Context and background

Historically, public-sector agencies have dominated forest plantation development

Forest plantations make up about 16 percent of the forest cover of the Asia-Pacific region and the region accounts for around 61 percent of the world’s plantation forest. Historically, public-sector agencies have dominated forest plantation development in most countries in the region. This pattern has changed in many countries over the past 10 to 20 years, mainly for four reasons. First, devolution of forest management has led to greater involvement of communities and the private sector in forestry. Second, the performance (financially and biologically) of public-sector plantations - with few exceptions - has been disappointing. Third, shrinking government budgets make it impossible for most forest departments to devote as many resources to forest plantations as they have in the past. Fourth, problems related to weak governance structures are driving many countries to reconsider the role of government in administering forest resources and in implementing forest programmes.

These developments have been paralleled by a shift in the main objectives of forest management, which traditionally focused on timber production. Although forest policies and management objectives diversified and expanded long before the United Nations Conference on Environment and Development (UNCED), since 1992 forestry has become even more multidimensional. Forests are increasingly valued for supporting local livelihoods and helping to reduce poverty, for providing local environmental services and as a reservoir of global biodiversity. In the Asia-Pacific region, this shift in thinking has affected forestry immensely over the last 10 years. Perhaps the most far-reaching outcome is that forest areas set aside for conservation have expanded considerably and that the area of production forests has declined even faster, due to unabated deforestation rates and, even more so, due to complete or partial harvesting restrictions - the logging bans (Durst et al. 2001).

The environmental impact of the various conservation measures, especially logging bans, has been mixed. In terms of wood supply, domestic timber supplies derived from natural forests have been reduced substantially. As a consequence of such developments, the search is on for means to generate alternative wood supplies. While some countries have turned to imports - at least in the short term - most have attempted to augment forest plantation resources. Today more industrial roundwood is sourced from plantations and trees outside forests in Asia and the Pacific, than from natural forests (Brown and Durst 2003). With the public sector retreating from direct involvement in planting and tending trees, the question is whether the private sector can grow the wood that many expect is needed.

Asia-Pacific Forestry Commission mandate

During the 18th Session of the Asia-Pacific Forestry Commission (APFC), held in Noosaville, Australia in May 2000, the Commission reviewed the results of the regional study on the Impacts and effectiveness of logging bans in natural forests in Asia-Pacific (Durst et al. 2001) and considered issues identified by the study as requiring additional information and analysis for effective policy-making. Among other suggestions, the Commission recommended conducting collaborative activities in the area of commercial forest plantations. In light of the above, the APFC undertook a comprehensive multicountry study on the Impacts of incentives on the development of forest plantation resources in the Asia-Pacific region.

The study’s aim and scope

The study is based on nine country case studies

There are several examples in the world where clear, consistent and stable policies, a conducive investment climate and well-programmed incentive schemes have made a significant impact on the success of forest plantation development. In contrast, where initiatives have been ill conceived or poorly implemented, the results have been disappointing despite heavy investment by governments. It is common knowledge that vast plantation areas are of very poor quality. Others exist on paper only, because mismanagement or some disaster led to their premature death in the field. Others were never established, but appear in records only to spuriously indicate that targets have been reached and funds spent.

This regional study was designed to comprehensively examine the reasons for the mixed results and to provide guidance in policy formulation to those countries interested in stimulating investments in tree growing through the provision of incentives to large- and small-scale growers. The study focused on policy instruments and mechanisms aimed at stimulating investment in commercial plantations grown for profits, while recognizing that forest plantations can also be established to meet broader social and environmental objectives.^[1]

This publication is based on country case studies conducted in Australia, China, India, Indonesia, Malaysia (Sabah), New Zealand, the Philippines, Thailand and the United States of America.^[2] The countries were selected to represent examples of major private-sector involvement in plantation development. In addition, experiences from other countries were reviewed to strengthen the results of the study.

Many governments and their respective forestry agencies are increasingly asking what it takes to effectively involve the private sector and local communities in forest plantation development. Hence, the main purpose of the study was to gain insights into this pertinent question.

The principal objectives of the study were to:

• Document plantation development in the Asia-Pacific region;

• Analyse past and current experiences in providing direct and indirect incentives for tree planting;

• Assess the broader socio-economic and political conditions that encourage investments in forest plantations; and

• Provide recommendations for enhancing the involvement of the private sector in plantation development.

Structure of this document

Section 1 provides an overview of plantation development in the Asia-Pacific region. It highlights the considerable increases in establishment rates during the 1990s and the more mixed results of the past several years.

Section 2 introduces the concept of, and a rationale for, providing incentives. It takes the reader through an assortment of diverse and sometimes confusing definitions. If it is agreed that incentives should only be applied for achieving public goals, what then is the justification for providing incentives to potential private investors in plantation establishment? There are a number of reasons that justify the transfer of scarce resources, especially in the nature of direct incentives, to commercial tree growers. There are also circumstances where such transfers should not be made.

Section 3 summarizes the main insights gained from the case studies. The impact of incentives on plantation development depends on numerous issues. There are considerable differences among the nine countries that were part of the regional study. What works in one country does not necessarily achieve the same outcomes in another country, even if situations are seemingly similar. Notwithstanding the diversity and the different paths taken to expanding plantation areas, a common theme emerges. The picture that surfaces is sufficiently coherent to conclude the section with guiding principles for supporting plantation development.