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Forest replacement schemes in Latin America: An effective model to achieve sustainability of supply for industrial fuelwood consumers

R. Carneiro de Miranda

A scheme for the operation and maintenance of self-owned reforestation projects associated with fuelwood production.

Rogerio Carneiro de Miranda is with the Association for Wood Energy Development, PROLEÑA, with activities in Honduras and Nicaragua.
Note: This article is an adaptation of a voluntary paper submitted to the Eleventh World Forestry congress. 13-22 October 1997. Antalya, Turkey.

A typical eucalyptus nursery of a Forest replacement Association in São Paulo, Brazil

In theory, fuelwood may be obtained sustainably from managed natural forests, from wood waste generated by forest industry and logging or from fuelwood plantations. Natural forests harvested under a technical management plan are only viable in countries that have the political will and financial means to enforce them. Since these are not common conditions in many developing countries, and since it is a much more expensive way to produce fuelwood, this option is not normally feasible.

Wood waste from forest industry and logging are often freely available, since this material constitutes a disposal problem for industries and loggers. In developing countries, it is a common practice to burn waste in an open pit. This includes sawdust and other wood waste from saw mills and wood processing industries. Unfortunately, in most cases, the wood waste is not close to the fuelwood-consuming industries, nor is there enough wood waste to meet the total consumer demand.

Fuelwood plantations thus represent the best source of sustainably produced wood in situations where wood wastes or managed natural forests are not alternatives. Plantations are usually located on degraded or deforested lands, the fastest-growing category of land in developing countries. Given this most common scenario, why are there not more examples of fuelwood plantations in Latin America? Small industries such as bakeries, tobacco producers, lime producers or brick factories simply cannot afford to buy land or invest in a full forest operation.

An old problem - A new approach

In order to guarantee a constant and sustainably produced supply of fuelwood to the small- and medium-size consuming industries, a new approach is being implemented in Latin America. When the eastern coast of Brazil was colonized in the early 1500s, the Atlantic Forest, a dense tropical hardwood forest, covered most of the region. Colonists began extracting Brazil wood, the tree which gave its name to the country, because it was abundant and highly valued as the source of red dye. Brazil wood extraction was the first main economic activity of Brazil under Portuguese colonization.

By the 1700s Brazil wood was becoming rare, and the remaining forest gave way to agriculture and settlements to extract the next main economic product of colonial Brazil, gold. Also during this period, the Atlantic Forest gave up space to three of the world's main agricultural commodities: sugar, cattle and coffee. Later in the 1900s, with the rapid industrialization of the region, the Atlantic Forest ceded its last major forest cover to allow the creation of urban areas, roads, industries, factories and agriculture for the more than 70 million people who live in the region.

Today, the Atlantic Forest is one of the most threatened ecosystems in the world, with only 8 percent of the original forest remaining. The other remaining forest cover in the region is in secondary (degraded) forests. Up to the 1980s, the fuelwood-consuming industries relied completely on secondary degraded forests, often having to pay high transport costs. In order to stop the unsustainable harvest of the secondary forests remaining in southeastern Brazil, new environmental legislation was introduced by some states in the 1980s. The legislation requires small- to medium-size fuelwood-consuming industries to form regional Forest Replacement Associations (FRAs).

Forest replacement associations

The Forest Replacement Association programme is based on a model that shares the costs of labour, land and capital equitably between consumer industries and resource-poor producers. Farmers traditionally are reluctant to invest in forestry activities because of the costs of the initial capital investment, and the length of time required for the return (usually five to ten years with fast-growing trees). To resolve this problem, many countries offer subsidies such as tax breaks and fiscal incentives. In the FRA model, the industry provides the initial capital but, since the farmers lack the land and labour, they are provided with incentives to participate. Basically, an FRA is a reforestation agent for wood-consuming industries that avoids the high capital costs of land and labour for the operation and maintenance of self-owned reforestation projects.

A eucalyptus energy plantation facilitated through a Forest Replacement Association in São Paulo, Brazil In the photo: a five-year-old tree (standing) and a harvested six-year-old tree

Each industry contributes monthly to a fund which is used to reforest the amount of wood (trees) consumed. For instance, if an industry consumes 100 m3 of fuelwood in a given month, it should reforest 600 trees since, in Brazil, approximately six fast-growing trees harvested at the age of six years will produce 1 m3 of fuelwood. The cost to reforest each tree is about US$ 0.25, including the seedling, technical assistance, fertilizer, wire, pesticides and administration.

With funds received from all fuelwood-consuming industries of the region, each FRA contracts forest technicians to promote reforestation among farmers from the area surrounding the industries. The trees are usually planted on small plots of land that are unproductive for agriculture but serve well for tree crops. Each farmer participating in the programme receives (free of charge) high-quality seedlings, technical assistance, fertilizers, protective wire and pesticides. The farmers agree to dedicate an agreed area to fuelwood plots; carry out the necessary maintenance to the trees; protect against insects, animals and diseases; plant 10 to 20 percent of the total area in trees with native fruits and wood species for conservation purposes; and grant first refusal rights to the industries associated with the FRA when it is time to sell the fuelwood.

At the time of harvest, industries that can prove that they are consuming the fuelwood produced by farmers enrolled in the programme receive the further incentive of a reduction equal to two-thirds of their contribution to the FRA fund. This provides incentives for the industries to consume the fuelwood from the plantations and guarantees a market for the participating farmers. The reduced but continuous contribution is needed to support and maintain the reforestation base for sustainable industry consumption.

A small brick industry In São Paulo, Brazil, using plantation-grown eucalyptus as its fuel source

Why FRAs work

In Brazil, FRAs have been operating successfully for more than a decade. From 1985 to 1995, in the State of São Paulo alone, 13 FRAs were created and more than 20000 ha of fuelwood plantations established, involving more than 3000 farmers. Thousands of small industries in the State of São Paulo are currently consuming wood produced under FRAs. Recently, the states of Minas Gerais and Mato Grosso do Sul have also started adopting the FRA model.

What the FRA model does is to ensure a better distribution of the costs and profits of the fuelwood. In the developing world, there are several disincentives to reforestation and, besides the long period before returns are realized, farmers are usually paid a low price for fuelwood products.

In the FRA model, farmers avoid the capital cost of planting the trees and industry avoids the land and labour costs. Further, by reforesting closer to the consumer sources and trading through the FRA, the intermediary and transport costs are reduced. This decreases the final price of the fuelwood for the consumer industries and transfers better profits to the producers.

In addition, the benefits to industry from this programme are not only financial. Compliance with environmental and forest regulations, e.g. consuming sustainable fuelwood, carries a significant public relations value. Other benefits include the reduced risk of shortages owing to a guaranteed supply of fuelwood near industrial plants and the strong, positive image that the industries project in the region by supplementing the incomes of local farmers.

Farmers benefit from the incentives for reforestation, as the capital is provided by the industries. They receive a guaranteed market with the consuming industries and a higher profit by trading directly through the FRA. Other benefits include increased production on formerly unused land, the protection of fragile soils and diversification of economic activities.

Other forest replacement schemes in Latin America

In southeastern Brazil, the big steel, cement and pulp industries that consume wood as charcoal, fuelwood and fibre are also implementing partnerships with farmers in the surrounding areas in order to reduce the costs of wood inputs. In a programme similar to FRA, called Forest Farmers, the capital provided by the industry is a loan, not a grant. On the signing of the contract between the industry and farmers, capital is provided in the form of inputs, equivalent to US$ 350/ha. This is then repaid in the form of "n" cubic meters of wood in the future, based on the market price on the signing date of the contract. In general, the farmer uses approximately 30 percent of the total wood production in order to pay back the loan. By giving first refusal rights to the financing industry, they can sell the extra wood produced at the actual market price. In the Forest Farmers programme, more than 100000 ha have been contracted, benefiting about 1000 farmers. This programme can generate a profit of approximately US$ 200/ha/year from land that is not usually productive under agricultural crops.

In Honduras there is another successful example of forest replacement in operation. In the late 1980s, fuelwood-consuming industries began experiencing shortages in local fuelwood supplies, together with associated increases in transport costs. Most of the industrial fuelwood available in the region comes from unsustainable harvest of the natural pine and hardwood forests in the surrounding mountains. Honduras is losing 80000 ha of forest each year, with the overall forest cover having been reduced from 71 to 46 percent between 1965 and 1992. Fuelwood in Honduras accounts for 65 percent of the primary energy needs and 80 percent of all wood consumed, while more than 70 percent of the population relies on fuelwood as a source of cooking energy.

A cigar manufacturing company, Tabacalera Hondurena S.A. (TAHSA), has helped tobacco farmers of northern Honduras to reforest for fuelwood. Some tobacco growers need fuelwood to dry and cure the tobacco leaves. In 1989, TAHSA started a programme to promote fuelwood reforestation among the tobacco farmers in order to meet the industry's needs for a constant and sustainable supply of fuelwood. TAHSA required all tobacco farmers using fuelwood for the curing of tobacco leaves to reforest 150 fast-growing trees per hectare of tobacco cultivated. TAHSA provides inputs (on loan terms) such as good-quality seedlings, technical assistance, fertilizers, pesticides and wire to protect the plantation against animals. At the time they sell the cured tobacco leaves to TAHSA, the farmers pay back the loan. TAHSA guarantees a market for the farmers' tobacco, using it to manufacture cigars for the Honduran and export markets.

Initially, farmers did not like the imposition of TAHSA and asked why they should have to undertake the extra work of reforestation. But after 1994, when the first trees were harvested, farmers found that the cost of fuelwood in the tobacco curing process had decreased by 30 percent, mainly as a result of very low transport costs and better-quality fuelwood. Today, there are about 230 ha of eucalyptus in the northern region of Honduras, exclusively to sustain the tobacco farmers. Most of the farmers now support the programme and some are even planting much more than they need, looking ahead to a guaranteed fuelwood market in the near future as wood scarcity increases with deforestation.


Traditionally, the fuelwood sector has been informal, disorganized and inefficient. Governments have usually allowed natural forests to be a free source of fuelwood, largely as a result of their inaction. Traditional solutions have focused on giving farmers resources to plant trees for their own consumption. This has been largely unsuccessful, since small amounts of biomass are always available free of charge for family-level consumption in the rural areas. Moreover, the costs associated with providing farmers with materials and information needed to start their own plantations are high relative to the size of the plantations established.

The forest replacement concept, on the other hand, uses new and successful approaches: it holds commercial consumers responsible for the environmental impacts of their business (reversing the traditional business concept of privatizing profits and socializing costs); it reduces dependence on the public sector and foreign aid to finance reforestation; and it guarantees a commercial market and fair price for farmers.

The policy concept behind forest replacement can be used for any size of economy and could even be adapted to address commercial urban fuelwood demand, since there is profit behind it. For instance, in the capital of Honduras (Tegucigalpa), urban household consumers are paying more than US$ 20/tonne of fuelwood and, in Managua, the capital of Nicaragua, the prices have reached US$ 60/tonne, making fuelwood for cooking even more expensive than electricity and LPG.

Forest replacement policy so far has proved to be a win-win solution, since industry benefits from lower transport costs, law enforcement, better fuelwood quality, greater availability and closer vicinity. Farmers' benefits are free or low-interest capital for reforestation, a guaranteed market at fair prices, diversification of economic activities and the use of low-productivity land. Finally, society benefits from the generation of jobs resulting from the injection of capital into the local forestry economy; reduced pressure on natural forests with conservation benefits; a shift to the private sector of the responsibility for environmental impacts incurred on a public good by industry; and increased national pride as a result of a decreasing dependency on foreign aid for reforestation purposes.


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