Forest charges are paid to the government for the rights to produce forest products from forest areas owned by the state or held by the state on behalf of the people. The way that these charges are set, assessed and collected is referred to as the forest revenue system. There are two main elements to forest revenue systems that have to be examined, the overall level of charges that are paid and the structure of the charges. The structure of charges is closely linked to the types of licences that are used to control production, so this report also examines the forest licensing system currently in place in Zambia.
The forest revenue system concerns more than just the collection of money
The way that the licensing and forest revenue system is designed can have a major impact on the way that the forest is managed. In particular, any appraisal of licences and the forest revenue system should consider the following issues:
Economic efficiency. Do the arrangements promote economic efficiency or do they distort the economy? Do they meet other economic objective of government or work against them? Is the administration of the system efficient (i.e. are the costs of collection reasonable compared with the amounts that are collected)?
Forestry policy. Do the licences and charges encourage sustainable forest management? Do they result in an equitable sharing of costs and benefits between all stakeholders? Will revenue-sharing work?
Institutional capacity. Can the licensing and revenue system be properly implemented given the resources available? Do all staff understand exactly what the licences and charges are for and how they should be assessed and collected. In the specific case of Zambia, another question that must be answered is: do the charges supply sufficient revenues for the Forestry Department to become self-financing and adequately fulfil its obligations?
Political acceptability. Are the charges fair and is the law related to charges and licenses applied evenly? Do the charging and licensing arrangements follow the principles of good governance (e.g. transparency and accountability)?
At the moment, a great deal of emphasis is placed solely on the collection of money from the forestry sector in Zambia. The current licensing and revenue system performs less well in some of the above areas.
The legal arrangements for licensing and forest charges
The current legal arrangements for licensing and charges are spread across a large collection of different documents, including: The 1999 Forests Act; Statutory Instruments; licence agreements; policy statements (e.g. the National Forestry Policy and the timber export regulations); and felling regulations. These documents present a confusing mixture of instructions about what sort of licence is required and what charges must be paid. For example, they contain references to the need for permission to enter forests, to cut trees, to produce products, to transport products and to operate equipment. There appear to be inconsistencies in some places between documents and within the same document. In other respects they do not give any guidance at all (e.g. the definition of "personal use" of forest products). Where implementation of the law is left to the interpretation of forest officers, there is the risk that the law will not be implemented as intended or will be implemented differently in different areas.
Currently, the licensing and charging system seems to try to distinguish between the following:
five different types of land ownership (National Forests; Local Forests; Joint Forest Management Areas; state/customary/open areas; and private land);
two different types of use (personal use and commercial use);
many different types of product (8 wood products – logs, poles, fuelwood and charcoal, each of these from indigenous or planted trees; several minor forest products; and services such as site fees); and
two different activities (production and conveyance).
It is extremely difficult to make all of these subtle distinctions with the very simple licensing arrangements currently in place and given the lack of supplementary guidance on how the law should be interpreted. For example, anyone wanting to produce or transport a forest product has to ask three questions:
Do I need a licence (and if so, how do I get one)?
What can I or can’t I do when I have my licence?
How much do I have to pay?
Some of these questions are not clearly answered and, where they are, the answers are spread across many different documents.
Are the licensing and charging arrangements efficient?
The efficiency of the current licensing and charging system could be improved in several ways:
Charges are too low, leading to waste and overutilisation of the forest resource.
The production and conveyance charges more or less duplicate each other and could be rolled into one volume-based charge.
The conditions attached to licenses restrict flexibility in the amount of production and restrict competition.
The export licensing requirements are successful at protecting the resource, but may be restricting the export of value-added wood products.
The current arrangements for monitoring production require the Forestry Department to perform functions that the forest concessionaire should be doing (and the Forestry Department should be checking rather than doing them themselves). Thus, the cost of these activities is higher than it should be.
The current emphasis on measuring volumes in the forest is a very expensive way of assessing revenues and there are lower cost alternatives that can still perform quite well.
Simpler charges could be designed to collect revenues from the large number of small producers, which would be cheaper to operate and still give an acceptable measure of control.
Do the licensing and charging arrangements support forestry policy?
The requirement to produce a plan of operations in a forest concession provides a basic level of support to sustainable forest management. However, outside these areas, only verbal guidance is given to producers. Currently, a great deal of emphasis seems to be placed on capturing illegal production and punishing offenders rather than finding solutions to problems. The high level of demand for wood products will not go away and the Forestry Department should try to resolve some of these problems. Joint Forest Management may help in this respect.
The current emphasis on volumes of production rather than the area of forests being used for production is leading to a gradual degradation of forest resources. This could be slowed down if more attention was paid to the production per hectare of forest. The forest revenue system could help if there was greater differentiation in the charges between species and licensees were charged, in part, on the basis of the area of forest that they are using.
To a certain extent, the Forestry Department is already sharing most of the benefits from forests with other stakeholders, through their inability to collect all of the charges due to them. This has interesting implications for the implementation of revenue sharing and Joint Forest Management. For example, under current laws, the largest share of the charges on charcoal production should be paid by producers. These producers are members of local communities so benefit sharing would, in a way, be asking them to tax themselves. This problem could be addressed by shifting the majority of the charge towards the conveyance charge.
Are the arrangements for licensing and forest charges acceptable from an institutional and political point of view?
The amount of revenues currently collected from forest charges is not sufficient for the Forestry Department to fulfil its mandate. However, the potential is there to collect sufficient charges and low-cost alternatives to some of the current arrangements could be found.
Staff of the Forestry Department do seem to be clear about the most of the technical aspects of licensing and charging. However, there appears to be some uncertainty in a few areas and the organisational culture of the Forestry Department seems to be more orientated towards command and control rather than problem solving with the participation of stakeholders. There also seems to be little incentive to take the initiative at lower levels of the organisation.
Suggestions for future development
Planning forest harvesting and awarding licences. The Forestry Department should develop an overall strategy for the identification of production forest areas, which will be managed as forest concessions on a sustainable yield basis. Such areas may be parts of larger contiguous blocks of forest or may be groups of smaller blocks. They may vary in size and may run across current boundaries for different land-uses. A process should be developed for awarding licenses that is open and transparent and encourages licensees to take a more long-term view of the development of the forest.
As part of the above process, areas should also be identified for short-term licences for pole, fuelwood and charcoal production. Where illegal production is discovered, efforts should be made to resolve the situation using such areas.
Charging by area. Once a concession area has been identified, it should be divided into felling coupes that are appropriate for the planned level of production. Forest concessionaires should be charged a fee based on the area of forest that they want to harvest (i.e. the coupe size). This should be set at a level that is roughly equal to half of the stumpage value of a minimum reasonable harvesting intensity (e.g. six trees per hectare). This charge should be collected in advance on a "pay as you go" basis.
For the production of other forest products using different types of licences, the Forestry Department should also introduce an element of area control and charging by area. For example, a casual licence to cut some fuelwood could be set as a charge per hectare based on an average stocking level. A kiln levy for charcoal production (over a fixed period of time) would be an effective way of collecting production charges for charcoal production.
Monitoring production and area use. The Forestry Department should switch emphasis from trying to measure and count every tree cut in the forest to checking that forest concessionaires stay within the felling coupes and use good harvesting techniques. Waste and felling damage found during inspections should be charged the volume-based charge (see below). Information about areas used and volumes produced from areas should be collected and kept in an information system that provides useful forest management information as well as serving the purpose of monitoring revenue collection.
Volume based charges. The current conveyance charge would become, in effect, the only volume based charge on production and should be adjusted appropriately. Logs and poles should be charged per cubic metre on the basis of the volume of wood coming out of the felling coupe. These volumes should be measured and recorded by the licensee and checked by the Forestry Department at agreed landings and extraction points. It should be stressed that licensees must not take roundwood out of the forest (or to the sawmill, if this is in the forest) before it has been marked and charges have been paid. High penalties should be used to enforce this. Conveyance of sawnwood products would no longer be charged.
For commercial charcoal production, a system of labelling would be more efficient to operate than the current system of conveyance licences and, probably, more effective at controlling production and revenue collection. A label should be designed that includes: the Forest District name; a serial number; and explicit instructions that the label has to be put on the bag of charcoal and remain there from as soon as it leaves the kiln site until it is finally sold in the market.
Types of licence. Eight types of licence might be used in the future:
Forest Concession Licence. A forest concession licence would be issued for five years for an area of forest of between 2,000 ha and 20,000 ha. This forest area should be fully stocked and may be made up of several separate contiguous areas managed together as one unit. The forest concession licence would replace the current Forest Licence (Commercial Sawmilling) and Forest Licence (Pitsawing). It would allow the concessionaire to cut timber logs from specified areas at specified times agreed between the licensee and the Forestry Department (i.e. to harvest felling coupes arranged so as to promote sustainable yield). It would also allow the licensee to cut poles as by products and operate one charcoal kiln for the processing of waste. An area-based fee would be paid under this licence, plus commitment fees and site fees.
Standing Sales Licence. Standing Sales Licences would operate in a similar way to the current casual licences. They would, however, also include a simple plan specifying the area of forest that will be used along with any other felling regulations or conditions that might apply to the felling area. Charges would be set competitively, with reserve prices equal to the charges fixed under other types of licence.
Charcoal Production Licence. A licence would be issued to permit the operation of a "standard sized" charcoal kiln for a specified period of time in a specified area (shown on a simple plan). This would specify the area of forest that should be used for this purpose and any other felling regulations or conditions that might apply to the operation of the kiln.
Fuelwood Production Licence. This would operate in the same way as a Charcoal Production Licence.
Non-Wood Forest Products Permit. A licence to collect NWFPs in National Forests and Local Forests and to use forests for other odd purposes (e.g. removal of top soil).
Conveyance Licence. The conveyance licence will operate as at present, as a relatively simple receipt that a volume charge has been paid. The hammer mark of the Forestry Department or an official label (in the case of charcoal production) will be the method of control and anyone found conveying products without these marks would be conveying products illegally. It should not be necessary to carry the conveyance licence as well.
Sawmilling and Pitsawing Licences. These licences will be used mainly as a means of collecting statistics about the ownership of production facilities, capacity and location. A nominal charge should be levied to acquire one of these licences each year.
When a licence is issued, the licensee should be given a complete set of all relevant rules, regulations and other instructions related to the operation of that licence. Clearer guidance should also be developed to assist Forestry Department staff to interpret the law consistently in areas such as the definition of personal use, the charging of products from forest plantations and marking and measuring conventions.
