FAO’s Investment Centre Division, in collaboration with FAO’s Forestry Department and the World Bank, has recently published six case studies in Latin American countries entitled: “Evaluation of the impact of stumpage and other administrative fees on sustainable forest management”.
It is widely recognized that one of the main drivers for deforestation and forest degradation is the high opportunity cost of using land for sustainable forest management (SFM) and biodiversity conservation. Competing land use from shifting cultivation, agro-industrial crop production and cattle ranching, bring much higher returns, thus discouraging the use of land for SFM.
Some of the problems include:
• Timber production in sustainably managed forests implies a much higher cost than illegal logging, especially in countries where forest law enforcement and governance are weak.
• Bureaucratic burdens impose high transaction costs and long waits for licensing and logging approvals.
• A “stumpage” value tax is placed on standing trees, not only in public forests. Stumpage fees to harvest and transport timber and other administrative fees (SAFs) impose an additional economic burden that private and communal forest dwellers have to pay, even on trees grown on private or communal forest land.
The case studies review the situation of forestry management policies in Ecuador, Guatemala, Honduras, Mexico, Paraguay and Peru. The studies revealed that stumpage taxes, together with administrative fees and the cost of getting a forest management plan approved can account for up to 10-20% of total cost of timber production. The studies also showed that:
• Stumpage and other administrative fees affect more small forest owners and communities.
• Long waiting times for plan approval impose transaction costs which are as strong a disincentive as stumpage.
• Income from stumpage cannot compensate for the insufficient budgets assigned to public forest administration institutions.
These studies were presented at the 27th Session of the Latin American and Caribbean Forestry Commission (LACFC) that took place in Asunción, Paraguay in March 2012.
For more information about LACFC, click here.
Please click here to view and download the individual studies carried out with the Governments of: