Better governance critical to reversing forest degradation in Southeast Asia

Jerry Bisson, Ernesto S. Guiang, Peter Walpole and Dionisio Tolentino, Jr. 1


FAO data indicate that the Asia-Pacific forests produce substantial amounts of roundwood and provide valuable environmental services. Continued deforestation and degradation, however, threatens the sustainable use and environmental contributions of these forests. The continuing loss of forest has resulted in loss of lives and biological diversity, destruction of infrastructure, and decline in agricultural productivity. It has decreased rural incomes, supply of food and fibre, and germplasm reserves.

The authors identify weak environmental governance as the root cause of continued deforestation in Indonesia, the Philippines, Thailand, Cambodia and Myanmar. Limited transparency, accountability and participation in decision-making are corrupting the allocation of land and natural resource use rights and are stalling the development efforts for the forestry sector. This has led to over-cutting of natural forests, non-enforcement of regulations, displacement of indigenous peoples, increased upland migration and unequal distribution of wealth. Weak governance has also increased open access of forest lands; contributed to conflicts between government institutions and forest communities, private sector and communities, forestry and other government institutions; inadvertently supported armed insurgencies; and discouraged investments in forest plantations. Vested interests continue to dominate forest policy development and implementation.

The authors recommend that strategies for reversing forest degradation in Southeast Asia should enhance transparency (with equal access to information), build accountability (strong civil society participation) and promote participatory decision-making (with defined incentives) in the allocation and use of forests. Devolved co-management arrangements with local government units with well-defined responsibilities and authority are recommended to improve the governance of the region's economically, culturally and environmentally valuable forests.

I. Forest degradation continues in Southeast Asian countries

FAO data indicate that the Asia-Pacific forests produce substantial amounts of roundwood and non-wood forest products (NWFP), and provide valuable environmental services (FAO 2001). For example, Indonesia is the largest exporter of tropical forest products, generating $4.2 billion in foreign exchange earnings in 1999 (Scotland 2000). Five out of the seven top global producers and consumers of NWFP - in terms of world trade (estimated to be US $11 billion in 1994) - are from Southeast Asia. These are Indonesia, Vietnam, Malaysia, the Philippines, and Thailand. Major NWFP products include rattan, bamboo, medicinal and aromatic plants, resins, mushrooms and essential oils (FAO 2001). In many countries, harvesting and initial processing of NWFP products also supports the livelihoods of local communities, especially indigenous peoples.

One example of environmental benefits is the invaluable hydrological services - clean and stable supplies of water for irrigation, power generation and domestic needs - that forests provide to national economies, especially in rice-growing countries such as Indonesia, Thailand, Vietnam, and the Philippines.

Continued deforestation and degradation, however, threatens the sustainable use and environmental contributions of these forests. Forests are lost primarily through unsustainable legal logging practices, illegal forest activities and conversion of forests to agriculture.

Indonesia has the largest forest reserves in the region (over 95 million ha of forests as of 2000); however, Indonesia lost about 1.3 million ha of forest annually from 1990 to 2000 (FAO 2001). If this trend continues, Indonesia's valuable forest resources will be depleted within ten to 15 years (CIFOR 2000). Myanmar had about 33 million ha of forest in 2000 and has lost about 517,000 ha/year from 1990-2000 (FAO 2001). Thailand has about 9.8 million ha of forest in 2000 and has lost about 112,000 ha of forest/year from 1990-2000 (FAO 2001). Cambodia has about 9.2 million ha of forest in 2000 and has lost about 60,000 ha of forest/year from 1990-2000 (FAO 2001). With about 5 million ha of forest left, including 800,000 ha of valuable old growth forest, the Philippines lost about 100,000 ha/year from 1990-2000 (FAO 2001). If this deforestation rate continues, the country will have virtually no valuable forests left by 2010 (ESSC 1999). Mangrove forests have not been spared. The Philippines and Vietnam have lost 50-75% of their mangrove forests (ADB 2001; Durst, et. al. 2001).

The continuing degradation of forests has resulted in the loss of lives and biological diversity, displacement of indigenous peoples, and decline in agricultural productivity and germ plasm reserves.

II. Weak governance is a root cause of continued deforestation

Several studies have concluded that in most Southeast Asian countries the root cause of environmental degradation is a combination of weak institutions and poor governance - little or almost no transparency, lack of accountability, and limited participation of stakeholders - in formulating and implementing decentralized forest and forest land management policies (World Bank 2000a; Anderson 2000; Morfit 1998; Mickelwait, et. al. 1999). This has led to over-cutting of natural forests, increased upland migration, and unequal distribution of wealth.

Weak governance has led to national policies that resulted in "state capture"2 of rights to forest lands and forest resource use. This "state capture" has fueled corruption in securing resource use rights and transport permits, timber concession privileges, and tenure rights over public lands for plantation development (Callister 1999; Wallace 1993; Vitug 1993). In the Philippines, Indonesia, and Cambodia, it was only after highly authoritative and allegedly corrupt national leaders: Marcos, Soeharto, and Pol Pot, respectively, were deposed that local government units and civil society have been able to gradually participate in national policy formulation that could minimize state capture of forest resources (Gollin and Kho 2002; Simon 2000; AFN 2002).

Ascher (1999) and McCarthy 2000) contended that Soeharto, the former Indonesian president, in exchange for financial returns, implemented policies that favored Indonesian-Chinese entrepreneurs in establishing highly profitable concessions and wood processing industries. Brown (1999) showed that the 10 largest timber groups in Indonesia held 47% of the 51.3 million hectares allocated as production forests under concessions in 1997/98. In 1976, the Government of the Philippines allocated 10 million ha of forestlands (one third of the country's total land area) to 200 Timber License Agreement holders based on politics, military and other vested interests (Wallace 1993; Porter and Ganapin 1988; and Vitug 1993).

In addition to negative environmental and social impacts, illegal forest activities over the past decade deprived national and local government of much needed tax revenues. For example, the Government of Indonesia lost potential tax revenues of $1 billion to $1.9 billion due to illegal forest activities annually (CIFOR 2002). Indonesian wood processing industries and local demand was estimated to be about 60 million cubic meters in 2000; yet, the forests were estimated to generate a sustained yield of only about 20 million cubic meters per year, also the authorized harvest level. Thus, in the year 2000, about 40 million cubic meters was cut illegally (Earth Policy Institute 2002). Scotland 2000 estimates illegal logging in Indonesia at about 30 million cubic meters in 1997/98. In the 1980s, the Government of the Philippines lost about $1.8 billion (over ten years) in potential revenue due to illegal logging (Kishor 2000; De los Angeles and Oliva 1996). In Cambodia in 1994, 4 million cubic meters of wood was logged with a loss of revenue to the Government of Cambodia of $60 million, and exceeding the estimated sustained yield of Cambodia's forest sector by 1.5 million cubic meters (Savet 2000).

Logging bans in one country may increase illegal forest activities in and among neighboring countries. For example, the logging bans in Thailand and China led to increased illegal forest activities in Myanmar and Russia, respectively (Dust, et. al. 2001). Myanmar has been a leading exporter of forest products to Thailand with armed conflicts arising among different factions in Myanmar over log trade routes (Durst et al 2001). Malaysia also imports a significant amount of wood from Indonesia that is reported to be illegally harvested and transported across the border (Obidzinski and Suramenggala 2000 as cited by Scotland 2000).

Countries with weak governance appear less able to address environmental and social concerns and ensure forest management activities generate the appropriate tax revenue and economic benefits for national and local governments.

Limited transparency, accountability and participation in decision making are corrupting the allocation of land and natural resource use rights and stalling development efforts of the forestry sector (Savet 2000).

Weak governance has also increased open access of forest land and clearing of forests through illegal forest activities. In 1987, the Government of the Philippines canceled many timber license agreements because of their alleged violations, non-payment of taxes, over logging, and collusion with former government leaders. Once the concession holders stopped operations, these areas became open access forest lands. With the national government's limited resources to manage these forest areas combined with the lack of effective governance mechanisms, increasing demand and high prices for timber products, illegal logging and forest clearing increased in these forests (Laarman, Stewart and Dugan 1995).

In Indonesia, recent reforms in the forestry sector to allow for greater involvement of local institutions to manage forests have indirectly caused an "open access condition of forests" with illegal logging reportedly increasing (Simon 2000). After the Royal Thai Government revoked the licenses of companies to log natural forests, illegal logging and upland encroachment reportedly expanded (Lakanavichian 2000).

Weak governance has resulted in high transaction costs in managing forest operations. The Philippines has placed over 5 million ha under community-based forest management, however, these operators are incurring high costs in obtaining approval of management documents and in transporting legally-harvested forest products. For example, a medium-sized truck transporting wood products was required to pay $60-$140 in "transaction costs" at each of 14 check points in Eastern Luzon (Durst, et. al.al. 2001).

Philippine community-based forest management operators reported that each operator has to pay the Department of Environment and Natural Resources (DENR) up to $400 for the approval of a work plan authorizing the annual allowable cut (Mindanao Federation of Peoples Organizations 2002). In addition, these operators pay DENR up to $500 each year to facilitate the issuance of an Environmental Compliance Certificate (EnterpriseWorks Worldwide 2002). These transportation and approval fees are not legally required and significantly reduce the profitability and economic viability of community-managed forest operations

In many countries, tax revenues from legal logging accrue almost solely to central governments and do not provide significant revenues to local governments or communities (Scotland 2000). Consequently, illegal loggers have been able to build powerful networks of influence at the local level (McCarthy 2000).

Weak governance has discouraged investments in forest plantations. Unpredictable government policies governing the establishment of forest plantations and conflicts with local communities have virtually stopped plantation development in the Philippines (Acosta 2002). Despite ideal growing conditions in Eastern Mindanao, many small, medium and commercial forest plantations have not flourished because of changing policies on incentives, tenure and resource use rights and participation of communities (Nuevo 1998; Olizon 1991). Philippine forest policy on forest plantations changed 20 times from 1975 to the 1990s (Olizon 1991). High transaction costs for obtaining harvesting and transport permits, difficulties in handling demands for "revolutionary taxes" from armed groups combined with the high cost of money have also discouraged forest plantation development.

There is considerable potential for increasing timber production through plantations, especially in increasing the productivity of the region's extensive grassland areas. Successful approaches have encouraged the participation of the private sector, local communities and governments. The conversion of natural forests to plantation crops, however, has led to significant negative social and environmental impacts.

III. Weak governance in the forestry sector contributes to increasing conflict in rural areas

The high transaction costs of applying for forest land tenure instruments and obtaining resource use rights can also fuel conflicts between forestry-based institutions and communities. In the Philippines, communities with forest management agreements feel that they are only used by the state to protect the natural forests in their concession areas because their forest resource use rights have been severely curtailed by DENR through an arbitrary and non-transparent process (Gollin and Kho 2002).

Communities suffer from conflict when there is a lack of transparency and accountability in the management of funds generated from the sale of timber harvested under community-based forest management agreements (Borlagdan 1999). In addition, active and committed community efforts to protect forests under their stewardship can lead to conflict and even the death of community members trying to stop illegal activities. (Cadaweng, et. al. 1999). In many parts of the Philippines, lawless elements and armed insurgencies are reportedly able to obtain funding to support their activities from both legal and illegal forest operations.

IV. Opportunities exist to strengthen the governance of forest resources

The authors recommend that strategies to reverse forest degradation in Southeast Asia should enhance transparency (with equal access to information), build accountability (strong civil society participation and enforcement) and promote participatory decision making (with defined incentives) in the allocation and use of forests and forest lands. Strong civil society participation - media, religious groups and other concerned stakeholders - can increase public awareness and build the political will to reduce illegal logging and put in place progressive forest management policies. Strengthening judicial capability to prosecute and convict violators of forest laws is needed to provide a credible deterrent to illegal forest activities

Devolved co-management arrangements with local government units with well-defined responsibilities and authority are recommended to improve the governance of the region's economically, culturally and environmentally valuable forests.
Agbayani (2002) demonstrated that in the Philippines a proactive involvement of local government units under a co-management agreement between the national government and a provincial government can accelerate forest development, improve protection of natural forests from illegal cutting, reduce forest fires, and encourage natural forest regeneration. Local government support can also increase the establishment of small-scale tree plantations.

An analysis of 169 recommended exemplary forests in Asia-Pacific region revealed that the capacity of institutions to coordinate and collaborate with key stakeholders and become accountable is one of the key ingredients in producing exemplary forests (Rhee, 2002).

Another promising approach is to establish mechanisms for downstream water users to pay for upstream environmental services (ICRAF 2001).

Southeast Asian forests are rapidly disappearing. Immediate action is needed to address the root cause of continued deforestation - lack of accountability, transparency and participation - in order to ensure the region's forests can continue to generate important economic benefits and valuable environmental services.


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1 Office of Environmental Management, U.S. Agency for International Development, Asia. [email protected]

2 State capture refers to "the actions of individuals, groups, or firms both in public and private sectors to influence the formation of laws, regulations, decrees, and other government policies to their own advantage as a result of the illicit and non-transparent provision of pirvate benefits to public officials" (World Bank,,2000a).