1031-C5
E.J. Brennan, CJ Rushin-Bell, B. Acharya and E. Stoner 1
The United States Agency for International Development (USAID) recently presented a new development assistance model: to change the way USAID implements its foreign assistance mandate through partnering with the private sector. The Agency's work within the forestry sector involves efforts to encourage forest industries operating in developing countries to capitalize on emerging markets such as those associated with responsibly harvested forest products and environmental services. The development challenge facing USAID is to facilitate local industry and community participation in, and benefits from, these expanding market opportunities. This paper presents an overview of three new forest programs currently funded by USAID to illustrate the new development model.
The United States Agency for International Development's (USAID) forest conservation and management program can be described as occurring in three phases: the first phase, dating back to the 1970's, focused on supporting governments in developing countries to promote fuel-wood plantations, multi-purpose tree planting, on-farm tree planting, and various forms of social forestry. By the mid-1980s, in response to large-scale deforestation and loss of biodiversity worldwide, USAID's program evolved into a second phase: promoting activities aimed at generating benefits to communities associated with natural forest or protected area management by working through non-governmental organizations at the local level. This approach, which dominated through the 1990s, also included building institutional capacity to support and promote sustainable forest use and management, transferring appropriate technologies, fostering education and awareness of local groups and policy makers, and supporting policy reforms to provide legal, economic, and social environments supportive of local forest stewardship.
USAID recently proposed a new development assistance model which signals the Agency's transition into its third forest program phase: establishing public-private partnerships that engage forest industries and link developing countries to emerging markets such as those associated with responsibly harvested forest products and environmental services (sequestration of atmospheric carbon, watershed protection, and soil conservation). The question and challenge USAID faces as it moves into this new phase is how to link the development assistance needs of local people under this new model in a manner that will not only help protect local communities and their forests, but will enable them to participate and benefit from these expanding markets and trade, and at the same time create new overseas markets for U.S. goods and services. The lessons learned over the 25-year history of USAID working with local communities and forest user groups provide a valuable framework as USAID develops new strategic public-private alliances.
USAID believes that the key to community participation is support for the organization, training and capacity development of legally recognized, empowered community-based organizations. Ultimately, this requires government decision makers and political leadership to enact appropriate legislation and support needed institutional reforms. USAID's forest program has also been instrumental in designing legislative and policy reforms. However, deregulation and devolution of control remain a slow process in many countries as there remains strong reluctance to relinquish the command-and-control approach. The results have been encouraging, but slow to develop. This has had a constraining influence on community involvement and effective government-community partnerships.
The reality is that forests must ultimately compete with alternative land use options and economic considerations. The decision to convert forest to other land uses, primarily agricultural uses, is supported by the fact that many of the forest goods and services are currently not calculated in terms of a market value, thus they cannot compete against financial incentives to convert forests to farmland, pastures, or plantations. Short-term profit motive is further promoted by the fact that the benefits of non-traded goods and services are currently flowing to others free of charge. But these are not "free," and the poorest members of society are being forced to bear the costs. The choice to maintain the land in natural forest cover and manage the forest more sustainably in a manner in which both costs and benefits are distributed in a more equitable manner will require trade-offs. Various financial incentives were introduced in the 1990s under the term of conservation financing as a way to achieve the trade-offs while rewarding sustainable development and conservation. The economic reality represents the development challenge, while the suggestion of seeking creative financing alternatives represents the development opportunity in forest conservation.
A critical issue in the question of the sustainability of community approach to conservation and development rests with the issue of long-term benefits or funding. To succeed and to be sustained, communities must perceive and realize benefits in exchange for cooperation in resource protection and conservation. Sustainability is also enhanced if the benefits are perceived as serving the interests of the communities rather than the interests of outsiders. The weakness in the strategy is the dependancy on continuous rewards to ensure continuous participation. Several innovative mechanisms have been implemented to ensure continued flow of funds to help ensure the flow of benefits to the communities in exchange for continued resource conserving behavior such as the creation of environmental trusts, debt-forgivenenss or debt-for-nature swaps, establishing user fees, ecotourism, and co-management schemes tied to benefit-sharing agreements.
Ultimately, forest conservation will only be achieved if we are successful at sharing both the cost and the benefits of forests in a more equitable manner, which promote long-term economical and ecological sustainability and environmental quality. This will require a combination of approaches: measures relating to poverty alleviation and secure livelihoods, as well as promoting national-level effort to balance forest management objectives (i.e., identifying trade-offs between different interests which optimize the social benefit from the national forest estate as a whole). Absent of any profit or market incentives, there is little evidence that the timber industry is willing to pay the full cost of managing forests in a sustainable manner, and little incentive for local people to bear the full cost of conservation by foregoing the land and resource use. Therefore, the issue of "who pays" to conserve forests and maintain its biological diversity offers an exciting entry-point into designing environmentally sustainable development programs.
Recently, USAID's Administrator proposed a new development assistance model: to enhance development impact by mobilizing the ideas, efforts and resources of the public sector with those of the private sector and non-governmental organizations through the formation of strategic alliances. Alliance partners operate through a formal agreement, make financial or in-kind contributions, and share a common commitment to achieving environmental and social sustainable development objectives. USAID's forest program adopted this model to its effort to maintain biodiversity and address the threat of deforestation. The following three program descriptions help illustrate the Agency's new focus on public-private partnerships in the forest sector.
Nepal's community forestry program has been an outstanding success story. To date, over 11,000 community forest user groups have formed across Nepal, directly benefiting more than 1 million people and responsible for the management of over a half million hectares of forest. Many sites under community protection are now producing forest products at levels beyond those needed to satisfy the community's needs, producing timber at a commercial level. Non-timber forest products (NTFPs) offer a unique entry point to achieving the dual objectives of forest conservation and improving local livelihoods. Although forest timber products have a long rotation period before their growth can yield cash benefits, NTFPs can be harvested in a relatively short period of time. As an intermediate crop that yields benefits while slower growing tree stands grow to merchantable volume, NTFP play a vital role in contributing to the rural economy, and providing immediate rewards for forest conservation. However, due to their value and demand these products are not always harvested on a sustainable manner.
Promoting the local management of forests, in part for the production of NTFPs, is a promising conservation strategy: many rural Nepali families traditionally harvest these products for their medicinal, cultural, cosmetic and other uses; the return for the protection of forested areas that yield these products are quickly realized; and it further supports community-based forest management and offers the potential to support community-based enterprise to help alleviate poverty in rural areas. Collecting and selling NTFPs is a familiar concept, practiced a traditional manner. It is the entrepreneurial activities related to NTFPs that are unfamiliar.
USAID/Nepal has sought to promote public-private sector partnerships to achieve its forest conservation efforts through the support of a strategic alliance with the aim to link Nepali producers of non-timber forest products, NGOs, and government programs, to domestic and foreign buyers and designers. The program (Certification and Sustainable Marketing of Non-timber Forest Products) builds upon work in certification issues and Nepal NTFP supported by The Ford Foundation and the Rainforest Alliance's "NTFP: Management, Marketing and Certification" campaign aimed at developing a system of certification for NTFPs. Nine partners, each offering complementary skills and resources, have joined the alliance. The partners make up an alliance representing all the major participants within the sector: forest communities, Nepali and foreign private companies, Nepal NTFP network organizations (both government and donors), NGOs, and foundation and certification representatives. Alliance members offer Nepal-based field expertise, established network and relationships, a proven track record with community forest user group formation, policy advocacy, enterprise development with new NTFP sustainable buying practices initiatives in the U.S., and cutting edge programs in forest certification.
The goal of the alliance is to link domestic and foreign NTFP buyers, Nepali producers, and NGO and government programs assisting the NTFP sector (including certification organizations) in order to: increase incomes and employment for Nepal's producers of non-timber forest products (especially in remote rural areas); promote sustainable resource management; and expand responsible buying practices among industry members. The market as it currently exists is inefficient from both the industry and conservation perspective. The overall non-timber forest products sector is inefficient since industry participants know little of each other's needs. From a conservation perspective there is both loss and deterioration of valuable natural resources before they reach the market, thus putting more pressure to increase yields, in some cases beyond sustainable levels.
Currently, over 90% of NTFPs leaving Nepal in raw form pass through upwards of seven traders before they reach their primary markets in India. The problems that result are many. From the producer side, the forest resource managers are separated from end markets and as a result see low returns for their forest stewardship. From the buyer and market side, there are few companies in Nepal to process raw materials for export to the higher value markets and thus most materials pass through multiple traders, often resulting in deterioration or adulteration of products. The net result is processing companies receiving low quality materials that taint the reputation of Nepali industries. Progressive companies like U.S.-based Aveda Corporation (a subsidiary of Estée Lauder Companies, Inc.) are choosing to source only sustainable products. The decision reflects their commitment to support larger environmental and social goals, but it also serves to correct the current problems that occur due to the long supply chain - which makes it difficult to tell the true environmental and social situation on the ground. Since Nepal does not certify its NTFPs, this represents a market barrier.
There are no certification programs, nor recognized industry standards for non-timber forest products in Nepal, although there is demonstrated interest among international buyers to support sustainable product sourcing. This fact, coupled with the Rainforest Alliances' certification expertise and the very important network and coordination functions the Nepali partners provide for the NTFP sector in Nepal, this new strategic alliance may prove to cost effective in a way that any one group working alone could not achieve. Several issues remains unresolved: if certification of Nepal NTFPs can link to higher value markets; if the certification process will be cost effective for communities and buyers; and if buyers and producers can achieve sustainable long-term supplies of quality NTFPs. Implicit in the pursuit of a certification system is the assurance of social equity and environmental health and sustainability of the natural resource. The theory is that if the certification of NTFPs as a conservation and forest-enterprise strategy is proven, it could position Nepal's NTFPs in the highest value markets worldwide, and will improve and maintain quality and consistency of Nepali non-timber forest products. From a development objective the hope is this alliance will also serve to increase short-term employment and income generation opportunities for the rural poor and will provide further support for continued protection and conservation management of Nepal's natural forests.
The second example of targeting public-private partnership development as a conservation and development tool is the USAID Environment Program in Brazil. The Brazil program was also selected because it illustrates a broad application of the model, plus a unique aspect, to encourage strategic alliances among the NGO community.
The Brazilian Amazon is home to almost 20 million people whose livelihoods are tied to the health of the forest, either directly through traditional activities such as rubber tapping and Brazil nut collection, or indirectly through dependence on energy, water, food and fiber in large urban centers. Although parts of the region are still sparsely populated, approximately one-third of the population lives in rural areas, which are characterized by extreme poverty and social exclusion. Economic development in the region has a history of boom-bust cycles that generate little lasting wealth. Earlier government policies viewed Brazil's forest expanse as a frontier for agricultural expansion and promoted land conversion. But forestlands are not often suitable for agriculture. Slash-and-burn agriculture produces only marginal yields and contributes to unstable, itinerant livelihoods. Commercial forest harvesting as it is commonly practiced in the region amounts to forest `mining', leaving behind joblessness and damaged forests that are frequently converted to unproductive pastures. Breaking this pattern will require an approach that sustains the natural resources on which the rural poor depend, while improving their livelihoods and economic opportunities, and enhancing their ability to influence decisions affecting their lives.
The opportunity to attract public-private partnerships under USAIDs new development assistance model is becoming increasingly attractive to private companies, organizations, and foundations interested in supporting new emerging `green' markets, as these have become the hallmark of environmentally and socially-responsible enterprise development. Over the past several years there has been an increasing trend to develop markets for environmental goods and services. Brazil is well positioned to attract foreign investment in these new market opportunities, given the country's stable and democratic form of government, efforts in decentralization, free press, independent judiciary, and increasing public awareness to conserve the forests and promote social justice. Brazilian society is poised to shape land-use patterns, especially in the Amazon, and to influence decisions to protect the social and environmental benefits derived from the country's natural resource base in order to ensure ecosystem health and long-term productivity which are fundamental to improving rural livelihoods. Forest conservation and management lessons learned under previous USAID support to Brazil are ready to be scaled up to a regional level, promoting wider penetration of market mechanisms at the community level. Key markets, such as those of certified timber, organic and natural products, ecotourism, and carbon, illustrate these new sources of funding and development assistance to encourage both environmentally sound products and services.
Huge potential exists to create or strengthen ties between companies and communities in order to link with these emerging markets, and the idea is attractive to both sides. From the company side, ties with local communities provide social and political legitimacy that can serve as a hedge against potential threats such as resource destruction or land invasion. From the community-side, linking with companies and organizations provide a critical source of employment and the opportunity to develop business, planning and management skills that they lack and have few opportunities to develop. These are the skills that will be prerequisite for future community-based enterprises and national growth and development. Community-based enterprises are typically small or medium sized enterprises, and it is the small and medium enterprises that have been the backbone for innovation in developing countries over the last 30 years; accounting for about half of Latin America's GNP and employing 80% of the region's workforce.
Emerging green markets offer a niche where the smaller enterprises appear to have a comparative advantage over their larger counterparts.
Steady support to its partners, dating back to the 1990s, has placed USAID in a strategic position to influence the course of development while increasing the well-being of Brazil's rural populations. The USAID/Brazil Environment Program is currently in the early stages of defining its new 6-year program but has identified its strategic objectives: to support interventions aimed at providing increased benefits to rural poor and to help influence future land-use trends over large geographic areas of Brazil, while continuing to mitigate the global impacts of climate change and biodiversity loss. Support of markets for environmental goods and services that provide tangible benefits to poor communities is one of the Program elements that have been identified. Activities supported under this program will focus on training and building business and organizational skills in rural communities; market analysis, policy formulation and development of private investment portfolios to increase access of such communities to capital; and improved communication and strengthening of community-based networks to disseminate relevant market information.
A novel aspect of the Brazil Environment Program is its commitment to formally promote formation of NGO networks along strategic alliances. This effort builds on the success of the early USAID Environment Program which was attributed to the strength and capacity of its local NGO partners. USAID has worked with NGO partners with demonstrated track records in Brazil and strong linkages to Brazilian counterpart organizations. These linkages help to magnify the impacts of program investments and create multiple synergies. Long-term funding commitments, which have been characteristic of the program since its inception, enable partnerships to mature and organizations to grow and expand their capabilities. Through such approaches, USAID has helped to build institutional networks that include rural communities, NGOs, technical schools, universities, public research centers, private businesses, and governmental agencies and policy makers at diverse levels. These networks work to empower local communities, generate and disseminate sound resource management practices, and formulate public policies to support and encourage such practices. USAID helps strengthen linkages between partners through annual meetings and support for networks of NGOs and grassroots organizations.
The program success achieved under its previous funding period is due, in part, to the willingness of the diverse environmental groups to spontaneously form informal networks to join forces and concentrate efforts on specific environmental themes or policy issues. Such partnerships have formed around functional alliances based on institutional and professional affinities. Experience has shown that this type of networking does not diminish individual organization's identity, but rather adds value to groups that have established credibility in specific niche areas. The informal networking emerging among environmental groups in Brazil greatly expands outreach of successful models of conservation and sustainable development while creating the critical mass needed for effective public policy advocacy. It is the proof of what strategic alliances can achieve. The intent of the new Environment Program to promote this sort of networking as an integral part in the creation of public-private alliances.
The final example of USAID's new development model is the Sustainable Forests Products Global Alliance (Global Alliance), launched in 2002. The Global Alliance seeks to encourage responsible forest management and reduce illegal trade in forest products by facilitating integration into world markets for producers of responsible forest products. Toward these objectives, the Global Alliance will engage leaders in the global forests products market and will facilitate partnerships between communities, land managers and owners, and the global forest products industry. It will utilize a powerful combination of market intelligence, technical expertise, and country knowledge to create synergistic benefits for forest managers, forest products traders, and consumers. These benefits will lay the groundwork for increased practice of responsible forest management.
The Global Alliance has two main components: (1) build demand for responsible forest products, enhance market knowledge available to producers and suppliers, identify barriers to marketing under-utilized products, increase knowledge of responsible forestry, and promote open and productive dialogue and collaboration necessary for functional market mechanisms lead by Certified Forest Products Council; and (2) development and application of global building blocks for responsible forestry, creating market linkages for certified products in key markets, and increasing supply of certified wood products in key producing countries. These building blocks include tools for producer groups, multi-stakeholder standards setting, and high conservation value forest identification and management. The World Wildlife Fund will lead efforts on this component in coordination with the Global Forest & Trade Network. USAID, together with the U.S. Forest Service and Forest Trends, will provide country knowledge and technical support to Global Alliance activities.
The expected achievements of the Global Alliance are:
The three programs highlighted above introduce the new way USAID will do business in the 21st century. The market potential appears great. We must now wait and see if we are successful at leveraging the financial and technical resources and creativity of the private-sector to help meet our global development challenge.
1 USAID Office of Environment, 1300 Pennsylvania Ave, N.W. Rm. 3.08, Washington, DC, USA. [email protected]