Critical revenue scenario factors

The use of the term Extra Budgétaire is an arbitrary designation. For the purpose of this project it is deemed to simply mean sources of funding not currently identified or available to the Ministry. This could include:

revenues potentially (directly or indirectly) available from the sector but not currently produced

revenues that may be generated but not currently taxed or collected

revenues originating outside of the sector.

As stated earlier, forest land and environmental resources and services often can not produce the revenues needed to wholly finance their own management and development. This is especially so where the range of cost to society (as in the case of Morocco) include those related to:

"open access" resources consumption (e.g. free fuelwood and grazing)

non-marketed unpriced services (soil and water conservation)

excessive capital depreciation (degradation, loss of productivity).

The definition of extra budgétaire is effectively only defined by what government decides to allocate or not to allocate to the Ministry.

The sections that follow discuss approaches to increasing the efficiency and range of mechanisms for improving and maximising the rate of forest revenue from Morocco's forest land resources. It remains largely unquestionable that this challenge must be met and that failure to do so will lead increasingly to situations already verging upon the irreversible.

An accurate and farsighted justification for improving forestry financing is found in the Plan Directeur de Reboisement. This simple statement very accurately reflects the broad and inescapable objectives for forest management in Morocco. It is instructive to note that preventing the conditions that the PDR is attempting to reverse is far less costly than the actual reversal process.

The PDR goes on to suggest conditions necessary to achieve the above objectives. These same conditions (see text immediately below) are also directly applicable to achieving sustainable forest management and development which, itself, is a direct requirement for achieving sustainable forest productivity, sectoral stability and optimal revenues.

An equally noteworthy and valid verdict was presented in the Programme Forestier National, Phase 1, Situation du Secteur Problematique-Defis (ONFI, Agroforest, CIRAD Forêt, 1998) and is also repeated immediately below.

The significance of several factors related to forest sector funding is discussed in detail below. These fall broadly under the following headings:

renewing fiscal and administrative structures and mechanisms

capitalizing on new products and services

developing new partnerships and cost sharing arrangements

enacting new taxes

Unsustainable resource use, by definition, provides no scope for a sector to be self-sufficient. Funding for the management and development of a sector that is "living beyond its means" or "liquidating its capital" must be provided from sources external to the sector. The long-term goals of the Ministry should include imposing sustainable development principles upon the country's forest land resources.

Where administrative and transformation efficiencies can be improved, costs drop and yields increase. This can result in improvements to both the Ministry and the sector's expenditures and the sector's ability to generate revenues and contribute to its own financial self-sufficiency.

The premise for increasing MCEF funding through general budget allocations is a re-ordering of government spending priorities to reflect a greater recognition of the value of forest land and its resources (tangible and non-tangible) to Moroccan society.

By many measures, presented in this report and in several others that have been undertaken in recent years, there is a huge discrepancy between the value of the actual services and products Morocco's forest patrimoine provides to society and the funding available to maintain this natural capital. The consequences are; i) almost everywhere visible in the country, ii) have huge remedial costs associated with them, and iii) are increasing rapidly.

Budgets can be influenced by:

demonstrable social needs

pressure from interest groups (commercial, environmental, ideological, professional, etc.)

unplanned circumstances (natural or human disasters, war, etc.)

external influences such as changes in oil prices or other commodities, and

directly by political objectives.

Because budget funds are scarce (in limited supply) the consequence of attempting to re-order spending priorities is that considerable support from many avenues must be rallied to succeed.

From both public forest management and commercial perspectives, there are many justifications for increasing the Ministry's budget directly through General Budget allocations, including:

the inadequacy of current Ministry budgets to fund Ministry programmes

the inadequacy of current funding to manage other tasks imposed upon the Ministry for activities beyond its mandate

an inability to attract investments to the commercial forest sector - perhaps due to the instability resulting from the many unaddressed problems it faces

improving Ministry capacity to prevent and reverse the estimated 31,000 ha of annual forest land degradation

increasing potential revenue from currently non-productive forest land

inflation

There are, in fact, many other forest development related activities also worthy of increased funding including:

increasing product and market development activities into uniquely Moroccan forest resources (e.g. Argania spinoza, liège, alfatière)

creating eco-tourism pilot projects highlighting Morocco's high localised rate of endemism

incorporating the outputs of successful external donor projects into mainstream forest management programmes.

For the MCEF resource valuation consists principally of calculating adjudication (auction) reserve prices - though this should not be assumed to be a simple task. Such calculations form the bases of Ministry auctions of state forest resources - and directly influence state revenues.

Accuracy in resource valuation depends upon using representative market prices when calculating a range of microeconomic and macroeconomic variables - such as operator profit levels, payments to fixed capital, incomes, and government tax revenues. Because of the influence of government interventions forest products prices and product flows in Morocco represent an "imperfect" market and do not reflect the outcomes of conventional efficient freely competitive open market transactions.

Government's interventions include implicit and explicit subsidies through inadequately integrated taxation policies (import and export taxes) and direct allocation of forest resources. (e.g. eucalyptus roundwood for pulp production and fuelwood to rural populations). For example, because of concessionary allocations to the only cellulose plant in the country, eucalyptus roundwood prices should not be considered realistic "market" prices. Similarly, because "informal" fuelwood harvests are "gratis" and equal to 3 to 4 times what is legitimately harvested" - fuelwood roundwood prices cannot provide an accurate assessment of this products value.

The outcome for the Ministry is that it must use "shadow" prices to more accurately establish resource values. Accurate shadow pricing can also influence the distribution of the resource (economic) rentes upon their conversion to incomes, capital expenditures and profits. For instance, any calculations involving the input price of the subsidised eucalyptus roundwood used in pulp production should use the price that would prevail without the subsidy.

Reserve prices constitute a key component of the Ministry's "administratively" determined value of the roundwood it sells at auctions (adjudication). Exploiters' operating costs form the basis of "reserve price" calculations. Where such input prices change frequently, valuation calculations should be updated accordingly.

To be consistent with the principle upon which the Ministry calculates "reserve prices" it should further introduce a mechanism to ensure that, on a regular basis (at least quarterly or trimestriellement) the level of forestry fees paid by the buyer is recalculated and adjusted accordingly to reflect changes in operators "input costs" and in "end product selling prices". The frequency of recalculation should reflect the frequency with which the prices under consideration change and the magnitude of such changes.

Forest land productivity of sustainable consumption levels for roundwood, grazing, water conservation, etc., can be increased by a wide range of measures including:

selection of superior planting stock for reforestation

effective disease, pest, and fire protection programmes

replacing non-commercial forest with commercial species

improved and broadened silviculture programmes and prescriptions

fertilising in plantations and appropriate natural stands

banning livestock grazing in newly established stands

curtailing and/or banning ploughing and introducing low tillage methods

curtailing or banning livestock grazing in all stands

establishing fuelwood plantations to reduce/eliminate pressure on other forests

introducing alternate fuels

introducing alternate improved stoves requiring less fuelwood

using alternate farming systems (agroforestry, sylvo-pastoral, etc.)

increasing the existing value of forest raw material to promote their protection until mature

improving water management programmes (storage and distribution structures, co-operative organisation, water schedules, "drip" and other irrigation techniques)

broadening anti-desertification programmes

improving the exclusivity (ownership) of user rights

effective overall enforcement of laws (policing, penalties, detention)

Productivity can also be increased by "commercialising" tree species and other forest products for which markets may be developed (but may not now exist). Private sector interest is already evident for some less conventional forest resources (e.g. aromatic/ medicinal plants, arganier and alfatières) and warrants efforts to fully examine their potential.

Studies have shown that few of the species growing in Morocco have annual incremental growth rates equal to their full potential. In fact, it has been pointed out that, though the PDR projections for plantation volumes are based upon an average annual growth rate of 5m³/an, actual growth rates - in the most intensively managed forest crops in the country - are 1m³/ha (1/5^th of their potential).

Similarly, studies have estimated the potential unité fourrages to be around 1,500 million annually. Current consumption is estimated to be around 600 million - though at the level of intensity that grazing is currently practised, this is not sustainable.

The potential significance of increased forest productivity upon revenue stems directly from the increase volume of sales that may arise and from the reduced costs of rehabilitation costs resulting from current levels of degradation.

Besides the removal and transport of the commercial logs (grumes) - roundwood harvests in Morocco are generally associated with the complete removal of virtually all combustible or consumable (fodder) biomass. In those instances where this may not be the case, penalties should be applied (as in many countries) for what are described as "avoidable harvesting wastes".

Penalties would apply to, i) waste volumes that have been felled < I>(abbatagé) but not harvested (recolté), and ii) volumes that have been used for road, bridge, or other operations structures prior to the payment of forestry fees. The level of the prescribed penalties in some jurisdictions is equal to three times the normal forestry fees (auction selling price) payable for that particular product.

Because already existing high levels of recovery, realistically it is not likely there is much scope for increasing that rate in Morocco.

The transformation units in the forest sector in Morocco have been unflatteringly described in previous reports as vétuste, undercapitalised, using poorly trained personnel and suffering from poor management. Sawmills have low yields and produce high volumes of low valued waste and residues - an unfortunate circumstance as taxes attributable to the transformation sector are directly proportional to its yield and the value of those outputs.

The same raw material supply - used by a modern mill - could in some cases achieve twice the output. The maximum recovery rate realised in Morocco is for sawmills cutting cedre - which sometimes reaches 45% for exceptionally large logs.

As stated earlier, however, investments in modern transformation technologies (sawmills, fibreboard, etc.) will be predicated upon the creation of a credibly stable and well managed forest resources and commercial sector.

There is scope in Morocco to increase forest revenues by penalising sawmills and other transformation facilities for using wood material in a process that does not maximise its value. A strategy can be applied to ensure that all wood raw materials are directed to transformation facilities that transform them into their highest potential value-added. Under such a regime, using a roundwood log (grume) of sawnwood quality for construction poles (perches) instead would attract a penalty, as also would using a pole quality log for fuelwood. Penalties applied in such cases could consist of: i) a cost component to recover the value-added tax that would have otherwise been payable on the higher valued product and, ii) a punitive component adequately high enough to discourage wasteful practices.

The scope for collecting taxes that are payable - but not currently paid - seems small, though the amounts that remain uncollected are not trivial. The principal reasons for uncollected taxes are:

low or subsistence level incomes

deliberate evasion of payment

insufficient tax collection facilities and personnel

low probability of being caught - if not paying taxes

low probability of receiving penalties - if caught

The short-term to medium-term opportunities for increasing the collection of unpaid taxes are few. A number of conditions would have to be met that can only be effectively put in place over a medium-term to long-term period.

There is, admittedly, a point at which the cost of employing more tax collectors (percepteurs) exceeds the additional revenue they collect.

A dramatic example of uncollected revenue is associated with about ¾ of the 10,000,000 m³ bois de feu that is collected in Morocco which World Bank estimates even 10 years ago suggested having a value of 1.5 milliard dirham - at that time equal to ¾ of the official PIB of the forest sector. A recent report (in an analysis of the economic efficiencies of alternate energy sources) gave a fuelwood selling price of 0.40 DH/kg to 0.60 DH/kg - which translates into 250 DH/m³ to 400 DH/m³. The impact of collecting even a 1% tax on these 7,500,000 m³ of "direct" harvests by rural populations is roughly 19 to 30 million dirhams. Aside from revenue objectives, the application of a tax on the direct harvest may also be used to manipulate the rate of harvest - which is currently equal to 3 to 4 times the possibilité realisée and is clearly unsustainable.

An second equally dramatic example of uncollected revenue is attributable to the 1,500,000,000 unités fourragéres - equivalent to 15,000,000 quintaux d'orge/an (1.5 million tonnes of barley annually). At a price of 2 dirham/kg), the value of these UF is equal to 3 milliard dirham annually! Here again, a 1% tax would generate 30 million dirham annually! And, as with the fuelwood tax, there is a further opportunity to modify grazing behaviour through taxation rates.

Thirdly, estimates of annual forest land conversion to agriculture (defrichement) range up to 31,000 ha annually! There can be very little justification for not applying at least a minimal (if not more) land rent or production tax to the use of this land. More importantly perhaps, to control unwanted or unmanaged land conversions, such a tax (or penalties) may necessarily be at a higher level to curtail this practice. Defrichement has severe negative consequences and may eventually become (if not already) even more excessive and irreversible.

There are a number of other products harvested from forest land, principally by rural populations, also not subject to user fees or some form of tax (value-added, etc.). These as well may be subject to review to determine the level of taxation they may be subject to. If not already enacted, the general value-added taxation strategy of the state can also be applied to the secondary and further value-added products originating from forest land resources.

A discussion on the policy of communities retaining forest selling price receipts was initiated in Section 2.1.2 of this report - which demonstrated the rational for a single agency being responsible for all state revenue collection and discouraged all other practices.

Further arguments against communal retention of state forest revenues are based primarily upon the inescapably irrational (and perhaps absurd) cost/benefit ratio of communal forest resource use.

If a balance were compiled of the benefits and cost of the communes' use of forest resources it would appear as below:

Admittedly, the figures are rough estimates, and do not account for Morocco’s overall social benefits regime - there is however, no argument as to the order of magnitudes involved.

The analysis in Table 5.1.8.1 above may be compared with a similar exercise prepared for the "Stratégie nationale pour la protection de l'environnement et le développement durable (1995)" conservatively calculates the forestry and environmental degradation cost to society.

The claim is made that some of the benefits that arise from rural communes' activities actually benefit the rest of Moroccan society through the provision of meat, wood products and other non-wood forest products. This, then, justifies treating the communal operators that provide such goods. Certainly, no other commercial sector in Morocco received a level of "subsidies" measured in the milliards of dirham.

Others claim that taxes and forestry fees can not be applied to communes because of their subsistence incomes, etc. - which to some extent is undeniable. Again, it is inconceivable that if urban populations were facing a similar level of subsistence that Moroccan society would tolerate a similar scale of disregard for social and economic equity and environmental principles.

The signals that are being sent to rural commune populations in respect of their use of forest resources effectively constitute an approval of their unqualified treatment as an "open access" resource.

Regardless of the overall intent of government in enacting the 1976 dahir, its implementation for over twenty years can only suggest to communes that they are not responsible for their actions in respect of the damage they cause or the costs they impose on the rest of Moroccan society.

Current practices - in regard to the government’s treatment of rural communes and in regard to the commune's treatment of forest land and other resources - are demonstrably inconsistent with the development of self reliance, and the development of economically and environmentally sustainable resource use. Rational governance demands that this situation be changed - perhaps commencing with the repeal of relevant articles of the 1976 dahir.

Import and export taxes can be used to protect domestic producers and consumers. (The general principles are commonly understood and will not be discussed here.) A rational application of border (import and export) taxes can be effectively used to support the establishment of a competitive industry. However, if used imprudently, such taxes actually constitute an incentive for the continued operation of inefficient operators who - because of the price protection provided by the border taxes - will make profits anyway. The complexion of Morocco's forest sector is the predictable outcome of such taxation practices - and is featured by under capitalisation, outdated, dilapidated transformations plants with low product volume yields, low quality products, and improbable prospects for improvement.

The communal forest revenue retention scheme has been discussed in detail in a previous section. This report suggests that it is timely to revisit the legislation, and certainly the rationale (irrationality) surrounding this practice. The untenable dimensions of this scheme suggest that it seeks its justification upon principles outside of rigorous logical debate.

Admittedly, the relative state of economic development of rural populations is not in question. It is far lower than that of urban areas and has fewer opportunities for rapid advancement. There is a justification for exceptional treatment to address these circumstances.

There is, nonetheless, also a justification for addressing rural development within the context of the Ministry's objectives for the preservation, management and restoration of a wide range of forest land benefits for all Moroccans.

Substantial benefits are to be gained by depositing forest auction receipts directly to MCEF accounts to be managed in the scope of its overall plan for the development of forest land and rural populations. It can certainly be argued that both the level and efficiency of planning and implementation of forest management activities on rural commune lands would increase very significantly - if they were included in MCEF programmes. Currently 92% of the forest revenues retained by communes is not currently directed to forestry activities - even though:

communal harvesting and grazing practices contribute directly and dramatically to forest degradation through, principally, fuelwood harvesting (bois de feu), land conversion (defrichement) and, grazing (l'élevage)

communal planning demonstrably does not provide for the proper management of forest land resources; (levels of communal investment in forest capital are less than 40% of what is legislatively required), and

communal populations demonstrably benefit most directly from forest land resources; (rural populations consume 1.5 milliard UF annually, 10,000,000 m³ of fuelwood annually as well as a large number of other fruit, construction, and medicinal and aromatic products).

It is undeniable that some of the responsibilities currently assigned to the MCEF cover environmental, agricultural, and developmental (e.g. communal) issues as they relate to forest management. This multi-disciplined structure facilitates developing integrated approaches to what are multi-dimensioned and complex resource management issues. In a similar fashion other ministries cover forestry issues as they relate to hydro-electric dams, irrigation, rangeland and grazing, anti-desertification, parks and recreation, and biodiversity conservation (floral and faunal).

If funding inadequacies limit the MCEF's ability to adequately manage and implement peripheral resource management programmes components (e.g. environmental, agricultural, or development) there may be a logic to assigning certain responsibilities for these component s to other ministries.

Morocco has a questionably large number of Ministères and Ministères Délégué Chargé. Parliamentary reform is a familiar topic and has advanced rapidly in Morocco in recent years. There are potential benefits to continuing this process to reduce the current fragmentation of natural resource management responsibilities by consolidating them under fewer portfolios. Consolidation also provides an opportunity to maximise planning, management, implementation, monitoring efficiencies and reduce costs in a number of areas.

More specifically, a similar rationale could be applied to removing from the Ministry the responsibility for a number of forest management responsibilities on communal forest. Communal receipts from forest products sales do not differ much from the MCEF budget - which has to be applied to the management all of Morocco's forest lands - 9,000,000 hectares.

It is not unrealistic to envisage the MCEF with a much broadened mandate and an appropriately much larger budget. This would result from the consolidation within a single ministry of all state programmes and activities related in any way to forest resource management and development. Table 5.1.12.1 shows Ministries that have some responsibilities for activities that, in reality, are essentially forest land management activities.

A negative aspect of having so many forestry related responsibilities and activities scattered amongst such a large number of agencies is the inevitable inefficiencies and stalled progress that result from:

a fragmented and uncoordinated approach to the management of all of Morocco's forest land, forest resources and forest environmental services

uncoordinated financial planning resulting in an inability to actually identify the most cost effective approaches, let alone implement them

a potential crisis regarding the governments management "credibility" in the view of its own public service, its citizens, the private sector and prospective international investors (donor and private sector)

inability to effectively monitor and audit the performance of Morocco's forest land, forest resources and its forest environmental services

ministries assuming responsibilities for which they do not have enough (if any) adequately trained forestry personnel

duplication of administrative services, infrastructure

overlapping jurisdictions, planning, programmes, and activities

an inability of the MCEF to identify and implement "best practices" in forest management throughout the country.

Responsibilities for most forestry related activities - regardless of their intent - should be delegated to the MCEF. Admittedly, there are non-forestry government agencies that have legitimate claims to make in respect of the direct and indirect impact of forestry issues on their broader non-forestry responsibilities. There are many mechanisms that could be instigated to ensure for them an "appropriate" level of participation and influence, including:

steering committees

interministerial advisory panels

professional/technical committees.

The MCEF should be broadened to absorb all other ministries' forestry roles and to then represent the single identifiable Ministry serving all of government's forest interests. Ultimately, government agencies currently attempting to "manage" forestry issues, in respect of their other "primary responsibilities", will be better served by a properly funded comprehensive MCEF than through their own imperfect efforts.

Forest resources constitute an asset base or "capital" from which revenues can be earned. Those earnings depend upon value-added (wages, payments to capital, and profits and "rentes") realised upon the resource's conversion through various transformation processes. Contributions to overall sectoral self-sufficiency are increased wherever new product and markets can be developed - and therefore have a direct impact upon Ministry financing requirements.

The range of topics that could potentially be discussed under this heading is extensive and should, of themselves, form the basis of a study - as, indeed, some of them already have or are under investigation. The following discussion addressed some key principals.

A large number of wood products are essentially sold as "commodities". As with other commodities (e.g. oil, cotton, coffee, copper), the ability to compete is basically only dependent upon being able to meet internationally accepted standards for product quality and delivery. Prices fluctuate with market forces but are primarily determined by the sales of the largest volume producers who generally have the lowest production costs and, therefore, the best prices (unless a workable "cartel" is in place).

For any "commodity-like" forest product that Morocco intends to produce, it must recognise that there are at least two important consequences of not being able to match international standards, namely;

sellers will be forced to "discount" their export selling prices - to the extent that their products do not meet international standards

higher quality imports of the "same" product may become available in Morocco at below the domestic cost of production.

The ultimate consequence, of course, is that value-added (wages, payments to capital, and profits and rentes) are less than what they could be.

Value-added can be affected by any factor that impedes (directly or indirectly) maximising productivity or efficiency or the equitable distribution of economic rents. This can cover a very wide range of issues, including:

Resource valuation (appraisal methodology)

Resource information management systems

Inventory (sampling plots and strategies, field measurements, growth & yield modelling and research)

Silviculture (species selection, planting spacing, thinning)

Harvesting (rotation age, volume recovery, removal strategy)

Tenure (stumpage, allowable costs, profit margins, risk allowances)

Processing (unprocessed log exports, lumber recovery, residue markets, product and market development, capital efficiency )

Governance (laws, regulations, practices, procedures, enforcement, sanctions).

Each of the above can affect the quality of decisions made to optimise forest sector productivity and efficiency - and, ultimately, governments revenue from the relevant forest sector activities.

In sharp contrast to "commodity" markets are the markets for "niche" wood products. Success in these markets is dependent upon a very different range of producer and product issues, usually including

developing a highly specialised production capability

placing a very high priority upon "service" to the client

meeting each buyer's own product quality specifications

staying current with modern production technologies

anticipating market trends and developing products accordingly

An example of a potential for developing "niche" markets is seen in Morocco's own cèdre sector. Morocco's own perception of cèdre as a highly valued species is seen in other countries as well. International niche markets exist for clear high grade fine grained sawnwood and products of cedre, particularly in Asian (probably most noticeable in Japan). Low grade sawnwood of cèdre-like species from North America have reasonably well established export markets which could also be served by Moroccan cèdre.

In cedar markets the unmet demand for the higher grade products translates into export selling prices routinely higher than can be realised domestically. Unfortunately, Morocco's cèdre sector suffers from a number of inadequacies, principally low productivity, poor quality products and dilapidated sawmills. In 1997 the unrealised potential in the cèdre sector was manifest by; i) over half of the raw material available at auctions remaining unsold, ii) less than half of the raw material purchased at auctions being exploited, and iii) half (43) of the cèdre sawmills provisionally or permanently ceased activities.

The current state of Morocco's wood products sector is unflatteringly dismal. As a direct consequence, the resource is being under-utilised and wasted and potential value-added and revenues are being lost. It is undeniable that many existing government policies (forestry and non-forestry) have largely influences this outcome. Addressing these, and other relevant structural and institutional items discussed elsewhere in this report, is necessary to improve the production and revenue performance for this sector.

The use of "Alfa" as a raw material for pulp production is already being examined and should be vigorously pursued. Morocco should examine innovative land tenure and stakeholder participation mechanism to maximise the benefits to the entrepreneur, local job-seekers, and to value-added, and state revenues. A detailed benefit-cost analysis will determine the overall economic sustainability of such a venture.

Because of the large land areas involved, the context in which the development of alfatière is undertaken includes short-term and long-term impacts. If such lands are, in any event, considered available for development, the alfatière proposals should be compared to the current disposition and status of such lands and also to other potential development activities (e.g. feed lots, fodder production, etc.)

The Ministry's recognition of the importance of the country's cork oaks resulted in a return to a more direct involvement by the Service de la Valorisation de Produits Forestière. This measure was taken to prevent further loss of quality and value of cork production under more private sector control. Morocco's own cork oak forest stands are comprised of about 350,000 hectares and constitute an asset that warrants a high level of protection and development consideration.

Though they have been reasonably stable in past years, currently cork markets are experiencing relatively vigorous growth. Demand is expected to continue, and prices are expected to increase, due to trends to increased wine consumption and due to productivity issued in other traditional cork production areas.

The full scope for further manufacturing of cork into end-products should be examined to maximise local value added.

As an export product, derivatives of arganier are attractive because of their potentially relatively high price/volume or price/weight ratio. The oil of arganier is used by such companies as Colgate Palmolive, Galenic and Yves Rocher in cosmetic products. The exclusiveness of arganier attributes to it a cachet that can translate into its commercialisation into similarly exclusive and expensive end products.

Arganier spinoza occupies about 830,000 hectares within a very limited distribution in Morocco. Its presence is exclusive to Morocco - except for some minor representation in islands off of its coast. This endemic species is long lived and can exceed 300 years in age. The species features a unique sylvo-agro-pastoral character providing fruits, nuts, oil, fodder and fuelwood.

The further development of arganier will require a close level of direct co-operation with an end user. One reference indicated an annual oil production of 128,000 tonnes. The silviculture of arganier is well understood and the potential for establishing plantations may exist. An existing GTZ project already serves to heighten the value of arganier oil in the export market, and a steady supply of increased volume is likely to stimulate further development.

The total export of non-wood forest products for the middle of this decade has been described as "not negligible" and in 1994 reached 315,000,000 dirham. Non-wood products include carob (seeds, flour and pulp), myrtle, essential oils and other aromatic and medicinal compounds. Examples of annual production of such products are seen in Table 5.2.5.1 following.

Internationally, "biodiversity prospecting" has broadened the perception that geographic areas with high rates of endemism may be sources of pharmaceutically important chemicals. As with all "prospecting" activities, target countries that become the "hosts" of such prospecting must carefully monitor such activities. Similarly, because of the international treatment of "intellectual property" it is also critical that countries retain an effective control over the benefits that can arise from the development of such compounds.

Consistent with principles of biogeography, Morocco's endemism is attributed to its "isolation" from surrounding areas by, the Mediterranean sea (to the north), the Sahara desert (to the south), the Atlantic Ocean (to the west) and the Atlas mountain chains, some of which exceed 4,000 metres in elevation, (to the east). This broad juxtaposition of climatic influences also imparts to Morocco an exceptional range of biogeoclimatic zones - including, Saharan, arid, semi-arid, subhumid and montane. The range of endemism in floral and faunal species is seen in Table 5.2.5.2 below.

Morocco does face considerable threats to many of its species. Of its plant species, 1600 taxa are threatened and amongst mammals and birds, 19 species may no longer exist. Programmes to reintroduce, or eliminate the threats of extinction, are in place for le Cerf de Berbérie (Cervus elaphus barbarus), la gazelle Dama, l'antilope Addax (Addax nasomaculatus), and l’Oryx alagazelle. These are clearly representatives of "charismatic" species (c.f. Panda bear, Golden Lion Tamarin and Siberian Tiger) which attract considerable international attention and funding assistance.

Overall, Morocco's endemic floral species warrant further research to establish their full commercial potential. The development of their derivative products should not be realised solely through their export and further transformation in foreign production facilities.

The full potential of the country's own skills and technologies in medicinal, aromatic and other products should be examined for opportunities to increase the level of domestic processing and of value-added - for both local and export consumption. Partnership arrangements (with due regard for the protection to Morocco's "intellectual property") may be useful in both the short and long term.

Its rich culture, its history and, generally, its mostly favourable climate, has earned Morocco an international reputation as a tourist destination. The country attracts more than 2,000,000 foreign tourist annually and an additional 1,000,000 expatriates.

Unlike for many other countries for which "ecotourism", for instance, is suggested, it is very realistic to suggest that there is room to further develop its potential here. However, because of ongoing degradation, and threats to species extinction, (as discussed in the previous section) it is more important to recognise that the reputation that Morocco now enjoys may be wane. [It is illustrative to note that Majorca, once acclaimed as an incomparable tourist destination, has suffered significant decline in past years in large part because of a degradation of its environmental amenities.]

Morocco's traditions, legislation and development strategies appear to capture the notion of a national solidarity towards social development. This concept has been referred to in earlier reports in their sections dealing with socio-economic issues. Prevailing circumstances now warrant that this concept is revisited and that socio-political priorities be reordered to more equitably and effectively distribute the costs and benefits arising from Morocco's forest land and environmental resources.

Rural populations and community groups that are not deliberately made part of the solution to forestry problems will remain very much part of the problem instead - a problem that this report has done much to deliberately emphasis. Rural participation is necessary:

to recruit local, cost effective, management and field workers

to promote local "ownership" and "commitment" to sustainable results

to change land use patterns to eliminate degradation, etc.

to justify local investment in forest land productivity and development

There are limits to the pace of adjustment that rural populations are capable of.

These limits will relate, in part, to government's ability to:

provide an alternative to fuelwood consumption through electrification, or other energy sources.

provide alternatives to grazing (e.g. stall feeding of livestock, forage crops, alternate species, etc.)

demonstrate a social solidarity - including cost-sharing through taxation - amongst both urban and rural populations in combating forest degradation practices and their many consequences

demonstrate an effective co-ordinated approach to the management of all forest land and its environmental services

provided programmes - including training, extension and access to credits - to develop alternate employment and income generating opportunities

Without very significant changes, rural populations, through their unsustainable and destructive activities, will undoubtedly continue to contribute an enormous "net costs" to MCEF budgets. They simply must be very meaningfully and effectively fully integrated into the Ministry's activities to bring such changes about.

Urban populations are "users" of forest land resources in that they consume:

potable water from "bassins versants"

electrical energy generated from water captured as "stockage"

wood products for industrial, construction, and "menuiserie" purposes

11% of the countries fuelwood

domestic and "game" meat, and a wide range of other produit non-ligneux

as well as the benefits that derive from recreation and leisure experiences. All of Morocco's citizens also benefit from the mere "existence" value of the forests within its territory, the provision of habitat for its wildlife, and its capacity as a "sink" for the purposes of carbon sequestration.

Significantly, from a financial perspective, many of these services are not "traded" in a market place and are generally available to all for "free". The actual selling prices of those that are "purchased" almost all fail to "internalise" the social costs resulting from their consumption.

The extent of the private forest sector's ability to contribute to domestic forest revenues is only related to how commercially successful they themselves become. In other sections of this report many issues have been discussed which relate directly to the potential for attracting private sector investments. Morocco's should develop a private sector development model unique to its own circumstances.

The national forestry advisory council, and provincial and communal councils should be invited by the MCEF to participate in a "round table" process to identify their respective needs and how to integrate them into a workable model for private sector participation. Critical issues on the agenda for such a dialogue include:

increased Ministry investment in reforestation and resource development

tenure/concession reform and "security" of timber supply

comprehensive resource inventory, valuation and development planning

"normal profit" selling price mechanism

taxation rationalisation

communal participation in sustainable resource use

"internalising" society's user costs through "environmental taxation".

International investors should, as much as is practical, be given opportunities equal to those of domestic investors - that is, the opportunity for "normal profits". In the case of international investors this translates into, either reducing the perception of "risk" involved in investing in Morocco's forest sector, or conceding an appropriate "risk premium" (likely in excess of the risk premium for domestic investors).

A comprehensive analysis of the benefits to Morocco of attracting international "know-how" to its forest sector may reveal that long term benefits may warrant further incentives to attract international investors. The potential positive impact upon the sector and the country ( in terms of fixed capital, employment generated, taxation base) may justify consideration of an appropriately limited period during which international investors are also potentially eligible for:

remission/ reduction of profit/ income taxes

remission/ reduction of import duties

However, these and other potential measures should be very prudently used. They should be negotiated on clear and largely irrevocable terms to avoid subsequent non-performance by either party. They should be withdrawn at staged intervals to ensure that clear and timely signals are provided to demonstrate compliance. And they should be largely consistent in all other respects with the conditions under which the domestic private sector must operate.

A number of international "official aid" donors have demonstrated preparedness in the past to assist Morocco with favourable loans appropriate to its circumstances. However, there are indications that some donors consider Morocco to belong the "graduate" class of recipients - reducing, if not eliminating, the "favourableness" of loan parameters (interest rate, duration, conditionally). It is decidedly premature to limit such options for Morocco.

Morocco's goals with respect to external donors should be to maximise the visibility of those areas in which international donors are prepared to participate and to maximise the efficiency with which it deploys the loans and grants it eventually does receive.

Donors are particularly keen on being able to demonstrate an acceptable level of benefits to recipients through the provision of the donor's funding. Where Morocco can create the circumstances for "synergistic" effects and cross-sectoral benefits amongst participants, donor funding will demonstrate higher social or economic "returns" than where this is not the case. Obviously, from a Ministry perspective, overall resource management costs and performance are also optimised where this can be achieved.

Introducing new forest sector taxes will be most successful when:

productivity increases (biological, harvesting and transformation) referred to in the above section lead to a higher volume of higher valued outputs than is now the case

overall increases in sectoral value-added leads to higher "economic rents" being realised from forest resources

state forest sector taxation has been rationalised and made more socially and economically equitable

forest land resource management responsibilities are more directly managed, or at least under the overall review of a single ministry; [parts are now fragmented and, effectively, delegated to diverse ministries]

authority / legislation relevant to all aspects of forest land management and use is seen by the public to actually be more effective in terms of policing and sanctions [estimates of forest related offences (delits) reach 26 000 annually].

Until such time as some of the above issues are addressed, the overall level of economic rents capable of being captured as taxes remains low or will simply evade collection.

Aside from collecting taxes "payable" (but "unpaid") there exists also the option of creating new non-forestry user fees and taxes. The principles upon which new taxes are based should include the same consideration of social and economic equity discussed elsewhere in this report. For example, items 3 and 5, listed above, are generally applicable across other commercial sectors to improve potential taxation revenues.

The concept of non-forestry taxes is already under discussion in Morocco and candidate targets for new taxes already fall into the broad categories of:

water taxes (either for water consumed or for water disposal)

environmental taxes

energy taxes (fuelwood, electrical,

forest capital depreciation taxes

pollution taxes (e.g. vehicle pollution tax based upon engine size and vehicle weight )

How a tax is actually "named" may have a direct bearing on, i) how it is perceived by the public, ii) how it might change behaviour patterns, and iii) the resistance to pay the tax.

A public awareness and taxation programme to combat the severe consequences of "forest degradation" could similarly be launched under the heading of "environmental degradation". Survey and "focus group" techniques can be used to establish such responses and maximise programme effectiveness.