15. Capturing Opportunities in Forest Harvesting and Processing to Benefit the Poor in Papua New Guinea

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15. Capturing Opportunities in Forest Harvesting and Processing to Benefit the Poor in Papua New Guinea



Papua New Guinea (PNG) comprises the eastern part of New Guinea island, the Bismarck Archipelago, the North Solomons and many smaller islands. Forests cover an estimated 67 % of the land area or 30,601,000 ha (FAO 2005). Much of this forest is inaccessible due to the mountainous nature of the terrain. Papua New Guinea is one of the world’s most important reservoirs of biodiversity, containing an estimated 7–8% of world species bio-diversity. There are 15-20,000 species of plants, 700 species of birds and 250 species of mammals within the country, of which many are endemic.

Economic and social indicators

In addition to this wealth of biodiversity, PNG is rich in other natural resources. Apart from the extensive tropical forests and maritime fisheries, there are significant mineral deposits including gold, copper, oil and natural gas. There are large areas of arable land which could be developed for agriculture and there is scope for an expanding tourism sector. The rugged terrain and high costs of developing infrastructure, however, have hampered natural resource exploitation, while ongoing political instability has undermined investor confidence.

By mid-2006, it is estimated that the population reached 5.85 million, but population density remains low at less than 11 people per square kilometer. Estimates of the adult literacy rate (those over 15 years of age who can read and write) range between 55% and 65%.

From the mid-1990s until the early years of the 21st century, PNG’s economic and social development levels were poor. Real GDP remained broadly unchanged from the early 1990s onwards. Activity in the private sector was virtually stagnant and social indicators were deteriorating. In 2003, real GDP per capita was US$ 650, and had been contracting for a decade. It is estimated that 40% of the population lived on less than US$ 2 a day, up from 25% in 1996. Formal employment had risen by only 1.5% since 1996. Those living in rural areas were poorer than urban dwellers in monetary terms, but rural people tend to be landowners and ample subsistence opportunities exist for the rural population.

Although most Papua New Guineans are landowners, the focus of international aid in Papua New Guinea has been the alleviation of poverty. The principal development partners are the Australian Government, the Asian Development Bank and the European Union. Within this context, the European Union has taken an interest in natural resource management, particularly in the context of rural development.

With an improvement in global commodity prices, the current outlook is brighter. Inflation is projected to remain at 1–2% annually. The government’s Medium Term Development Strategy harmonizes development priorities for 2005–10 with the Millennium Development Goals. The Medium Term Development Strategy seeks to:

Role of the forest sector

Forest industry plays a key role in the PNG economy, with timber comprising more than 95% of export sales. A majority of forest land is held through customary land tenure by local communities, informally considered to be the landowners. Under traditional management, there has been limited clearing of forested land. Papua New Guineans are diverse in culture with more than 800 separate tribal languages, but their relationship with the land is consistently strong.

The State has negotiated logging permits with customary landowners, allowing large foreign companies to exploit more than three million hectares of the total forest area. Under these agreements, customary land holders expect to receive cash royalty payments, and the communities expect to have roads, aid posts and other amenities built and staffed. In practice, these arrangements have not always worked out well. The gap between expectations and actual delivery has been wide. Logging operations are accused of practicing unsustainable, industrial logging that primarily exports round logs with limited benefits accruing to the communities. Figures are debated and recent numbers are not yet available, but deforestation rates have been estimated at 1.5% (approximately 450,000 ha) per year.

There is an increasing awareness of the damage occurring through unsustainable commercial logging, and communities are seeking alternatives over which they have more control. “Eco-Forestry”, as community-based forest management is known in PNG, is intended to present local communities with such an alternative. The objectives of Eco-Forestry are:

Eco-Forestry management practices allow communities to utilize their forest resources in a modest, sustainable manner to enhance their incomes and living standards, while ensuring that their forest resources continue to be available for future generations. Methods of utilization include cutting, milling and further processing of timber on a selective basis. Eco-Forestry may also include replanting of trees in depleted areas, collection of non-timber products, and development of ecotourism. The essential principles of Eco-Forestry activities are that they depend on local forest resources, they are sustainable, they improve local living standards and they are under the control of the local people.

Islands Region Environment and Community Development Program

The European Commission (EC) provided a significant boost to the practice of Eco-Forestry in PNG by supporting the Islands Region Environment and Community Development Programme (IRECDP), from 1995 onwards. When the IRECDP closed in 2001, it had achieved a number of important results. Thirty two communities had established small-scale saw-milling operations that brought significant benefits, including improved houses, newly constructed schools and other public buildings, and improved income from timber sales. Some communities invested part of the proceeds of their saw-milling enterprises into other productive activities within the communities. The program also promoted the Eco-Forestry movement among a number of non-government organizations within PNG.

However the IRECDP suffered from a number of weaknesses. First, the program was nominally under the administration of the Department of Environment and Conservation (DEC), which had very limited capacity for implementing or monitoring activities. Thus, there was no government framework within which the principles of Eco-Forestry could be learned, supported and replicated. Second, the program operated primarily in the islands and had little impact on the mainland, though later projects were established in Madang and Morobe. Third, certain aspects of the methodology turned out to be unsustainable.

This lack of sustainability can be attributed to the program, not the communities, retaining responsibility for the logistical arrangements of selling sawn timber, and delivery of fuel and spare parts. When IRECDP support faltered, the communities had not yet developed sufficient capacity to assume management of these aspects of their businesses. As a result, production levels declined rapidly after 2001.

The Eco-Forestry Program

The Eco-Forestry Program was intended to build upon the achievements of IRECDP. According to the financing agreement, the Eco-Forestry Program was expected to facilitate “a systematic introduction of Eco-Forestry in Papua New Guinea” at the national level, and at the local level it was to “improve the Eco-Forestry approach developed by the IRECDP.”

Like IRECDP, the Eco-Forestry Program was originally designed to be managed from Kimbe, West New Britain and to continue for five years. It included three components: the field and marketing components were both based at program headquarters, while a policy component was based in Port Moresby. Unlike IRECDP, the Eco-Forestry Program has been administered by the Forest Authority of PNG, with a total budget of Euro € 7.5 million (approximately US$ 10 million).

Purpose and overall objective of the Eco-Forestry Program

The stated purpose of the Eco-Forestry Program is to enhance the economic welfare of the people of PNG through community-based sustainable forest management. The program aims to enable landowners to benefit sustainably from their forest resource. The program outlines eleven procedures to ensure that resource management meets certain basic standards for sustainability of the forest resource. The program aims for the community to be able to use the benefits generated through forest management to develop other enterprise options. However the question arises on the sustainable management of forest resources by succeeding generations, as a 20 year cycle of harvesting is traditionally required.

According to project documentation, the Eco-Forestry Program and its predecessor, the IRECDP, have demonstrated that community-based forest management can enhance the welfare of communities in various ways. These include self sufficiency through the construction of aid posts, class rooms, and meeting halls as a result of income derived from community owned and milled timber. Income from the sale of timber has even been used to subsidize the health expenses of community members. Funds generated by the program activities have also been used to fund the development of income-generating agricultural enterprises, such as coffee, cocoa, vanilla and oil palm.

Project documents recognize that the sustainability of the above forest management programs remains inconclusive. Traditional forest management and utilization practices are, in theory, low impact. Harvest cycles are forty years or more. What typically happens is that as operations move further from the more accessible routes, the work involved in extracting timber becomes more labor-intensive and eventually ceases. By the time this happens, the communities have often attained reached most of their immediate objectives of becoming cash-crop producers, thus relying less on timber extraction. Consequently, the community feels less urgency to sell its forest resources, which are then better conserved and protected against exploitation by outsiders.

Results expected compared to actual experience

Below are the six expected results from the Eco-Forestry Program, with narrative on what the actual experience has been.

1. Relevant actors are aware of the ecological and productive potential of the forest resources.

Communities seem to have adopted the ecological standards of Eco-Forestry readily. Expectations of the productive potential of forests are high, but given the size of the resource available, the expectations can usually be met. In the projects undertaken by the Eco-Forestry Program, the sustainable production cycles actually exceeded the capacity of the community to exploit the resource.

It should be noted that the criteria and indicators for sustainable forest management are often not sufficiently monitored in large timber projects in PNG. There has been considerable work done on assessing the sustainable harvest cycles of PNG forests, but this knowledge has yet to be incorporated large-scale logging management schemes. The evidence suggests that PNG forests are not particularly productive, and that harvesting cycles should be longer, or harvest rates lower, than in the neighboring Indonesian forests of Borneo, for example. This issue has not been adequately addressed by the Eco-Forestry Programme to date, but it is generally perceived that the relatively low volumes removed under the Eco-Forestry Programme are in line with sustainability principles..

2. Development, testing and promotion of economically, environmentally and socially sustainable options for Eco-Forestry.

The program developed six Eco-Forestry options. Two of these, the Walindi and Multifor schemes, relate to the original objective of managing the natural forest. The other four, reforestation (REFOR), ecotourism, downstream processing and non-timber forest products (NTFP), were peripheral options that were addressed, but never developed or tested in a meaningful way.

The Walindi scheme has experienced problems with financial viability due to limited available resources, factors relating to the level of education and literacy of community members and difficulties resulting from cultural differences.

The Multifor scheme was developed to address some of the financial shortcomings of the Walindi scheme by increasing available forest area, thereby increasing the supply of timber which would then allow mechanical harvesting and extraction. The Eco-Forestry Program has implemented two Multifor projects. The first involves Ruti community in the Baiyer River Valley, Western Highlands Province. In this case, the community secured two semi-portable mills that were placed on site with the assistance of the program. They also acquired a D7 bulldozer, tractor, bench saw and a 250 KVA generator to power downstream processing operations. Training was conducted in both the field and classroom. A forest inventory was completed, and a Forest Management Plan was developed..

The second Multifor-based project is a cluster of Walindi-based projects in West Pomio, a remote area of East New Britain. Most of these projects were originally developed under IRECDP. The clustering strategy is an attempt to consolidate timber output to meet the requirements of export sales orders. In the past there were problems with the transport of timber to sales points. To address this, buffalo were introduced in 2005, which significantly improved transportation arrangements. Buffalo have since been introduced in other Walindi projects, and their use has been successful where the animals are used and cared for properly. This is a significant advance over previous technology, and a major achievement cited by the program.

On paper, the Walindi and Multifor schemes are financially viable, but this viability has not always been demonstrated in practice. However, the wider social and economic benefits experienced (service buildings constructed, clean water supplies built, long-term conservation, capital for alternative agriculture, etc.) are seen to far outweigh the marginal financial viability.

The other four options have not been developed by the program, but outsourced to other stakeholders. The development of ecotourism is a branch of the tourism sector. The forestry sector’s contribution is generally the management of natural forests and foresters often are not trained for tourism activity management. This aspect of the program was therefore outsourced to Maniho Na Dari, an NGO involved in the promotion of ecotourism in PNG.

The reforestation project, including establishment of nurseries, developed from trainings conducted on community nursery development in 2004, involving communities from the Highlands and Mamose regions of PNG. The medium- to long-term viability of this activity is still uncertain. There is a need to establish a stream of benefits to the community from this model before the planted trees mature, which is not expected for at least 15 years. Waiting for 15 years before any income can be realized is for the most part unsustainable at the community level. Present models which involve compensating the community to plant trees on their own land also have not been successful in the past. Carbon sequestration payments linked to reforestation provides a possible avenue for income generation and should be explored further by the government as a priority. If this is seen as a viable option, a key task is the establishment of institutional arrangements for benefit sharing.

Downstream processing is a good option for PNG, but not for community-based timber producers who do not possess adequate processing capacity. This should be developed at a medium-scale level (Multifor), where professional wood manufacturers have the capacity to produce high-quality certified timber products for export.

Using NTFPs for income generation is another option. Eagle wood and other forest products provide significant opportunities. These are currently being undertaken in specialized projects. The private sector could assist, especially if the opportunity for profitable returns exists. It should also be understood that there is the potential for over-exploitation of these products if production is not sustainably managed.

3. Standards for Eco-Forestry are further developed.

An Eco-Forestry policy for PNG was produced through a long participatory process. This was necessary, as the PNG Forest Policy and Forest Act developed in the early 1990s do not address the community management of forests. The Eco-Forestry policy has been approved by the National Forests Board, but not yet endorsed by the Minister of Forests for consideration by the National Parliament. Consequently, a code of practice has not yet been drawn up and institutional arrangements still need to be put into place. It is hoped that the Eco-Forestry policy will be enacted by parliament and then actively implemented.

4. Eco-Forestry integrated in the training programs of existing institutions.

The Eco-Forestry Program developed sawmill and chainsaw manuals to support training of project personnel in the field by field trainers. Some 455 people were trained as trainers. These field trainers are a significant resource who will be able to support projects on a commercial basis.

The Small Business Development Corporation (SBDC) has developed two training modules, including training manuals specifically targeting small-scale forest enterprises. A cadre of 17 certified trainers has been trained who can be hired for instruction. So far they have delivered nine courses. The marketing office has worked in conjunction with the Eco-Forestry Program business development officer to achieve this result, and it is cited as a major success of the program.

5. Landowners can market their products from Eco-Forestry.

There have been mixed results on this point. Landowners can now market their own products, but improvements could still be made to market products more efficiently. Due to the mixed objectives of the marketing component, landowners are confused over the costs of marketing and are far from competent in selling timber. Much energy goes into trying to maximize short-term profits, rather than developing sustainable long-term trade for the benefit of all involved. Trust between landowners is in short supply, and the Eco-Forestry Program’s role in this respect has been questionable.

There is a small group of overseas buyers who know the PNG market and will buy any certified timber produced of reasonable quality. Producers could sell as much timber as they produce, but they are currently not meeting even minimum quality standards, nor are they supplying finished products in sufficient quantities to develop a steady trade.

Other aspects of marketing have received more attention, such as promoting lesser-known species or developing newsletters to inform potential buyers. Unfortunately, based on results to date, it does not appear that these efforts are directly helping the producers. It also appears that these activities have been poorly targeted, with many project initiated but few completed or effectively followed through. This is at least partly due to the slow performance of the field component, which only started to produce timber in late 2004.

6. Community development activities supplementing Eco-Forestry projects are encouraged and supported.

Good progress has been made on supporting community-based forest businesses. Training modules have been developed, and this training could easily be mainstreamed through the use of business schools and certified trainers. The same approach is being developed with sawmill trainers. Trainers are already in the villages and various projects have led to partnerships with trainers who supervise production while taking a percentage of the profit as payment for ongoing training. Sustainable forest management is more difficult to teach and training in this has been less developed to date. This management knowledge needs to be incorporated into training modules and tested. Other areas requiring more training and capacity building are enterprise management and marketing techniques.

The communities themselves have ensured that their immediate needs have been met. Aid posts, classrooms, village halls and churches have been built. The secondary development of agricultural enterprises can also be seen as a positive result. Much remains to be done, but a base has been established from which a new institutional framework could be confidently established.

Summary of observations


Participation in Eco-Forestry projects engenders self-sufficiency and empowers communities by enabling them to derive benefits and services from their own forests as well as assuming responsibility for forest management. Indirect benefits of Eco-Forestry include aid posts, and classrooms, capital for agricultural investment and cash for supplies.

Eco-Forestry potentially offers rural communities a viable alternative to industrial logging. Eco-Forestry also meets the objectives of the government’s Medium Term Development Strategy and is strongly supported by various sections of government. However, there is also strong resistance within the forest industry and their proxies in government.

The Eco-Forestry Program has produced some good examples of activities that provide a stream of economic and social benefits to communities, especially in remote areas. On the other hand, while there is evidence that Eco-Forestry can be financially viable, further evidence and experience is needed to reaffirm this. The evidence from early projects is inconclusive, but suggests that the projects do deliver a stream of benefits to the communities and provide a viable alternative to industrial logging. There is also emerging evidence that Eco-Forestry activities are being used to build capital, to launch agricultural enterprises and to derive income from land clearing.

Challenges do remain, however. The Eco-Forestry Program has led to an Eco-Forestry policy, but not, as yet, a viable institutional framework. Furthermore, despite early successes, including a proliferation of good ideas and awareness-raising around Eco-Forestry products, the Eco-Forestry Program Marketing Component failed to successfully increase the capacity of the community to organize and manage the sale of timber at the community level.

The Eco-Forestry Program has been effective in developing capacity in communities and has probably played a key role in raising awareness of Eco-Forestry and the potential of Eco-Forestry in the country, although this process has not necessarily been efficient. Ongoing capacity building is needed.

The roles of various stakeholders beyond the program will remain important. The private sector will play a key role in the further development of community-based forest management. International buyers are already buying certified sawn timber from Eco-Forestry Program producer groups. They would buy many times what is presently available if supply and quality were more reliable. NGOs are already playing a significant role in Eco-Forestry development. They will continue to do so despite a precarious operating model and limited capacity. The European Union and other donors benefit from carbon sequestration and conservation derived from improved natural forest management and increased forest resource security, which Eco-Forestry provides to community-owned forests.

Community reforestation schemes show promise, but unless a steam of benefits can be generated immediately, they are unlikely to be supported by the communities themselves in the medium term. In particular, reforestation schemes funded under the carbon sequestration component of the Clean Development Mechanism of the Kyoto Protocol may provide a vehicle to mobilize income for reforestation schemes, increasing their viability.


FAO, 2005. Global Forest Resources Assessment 2005: Progress towards sustainable forest management, FAO Forestry Paper 147, FAO, Rome.

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