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_,brkingPaper 84-03 POLICY ISSUES(3_CEP_ERCIALFOREST M__ by CerenillaA. Cruz and Marian Segura-delosAngeles


POLICY

ISSUES

ON COMMERCIAL

FOREST MANAGEMENT*

by

Cerenilla

A. Cruz

and

Marian

Segura-de

los Angeles**

INTRODUCTION The Philippines

expects

to permanently

maintain

some forty

six

per cent

(46%) of the country's

total

land area of thirty million

hectares

under permanent

cover

(Cortes,

this, approxlmatelysix or degraded vegetative

forest cover

forest million

lands need

(PREPF_

hectares

1979).

of inadequately

to be restored

with

To achieve stocked

appropriate

1930).

Paper presented during the seminar-workshop _Economic Policies for Forest Resources Management _' sponsored by the Philippine Institute for Development Studies on 17-18 February 1984_ at Club Solviento, Lagunap Philippines. _ Assistant Professor of Forest Resources Management, College of Forestry, University of thelPhilippines at Los Ba_os and, Research Fellow, Philippine Institute for Development Studies_ respectively째 The able research assistance of Lota Almira is gratefully acknowledged째


- 2-

Thusp forest focused

on:

system;

(b) the conduct

agro-forest

Philippine

focuses

forests

and renewal Speclfically,

forest management

welfare,

OF COMMERCIAL

The implementation aged, dipterocarp system

defective injured

(SLS).

and forest

priorities

residual cover.

of commercial

consideration

for research

The Natural

yield management

the removal such

point

and the tree plantatlons.

of the country

Here,

of

the forest

from the private

w-Ith simultaneous

of sustained

trees is prescribed

and healthy

of timber

forests

the management

the economics

FOREST MANAGEMENT:

forests

interested

it deals with

initially

it hlghllghts

after which

(c) the

farms, and

and other

surrounding

are discussed

logging

by government_ tree

have

of forest occupants.

and hence_

problems

of natural

implications

of societal

on issues

schemes

of the selective

tree plantations,

and (d) the management

_ommerclal

destruction

logging

enforcement

of reforestation

of industrial

This paper

ECONOMICS

and conservation

farms by forest concessionaires

indlviduals_

of view.

renewal

(a) the strict

encouragement

Policy

resource

are suggested.

Forests

for the uneven-

is through

the selective

of mature,

overmature

that an adequate

trees are left behind

number

and

of un-

for a future

crop


-3-

The immediate dlpterocarp cut which

goal of the SLS, accordingly,

forestunder

regulation

is comparable

It has three principal inventory,

and

of insuring

in volume phases:

(3) timber

and quality

of trees

inventory,

evaluation

which

is conducted

in avoiding

damages

mine the condition, The healthy

of whether

to marked

trees.

in the next given

ment

to improve

isdone

The licensees market

conditions

are, however, a volume hibited

of healthy

the number_

to maximize

growth

net returns

In the an

exercised

care

is done to deter-

residualtrees

that

from their

left.

the volume

The timber

and quality

stand

allowable

at the end of the prescribed

cutting

cycle

to

improve-

of the growing

fluctuates

cut째

Relogging

areas

is permitted

of the region

where

stock.

with

investments.

by the fact that they are only allowed

and the second cut on the logged-over

is located.

operations,

to cut a volume

that does not exceed their

concession

damages.

for predicting

cycle.

is a means

crop and seed

Also this phase

cutting

are encouraged

constrained

from logging

be the basis

be harvested

marking

or not the loggers

sizes and number

trees left will

Tree

logging

cut.

(2) residual

for the future

is done after

cyclic

to the old growth

improvement.

trees that shall be left and protected residual

to have a second

(i) tree marking,

stand

the needed number

in order

is to put the

They to cut

is proonly the


-4-

Economic

Efficiency

Economic the systemls (Rebuglo, within

studies

conducted

financially

1979).

on the SLS in the seventies

sound

Net return

1.70-2.56.

for depressed

of the SLS

in the two logging

per peso investment

A later recalculation

log markets

yielded

lower

studies

have the following

sidered

only one cyclic cut instead

sustained

yield concpts

shortcomings,

and,

set-ups

of a perpetual

(b) the third phase

to be

(1980) which

of 0.2-0째7

however:

only.

allowed Both

(a) the analysis series

that

analyzed

was calculated

by Cabanayan figures

indicate

con-

of cuts under

of timber stand

improve-

meat was excluded.

A more recent totality.

Three

study conducted

logging

for site differences consequently9

areas

which

revenue

by Cruz

in the country

influence

and costs째

yield

The main

beneflt-cost

ratio, which

appropriately

time period

and discounting

effects째

factors

considered

(1982) analyzed

in the study.

were

examined

and logging criterion

takes Figure

SLS in its to allow

conditions,

and

used was the

into account i illustrates

the long the specific


-6-

Initial

assumptions

made

include

the following:

(i)

The analysis period for the study areas is the length of their respective cutting cycles.

(2)

Future growth of the untreated stands will be the same as that during the observation period.

(3)

Expected mortality is 25 per cent.

(4)

Yield in treated stands (or stands receiving TSI) is 20 per cent higher than the untreated stands째

(5)

The cost incurred in practicing the selective logging system is the same as the cost of operation of the logging firms in the study areas,.

(6)

Costs and prices analysis period.

are constant

(7)

Rate of interest 18 per cent.

for the use of capital

(8)

Timber marklng_ logging and residual inventory of a given working unit or logging setting is done in the same year.

The volume

during

of the first

cut(flrst

areas was taken from the interview second

selection

cut was dete_ined

the data from the Continuous Appropriate

statistical

in the analysis

the analysis

Forest

within

the

cyclic

data but_the

is

cut) for the study volume

for the

by means

of projections

Inventory

(CFI) plots

and forest biometry

of the data.

period

procedures

using of FORI.

were used


-7-

To determine following

whether

conditions

the system

were

is economically

efficient,

set;

i.

The analysis period for each study area is its cutting cycle, that is 35, 40, and 30 years, for Areas I, II and III, respectively°

2o

Costs included in the analysis are those incurred in the aforementioned activities. The data obtained from the logging firms operating in the study areas were assumed to be reflections of the opportunity cost of the resources used in following the selective logging system° The logs produced by the system were valued at 2650 per cubic meter_ costs and log prices were based on 1980 levels°

3o

_

By practicing the selective logging system, the logger is allowed to cut the harvestable volume at the end of the cutting cycle. The harvestable [_velume is equevalent to the permissible cut°

Benefit-cost which

analysis

o_ the average,

computed

using

is 15 hectares

for a logging

in area°

the formula:

n B:/C

was conducted

,,

l t=o

B

n

C

t (i + |)t

t t-o

(i =

set-up,

The B/C ratio was

the


-8-

where: t; C t

B/C is benefit/cost is cost incurred

the length

logging

at year

of the cutting

The benefit set-up

ratlo_ B

cycle_

t_

I

and

t

heavily

the present

returns

comprise

value

net worth in Table

of 3.47,

from the first of benefits.

at year

rate_

is O, i, 2, 3째.., n

in all areas as presented

it is the revenue

received

is the discount

cost ratio and present

Areas i, 11 and iii have B/C ratio However,

is benefit

t

2.66,

cyclic

n

is

years.

for a 15-hectare i showed

that

2.37 respectively째 cut which

For all the areas,

at least 99 per cent of the values

influence such

of revenues.


- 9-

Table

i

BENEFIT/COST RATIO AND PRESENT NET WORTH FOR A 15-flECTARE LOGGING SET-UP, ALL AREAS

AREA

BENEFIT/COST RATIO

PRESENT NET WORTH (Pesos)

Area

I

3.47

Area

II

2.66

900,805

Area

III

2.37

1,147,102

Source:

Cruz

(1982).

21,178,536


- i0-

Economics

of TSI

TSI is a component such, should phase

in the selective

not be evaluated

in the system_

separately.

an exploration

why this is not performed

logging Since

system

this is a neglected

of .the economic

in most logged-over

and as

explanation

forest

of

areas was

conducted.

It was assumed

that TSI is a silvlcultural

logger may or may not perform.

Thus, the benefits

TSI is done are compared

to the benefits

performed

areas.

volume

in logged-over

of permissible

In arriving benefits

derived

of economic

first cyclic cut were sunk values not do TSI째

using

relative

arise

from the greater

discounted

the sarae rate of discount

efficiency.

excluded

Costs

stands. costs

of whether

and

used in the

and revenues

from the TSI analysis

to the question

it is not

cut from the treated

the incremental

that a

and costs when

and costs when

The benefits

cyclic

at the B/C ratios

were

determination

second

operation

since

one should

in the they are do or


- ii -

Theanalysis has the highest and Area

that among the three

B/C ratio (1o43).

III has 0째62.

explained benefits

showed

in the distant the magnitude

These

in the ratios

on the TSl.costs indicate

areas, Area

could be

and the incremental

that an increased

future ,, _ .:_/ may not prove of the cost of obtaining

I

II has a B/C ratio Of 0.44

The differences

by the differences due to TSIo

Area

study

harvest

to be desirable

it during

cut

considering

an earlier

point

in

time.

Sensitivity

Analyses

Since there was a need to explore uncertainty the measures

surrounding

the values

of economic

basic assu_ptlons

efficiency

in the study,

of the parameters as well

sensitivity

In each of the study areas, all possible were

evaluated:

annual

(a)

increment

40 per cent_

(c)

20 and 30per

(PAl) of diameter_ variations

rate

analysis

combinations

cent decrease (h)

stands;

from 18 to 24 per cent;

(f)

(d)

increase

derived

of the

was conducted. of the following

rates

second decrease

(e)

for

in the periodic

mortality

from _650 to _500 per cubic meter_

of

as violations

in the permissible

+ i0 per cent over the untreated product

the implications

cyclic

up to

in price

increase

in truck

of 30 and

of the

in interest

hauling

distance


-

12-

+ 25 Km. and + 50 Km. over the average firms that provide of + i0, +•20 phases

interest

ratio° while

in negligible

in price,

analyses

given

rate and haullng

the second

Likewise,

increased

other factors

All these•are

were

depicted

costs

cyclic

or longer

2.

in

But,

cut conditions

the untreated

affect

held constant

that variations

of cuts over untreated

(PAI,

stands),

cost_

the B/C ratios.

per cubic meter

in Table

in the different

in the B/C ratios.

cut-over

dlstance,

lower than _650

of the

variations •in the cost

showed

increase

changes

rate_ and the per cent

A price

(g)

distance

system.

rate and percentage

resulted

mortality

logging

of the sensitivity

PAI_ mortality

variations

and,

hauling

and + 30 per cent of the cost incurred

of the selective

Results

stands

the cost data_

truck

decreased

truck

the B/C

hauling

also lowered

distance,

profitability.


- 14 _

Implications

and Prelimlnary

The Cruz study showed feasbile

Conclusions

that the selective

for the areas examined,

were not achieved.

value

constituted

The factor which

of the net revenue

only a very

the revenues.

into the future, present

heavily

from the second

its value

cyclic

is much

the PNW in

cyclic

cyclic

of the present

when

cut.

The

cut

value

cut is made much

reduced

is

capacities

influenced

from the first

small portion

Since the second

system

even if full logging

the study areas was the net revenue present

logging

of all

further

reckoned

at the

time.

The insignificant cut has an important forest.

influence repercussion

If a licensee

the residual

conformed

stand could provide

of the net returns on the continuity with

horizon,

to net returns

that are received

for returns

in the distant

future

logical

than the cut

prescribed,

of a logger.

However,

more weight

in the present

would

and less cyclic

only from the first A first

from the.

system,

cuts.

(the one from the second

of the net returns

objective

logging

for the next harvest

be attached

be a very

of harvest

the selective

for a logger who has only a short planning

Thus, the maximization

from the second

cut).

cut would

cut that is heavier

that is, the case of overlogging,

would

reduce the


- 15 -

residual

stand that provides

the objective

Hence, feasible,

of sustained

although

phase

cost and revenue

date, and revenue to liquidate there were

much

logging

found

In this case,

from TSI are incurred: Therefore,

a rational

on harvestable

to be

to be economically

This was due mainly

cut all the commercial

no constraints

cut.

system was found

of TSI wasnot

later.

at the first

cyclic

from the forest may not be realized.

in the areas examined.

in time when

able

yield

the selective

the subsequent

attractive

for the second

to the difference

cost at an earlier logger would

volume

tend

in an area if

cut such as the annual

allow-

cut regulations. The length of the cutting

licensees

on some silvicultural

a 25-50 year cut before required

tenured

logger

cycle affects and management

is not allowed

the end of the first

silvicultural

at all be practiced

treatments

by a rational

concerned

with

and, with

some desirable

of the forest.

cutting

improvements

licensee

in quality

biological

of the

prescriptions.

to do the second

cycle

needing

thedecislons

of 25-30

Since cyclic

years,

the

a cost outlay may not unless

he is also

of the products

and environmental

forthcoming attrlbut_s


- 16 -

There

is a need,

rules and regulations variables yield, Also,

therefore, relevant

to be examined

diameter

continuity

cycle,

the study dealt

to areas with

similar

conditions

in the logged-over

not on a logging

forest

Related

studies Here,

appropriately,

charges

concessionaires. externalities

analyses

set-up basis.

be dealt with more as taxes_

similar

could be more

cut.

effects

of higher

results

may be

cut, stocking

growth and cost conditions,

conducted.

Butt

for awlder

should be done on a concession tenure

along with

effects

and

to be evaluated.

old growth

and the like, which

Moreover,

allowable

three areas,

areas, diameter

up to the range of sensitivity range of application,

in cut have

average

the growth

of TSI on growth

from the forest,

only with

study of the

Among

and the annual

of harvest

applicable

larger

are the effect

cuts or other prescriptions

Although

an in-depth

to the licensees.

closely

length of the cutting to ensure

to conduct

of scale

appropriately

and

and area regulations

could

other

such

considerations

are collected

from

(dis)economles

accounted

as well

as

for by researches

on

areas.

Issues and Research

An earlier alternative

Needs

study by the same author

management

schemes

for a given

advantage,

from the firm's viewpoint,

instead'of

maintaining

alternatives

which

a natural

are presented

(Cruz, 1977) which forest

area point

of establishing

stand. in Table

values

this.

into

out the

plantation

The net present 3 indicate

looked

forests for such


- 18 -

Another

alternative

seems evident

which

from the observed

rules is that of clearcuttlng 1982 Cruz study implied timber

perhaps_

implemented

the forests.

to SLS was found

that clearcuttlng

from the private

then that despite

opt for 'losing'

the system

of license),

protection

hort run when logged-over speculators_

of residual

licensees

to practice

public

viewpoints

need

because

space.

Thus, should

natural

forests

even It is, being

of loggers, as a long-

the business.

forests

which

of timber is

to be evaluated

more preference

becomes

worse

in the

loggers_

kalnglneros

and

consequences__

from both private span across

be attmched

to maintaining

reasons,

.........

of the unsecured

externalities

and posterity

the in__

detrlment@lec61oglcal

of forest

for ecological

to be

point.

forestry

are cancelled_ .... Encroachment

leads to even more

the

of punishment

a number

areas which may be done by illegal

Such alternatives

would

vantage

Another problem rel a_ed t0 the _erha_est .................................. adequate

If

for the firm not to practice

those who do not intend

term venture,

violation

or liquidating

(i.e., cancellation

particularly

of forestry

expect

profitable,

no wonder

widespread

and_ the adherence

then one might

appear much more

yet but which

a tendency

stand improvement

profitable,

has not been studied

studies

and time and

on


- 19-

•the corresponding Such researches of stumpage_

system should

(b)

generation,

of incentives

simultaneously

forest

(c)

should

taxation

the effects

be given high priority.

investigate;

for national

of international

(a)

the valuation

and local trade

revenue

concerns,

........

more

generally,

(d)

the system

for enforcing

and, .........

forest conservation

prescriptions.

AS very often •noted, has been inadequately considered

with

estimated

its proxy.

to be insignificant respect

the value

relative

to output

in site

underpriclng

of the resource

in wasteful

use of the input

Both Thus,

a recent

for Philippine

at piloting

Development

because

charges

while

application

(NRMC, 1980) its progress

value

(or stumpage)

and taxes are have

(Table 4) and,

conditions.

rents;

as well

exploitation

(Serna, 1974) has been quite

should

that

as a tendency

for

concessionaires).

of forest

the stumpage

the methodology

inflexible

this results

of even the inefficient

Corporation

tended

It should be noted

to excessive

(i.e., timber)

and destructive

attempt

Resources

particularly

leads

(i.e., proliferation

cause faster

Natural

if forest

timber

Such fees paid by concessionaires

to varia_es

overcrowding

of standing

resources.

appraisal

system

be given more

by the

support,

has long been investigated and positively slowo

endorsed


s

- 20 -

......._

..

......

k

" '--...... ,_

...... <

A related

domestic

problem

marketso,Prlce

the profits

from

differences

logging.

(e.g°, about individual quicker

is. the disposal

Along

firm's

gains it is no wonder

of logs for the foreign

in both markets

with

the influence

log export

quota)

then that recent ...

volumes

of logs being iliegally

exported,

,. study of the costs and benefits "Needless to...say;-the study - _.............. - .......... considerations,

such_as

• .••

on wood-based

affect

of uncertainty

and the lure of

reports -..

indicate

. .............

s_Indeed, a more

large

..._

intensive .............

of the log export ban is in order.

should

economic • ..

as impacts

naturally

......

or

take into account a wide • .... • .• • and administrative :

industries

....

-

-'.--......... ,........ ,..

range of

feasibllit)as .....

and the envir0_men_t.

well


- 21-

Table

CHARGES

Average Charged

4

AND FEES OF EXPORTED

Amount (_/m3)

TIMBER

Price of Exported Timber (_/m3)

Shares of Charges and Fees to Price

1965

1.85

94.0

2.0

1970

4.75

150.5

3,2

1975

14.45

216.7

6.7

1982

30.00

842.6

3.6


- 23-

are bound to be significant becomes

particularly

in the development

and should

important of a region

uniformly

examine

policy

conducted

in such a manner

when

also be evaluated.

the role of forest

is studied.

Here,

tools such as local

This

resources

case studies

taxatlon_

that some generallzability

need could

which

to be be done

â&#x20AC;˘n the fuÂŁureo

All these imply and costsassoclated on private

with

and social

on Intergenerational responsive

policy

PLANTATION

FORESTS

Thus,

the need

to identify

natural

concerns, equity need

forest

national

of benefits

schemes.

and local priorities more

fully

Effects and,

for more

formMlation.

forest management

few studies

have been

well

as their significance

were

done on the PICOP

ventures°

mangement

to evaluated

Plantation

the nature

the incidence

conducted

on their

on the social

tree farming

of pre-project

is relatively

feasibility

private

scale.

project_ studies

recent

more

in the country.

feasibility

The earliest recent

of proposed

as

studies

ones were

in

tree farming


- 24-

The PICOP Tree FarminKProject

The PICOP tree farming inputs well

and technical

knowhow

as the assurance

Since the project the company

of a ready market

minimal

_LindaJao'sstudy

is influenced

showed

additional

by the availability of loans

education

seemed

before

these levels were

otherwise; cited:

the gestation

period

The economic by Table 5 which cent

reached

meant

feasibility

was obtained

from both private

to management

and non-

participation

was used as collateral

education

faster

levels

as well

of

or income

participation

the following

and slower

constraints as impatience

were about

trees.

of the PICOP

project

from a more recent

tree farmers.

and public

on infrastructure.

(b) threshold

- higher

land and manpower

of growing

of the participating

sensitivity

evident

buyer.

own tree plantatlonj

(a) initial

from the DBP_

as

as the major

participants

land which

(e) for non-partlcipants,

lack of suitable

PICOP_s

results: of

PICOP

project

of

tree farmers

_nvestment

(1978) on PICOP

by those who availed

with

to augment

the following

and income

involved the provision

to the participating

was intended

incurred

participants

project

viewpoint,

practice,

is depicted

study

The figures

on 20 per

sh_

as well as depict

wage rate,

and yield

profitability the project's estimates.


Tab]e

• _-

PROFITABILITY 0_" PICOP TREE FARMING: SCENARIOSOF ASSUHPTIONSFOR.COST ANO.BENEFITS

Scenario

Si Iv| cultura! Practices

1 2 3 4 5 6 7 8 9a b IOa b I |a b 12a b 13a b i/_a b 15a b 16a b

Dal !y Wage " "Rate .........

prescribed; prescribed prescr i bed prescr{ bed actua I actual actua I actual prescri bed presc ri bed prescribed prescribed prescribed prescr | bed prescribed prescribed actua | actua] actual actua] actua I actual actuai actual

Source:

a/Figures

presented

Hyman (198I),

Boundary of Analy

Internal •Rate . of Return (_)a/

250 200 250 200 250 200 250 200 250 250 200 200 250 250 200 200 250 250 200 200 250 250 200 200

tree-fan t tee- fan tree-fan t tee- fa rl t ree- fan tree-fan t ree-fa n tree-fare society society society society society society society society society soc rety society soc |ety society society soc iety society

17.9 9.6 I. 3 10.0 31.2 21.6 12.4 0.2 | 7, 9 22,0 9.8 ]3.7 I0,8 14.7 I ,9 5.5 21.9 25.9 13.7 17.5 16.0 20.0 6.9 1] .0

_12.60 12.60 17.00 17°00 12.60 12.60 ! 7.00 17.00 12.60 12.60 12.60 12.60 17.00 ./.uv ! 7.00 i 2.60 12.60 12.60 12.60 | 7.00 17.00 | 7. O0 17.00 . . . .....

Note:

Y_eld (m_/ha)

,............. i

by Hyman were rounded up for

Tables

1 and 8.

.

.......... ,

simpl|c{ty.

i

i


- 26-

From the private when

wages

practices_ likewise lessons

nevertheless

silvicultural

the project

is important

(a) the need for financial of the original

size_

and

households

model

(c) the need

In addition,

on for a

the project

of the area could not

the participants,

experienced

actual

to be viable

some of the more

returns;

of tree loan

that the poorest

income class_

Related

(b) adoption

appears

concerns,

(1981) summarizes

to allow for earlier

re-evalutation

participate_

who were

increases

in their

mostly

from the

income.

Studies

As earlier unique

Hyman

under

about the PICOP venture:

was such

middle

the project

to societal

for harvesting;

agro-forestry

design

according

feasible째 learned

periodic

of view,

are lower than _lT/labor-day, viewed

assistance

point

discussed,

due to its pioneer

existing

tree plantation

tothe

the following

and processing

and processing in the area,

reforestation aspects: facilities

experience

nature,, its being

of land for its participants째 relevant

the PICOP

Thus, needs

may be considered

part

complex_

of an already and the availability

more complete of denuded

the establishment and, involvement

studies

areas

should

of infrastructure, of the poorer

which

are

include marketing

households


- 27-

With respect looked

to utilization,

a study by Meimban

into alternative.processlng

plantation

into firewood,

(dendro-energy)o discount

production, divergent

charcoal,

The benefit

rate were

of the products

cost

as follows;

the final decision

was to be processed

ratios obtained

ipil-lpll

ioi

at 12 per cent

production, Since

these

on how the ipil-lpil

would have

of a giant

for example,

or electriclty-generatlon

firewood

1o2 and dendro-energy,

(1982),

to rest on other

1.06; ratios

plantatin

criteria

charcoal are not very products

such as

local basic needs.

A related

concern

would

be the market

and utilization

stages.

Where

the industry

or monopolistic

pricing

the local communities because

tends

These

of the large scale of industry or even host

In the case of involvement the shifting the factors

cultivator, leading

(19B1) who

expect higher

returns

found

to be monopsonlstlc at least as far as

are bound

operations

of the poorer

studies

A preliminary

at the harvest

to be significant

relativeto

the size

region.

to the integration

developmentprocesso by Corpuz

more

tends

to be inequitable,

are concerned.

of the host province,

structures

need to be conducted of upland

attempt

residents

at this was

that a traditional

from his upland

households,

shifting

such as to ascertain into

the

conducted cultivator

farm than from establishing

could a tree


- 28-

farm of the PICOP influenced

by the effects

Industrial

As a result giving

to tree

been granted plantations

Tree

as leases.

material

requirements

are granted

i0 hectares,

which

incentives

(Annex Table

Table

6 shows

and which of wood

for a minimum

and tree crops_

of revenues

largely

and costs which

of discounting.

the majority

i00 hectares,

again

FarmingPKojects

farm projects

composed

made were

in the timing

of the various

at least

presented

The calculations

by the difference

was magnified

Current

type.

are planted

plants.

of I00 hectares

and are to be established

do not include

projects

hand,

for combined cover

cover

for the raw

Agro-forest

farms agriculture

a minimum

for tree crops.

under

tree

each of which

to tree crops

the new Social

is

area has

in 1981 industrial

of such leases

tree farms, on the other

the government

3), a considerable

that

processing

areas

which

area of

The figures Forestry

Program

focus on the uplan communities. A partial

llst of the approved

in Table 7 for discussion species

are included

longer gestation

purposes.

industrial

It may be noted

in some of the projects_

periods.

tree farm is presented that hardwood

these also involve


Table INDUSTRIAL TREE PLANTATION, TREE FARMAND AGRO-FORESTFARM LEASES IN 1981 ---

i

|l

,. .......

Industrial

'L

ii

Source:

116,894

105

11,110

19

12,220

Farm

j

i

BFD, Philippine

J

i

-

24

148 =ill

i

....

.Tree Plantation

TOTAL i

i

Area • (ha.)

_

Tree Farm

|

.Number i

Agro-Forestry

i

i

Forestry

ii

I_0,22_ i

Statistics,

::

1981.

_:

=ll


Table

7

EXPECTEDFEASIBILITY OF INDUSTRIAL TREE FARM PROJECTPROPOSALSAPPROVEDAS OF 19_3

I TP _

Gestati_

l

I0

2

II 16 _ 6 5 II 21 13

] 4

7 8 9 I0

It

12

13

14

15 16. 17 18

(pu Ipwood) (s._t i,_er) (Ipl l-ipi I) Ca, falcataria) (Ip|l-ipl I pulpwood) (bagras pulpwood) (bagras sawt Imber) (ca r I bbe,.m pine puI pwood) (caribbean pine sawt Iml_ r) (bengue t pine s_tlmber)

19

5" I+I

(a.

National January

-

I RR (_.!...

1,7 over a I0 yr. pd. Z9.30

21.7£1

15+91

12.5_

+

6.8 over a 25 yr. pd, 16.7 over a 16 yr- pd.

-

14.5 -

+

_2 5.5 owr a 16 yr. pal.

+ -

+

fa-lc_taria)

(pUlpwood) (s_tin_er) (mab_3any)

B Ca, falcalaria) 16 (bag ras) ,8 (a. falcatarla) 5 • (Ipll-lpll) 8 (a. falcatarla) I_ (mahogany) rotation period will I_ every 30 yrs. for dlpterocaPp 5 (Ipi I-Ip_|) 16 Ccari bbear+ pine) 8-12 Cothers 12o28. (s_t imber) S (fucl_od) 8 Craw n_ter{als) 14 (Ipl I+ipi |) 5 (giant lpi I-tpl I) II

20-30

Source:

(nlahOg,+my)

8 5 8 12+16 S Ill

4 20-30 3

ROE (Z)

1.4

21

6

ROi (_,)

(¥rs)

,

25

5

Period

(lpi I-tpI 1) (f_hogany i narra) (bagras for banana proppin 9 poles) (m_hogany, .narra + logs)

Industrial 1984.

Tree Corporation

-

60.7 (simple

27.63 -

-

ROI)

_2.3

151 (sin_ole ROE)

-

32+82

IS.9 o_r a 30 yr. pd, 48 (simple ROt) 28.5 over a 10 Yr. pd,

and Bureau of

-.

18,49

Forest

Oevelopmmnt,


- 31-

No computation the projects list.

with

for the internal

the longer

The fact, however,

implies

the importance

of the hardwood

gestation

rates

of return

periods

are provided

that these projects

attached

IRR's

of

in this

have been approved

to establishing

type, even of lower

for most

plantation

forests

may be expected.

Issues The more man-made

forests

required;

While

afford 1979). Bureau agency.

are:

problems

The costs

participation

feasibility

decade,

important

doubts

involved

by the upland

of plantation

government

confronting

communities;

reforestation

on whether

(1977) proposed

Development

It was likewise

additional

forest

charges

the recent

establishment

(NITC), a subsidiary

financing

and, technical

work had accelerated

the cost of reforesting

Thus Monsalud of Forest

and corresponding

of

projects.

have been_expressed

to shoulder

the establishment

the government

degraded

lands

for reforestation

to be supplemented

suggested

in the last

(Sanvictores,

work

of the National

of the National

through

and licensees.

Industrial

Development

by the

by a _uasi-government

that funds he generated

on concessionaires

could

In fact,

Tree Corporations

Company

(NDC), is a


- 32-

step in this direction. interest

loans

NITC is currently

from foreign

out to industrial

tree farming

of the rates to be charged

A different problems been

lending

approach

by Revilla

institutions

projects

which

at very

annual

stipend

to the simultaneous and poverty

(1983a)

in a paper

trust fund from which

and subsequent

larger

reforestation/agro-forestation such fund is initially forestation

budgets

solution

sector

Indeed,

of concerned

the involvement

efforts

detail.

During

informal

agencies째

sector,

wariness

as a reason

for not proposing

system,

strategy.

The creation

cooperator

draws

upon completion

of a

The source

relative

(e.g., about _14,000

communities

sector needs with

to deal with renewal

the _,

per hectare

in 1983).

in the forest in more

some representatives

projects

of

posits

to what

to be studied

upland

an

~

The paper moreover

be entailed

conversations

the private

has

on the COSTEF

is suggested.

of upland

of the private

of the

to be the reforestatlon/agro

would

has been quoting

renewal

be lent

evaluation

in the uplands

a COSTEF

amounts

project

conceived

that lower costs per hectare private

could

low rates;

or cost-effeetivereforestation/agro-forestation of a reforestation

for low

is on-going.

of costly reforestation

suggested

negotiating

residents

far from

from

was cited

their concessions.


- 33 -

And,

in a particular

project

in Northern

conflict (Aguilar_ access

between 1983).

case, the establisPanent of a large Philippines

the project

Implementors

In this respect

to reforestation

in the uplands.

did not initially

ventures

result

tree farming , in serious

and the local populace

unchecked

inequitable,

may even result

differential

in increasedlnstability


- 34-

With

respect

to the technical

needs to be exercised forest

renewal

of the feasibility encroachment

per hectare_

Thus, Hymen made made

falcatarla

ecological

multi-specled,

uneven-aged

were made

have

predictions figures were

forest conditions,

on experimental

even in other

tended

plots

types of

to be optimistic.

out the downward

also needs

risk involved

stands

Table 8, for instance

yearly

adjustments

plantations.

concerns

in terms of the high

in actual

Indeed,

points

and

from 15 to 25 cubic meters

of plots

environments.

effects

plants

(1983) reveal

lower productivity

which

(1981) for example

Moreover, partlculary

n_ber

of future

been expressed.

35 to 50 per cent of yield

yield predictions

for alblzzia

generating

and Gregorio

Such

for

the consequent

cover have

to range

measurements

favorable

forest plantations,

forests.

plantations

from an adequate

under highly

forest

researchers.

the earlier

electricity

care

estimates

on over-estimates

farms and

by Revilla

or only around

by earlier

unlike

of wood-based

estimates

yield from leueaena

obtained

dendro-energy

issue, more

of yield

Apprehension

on the remaining

Recent

made

in the preparation

activities.

yield from ipil-ipll

feasibility

in the conversion

to uneven-aged,

shows

to be addressed, of

slngle-specied

the phosphorous

draining

effect


Table

8

INDICATORS FOR SOME ]OIVI,ROMI_t_,J_EFFECTS OF DIFFERENT UPLAND ECOSYSTEMS AT PUTING LUPA, MT. MAKILING

""

Secomia

(1)

Acidicty

(2)

O_g--Ic Matter Content (Per Cent) (a)

(3) (4) (5)

Plantatn

ee-Year

5.2

n.a.

6.1

6. a.

5.5

3.0

n.a.

2.4

n.a.

2.9

0-15 ca. depth

Net Gaiu in Phos,phorous (ks/ha./yr.) +52.6 Diversity of Insect Species

908

Kalusin

-56.8

-78'7

454

67

KainEin

..........

Forest

(ph)

Old

Nev

Forest

-45.9 n.a.

Grasslan_

+35.4 202

Per cent of Total Average Run-off due +to ra£nfed: (a) (b)

lIsht rainfall, unsaturated soil 9_i

11.5

9.7

ii.7

5.1

light rainfall+ saturated soll

8.6

i0.3

10.7

12.5

4.1

18.4

19.8

14.4

17•5

17.3

58.5

65.2

58.2

73.5

6.4

n.s.

(c)".heavy ralnfa11, unsaturated soil

(d) heavy rainfall, saturated soil 63.8. (6) 'Change _m Sedlmeat Load Due, to Pze--. c£p£taticm Intancity Chanses _ (Per cent)

Sources:

Upland

Hydroecology

Appendix Upland

Table

Hydroecology

Appendix

Table

12.3

21.3

Pzosr_ 1 and,

FiEuze

Prosram 9+ p.

(1977)+

30.

3&a.

(1978),

Tables

1,

2 & 6; pp.

20-24,


- 36-

of an ipil-ipil For comparison

plantation, purposes,

compared

the same table

uses and their environmental

GENERAL

plantation

problem

forests

of degradation logging

resident,

conducted

in the management

such

reforestation

Such tools,

that some monetary

irrigated

for example,

farm and using value

the tax

of forests

it through

of costs

the selective

contractor,

or upland

occupants. of forest practices evaluation

to attempts

the benefits

may include:

farm is benefited

land

and

the distribution

by concessionaire,

on the externalities

tools for sharing

forest

NEEDS

at reversing

of forest

latter would be pre-requisite economic

the other

of both natural

is that of determining

and management

Studies

AND RESEARCH

and, of attempts

system,

presents

forest.

effects.

ISSUES FOR DISCUSSION

A common

to that of the secondary

by a nearby

need

may be feasible.

at identifying

of conservation taxing

in the fees paid by timber

The

the specific measures.

a low-lander

uplander's

to pay the latter4or,

to be

whose

well-conserved

including

the environmental

concessionaires.


- 37 -

Attendant

to such studies

system of incentives

for conservation

Gregory •(1972) for instance, their effects regularly

is the_determlnation

discourages

and disincentives

outlines

on conservation,

e.g.,

conservation

of an appropriate

the various

to overcuttlng.

types of taxes

and

a real •property tax collected

while

a yleld

tax has a lesser

slmilar

effect.

Concomitant their•effects directly

studies would

on the wood

affected

investigate,

processing

by forest-based

for example,

the logged-over

be those

means

on the incidence

industry,

and the•local

activities.•

local

by allowing

owners

of concessions

and, who are therebylnterested

timber

exploitation,

In this respect

of the Revised

Forestry

Code's

studleson:

provision

per

"',i

cent

of

thelrsubscrlbed

the general • : ..

ions/res

public

and,

capital

residents

stock

to

:

to protect

in sustainable (a)the

effectivity _elling

I0

employees,

(b) the real propertytaxes

laborers

an

paid by concess-

.,

to

local governments

are.suggested.

,' .

' .

Related temporal

to

them to be part-

onthellcensees'

municipality

It may be worthwhile

of encouraging

areas fromencroac_ent,

of taxes,

to thetaxatlon

sense .-

forest-based

issue

that of determining

activities.

is a parallel

problem in the Inter,....

the appropriate

As may be gleaned

,.

dlscountrate

from the earlier

for

discussion,


- 3B -

positive

discounting

attractiveness _elatlve

of timber

profitability

minimizing

user's

political

problems

of forest

depicted were

and possibly,

a preliminary

rate,

work in general

has been noted

to be exercised

in outright

able adoption in mos_

developed

more

were

lowering

countries째

affect

(c)

the

i_xamlned.

of various

types

to maximize

practices.

in Philippine

forestry

not only labor displacing Moreover,

intensive째

of the interest

tree plantations_

and

and regulations,

conservation

et alo, 1981). to be labor

the

agricultural

to be done in order

of technology

which

of labor displacing

rules

intensity

the

due to

to be simultaneously

investigation

(Laarman

versus

factors which

fast changing

to encourage

also destructive

stands,

such as uncertainty

also needs

equipment

to encourage

Over natural

of the capital

use of some

capital,

(b) increasing

Moreover,

limits need

investigation

(a) reducing

of tree plantations

in the uplands,

based activities

employment

improvement,

cultivators째

tenure

Parallel

effects:

of plantations

time preference

and restrictive

Indeed,

stand

the attractiveness

crops for shifting forest

had the following

tree planting

reforestation

Thus, rate,

such may result

but

care needs

or cost of

in the unfavor-

technologies

now available


- 39 -

In general, as in an earller

the studies llterature

not pollcy-orlented. while deriving information is partly being

They

some policy

necessary

usually

they should important

at least

for certain

studies

would

provide

through

macro-level

focus on private

the advantages

investigate policy

important

researches.

pollcy

d_ecisions.

additional

and,

studies

variables

This

to the cases

activities),

merit in the

which

If so conducted,

information

are

analysis.

of case

crltlcal

1982)

enough

findings

of certain

as well

concerns

do not provide

comprehensive

effects

above

los Angeles,

of the studies'

Thus, while

(e.g., localized

in the review

(Segura-de

implications,

due to the specificity

their conduct

deemed

survey

for a more

investigated,

future,

included

to those

are such

gathered


Annex THE ANNUAL

For

areas

annual

allowable

Series

of

with cut

A

ALLOWABLE

CUT FORMLILA

approve d timber/forest, formula

is

management

(BFD Administrative

Order

1_71t):

V C

=

A+V

A

0

r

X f

2cc

where:

c

=

annual

V o

=

55_

(Vol.

=

of

+ 25_

(Vol.

+ Vol.

of

based Vr

allowable

cut

70 cms, of

forest Vo,

larger

trees,

inventory..

as

the residual

trees at the end of cycle

A

=

Total operable

f

=

recovery

factor

mlnatlon

of timber

efficiency) =

trees)

same formula

the cutting

cc

trees)

60 cm. dia.

80 cm.. and

on virgin

dia.

cutting

cycle.,

plan,

except

that

are used,

area (70_; pending utilization

deter-

No,

the 7l_,


Annex Table

1

AREA, AAC, PRODUCTIONAND EXPORTSOF TIHBER LICENSEES

Area

(Hi1.

ha.)

1960

1970

1980

1981

4.5

9.4

7.9

7.7

]5.5

16.8

14.9

AAC(Hil.cu._.)7.5 Log Production

(Hll.cu,m.)

6.3

11.O

6.3

5.4

to ACC

84._

71,O

37,8

36.1

3.4

8.6

0,7

0.7

Per cent of Exports to Production

53.9

78.3

11.2

13.1

Source:

Development,

Log Production Log Export

(Mil.cu.m.)

Bureau of Forest various years.

Forestry

Statistics,


An i-l_x Tab 1,e _ 4" LIST

OF INCENTIVES FOR IN,DUSTR_AL TREE: FARMS_ AGRO_FOREST AND TREE FARI'tS

(I)

trees

belong

to

(2)

first priority to iicensee till peri<:)dof avai_ment elapsed; then declared open

(3)

nominal

(4)

no rental first (5) years; 6th-1Oth year, annual rental of P.50/ha.; thereafter, annual recital of _l.O0/ha. if long denuded, after 25 years, first 5 years I_.50; thereafter P|.OO/ha,

(5)

forest charges

(6)

exempted

filing

fee

=

for:

(7) a11 expenses

lessee

right

to

sell has

l_oSO/ha.

25% of regular

forest charges

of NIR(',.

% tax in Title V of NIRC, al! forms of sa]es taxes, local municipal taxes, and rea] property taxes (PD _53) withho]di_g tax at source upon interest paid on borrowings_ =

ordinary and n_.cessary business capital expenditures

(8)

BOI pioneer

(9)

priority

in securing

(I0)

exempted

from PO

(11)

assurance

(12)

product

of

with

area

links

credit

assistance

1153 of

may be exf)orted

processing

p'lants

expenses

or


Annex

Table

_

PERMISSIBLE SECOND CYCLIC CUT FOR TREATED A!!D UNTREATED STANDS FOR ALL AREAS OF THE CRUZ STUDY

Area

Permissible Treated

Area

I

Area Area

Second Stands

Cyclic

Cut (cu.m/ha.)

Untreated

264.5

220.5

II

13.9.5

116.3

Ill

212.4

177,0

.,.,

Stands


o 1983a. "The COSTEF System: A Cost-Effective Reforestation/Agroforestation Strategy." SEARCA Professorial Chair Lecture in Forest Resources Management. UP at Los Ba_os, 22 June 1983. Revilla,

Adolfo

Timber 1983.

V. Jr.

Harvesting?"

1983b.

"DYNACAL

The Filipino

- For a More Realistic Forester,

August-September

Revilla, Adolfo. Vo Jr. and Myrna C. Gregorio. 1983. "Predicted Wood Yield for Leucaena Plantations in the Philippines." Policy Paper No. 10. Forestry Development Center (FDC), U.P. at Los Ba_os. Sanvictores, Jose G. 1979. "Afforestation Work and the International Agro-forestry Development Project in Surigao del Sur." 19 Proceedings of the Agro-forestry Symposium/Workshop, PCARR, Los BaSos, Laguna, 19-21 December 1979. Segura'de los Angeles, Marian 1982. "Research on Forest Policies ._ for Philippine Development Planning: A Survey." " Philippine Development Research, Philippine Institute for Development Studies. Serna,

Cirilo B. 1974. "A Technique for Determining the Value Timber Concession," Master's Thesis, Asian Institute of Managment, Makati.

of a

Tomboc, Carlos C. 1976. "Growth, Yield and Economic Rotation of Bagras Pulptimber in PICOP Plantations, _' Master's Thesis U.P. at Los BaRos. Upland

Hydroecology Program (UHP). Annual Reports, 1979. UPLB-DNR-NIA-Ford Ford Fo_mdation. .

Policy

Report,

1978.

1976-1977

UPLB-DNR-NIA-Ford

and

Foundation.


Policy Issues on Commercial Forest Management