an instrument for inventorying biological resources and encouraging wise use of the country's biodiversity. The clear definition of protected areas helped to justify the investment needed for the inventories. In 1992, a new law protected resources from over-exploitation by requiring bioprospectors in conservation areas to have a permit from the Ministry of Natural Resources.

Social policies also contributed. Costa Rica's large investment in education has created a pool of skilled technicians and the university laboratories needed for the complex process of collecting biodiversity information.

IPR and the determination of royalty rates were major business issues in negotiating INBio's contracts. A team of INBio representatives and Costa Rican environmental lawyers worked with management consultants and pro bono corporate lawyers from developed countries to negotiate royalty rates. Bargaining power required good knowledge of the pharmaceutical industry, the biological resource, legal precedents in other industries and conservation needs (Sittenfeld and Lovejoy, 1994).

Direct support from national-level institutions

Information, training and education

With sound policies in place, government services can offer effective support to producers. The Joint Forest Management programme in India (see text box 4.2) illustrates one mode of government collaboration with communities to manage resources and share benefits. In other cases, governments provide technical support with less managerial involvement. At a minimum, key areas for institutional support are information, education, training, credit and promotion of local organizations.

As with policy, direct institutional support requires coordination among the agencies that deal with nonwood resources and NWFP producers, usually including: forestry departments, veterinary and livestock services, food crop services, health and medical services, and industry and commerce agencies. Coordination should emphasize clear identification of areas where support is needed and the major steps/actions for addressing these through cooperation (Sène, 1995).

Information, training and education

Producers need information from support services on:

• techniques for more efficient harvesting and post-harvest treatments;
• marketing and processing options;
• conditions throughout the market/production chain;
• policies and rules regulating NWFP utilisation, i.e. tenure, access, transport, processing and trade.

Programmes for training should be: closely linked to research and technical support (see Chapter 9), and specific training needs should be identified and courses developed for different levels of personnel involved in NWFP development: policy-makers, programme administrators and managers, local support workers and producers (FAO, 1995b).

Local knowledge is the starting point for solutions to producers' problems; therefore assessing local knowledge and presenting it in training courses is vital. Without this, training efforts can result in top-down transfer of generalized concepts that could squelch the local innovations, rather than promoting it.

Training should also provide information on networks that exist in the local and national context of the trainees. Materials should describe relevant cooperative programmes among forestry and agriculture departments, universities and the private sector. National forestry education institutions should develop and offer courses on products for which they have particular capacity and topics particularly important to the country or region.

Education and training programmes should employ a wide range of channels, including (Sène, op. cit.):

public awareness raising on the vital importance of existing resources and the value of traditional skills and knowledge for managing these resources;

local transfer of technologies and skills regarding utilisation of resources that may be well developed in one locality but totally ignored in another, through farmer-to-farmer exchange visits and/or seminars;

primary education, including exposure to natural sciences, geography and knowledge of local resources and their contribution to local economy;

secondary education, continuing the work started at primary school, dealing with the environment and the economic potential of all local resources;

job-oriented technical, vocational and professional training in forms outlined in Table 9.1.


Governments possess a variety of means for improving credit availability to rural producers. For example, clear land tenure policies and secure title can provide a farm family with loan collateral for investing in production/processing equipment. Credit programmes can increase flexibility by (Clay, 1995):

• using a producer's production history as a basis for forecasting production;
• allowing physical product stock to guarantee loans for working capital;
• counting forest inventories of economically valuable species as collateral.

In the 1950s, the Kenyan government recognized black wattle trees (Acacia mearnsii) as a form of farm loan guarantee in view of the species' value for tannin, charcoal, building poles and other uses (Dewees, 1991).

Credit programmes could usefully distinguish between new enterprises and existing enterprises seeking to expand. New enterprises show high attrition and are often less efficient than small enterprises seeking to grow. This suggests that scarce credit funds may be more effectively used if focused on enterprises seeking incremental expansion (Arnold, op. cit.), even though they may require more customized services than new enterprises.

Support for NGOs

Consortiums of government, private sector, and NGOs

NGOs have played a key role in improving local forest management. NGOs vary widely in their attributes and abilities, but many have proven that they can (Sène, 1995):

document local knowledge and traditional technologies;
promote traditional and income-generating activities using NWFPs;
organize producers and marketing channels;
advocate for policy reform.

Their pivotal role in the future of sustainable forest management has been widely recognized.

National governments can further their efforts by working with NGOs as partners and by offering training that strengthens NGOs' technical and institutional abilities. Technical needs range from production, harvesting and marketing to collective organization. Institutional needs range from management and record-keeping to policy research and analysis.

Consortiums of government, private sector, and NGOs

Chapter 9 described how public-private consortiums can provide technical support for local forest-based enterprises. Such consortiums can also arrange services such as credit and managerial support (see text box 10.2).