M.-R. de Montalembert
This article was prepared by Marc-René de Montalembert, Director of the FAO Forestry Policy and Planning Division, with the support of division staff and an interdepartmental multidisciplinary group.
This article assesses the influence of external policies on the contribution of forests to sustainable development and environmental stability. Based on an analytical matrix, it identifies broad cross-sectoral linkages and the main types of situation where there are significant policy interactions. Possible response strategies and action priorities are also presented.
The many contributions of forests and forest-based activities to the economy, food security, energy supply, environmental stability and social well-being are now well recognized. Major areas of concern regarding forests in sustainable development and the environment include: management, conservation and sustainable forest development; the promotion of sustainable patterns of production and consumption of forest goods and services; social aspects of forests; and in-stitutional strengthening and capacity building.
In most countries central forestry administrations have acted in relative isolation when determining forestry policies and laws which reflect the national priorities for revenue generation, foreign exchange and national economic development. The evolving and sometimes conflicting expectations of an increasing number of interest groups that depend on or are concerned with the fate of forests create difficult policy challenges for both forest and national development overall. Such challenges involve intricate relationships between forestry, food security, poverty alleviation, rural development and environmental stability. The new approaches to sustainable development place greater emphasis on the integration of the forestry sector in rural development and the balance between socio-economic and environmental needs at local, national and global levels.
In both the North and the South there is a growing awareness of the incapacity of traditional forestry strategies to ensure the sustainability of forest resources and to address on its own the accelerating pace of deforestation and forest degradation. Policy measures and activities in other sectors affect the ability of forests to perform their economic, social and environmental roles at least as much as policies set within the forestry sector. Indeed, policy decisions taken outside the forestry sector may be determinant for the sustainability of forestry.
Fiscal policies, exchange rates, terms of concessions of public land, price controls, transport networks, land and tree tenure, tariff and non-tariff barriers to international trade, investment incentives, agricultural sector strategies and other macroeconomic policies affect economic motivation in the management and conservation of all types of temperate and tropical forest.
At the same time, experience has shown the difficulty of ensuring a proper dialogue with other sectors and developing actions in these sectors which complement or support those in forestry. The influences of cross-sectoral linkages and the impacts of policies of sectors related to forestry therefore have to be identified and analysed within these areas.
Effective dialogue between forestry and other related sectors is essential
This article presents a general matrix indicating major sectoral policy areas, specific types of instruments influencing these policies, linkages affecting forestry, possible effects on forest development and options for action. First, however, the nature of the challenge is illustrated with a number of examples of the most significant policy linkages between forestry and other sectors: population policies; land tenure and land-use policies; policies aimed at raising agricultural production, including those affecting farm and agricultural commodity prices; and those policies which determine opportunities for employment outside agriculture.
EXAMPLES OF CROSS-SECTORAL POLICY LINKAGES
Policies that influence land use and tenure are of critical importance; the land resource base is the common denominator of all sectoral policies dealing with natural resources and rural development. For example, a recent FAO/World Bank agricultural review in Ecuador (FAO/World Bank, 1993) mainly recommended national policy changes for activities which are not directly related to the forestry sector but which nevertheless impinge on it. A clear need was identified to improve land utilization in the sierra and coastal regions so as to take migratory pressure off the tropical moist forests. Environmentally sensitive policy decisions were also recommended regarding petroleum exploration in tropical moist forest areas and for expansion of the shrimp industry in the mangrove forests.
Macroeconomic policies obviously affect the forestry sector, in particular the economics of forestry development and the competitiveness of investments in forestry. A World Bank review of the forestry sector in Argentina (World Bank, 1993) revealed how inefficient macroeconomic policies leading to low or negative growth rates had contributed to the loss of native forests, namely by: reducing alternative job opportunities for poor rural families and thereby increasing the attractiveness of subsistence agriculture in or close to native forested areas; fostering inflation, which boosted the need for inflation hedges and, consequently, the demand for land as a long-term but illiquid hedge and for cattle as a short-term and very liquid hedge (this encouraged the conversion of forests to grazing land); and lowering the priority attached to national conservation of native forests.
In the case of the Philippines, the potential rent from the forest sector was estimated to be more than US$1 500 million during 1979-1982, while actual rents were slightly more than $1 000 million (FAO, 1994). As a result of inefficient industrial and fiscal policies, a log exported as sawnwood or in raw form brought higher net returns than plywood made from the same log. During this period, total government revenue from forest charges and export taxes represented around 11 percent of potential rents. Specialists conclude that the government's inability to capture a larger share of the available rent promoted rapid deforestation by encouraging timber harvesting booms throughout the country (FAO, 1994).
A study of interactions between forestry sector policies and irrigation and power generation policies in Sri Lanka (Abeywickrema, 1987) showed how the pressure of poverty and unemployment can lead to priority being given to fast-yielding economic development programmes at the expense of the forestry sector.
Government policies concerning dialogue between specific sectors and interest groups may facilitate or constrain interaction and convergent development strategies. For example, in Canada provincial and federal forest agencies are acting to remove barriers between institutions with different mandates and are tending towards a forest management philosophy that includes all values pursuing cooperation among the various agencies and stakeholder groups so that they seek common goals. One outcome of this has been the Model Forests programme, in which forests are managed by a partnership of key interest groups, including industry, community groups, government agencies, environmental groups, academic institutions, aboriginal groups and private landowners [Ed. note: see Unasylva, 45(176)].
Policies that determine the role and structure of public administration, above all regarding the management of natural resources and public lands, are particularly influential on forestry development. Frequently, insufficient political attention to forestry results in weak forestry institutions that are unable to interact with or to establish and maintain an adequate policy dialogue with other land-use sectors. This is especially true of many countries in Latin America.
In countries undergoing structural adjustment, the responsibilities for environmental and natural resources management (including forest tenure and use rights) are often being redistributed and may be devolved outside the government forestry sector. This calls for different institutional attitudes that must move in the direction of leadership, coordination and integration and interrelation of policies and programmes among interacting sectors.
MATRIX OF MAJOR CROSS-SECTORAL LINKAGES
The general matrix (see here) has the objective of stimulating further analytical work. The development of a specific matrix for each major category of situations would entail a detailed analysis far beyond the limits and scope of this article. However, such an analysis would be indispensable in order to identify the specific sectors involved, the nature of the cross-sectoral linkages, the type of impact and the strategy needed to correct negative linkages and strengthen positive ones.
In the general matrix, each major sectoral policy area can normally be identified with a government department, thus enabling an institutional focus. An alternative would have been to focus on major policy instruments, such as fiscal policies, price policies and land distribution policies, and on their application in various sectors. Yet, this would have made the identification of institutional responsibilities more difficult.
In identifying the impact of forest development on sustainability, effects must be considered as positive or negative contributions and not seen merely from a conservation perspective. In most cases, a given cross-sectoral linkage could have a positive or a negative impact depending on the way it operates, the instruments used and the behaviour of the groups it influences.
Policies affecting the sustainability of forest development
Most of the linkages identified in the general matrix have a broad validity, independent of the geopolitical characterization. The main areas where changes in sectoral policies have major impacts on forestry are discussed below. There is a degree of overlapping between these policy areas, all of which affect the forestry sector in different ways (positively and/or negatively).
Policies oriented towards promoting, expanding or stimulating national economies (e.g. fiscal, monetary, trade, infrastructure and industrial policies)
Many such policies are designed to pull economies out of recession and to alleviate growing international debt. These are mainly problems affecting developing countries, where the concentration on major urgent socio-economic issues and short-term policies is rarely compatible with the long-term policies, goals and strategies pursued by the forestry sector. In the short to medium term, the policies in question can increase the demand for forest products; stimulate production, investment and trade; promote reforestation; and create employment opportunities in rural and industrial areas; etc. However, they may also foster deforestation, overharvesting and the unsustainable use of resources; orient economic operators towards minimizing expenditure and diminishing investments; and reduce government attention and resource allocations to forestry.
Short-term fiscal policies can impede sustainable forest development
Policies oriented towards improving people's welfare and alleviating poverty, especially at the rural level (e.g. population, crop and livestock, rural development and tourism and energy policies)
The forestry sector has considerable opportunity to contribute to the achievement of these policy objectives, especially through agrosilviculture, non-wood forest products for human and animal consumption, medicinal products, fruit, soil protection, off-farm income generation and employment in small-scale forest-based rural enterprises, agrotourism and recreation. In many developing countries, special attention is required to assess the extent to which sectoral policies and strategies promote the security of land tenure, access to resources and products and the participation of rural people and native groups in sustainable forestry.
Policies oriented towards conserving the environment and protecting natural resources (e.g. environmental, agricultural, fisheries, industrial and land-use policies)
A short-term impact of policies in this area would be the transfer of productive forest land to other categories (e.g. national parks or reserves), with a consequent reduction in the availability of forest products. Long-term effects would favour the adoption of silvicultural practices that integrate biological diversity and ecosystem conservation in sustainable forest management, raising and diversifying productivity and creating more economically and environmentally efficient forest industries.
Policies oriented towards increasing processing efficiency or intensifying the utilization of natural resources (e.g. privatization, fiscal, environmental, trade, infrastructure, energy and tourism policies)
Increasing public concern about the use of resources, the intensification or relocation of processing operations and the globalization of markets have significant impacts on forestry over the medium to long term. Guided by new macroeconomic policies, many developing countries and countries in transition to market economies have privatized existing public enterprises in an effort to achieve higher technical and economic efficiency and to favour a more rational use of forest resources. Trade liberalization can stimulate the supply and demand of forest products, while the resulting competition can lead to improved quality. However, environmental protectionism in trade policies (e.g. green labels, bans on tropical forest woods) could have controversial effects on forestry. It could favour a reduction in the supply, trade and demand of specific forest products from natural forests but could also produce deforestation and permanent conversion to other land uses because of the decreased economic value of the resource base.
Policies oriented towards changing the role of the government and increasing the participation of different actors (e.g. reduction of public expenditure and privatization, energy, industry, trade and tourism policies)
New economic and political trends show a clear orientation towards reducing the involvement of public institutions in all sectors. Historically, in most countries the state has had a major role both as owner and producer in the forestry sector, or else it has exercised strict control over activities carried out by others. The privatization of public forestry enterprises, of activities on public forest lands, of extension services and of research is a growing trend in many developed and developing countries. The decentralization of functions to regional and local levels has also stimulated the participation of local people in forestry. The responsibility of public forestry institutions is now more one of guiding national forestry development under the principle of sustainability, integrating efforts and providing support to the participation of different agents, rationalizing forestry policies and strategies with those of other sectors, increasing political and public awareness as well as an understanding of forestry issues and supporting national and international forestry negotiations and agreements.
Priorities for action
From this review of policy linkages, some actions can be identified that would promote and improve the outcome of interaction between forestry and other socio-economic sectors. An important prerequisite, however, would be increased political and public awareness of the role and contribution of forestry.
Review of national investment policies
Investments are mainly directed at those sectors which have a clear, direct and quick return in terms of national development goals or to those which are seen as indispensable in promoting or sustaining social welfare. If forestry and related environmental activities are to play a significant role in national economies, government and, particularly, the private sector should allocate them increased financial resources. International official and private allocations of investment resources to forestry need similarly to be promoted in priority and magnitude.
Internalization of sectoral externalities on forestry
Mechanisms should be established to internalize the costs of the impacts that development and policies applied in other sectors have on forestry. They should identify the negative impacts on forestry, assess their cost and facilitate the transfer of equivalent resources for carrying out compensatory activities or programmes in the sector.
Externalization of forestry benefits
Appropriate mechanisms should also be established to charge the costs of forestry benefits to those who will receive them. Examples range from the reforestation and sound management of forests around watersheds and reservoirs in areas supplying electricity, water and other benefits to downstream areas to the forestation and conservation of forests for the sequestration of carbon dioxide. Countries must find effective ways of assessing and charging society for forestry's contribution to national sustainable development so as to obtain adequate investment finance.
Incorporation of forestry's economic contribution into the national account system
The standard national income-accounting framework was developed in the 1930s when raw materials were valued at low levels and the environmental threats that are of common concern today were seldom foreseen. This accounting framework is particularly inadequate for countries whose natural resources are among their principal economic assets. A nation's depletion of its natural resources - consumption of natural capital - can therefore masquerade as growth for decades, even though it will clearly reduce income prospects in the future. Appropriate accounting for the forestry sector's economic contribution to national socio-economic development requires a thorough analysis and assessment of the value of the resource and of its use and non-use, thus highlighting the true socio-economic importance of the sector. Many economists endorse the view that national accounts should be revised to consider natural resources in the same manner as human-made capital (TSC/WRI, 1991).
Land use allocation
A coherent land-use policy should recognize that land is a finite commodity requiring careful allocation. National policies provide an overall framework but it is within the framework of regional, district and local planning that many sustainability policies are implemented. Unfortunately, many of these policies deal with forest land as a sort of open land fund or reservoir to which to resort in case of social conflicts in the rural area, without considering the land's use potential or suitability. Efforts should be made to integrate forests as a stable element and a valid land-use option. This requires the implementation of policies for effective land allocation and for the assessment, clarification and recognition of landownership and tenure rights, including the customary relations between indigenous groups and local communities living within or near forests. Attention should also focus on the issue of the large areas of lands that are unsuitable for sustainable agriculture or grazing and should consider whether such land could be reclaimed economically rather than resorting to further forest clearance. In Europe and the United States, new policies are encouraging the forestation of surplus agricultural land, e.g. the set-aside policies being promoted by the European Community.
Modernization of institutions responsible for the forestry sector
The importance of the issues indicated in this article, i.e. the socio-economic and environmental relevance of forestry for national sustainable development and the different aspects and actors directly or indirectly involved in the sector, evidences the need for revision of the political and institutional administration of forestry. The forestry sector is in an ironic situation where, although it has captured a central position in public concern and on the development agenda, the institutions charged with forest conservation and sustainable management are generally among the weakest. This has often been aggravated by institutional reforms resulting in a low visibility and stature of the forestry administration in the government structure, its merging in a conglomerate of public services in charge of natural resources and the environment etc., or, sometimes, its being divided between two or more ministries. The isolation of forestry staff from national policy-makers is further compounded by administrative rigidities which often maintain the isolation and inward perspective of forestry administrations and impede development of institutional capacity for consultations with other sectors. This is the reason for the low priority assigned the forestry sector in national plans and finance allocations.
Political support to the sector should be increased by providing forestry institutions with an adequate stature, building up sufficient capacity to maintain a policy dialogue between forest management politicians and through a proactive public relations campaign to improve cooperation and establish consultation mechanisms between government agencies and the private sector, non-governmental organizations, communities and countries. However, the increasing participation of different actors in forestry makes it necessary to share responsibility for and management of the sector among them. Capacity-building activities must be oriented towards strengthening skills not only of government staff but also of other actors, especially small farmers and organized community groups.
Development of appropriate policy analysis and research capacities within forestry
Sound sectoral policies cannot be developed in isolation but must consider the broader framework of national goals for economic and social development. A framework for the development of forest policies must allow for areas of overlap, interconnections and interactions within the sector, beyond the sector and, indeed, beyond national boundaries. An important area for action is that of contracting economists, sociologists, policy analysts, etc., to make up multidisciplinary teams for undertaking policy impact assessments and to strengthen the sector's capacity for cross-sectoral policy analysis, policy performance monitoring, policy formulation and policy implementation.
International cooperation
Most of the issues analysed above can only be addressed through action at the national level; however, international cooperation can and should play a supportive role in urging all socio-economic sectors to consider the impacts that their policies and actions will have on other sectors. Policy impact assessments by international institutions should be common practice, especially by FAO and the international finance institutions, namely the World Bank and the regional development banks, but also by bilateral institutions. Moreover, international cooperation has an important role to play in fostering the exchange of information and experience among countries.
Efforts should be made through international cooperation to increase financial support to forestry, either directly to the sector or indirectly through support to special activities of other sectors that might stimulate forestry-related development. This type of attitude can promote dialogue, coordination, and interaction among forestry and the other socio-economic sectors, thus contributing to improved cross-sectoral relationships and a stronger policy framework for national sustainable development. However, this does not imply merging forestry actions with broader programmes, such as natural resources management, in which forestry might lack visibility and specificity and be unable to pay attention to the appropriate issues.
CONCLUDING REMARKS
The analysis presented in this article evidences the importance and complexity of cross-sectoral linkages and the influence of external policies on sustainable forest development. Policy interactions are particularly critical within the broader framework of macroeconomic and land-use policies. The effectiveness of future efforts in the conservation and wise development of forests depends on the ability to establish a coherent policy environment in support of these activities and to ensure that forests are fully recognized as a valid, competitive land-use option wherever appropriate.
Forests are often still considered as a land reservoir and government strategies give residual attention to forest policies as well as ignoring the impacts that the policies, developments, decisions and instruments of other sectors have on the forestry sector. Forests have seldom been able to compete in the short term with alternative land uses, except in countries where they have received some form of subsidy for a long time. The basic question is therefore: what are the conditions necessary for making forest conservation and development a viable - i.e. economically and environmentally attractive - land-use option in an increasingly competitive market-driven environment? The answer lies partly within the sector itself and relates in particular to the prices and values of forest goods and services and to meeting the costs of sustainability.
A major part of the answer is also rooted in other sectors through cross-sectoral linkages. Within an increasingly interdependent economic context and the confluence of effects of other sectors on sustainable forestry as a land-use option, special attention ought to be devoted to three factors:
Finally, no meaningful discussion of the influence of external policies on forest development can ignore the major exogenous factors affecting both national and sectoral policies. Such factors may arise from neighbouring countries' policies or those of regional groupings (e.g. the European Union or the North American Free Trade Agreement); or they may be the result of broader international factors, especially trade relations and, recently, global environmental policies. The exogenous pressures affecting policy may be exerted directly on the sector or indirectly by events outside the country through their influence on national policy. International assistance and investment policies also provide examples of divergent and sometimes conflicting signals, even within a single institution, concerning economic reforms and growth and environmental stability. National governments often find it difficult to reconcile economic and environmental sustainability in a definition of priorities through dialogue with national agents, and forest development is affected by this.
Bibliography
Abeywickrema, N. 1987. Forestry sector policies and their impact on implementation of irrigation/power generation programmes. Rome, FAO.
FAO.1994. The State of Food and Agriculture 1994. Part III, special chapter on forestry. Rome.
FAO/World Bank.1993. Ecuador - Agricultural Sector Review - Forestry (Annex 4). Rome, FAO.
Tropical Sciences Centre/World Resources Institute. 1991. Accounts overdue: natural resource depreciation in Costa Rica. Washington, DC, WRI.
World Bank. 1993. Argentina - Forestry sector review. Washington, DC.
