Report No. 34481-IN India Unlocking Opportunities for Forest-Dependent People in India (In Two Volumes) Volume II: Appendixes December 28, 2005 Agriculture and Rural Development Sector Unit South Asia Region Document of the World Bank Contents Appendix 1 Description of Study Methods inJharkhand. Assam. andMadhya Pradesh 1 . .. Background......................................................................................................... 1 Jharkhand............................................................................................................ 1 Assam ................................................................................................................. 4 Madhya Pradesh ................................................................................................. 9 National Report................................................................................................... 10 Appendix 2 Structure ofthe Indian SecondaryForest Industry . ........................................... 11 India's Small Scale Sector .................................................................................. 11 11 The Paper and Paper Board Industry.................................................................. Structure o f India's Forest-Based Industries ...................................................... 12 The Wood-Based Panel Industry........................................................................ 12 13 Non-timber Forest Products................................................................................ Sawmilling and Wood Working ......................................................................... 13 Safety Matches ................................................................................................... 14 Wood Carving.................................................................................................... 14 Community-Based Production Enterprises: Joint Forest Management .............14 FarmForestry .................................................................................................... 15 Social and Economic Benefits o f SSFEs ............................................................ 15 Constraints to India's Small Scale Forest Enterprises ........................................ 16 Appendix 3 Fiscal Analysis of the Forest Sector . ..................................................................... 19 Appendix 4.National and State Legal and Policy Frameworks ............................................. 23 Key National Legal and Policy Milestones ........................................................ 23 Central Issues with State Legal Frameworks for JFM........................................ 26 Legal and Policy Conflicts .................................................................................. 28 PESA-Panacea Examples o f Conflicts and Contradictions with PESA and Forestry .................29 for Community-Based Forestry?............................................. 30 Appendix 5 Community Livelihoods inAssam. Jharkhand and Madhya Pradesh . .............33 Background........................................................................................................ 33 Tribals and Tribal Characteristics inIndia ......................................................... 34 What are Forest Livelihoods?............................................................................. 37 LivelihoodPatterns inthe Focal States .............................................................. 38 Forest Livelihoods and Linkages with Rural and Tribal Development in the 46 Appendix 6 Community Forestry Institutions inMaharashtra . Three Focal States............................................................................................ ............................................ 48 Appendix 7.Forest Management Planning Systems ............................................................... 49 Appendix 8.Linking Overstory Managementto Nontimber Forest Production ..................52 Appendix 9 Market Analysis for Selected Products and States . ............................................. 54 Saw Timber-Jharkhand and Madhya Pradesh Case Study............................... 54 Kendu Leaf-Jharkhand 57 Bamboo-Assam Case Study ............................................................................. and Madhya Pradesh Case Study ............................... 61 MedicinalPlants and Aromatic Oils-Madhya Pradesh and Assam..................65 Fuelwood ........................................................................................................... 69 Appendix 10 ForestFiscalSystemsandAnalysis . ................................................................... 71 What i s a Forest Fiscal System? ......................................................................... 71 Appendix 11 PreliminaryEconomicAppraisalof JFMForestManagementOptions . What are the Main Issues inIndia?..................................................................... ......76 71 Appendix 12 CommunityForestryModelsandForestPovertyPathways . .......................... 78 Appendix 13 Poverty ImpactMonitoringSystem . ................................................................... 80 Appendix 14 InstitutionalOptions-Roles andResponsibilitiesfor Key Actors in . ReformedCommunity-BasedForestry ............................................................. 91 Appendix 15 .What i s the Potentialfor IncreasedRevenuesfrom Community-Based Forestry? ........................................................................................................... 93 Background........................................................................................................ 93 Case Study from Jharkhand ................................................................................ 93 Extending the Modelto a National Level........................................................... 95 References ................................................................................................................................. 100 Tables Table Al.l, Typology for village selection inJharkhand............................................................ 3 Table A1.2. Workshop regional characteristics - Assam............................................................. 7 9 Table A2.1. Number o f unitso f mediumand large wood-based industries ................................ Table Al.3. Village typology for field surveys ........................................................................... 11 Table A2.2. Structure o f India's pulp and paper industry............................................................ 12 Table A2.3, Estimatedannual production o f selectednontimber forest products ....................... 13 Table A4.1. Conflicts between 1980 Forest Conservation Act and 1988National Forest Policy28 Table A5.1, Key socio-economic indicators, focal states............................................................ 33 Table A5.2. Landholdings by household group, Jharkhand 1992 .............................................. 34 Table A5.3, Population characteristics, maintribal states........................................................... 34 Table A5.4. Poverty intribal groups............................................................................................ 35 Table A5.5. Livelihoodpatterns, case study village Jharkhand, Assam...................................... 39 Table A5.6. Livelihoodcalendar o f a typical forest-fringe householdinAssam ........................ 40 Table A5.7. Permanent income sources by quartile, Jhabua ....................................................... 42 Table A5.8. Global case studies o f forest environmentalIncome .............................................. -44 Table A5.9. Relative importance of various means o f the Livelihood........................................ 45 Table A6.1. Contrasting community forest Institutions............................................................... 48 Table A9.1, SWOT analysis of HindustanPaper Corporation Nagaon mill ............................... 63 Table A9.2. Bamboo supply chain pricing analysis: comparisono f growers based 5 kilometers and 85 kilometers.............................................................................. 64 Table A1O.l.Benefit sharing schemes inthe focal states............................................................. 72 Table A10.2. Estimatednet revenue shares for alternative forest models and scenarios .............73 Table A10.3. Meanrevenue and expenditure per hectare, selected states, 1992-2000................. 74 Table A11.1.Estimated economic returns to alternative forestry options.................................... 76 .. 11 Table A14.1, Options for revisedinstitutional roles and responsibilities for community- based forestry ................................................................................................... 91 Table A14.2. Proposed key functions o f forest department to support community-based forestry ............................................................................................................. 92 Table A15.1. Potential forest product supply from reformed JFM programs-Jharkhand .........93 Table A15.2. Potential forest product supply fi-om reformed JFM program-National perspective ....................................................................................................... 96 Table A15.3. Data and assumptions for nationalprojectionso f revenue from reformed JFM....96 Figures Figure A1.1. Location o f selected villages for field surveys ................................................... 4 Figure A1.2. Location o f regional consultative workshops ..................................................... 7 Figure A3.1. Real central plan expenditures for MOEF 1992-03 to 2003-04 ......................... 19 Figure A3.2. Real plan expenditures on forestry 1992193. ...................................... 2002103 20 Figure A3.3. Budget shares, Forestry and Wildlife. MOEF .................................................... 21 Figure A3.4. Real state forestry expenditures. Assam and Madhya Pradesh 1995-2002 ........22 Figure A5.1. Livelihood components ...................................................................................... 37 Figure A5.2. Permanent income shares. Jhabua ...................................................................... 43 Figure A5.3. Natural resource permanent income shares. Jhabua ........................................... 44 Figure A8.1. Sustainability issues with Sal management ........................................................ 52 Figure A9.1. Cost allocations for kendu leaf. Jharkhand......................................................... 61 Figure A12.1 Community-based forest continuum................................................................... 78 Figure A12.2. The forest livelihoodpath and community forestry ............................................ 79 Figure A15.1. Income projections for Jharkhand case study ..................................................... 95 Figure A15.2. Total forest income projections. reformed national JFM.................................... 97 Figure A15.3. Total state revenue projections, reformed national JFM .................................... 97 Figure A15.4. Income per community projections. reformed national JFM.............................. 98 Boxes Box A4.1. Policy qualifications on forest rights......................................................................... 24 Box A4.2 Examples o f follow-on acts, rules and regulations, Madhya Pradesh....................... 27 Box A5.1. Munda relationships with the land ............................................................................ 35 Box A5.2. Traditional functions o f village councils................................................................... 36 Box A7.1. Attributes o f efficient resource assessment systems ................................................ 49 Box A9.1, Impact o f harvesting and transit rules inJharkhand.................................................. 57 Box A9.2. Kendu leafregulatory system................................................................................... 58 Box A9.3. Challenges for developingnew bamboo products ................................................... 65 Box A9.4. Positive and negative features o f patchouli.............................................................. 68 Box A9.5. What role does NEDFIplay inpatchouli marketing?............................................... 69 Box A1O.l. What i s economic rent? ............................................................................................. 71 ... 111 Appendix 1.Descriptionof StudyMethodsinJharkhand, Assam, andMadhyaPradesh Background Sector studies were conducted in three states: Jharkhand, Assam, and Madhya Pradesh. All three are important because o f their high poverty levels and the heavy dependence o f poor people on forests for livelihoods. The three states offer good contrast in terms o f the scale o f the resource base, forest cover types, forest utilization, history and scope o f JFM, forestry institutional capacities, and local legal, policy, and regulatory frameworks to support community-based forestry. Jharkhand Jharkhand covers an area o f 79,714 square kilometers, o f which about 23,000 square kilometers i s forested (52 percent dense forest and 48 percent open forest). About 78 percent o fthe state's population o f 27 millionpeople live inrural areas. About 16 million people in more than 10,000 villages situated in and around forests are dependent on forest resources for timber, fuel, and nontimber products. Recent assessment o f rural poverty in India identifies Jharkhand to be o f particular concern because the absolute numbers o f poor are high and increasing. InJharkhand 64 percent o f the rural people are below the poverty line, and the proportion o f poor in forested areas i s even higher. Forest fringe communities represent about 60 percent o f the total state population and more than 90 percent o f the state's tribal people. Jharkhand's tribal groups strongly identify culturally, and they use the forests for subsistence, as a safety net, and as a source o f supplemental income. The Forest Department's Vision 2010 strategy accentuates the need to shift the focus o f forestry programs toward efficient and effective decentralized management o f forest resources through village-level institutions. The strategy also highlights a growing concern over forest cover degradation from human and livestock pressures. Recent surveys indicate 12,000 square kilometers o f degraded forest cover. JFM i s expanding rapidly inJharkhand. The state's goal i s to register 10,000 committees by 2010, up from the current level o f3,358. To address the key questions and provide objective solutions, a team o f highly respected and experienced international and national consultants was recruited. The team addressed forest management planning systems, forest resource assessment systems, the state legal framework and key issues, marketing systems for selected products, and institutional structures around community forestry. It also assessed community livelihoods, forest use, and perceptions o f forestry and JFM. International consultants dealt with marketing, forest management, and resource assessment and worked closely with local counterparts identified with the assistance o f the Jharkhand forest department over a period o f about three weeks. Field missions included key informant interviews with relevant stakeholders in the private and public sector and in civil society, as well as field visits to communities involved in JFM at various stages o f progress. The national legal specialist in forest and environmental law gathered critical legal documents for review and worked closely with the team to identify legal and regulatory issues that hinder communities from increasing forest livelihoods. An international environmental lawyer reviewed the legal material to provide objective analyses o f issues and suggested solutions. A highly respected national research institute (The Energy Research Institute [TERI]) undertook the institutional assessment and gathered broad input from communities in conjunction with local community support organizations. The forest department identified technical counterparts for each consultant specialist to assist with information collection and organizing field visits. To facilitate an integrated study approach, team members met frequently both inthe capital (Ranchi) and duringfield visits to share ideas and information and to discuss potential technical and policy reforms. The social and institutional work undertaken by TERI was a critical component o f the integrated study, providing a "people's perspective" and valuable insight on social and institutional aspects of community forestry. The TEN inputswere derived from a literature review, results from three one-day stakeholder workshops across the state, and detailed field studies in six communities. The three workshops were representative o f the three main forest types inthe state (dry deciduous forests in north-western Jharkhand, moist deciduous forests in southern part o f the state, and mixed forests in the east). They also focused on areas with a significant number o f JFM committees according to forest department records, which also encompassed a high distribution of the major tribal groups inthe state, inparticular the Munda, Oraon, Santhal, and Ho. The tribal groups in the state have traditionally been located in specific parts o f the state. Their socio- cultural practices have been associated in different ways with the forests. Therefore, the concentration zone of tribal groups was considered as one o f the important criteria for selection o f the regions for the workshops. Inaddition, the selection o f regions for workshop was also based on the presence o f local community support organizations for organizing and facilitating the workshops, and grassroots experience o f various issues related to poverty reduction and natural resource based livelihood improvement in the state. Based on these parameters, three districts: Seraikela in South Chotanagpur, Hazaribagh in North Chotanagpur, and Dumka in Santhal Pargana region were selected for a workshop. Workshop participants were identified in consultation with local community support organizations and Jharkhand forest department. Participants mainly comprised o f tribal village members from the three regions and included women, socio-economically backward castes, as well as a few village heads. A balance was sought among those who had not been part o f any progradproject as well as a few members o f other community support organization led projectshelf-initiatedforest protection groups from the regions to facilitate better sharing o f experiences. Inaddition, a few representatives o f other local community support organizations, researchers working specifically on forestry issues in the region, and one representative o f the local forest department office, were invited to share information and village perspectives on forest management, use o f forests, local livelihoods and so forth The workshop objectives were to create a regional context for the baseline information to be gathered in the six selected study villages and triangulate information emerging in the secondary literature review; facilitate a discussion among the village representatives and local organizations about institutional and policy issues relevant to forest resource management; provide a space and opportunity for people to voice their concerns on priority issues; exchange information among villages about comparative forest resource use and promising models of community management; identify leader communities and their characteristics; identify constraints and opportunities for community or joint forest management or income generation, including policy and regulatory barriers, tenure and access and use rights, structure o f markets, location o f markets, and nature o f demand and competition; and gain a consensus on villages to be studied in-depthwithin that region. 2 A typology (table A1.1) developed by the World Bank and other stakeholders' was used to select six villages (figure A1.1) for more detailed field assessment was made usinginformation from the workshops. The methodology adopted for the village surveys was a mix o f both Participatory Rural Appraisal (PRA) tools for collecting village level information and a questionnaire survey for collection information at the householdlevel. These tools helpedgather informationmainly in group meetings held inthe beginning o f the survey. The tools were helpful in establishing rapport with the villagers. The mapping exercises undertaken in the beginning were useful, as it encouraged villagers from different hamlets to gather at one place. This helped in explaining the purpose o f study and also indeciding samples for household level surveys. Twenty to twenty-five household were selected from each village for a detailed questionnaire survey. In total two to three days were spent in each village. To further understand a broader perspective on some o f the main issues and "triangulate" the information, key informant interviews were conducted with resource persons from the forest department and community support organizations. The objectives o f the field studies were to: prepare profiles o f forest-dependent communities, groups and people; understand local development and priorities; ascertain contribution of forests to local subsistence and income livelihoods; understand community institutions and issues surrounding JFM and broader rural development, local forest management issues and key opportunities and constraints inpromoting community based forestry and livelihood improvement activities. Moist Sal Chaibasa Degraded Near mainroad Yes Nontraditional Thakura Guttu Moist Sal Seraikela Dense Distant from road No Traditional Rueudih Dry Sal Hazaribagh Degraded Distant from road N o Traditional Hathyari Dry Sal Hazaribaeh Dense Near mainroad Yes Nontraditional Murumkalan Mixed Dumka Dense Distant from road Yes Traditional Upar Murgathali Mixed ldry Dumka Degraded Near mainroad N o Nontraditional Semra Sal Ghaeharbari The reporting process was highly collaborative to promote. an integrated assessment o f community forestry challenges and opportunities in Jharkhand. The legal, forest management, forest resource assessment and marketing consultants reviewed each other's reports to ensure consistency and accuracy. The background papers were presented to the Jharkhand forest department by the task manager and valuable feedback was usedto make revisions. Forest Trends (Washington, DC); Jharkhand forest department, and community support organizations. 3 Figure Al.1. Location of selected villages for field surveys' 1 JHARKHAND~ ... ........ .................... ..... i B I H A R W E S T B E N G A L C H H A T T I S G A R H Map not to scale Copyright Q 2005 www.mapsoflndla.con Source: Maps o f India (map used with permission). Assam One-third o f Assam's total land area o f 78,438 square kilometers i s forested. The state's forests are among the most biodiversity rich in South Asia. However, forests are under threat from illegal harvesting, fire, overgrazing, and encroachment. High population growth, flooding, and migrants from neighboring `states are cited as major causes o f forest encroachment. Almost 20 percent o f the reserved and protected area forests are subject to various levels o f encroachment. The state's forest policy, developed in2004, outlines a number o f progressive strategies and programs related to JFM, forest product marketing, biodiversity conservation, and forest eco-tourism. JFM i s just beginningto be implemented and i s a major thrust o f the new forest policy. The same team and approach was used in Assam as in Jharkhand over a period o f about three weeks. The same approach to social and institutional work undertaken by TEN inJharkhand was repeated in Assam and again was a critical component o f the integrated study, providing a "people's perspective" and valuable insight on social and institutional aspects surrounding community forestry. The field study was conducted intwo phases. Inthe first phase, four regional workshops were organized to gather a broad understanding o f the issues across different regions Maps have proved a challenge for Jharkhand. Very recent revisions o f district boundaries (and creation o f four new districts) are not reflected on many digital thematic maps. 4 o f the state. Inthe second phase, detailed village surveys were undertaken to gather livelihood and social/demographic data at the household level, as separate case studies. The workshops were aimed to get a consensus on the villages to be surveyed inthe second phase o f the study and also issues, which needed detailed investigation in the field survey. Specific objectives included: creating a regional context for the baseline information to be measured over time in the selected study villages and triangulate information emerging in the secondary literature review; facilitating a discussion among the village representatives and local organizations about institutional and policy issues relevant to forest resource management and provide a space and opportunity for people to voice their concerns on priority issues; exchanging information among villages about comparative forest resource use and promising models o f community management; identifying leader communities and their characteristics; identifying constraints and opportunities for community or joint forest management or income generation; and gaining consensus on villages to be studied in-depth within that region, within the parameters o f the forest village typology. The selection o f regions for the workshops was done in consultationwith the Assam Forest Department. It took account o f the following variables: Physiographic regions: The state o f Assam can be divided into three main regions, namely the Brahmaputra valley, the hills o f Karbi Anglong and North Cachar and the Barak valley. The Brahmaputra valley covers 72 percent o f the state's total area with 18 districts. The hills o f Karbi Anglong and North Cachar are mainly confined to the districts o f Karbi Anglong and North Cachar Hills. The Barak valley, an active floodplain, in the southern part o f the state covers 3 districts. The selection o f districts to hold the workshops aimed at representing all three regions. However, conducting a workshop in the region o f the hills was not possible due to instable political conditions. The workshops in this report thus represent the Brahmaputra region where three workshops were conducted, representing upper and lower Brahmaputra valley. The fourth workshop was conducted inthe district o f Cachar, representing the Barak valley region. Forest type and cover: The four major forest types found inthe state can be broadly classified as tropical wet evergreen forests, tropical semi-evergreen forests, tropical moist deciduous forests, and sub-tropical broadleaved hill forests. Tropical wet evergreen forests are found mainly in the eastern and southern state parts o f the state. Tropical semi-evergreen forests are found in southern and northwesternparts o f the state. Tropical moist deciduous forests are found in central, western and northwestern parts o f the state and the tropical broadleaved hill forests inhilly regions of the state, especially inNorth Cachar and Karbi Anglong districts. However, it needs to be mentioned here that the above distribution pattern i s only indicative as usually a mixed pattern i s observed with one district itselfcontaining 2-3 forest types. However due to instable political conditions in the hilldistricts, we were not able to conduct survey in sub-tropical broadleaved hill forest areas. However, inorder to compensate for this survey was conducted inthe adjoining Cachar district. Status of JFM: Since JFM program has already been initiated by the forest department in the state from 1998 and has been amended in 2004, the status o f JFMprogram, interms o f number o f committees formed by the forest department in different circle was considered as one o f criteria for selecting the districts. The districts for workshops were selected from those regions, which had significant number o f EMcommittees as per the records o f the forest department. Major tribal groups: The tribal groups in the state have traditionally been located in specific parts o f the state and based on their socio-cultural and resource use practices have been associated in different ways with the forests inand around them. InAssam the tribal population is broadly categorized into the plain tribes and the hill tribes. The tribes inthe hillregions are still associated with the practice o f slash and bum agriculture. All the economic activities and cultural practices of such tribes have traditionally revolved around this resource use practice. Inthe Barak valley, the Khasi tribe i s associated with the practice o f "pan jhum, " which i s considered as having significantly different implications on forestry management. At the same time, the valley i s also home to a large number o f tea-garden laborers (considered as tribal populations in other states o f India), The increasing number o f unemployment amongst these groups i s also having a significant impact on forestry management in the region. The Bodo, one o f the major plain tribes, involved mainly in agriculture, i s another example of the variance in the impact o f resource use and socio- cultural practices on forestry management. Therefore, the concentration zone o f tribal groups was considered as one o f the important criteria for selection o f the regions for the workshops. Presence of a respectable local community support organization: The selection o f regions for workshop was also done taking into consideration the presence o f local NGOs not only for organizing and facilitating the workshops but also for their grassroots experience on various issues related to poverty reduction and livelihood improvement in the state. Therefore, selection of NGOs was done taking into consideration their activities related to natural resource management, promotion o f education and income generation activities for poor including women and their experience o f working with the forest department. Based on these parameters, as mentioned above, three districts in the Brahmaputra valley, Tinsukia, Kamrup, and Kokhrajhar, and one district inthe Barak valley, Cachar, were selected for the workshop (figureAl.2). More details on the characteristics o f each workshop site are shown in table A1.2. The participants for the workshops were identified in consultation with local CSOs and forest department. They mainly comprised o f tribal village members from the two regions including women, socio-economically backward communities as well as a few village heads. These members were identified considering on balance mix o f those who have not been part o f any progradproject as well as a few members o f other ongoing projectshelf-initiated forest protection groups from the regions to facilitate better sharing o f experiences. Inaddition to these, a few representatives o f other local CSOs, researchers working specifically on forestry issues in the region and representatives o f forest department wherever possible, were invited to gather information and village perspectives on the variation within each region in forest management, use, and livelihoods and so forth The specific details on profiles o f participants are given in detail inthe findingso feachworkshop. The workshops were organized in a manner to ensure broad participation by various groups as well as better understanding o f issues and priorities o f different groups. Hence, the approach adopted was to encourage an open discussion on each o f the identified topics given inthe terms o f reference. This ensured understanding o f the range o f variation among villages o f the region, different viewpoints and perspectives o f various groups, identification o f some o f the main problems and concerns, knowledge o f positive experiences and models adopted by some groups and so forth and collective information about forestry and livelihood situation inthe region. 6 Figure A1.2. Location of regional consultative workshops .-..-,---,-- I Source: TEN 2005 (map used with permission). Cachar Barak Tropical 21 JFM 1.3 percent inCachar and 0.3 Deshbandhu and semi- committees in percent inKarimganj. Tribal Club Karimganj evergreen Cachar, 18 in groups representedby Karimganj Dimasas, Khasis, Barmans, Tripuras and Halams. Kokrajhar Brahmaputra Tropical 33.7 percent o f districts Green Forest moist population. Mainly Bodo Conservation deciduous community. (mixed deciduous) Kamrup Brahmaputra Tropical 9.9 percent Shram-o- moist Shristi deciduous Tinsukia Brahmaputra Tropical 18 JFM 5.8 percent Ed-Enand Wet committees. MAA Evermeen 7 The starting session o f workshops were focused on introduction o f the participants, explanation about the purpose o f the workshop, brief presentation about the characteristics o f the region and sharing of experiences o f some o f locally well-known initiatives o f community efforts in forest protection and income generation activities. Of the identified topics for discussion, that is, forest tenure and resource management, utilization o f forest resource, forest product marketing and forest management arrangements, the first topic was discussed with all participants to get experience o f diverse range o f stakeholder present inthe workshop. The discussion o f second and third topic was organized in small sub-groups to understand the diversity o f different groups, These groups then presented their discussions to the other groups. Discussions on forest management arrangements were done again in full house with all the participants, which not only enabled the discussion on different experiences but also identification o f regions and few villages for further in-depth study. The limitations o f the workshops could be mainly categorized into those related to time constraint and coordination o f workshops. Given the short time for organizing the consultations, the participants were invited through the local CSOs and the forest department. Therefore, in some cases (for example, in the Cachar workshop), there were more participants who were resource persons o f the projects undertaken by the local CSO. However, duringthe process o f coordination o f the workshops, by forming groups o f project and nonproject beneficiaries it was ensured that all the groups had enough space to share their experience. The lack o f time also led to difficulty incross-checking the workshop arrangements, which inthe case ofthe Cachar workshop resulted in the under representation of JFM villages. However, this gap was filled by the enthusiastic participation of the forest department representatives and the well informed CSO participants and community members, who were aware o f the program. Not having been able to facilitate a workshop in the hills region due to the unstable political conditions was considered as a major limitation in the study. However, the workshop at Kokrajhar, a newly formed autonomous council, was an attempt to provide an understanding o f issues related to forestry management under such an administrative set up. In the coordination o f the workshop, flexibility was maintained to accommodate discussions on issues besides the identified topics. Also considering the time factor, the discussions o f themes like forest product collection and marketing were combined into one session. Inthe secondphase, village level surveys were conducted, subsequent to the regionalworkshops, with the broad aim to further investigate the issues raised inthe workshops and prepare a detailed case study o f the selected villages. The villages were selected using the typology given in the terms o f reference and taking into consideration the suggestions made by the participants o f the workshops as well as by the forest department. Based on this, eight villages were selected for the in-depth survey (table A1.3). The methodology adopted for the village surveys was a mix o f both participatory rural appraisal tools for collecting village level information and questionnaire survey for collection information at the household level. The information from these tools was collected mainly in group meetings held in the beginning o f the survey. The tools were helpful in establishing rapport with the villagers quickly. The mapping exercises undertaken in the beginning were useful, as it encouraged villagers from different hamlets to gather at one place. This helped in explaining the purpose o f study and also in deciding samples for householdlevel surveys. Since the total number o f household in the selected villages varied, taking time schedule o f the study into consideration, 25-30 households were selected from each village for questionnaire survey. In total, two days were spent in each village. In addition to the village level surveys, to further understand some o f the issues and `triangulate' the information, interviews were conducted with resource persons from forest department and CSOs. 8 As mentionedpreviously, not having been able to conduct a survey, due to political instability in the hills region was a major limitation. However during the village survey, this limitation manifested itself while conducting surveys in both the Barak and the Brahmaputra regions. The team was unable to go into villages located in the interior forest areas. Even in villages were permission was granted, there was a considerable limitation as the team was strongly advised not to spend more than a duration o f three hours in a village for security purposes. In the district o f Kokrajhar, the team was under the constraint o f carrying out the survey with accompanying security personnel and the constraint o f carrying out the sample survey according to the selection criterion and inthe presence of the Councils representatives. Table A1.3. Village typology for field surveys Tropical semi- Karimganj Karimganj Dense Accessible JFM Forest Korikhai evergreenForests Tropical semi- Cachar Cachar Degraded Restricted No JFM Revenue Maruacherra evergreenForests access Tropical moist Kokrajhar Haltugaon Degraded Accessible JFM Forest Bishmuri deciduousforests mixed deciduous) Tropical moist Kokrajhar Kachugaon Dense Restricted No JFM Forest Demdema deciduous forests access mixed deciduous) Tropical Wet Tinsukia Digboi Degraded Restricted No JFM Revenue Paharpur EvergreenForest access Tropical Wet Tinsukia Digboi Dense Accessible JFM Forest Soraipung EvergreenForest Tropical moist Kamrup Kamrup Degraded Restricted No JFM Revenue Chakrapani deciduous forests West access Tropical moist Kamrup Kamrup Dense Accessible JFM Revenue Garopara deciduous forests East aBased on observedcommunication links (difficulty inaccess) Additional criteria The task manager presented a summary o f the results to the forest department for feedback and to aid inrevision o f background papers. Madhya Pradesh About 75 percent o f Madhya Pradesh's population o f 66 million live inrural areas. The total land base i s 308,242 square kilometers, o f which about 77,265 square kilometers are forest cover (57 percent dense forest and 43 percent open forest). The state government i s also increasingly concerned over forest cover degradation from human and livestock pressures. Current estimates show 32 million livestock units inthe state. About 21 millionpeople inmore than 22,000 villages situated within 5 kilometers o f forests are dependent on forest resources for timber, fuel, and nontimber products. An estimated 37 percent o f the rural people are below the poverty line, and 9 the proportion o f poor inforested areas i s even higher.About 25 million people comprise o f tribal people and scheduled castes. Madhya Pradesh's tribal groups strongly identify with forests for subsistence and cultural reasons, as a safety net, and as a source o f supplemental income. The Forest Department's recent Vision 2020 strategy emphasizes investment and management on state, private and community forests for multiple objectives including environmental security, poverty alleviation o f forest-dependent communities, and bridging the gap between supply and demand o f various forest products. A key pillar o f many o f the specific sub-strategies i s greater empowerment o f forest-dependent communities with respect to forest management responsibilitiesand authority. JFM i s well developed with almost one-third o f the total forest area under community management. Madhya Pradesh has more JFM committees than any other state and has the country's largest area o f Teak plantation. A slightly modified approach was used inMadhya Pradesh to reduce costs and take advantage o f other ongoing work inthe state. The same team o f national and internationalconsultants gathered relevant data and other information through intensive field work. However, field surveys and workshops for communities were not held due to the availability o f similar information from a broad range o f other studies on JFM, community perceptions o f forestry, forestry and natural resources livelihoods, tribals, and so forth. Desk studies were used to collect and distill this information into a background paper. Further,tribal groups inJharkhand are very similar to those in Madhya Pradesh and much o f the research done for Jharkhand was applicable in Madhya Pradesh. The task manager presented a summary o f the findings to the Madhya Pradesh forest department for feedback and to aid inrevising the backgroundpapers. National Report The background papers drafted for research in the three states contributed heavily to the development o f a national report on JFM, augmented by a broad range of national and international material on community forestry, marketing, livelihoods and policy. Initial results from the state studies were presented to the National Forest Commission in December 2004 and valuable comments received that aided in drafting the national report. The presentation team also included experts from Mexico, Honduras and China, as well as experts with wide international experience in community forestry. The material prepared for these sessions was also extremely valuable in drafting the national report. The first draft o f the national report was reviewed internally by staff inAgriculture and Rural Development-SouthAsia. Comments and suggestions helpedshape a second draft, which was then evaluated by seven peer reviewers both from inside and outside the World Bank, as well as four anonymous reviewers inIndia. 10 Appendix 2. Structure of the Indian SecondaryForestIndustry India's SmallScale Sector India's small scale sector (all types o f industry)i s an important component of the Indian economy and contributes significantly to industrial output, exports and employment. This sector has seen steady growth during the past decade. The number o f units increased from 2.38 million in 1993- 94 to 3.44 million in 2001-02. Duringthe same period the production increased from Rs2,416.48 billion to Rs6,903.96 billion and employment from 13.93 million to 19.34 million. Exports increased from Rs290.68 billion in 1994- 95 to Rs697.97 billion in 2000-01. The sector plays a major role in India's exports and contributes 45-50 percent o f total exports (about 35 percent directly and 15 percent through merchant exporters, trade houses and export houses). It i s estimated that a million rupees o f investment in fixed assets in the small-scale sector leads to production o f goods and/or services worth Rs4.62 million annually, with an approximate value addition o f ten percentage points. This sector also creates the largest employment opportunities outside agriculture. Within the forestry sector, the focus has traditionally been on large enterprises. The Small Scale Forestry Enterprise (SSFE) sector, which processes the majority o f forest products and provides employment to millions o f poor people, has not received the attention it deserves. India has a very large number of poor (c. 260 million) and indigenous peoples (c. 80 million), many o f whom depend on forest-based livelihoods. Millions o f poor people earn their livelihood through fuelwood and nontimber forest product collection and through small scale pulp, paper, wood based panel sawmilling, joinery and furniture and safety match manufacture and through processing and sale o f wood carvings, sports goods and other products nonforest timber product- based SSFEs alone provide up to 50 percent o f the income o f 20-30 percent o f the rural labor force in India (Government of India 1999). Structure of India's Forest-basedIndustries India's National Forestry Action Program documents the number o f medium and larger scale wood based industries in the country some o f which could provide opportunities for additional IFC investment (see Table A2.1). Table A2.1. Number of unitsof mediumand largewood-basedindustries Papermills 21 Newsmint 5 Drawndirectly from a discussionnote (World Bank2005a) 11 The Paper andPaperBoardIndustry Paper and paperboard production i s an important forest-based industry in India. It is estimated that in 1993, there were 380 paper mills functioning in the country, o f which 359 (94 percent) were small mills having an installed capacity o f less than 30,000 metric tons per year (Pradhan and Barik 1999). The current capacity-wise breakdown o f the industryi s shown in table A2.2. Less than 5,000 140 5,000-10,000 112 10,000-20,000 88 20,000-33,000 32 More than 33,000 34 The total installed capacity for paper and paper board i s estimated to be 3.9 million metric tons but the actual production is about 2.6 million metric tons (Government o f India 1999). It is estimated that 66 percent o f the installed capacity i s in small units (Pradhan and Barik 1999). Actual production o f smaller scale Iunits has been reported as 1.7 million metric tons. Of raw material used by the pulp and paper industry wood accounts for 43 percent, ago-based fiber (mainly bagasse and straw ) - 28 percent and waste paper - 29percent The hand made paper industry, a traditional craft, i s a recognized village industryunder the Khadi and Village Industries Act and receives special assistance from the Khadi and Village Industries Commission. It generally utilizes textile fiber derived from rags, gunny bags, cotton linters and other waste material. According to an estimate made a few years ago, the total annual production o f handmade paper by the cottage industrywas just 5,000 metric tons with a sale value o f about Rs40 million. Most o f this paper i s used for greeting cards and certain stationery items. The Wood-BasedPanelIndustry There are three major wood-based panel products that are manufactured in India -plywood, including veneers, blockboards and flush doors; fiberboard; and particle board. SSFEs play an important role in the manufacture o f all o f these products. According to an estimate made a few years ago, there were 480 plywood factories inthe country, o f which 418 (87 percent) were inthe small-scale sector (Federation o f Indian Plywoodand Panel Industry2004) At the time o f the most recent survey there were 14 decorative veneer units, with an installed capacity o f 33 million square meters. It i s not known, however, how many o f these were in the small-scale sector. The current annual capacity o f decorative veneer units i s estimated to be 33 million square meters. There were 98 unitsthat were producing flush doors and blockboards with an annual production o f 7.6 million square meters. Of these, 98 units small scale units accounted for nearly a quarter of production. In1993 there were 11particleboardmanufacturing units inthe country with a total installed capacity o f 85,000 metric tons, while licenses for six more unitshad been granted with an additional capacity o f 87,000 metric tons. There were three fiberboard mills in India with a total installed capacity o f 57, 000 metric tons. Inaddition, there were two units manufacturingmedium density fiberboard with an installed capacity o f 65,000 metric tons. Fresh licenses had also been granted to one hardboard plant with o f 20,000 metric tons capacity and 12 seven medium density fiberboard plants with a total capacity o f 207,000 metric tons. The total annual capacity o f particleboard and fiberboard units at present i s estimated to be about 207,000 metric tons. SawmillingandWoodWorking It is estimated that there are about 23,000 sawmills in India. Ninety-eight percent o f these are in the small category with annual log intake up to 3,000 cubic meters. Annual production capacity i s estimated at 27 million cubic meters, but capacity utilization i s estimated to be 50-64 percent. The last survey undertaken estimated that about 140,000 workers were employed in the sawmilling industry. It was estimated that small sawmills accounted for 82 percent o f the total sawn timber in the country. The main uses of the sawn wood are for construction (28 percent); production o f boxes (18 percent); joinery (27 percent); furniture (11 percent); Sleepers (8 percent); and other uses (8 percent) Wood working i s a traditional industry in India producing furniture, doors, windows, panels, sports goods, handicrafts, shoelasts and heels, textile mill accessories (bobbins and shuttles), and so forth In addition, truck and bus body building and the manufacture o f agricultural implements are also important wood-based industries which consume a large quantity o f wood. It i s estimated that construction o f the body o f each truck consumes 6.25 cubic meters o f sawn timber. A large number o f wooden agricultural implements are manufactured each year. Most of the work i s done in small-scale units or by individual artisans. According to a field estimate, the total annual consumption o f wood for this purpose was about 4 million metric tons and there were 54,975 wood working units inthe small-scale sector. Non-timberForestProducts India's forests yield a large number o f diverse nontimber forest products. Estimated annual production o f some o f the commercially important nontimber forest products i s given in table A2.3. Table A2.3. Estimated annualproductionof selected nontimber Myrobalans 132,250 Sal (Shorea robusta) seeds 709,700 Mahua (Madhuca latifolia) seeds 697 600 Neem(Azadirachta indica) seeds 115,000- Other seeds 57.500 I Essential oils I 3.160 1 Gum(karaya) 15,000 Resin(from Pines) 45.000 Katha 5.750 Tans and dyes 222,900 Bamboo 4,7 16,600 Fibersand flosses 15,000 ' Beedileaves 360,000 Lac 30,000 13 Safety Matches There are about 12,000 safety match making units in the country, and all except five are in the small-scale and cottage industriescategory. Eighty-two percent o f the production i s in the small- scale and cottage sectors. The industry as a whole employs 250,000 people out o f which only 6,000 are inthe large scale mechanized sector. Wood Carving India has a well-developed traditional wood carving industry.The major wood carving centers are located in the states o f Uttar Pradesh (Saharanpur and Nagina); Rajasthan (Jodhpur); Arunachal Pradesh (Tirap); Gujarat (Surat and Mahuva); Kerala (Kochi, Ernakulum, Trichur and Thiruvananthapuram); Jammu; Kashmir; and Madhya Pradesh. In India there are about 90,000 carving centers and the number o f registered artisans i s reported to be 260,000. The actual number o f artisans i s perhaps higher: for example in Kerala, while there are 3,400 registered artisans, a survey by a private organization revealed that there were 6,000 wood artisans in Thiruvananthapuram alone. The number o f people indirectly involved in the industry i s much higher. For instance, in Saharanpur District o f Uttar Pradesh, it i s estimated that while 50,000 to 87,000 people are directly involved inwood carving industry, about 350,000 people are indirectly dependent on it (Centre for InternationalForestry Research 2002; World Wildlife Fund2003). The industry gets its raw material from the Forest Department as well as farmers. The consumption i s high. In Saharanpur alone, it i s estimated that about 25 truck loads o f wood are consumed per day by the industry, which translates into roughly 90,614 cubic meters per year. It i s estimated that 2,010 cubic meters of wood are consumed by the industry in Kerala. The main products made are boxes, figurines, idols, jewelry boxes, incense boxes and stick holders, candle stands, photo fiames, coaster sets, letter racks, stationery holders, pipe stands, tobacco jars, tables, screens and carved furniture (World Wildlife Fund2003). Exporters play a key role in the industry. They obtain orders from foreign buyers and get the products manufactured in their own units. If they are unable to produce the volumes required, they outsource some production to artisans on a contract basis. India i s one o f the largest producers o f wood carved products in the world. Exports amounted to Rs4.344 billion in 2000- 01, The main importing countries are the UnitedStates (25 percent) and the United Kingdom (12 percent) Community-BasedProductionEnterprises:Joint ForestManagement The JFM program, under which local community groups and the Forest Department jointly protect and manage the forest patches adjoining a village and share the benefits, i s now over a decade old. Many o f the EM Committees have started producing forest products such as poles, timber, grasses and other nontimber forest products on a regular basis and thus have emerged as important community-based forestry production enterprises. However, market constraints are an issue and few communities if any, are producing timber for sale as roundwood, or processing logs into lumber. 14 FarmForestry The provisions o f the Forest (Conservation) Act (1980) and the National Forest Policy (1988) effectively prevent a direct role for the corporate private sector on government's. legally classified `forest lands', which cover 97 percent o f the forest area. Outside government forest lands there are restrictions presented by statutory ceilings on the amount o f agricultural land that can be held by individual owners. Thus, the creation o f large-scale private plantations on either forest or nonforest lands i s currently almost impossible. The net result o f this legislation i s that farmers are now major producers o f industrial wood in India, The growth o f farm forestry insome areas such as Uddham SinghNagar inUttaranchal and Prakasam in Andhra Pradesh for example creates opportunities to promote the expansion o f existing and establishment o f new wood-based SSFEs. It i s estimated that Uddham Singh Nagar and Prakasam districts alone produce 0.2-0.28 million metric tons and 0.65-0.7 million metric tons respectively o f farm grown wood annually. Interms o f value, it i s estimated that wood worth Rs650 million and Rs560 million respectively i s produced annually in Uddham Singh Nagar and Prakasam districts. Thus, just two districts (or rather parts o f these districts) are producing nearly 1 million metric tons o f wood annually valued at more than Rs1,200 million. Many wood-based enterprises have sprung up inareas where abundant farm grown wood i s available. However, despite these positive farm forestry developments there i s a growing shortage o f roundwood for many industries inmany areas o f India. Social and Economic Benefits of SSFEs SSFEs play an important role in improving rural livelihoods, especially for the poor. This not only reduces pressure on scarce agricultural land but also decreases stress out-migration from rural areas into cities, where the poor often end up living in slums under sub-human conditions. Some o f the characteristics o f SSFEs that indicate their suitability for generating local livelihood opportunities for the poor and other vulnerable groups include the fact they are small in size and are often household based; they are predominantly rural and frequently seasonal; they are labor intensive and use simple technologies; they require very low capital inputs; they are accessible to low income and socially disadvantaged groups; they provide direct benefits to the local economy; and women are heavily involved, often forming a majority of the labor force. Landless and poor women often form a significant proportion o f the labor force inmany SSFEs. Even among landed farmers, earnings from SSFEs usually improve their income security and reduce pressures that lead to over-exploitation o f the agricultural land base SSFEs also boost the local economy through local purchase o f raw material for example, farm grown timber from farmers, and improve the technical skills o f the workers. As the capacity o f agriculture to generate additional livelihoods progressively declines, more and more rural people turn toward employment in SSFEs and other small-scale enterprises. A feature o f the Indian SSFE sector is that while most o f the forests are owned by the government, the bulk o f SSFEs are in the private sector. It i s estimated that more than 90 percent of India's wood based products are presently manufactured in the private sector SSFEs are an important players in the forestry sector. As noted earlier, 98 percent o f sawmills in India are small, but they produce as much as 82 percent o f the sawn timber in the country. About 87 percent o f plywood factories and 94 percent o f paper mills also fall in the small enterprise category. It i s estimated that the wood processing industries inIndia process about 24-30 million cubic meters o f wood per year, the bulk o f which i s processedby SSFEs. 15 It is clear from the above account that the Indian SSFE sector is very diverse and encompasses a wide range o f activities ranging from production or collection o f products such as fuelwood, poles and nonforest products; their processing either by hand (for example, leaf plate stitching) or by modem machinery, and marketing at every level ranging from barter at the local level to export to international markets. The Indian SSFE sector produces a wide range o f products such as poles, fuelwood, charcoal, sawn timber, furniture, veneer, plywood, blockboard, fiberboard, particle board, paper, safety matches sports goods, handicrafts, herbal medicines and other nontimber forest products. Due to the diversity o f products, markets and policies, it is difficult to make generalizations for the entire SSFE sector. However there are several emerging investment opportunities constraints to development and anticipated shifts in the structure size and location o f SSFEs that could provide a starting point for InternationalFinance Corporation (IFC) and World Bank engagement. Constraintsto India's SmallScale ForestEnterprises The key constraints faced by SSFEs inIndia are: e Despite the past success o f farm forestry a growing shortage o f quality raw material due to felling bans and restrictions on extraction in several states. e Growing concerns over environmental and labor issues. In recent years, many court rulings have resultedinthe closure o f forest produce processing industrieson account o f enhanced environmental concerns. e Since economic liberalization there has been growing competition from cheap imports and a trend toward removal o f protective policies, such as reservation. Indian SSFEs are generally quite inefficiently run, the quality o f products i s poor and there i s lack o f standardization - thus they are quite uncompetitive internationally. There i s an urgent need to improve both technical and business management and to attract foreign investment especially inmedium scale industries. e Difficulties o f market access. Stringent application o f an international intellectual property rights regime i s also likely adversely to affect marketing prospects for some Indian SSFEs. Since it i s in these latter areas that IFC and the Bank both have the potential to play a useful role this next section discusses those possibilities. Raw material shortages. Some o f the larger forest industries such as WIMCO (a match company) and several pulp and paper mills have been successful in engaging farmers located close to their mills as outgrowers. Earlier loan schemes had mixed results but current outgrower schemes under which companies raise and sell high quality clonal eucalyptus seedlings and guarantee farmers a reasonable and guaranteed price are proving more successful. For example about 9,000 farming families are now involved producing about 85 percent o f the BILT Corporation's annual wood requirement. BET`Schief executive officer has made the point that such schemes could be accelerated ifthere existed a mechanism for allowing access to government forest lands by companies that would be willing to collaborate with local communities inraising pulpwood as a cash crop. This has long been a politically sensitive issue because o f the risk o f preventing access by poorer families to essential fuelwood and grazing lands. Infact such leasehold arrangements are explicitly debarred by the 1980 Forest Conservation Act and 1988 Forest Policy. However a number o f factors 16 suggest that it might make sense for IFC and the Bank to engage in very exploratory dialogue with government on the possibility of pilot scale testing under very strictly controlled circumstances o f a scheme under which partnership arrangements might be introduced for areas o f degraded JFM community owned forest to be earmarked for pulpwood or other types of industrial wood production. These pilot schemes would need to worked out through carefully structured and transparently negotiated contractual arrangements that would fully engage and protect the interests o f local communities, provide improved seedlings and technical assistance to participating families and a guaranteed minimumprice for the wood to be produced. One o f the reasons for suggesting this approach i s that some JFM schemes are running into marketing constraints for the output o f their woodlands. IFC's Corporate Citizenship Facility could be an appropriate vehicle for testing such pilot scale business /community partnership schemes in India. A scheme along these same lines in Kenya i s in an advanced stage o f processing with a client company. What i s being suggested above as a pilot scheme for the pulp and paper industrycould feasibly be relevant to other types o f industry in India. For example, many other SSFEs are facing raw material shortages and are unable to utilize their installed capacity. Capacity utilization i s only 50 percent for plywood, 41 percent for decorative veneers, 41 percent for particle board and 60 percent for fiberboard (Government o f India 1999). The sports goods industry i s facing an acute shortage o f conventional sports goods timbers such as mulberry, ash and willow. Similarly, Saharanpur's wood carving industryhas started facing raw material shortages after the Supreme Court ordered the closure o f all unlicensed sawmills on 4 March 1997. Further,the state government imposed a 12.5 percent Sales Tax on wood brought from outside the state. It i s estimated that due to the Supreme Court's ban, Saharanpur's handicrafts industry has suffered a loss o f Rs280 -300 million (World Wildlife Fund2003). The safety match industryi s facing shortage o f raw material, especially o f veneer quality wood. According to one estimate, the projected shortfall for the year 2000 was 900,000 cubic meters. While farm forestry plantations, especially poplar, have increased raw material availability in the north, most match units are located far away in south India. Environmental concerns and judicial activism. The Supreme Court order to close unlicensed sawmills mentioned above i s not an isolated case. There i s a generally greater awareness about environmental issues and the judiciary has passed several judgments to protect forests and the environment, which have adversely affected several SSFEs. The most important court case for the forestry sector in recent years i s the ongoing case o f T.N. Godavannan Thirumulpad v. Union o f India, under which, starting in December 1996, the Supreme Court o f India has issued sweeping directions to oversee the enforcement o f forest laws across the nation. Some o f the important directions o f the court affecting forest-based industries were as follows: 0 The felling o f all trees in all forest was to remain suspended except in accordance with a working plan approved by the Central Government. 0 Licenses given to all wood-based industries (inthe NorthEast) were suspended. 0 A complete ban was introduced on the movement o f cut trees and timber from any seven north eastern states o f the country either by rail, road or water ways. The Indian railways and state governments were directed to take all measures necessary to ensure strict compliance o f these directions. Railways were asked to shift immediately to concrete sleepers instead o f using wooden sleepers. Defense establishments were also asked to find alternatives to various wood-based products. 17 Economicliberalizationandthe WTO regime.With increasingtrade liberalization and tougher environmental standards now being applied to many straw and bagasse mills some smaller sized agricultural crop waste based pulp and paper mills are finding it increasingly difficult to survive (for example, a study by Rao 2001) indicatedthat 211 such millshad already been closed). Secondly, GO1i s moving to adoption o f measures that will facilitate direct foreign investment. For example the regime o f licensing has been reduced to seven industries and this list no longer includes the pulp and paper industry.This means that large industries can now freely enter many fields where earlier their entry was restricted. Inrecent years as many as 39 products have been de-reserved: 15 items on 3 April 1997,9 items on 3 February 1999, 1item on 1January 2001 and 14 items on 29 June 2001. In short, it seems possible that foreign investment could be attracted for expansion of a few existing pulp and paper or construction o f new mills o f an economic size that would be able to withstand foreign competition. Also for expansion and upgrading the efficiency o f many o f India's medium scale wood base panel (plywood, medium density fiberboard, etc) plants (which inturn will create increased market opportunities farm forestry and the output from JFM owned forests). If that hypothesis i s correct this trend i s likely to create significant opportunities for further IFC investment. IFC has had much experience o f financing both pulp and wood based panel industries inmany different countries. Poor management andtechnicalskills. Many SSFEs suffer from inefficient operations andpoor quality o f products resulting in loss o f markets. For example, the sawmilling industry in India i s highly inefficient. The conversion rate is very low. It is estimated that the conversion yield from log form to graded sawn timbers i s only 45-50 percent, as compared to 55-65 percent in developed countries. Only 560 sawmills are following Indian Standards on grading and produce only 2.4 percent sawn graded timber. Wood waste produced by sawmills i s rarely put to any commercial use, with nearly 90 percent o f it being used as fuel. Seasoning and preservative treatment o f wood i s not common. Air seasoning o f wood i s carried out by only 470 mills and only 7 percent o f the sawn wood produced i s kiln seasoned. Wood treatment i s even rarer. A pressure impregnation facility i s available in only 118 units and a mere 0.4 percent o f sawn wood i s treated with wood preservatives. 18 Appendix 3. FiscalAnalysis of the Forest Sector Real expenditures from the centre are rising to meet timber supply challenges. At the national level, Ministry o f Environment and Forestry (MOEF) allocates central plan financial resources to forestry programs both through individual states, and independent national activities such as research and development. These funds make up the majority o f public resources allocated for capital investment and recurrent costs in forest management in India. In nominal terms, the MOEF central plan expenditures were about Rs990 Crore in 2002-03 (about $220 million), representing roughly four percent o f national GDP. These expenditures are spread across four main budget centers in MOEF: Environment; Forests and Wildlife; National Afforestation and Eco-development Board; and the National River Conservation Dire~torate.~ loo), Inreal terms (1993 = public expenditures across these four thrusts have increased fromjust under Rs300 Crore in 1992-93, to Rs543 Crore in 2002-03, representing aggregate real growth o f 81 percent (figure A3.l), or an annual average o f 8.1 percent over the 10- year period. FigureA3.1. Real centralplanexpenditures from MOEF 1992-03 to 2003-04 600 500 h 2E -.-E400 v 300 100 0 National Afforestation, Eco-Development Forests &Wildlife 13 Environment National River Conservation Source; MOEFAnnual Reports, various years. The budget headings most closely aligned to "forest management" are Forests and Wildlife, and those o f the National Afforestation and Eco-Development Board. Inreal terms, the total budget for these elements has increased fi-om Rs192 Crore to Rs247 Crore between 1992-93 and 2002- 03, or about 29 percent over the 10 year period (2.9 percent per year on an average basis (figure Environment comprises o f national environmental management and protection services ;Forests and Wildlife covers management programs for forestry, community forestry and wildlife; National Afforestation and Eco-development Board delivers the National Afforestation Program (NAP) through Forest Development Agency structures ineach state and JFM committees, National Action Plan to Combat Desertification, and grants to voluntary organizations; National River Conservation Directorate implements river system management, pollutioncontrol, monitoring. 19 A3.2). Of interest i s the steady increase in expenditures by the National Afforestation and Eco- Development Board, which delivers the National Afforestation Program (NAP).The NAP i s comprised o f four sub-programs including Non-Timber Forest Products (nonforest timber product); Integrated Afforestation and Eco-Development Scheme (IAEDS); Area Oriented Fuelwood and Fodder Project (AOFFP); and Association o f Scheduled Tribes and Rural Poor (ASTRP). Countering this increase in budget however, i s the worrying dip in real budget expenditures for Forestry and Wildlife from 2001-02 and the fact that the nominal allocation for 2003-04 were the same as the previous year (Rs265 Crore). This i s cause for concern since the Forestry and Wildlife budget underpins forest management activities such as research and development, and forest inventory surveys, which are fundamental to monitoring and improving the performance o f forest management programs. A breakdown o f the Forestry and Wildlife outlays (figure A3.3), based on averages over 1998-89 to 2001-02 shows that the budget i s among five - major program areas, with Figure A3.2. Real plan expenditures o n forestry 1992/93 2002/03 the majority if funds 300 directed to Research, Development, Education and Training.' A main feature o f Figure A3.3 i s the relatively low share allocated for forest surveys and policy, which are critical elements to 0 inadequate funding. In -Forests Wildlife addition to central plan P - -Total National& Afforestation, Eco-Development support to local Forest Departments. Another concern i s delivery o f central plan expenditures relative to budget allocations. Of the four N A P components delivered by the National Afforestation and Eco- Development Board between 1997/98 and 2001/02, on average 71 percent o f sanctioned budgets were released for expenditure. The lowest performing component was the ASTRP with 55 percent o f budgets released over the three year period. This i s worrying since these expenditures are directed at tribal communities, who are a major group o f forest dwellers. A main conclusion o f the previous analysis i s that MOEF, through central plan allocations, i s providing the bulk o f finance for capital investment in forest management for plantations (through community programs), and recurrent forest research, protection, monitoring and inventory. While real expenditures are rising, questions remain about how well these are supporting the ongoing evolution o f EMat the state level. Forest Survey supports national forest cover surveys by Forest Survey o f India inDerhadun; Forest Policy deals with policy development and forest sector information; Forest Protection includes programs to reduce losses from fire, insects and disease; Strengthen Forest Divisionprovides support to forest agency infiastucture; Research, Development, Education and Training supports the IndianCouncil o f Forest Researchand Education, and several national forest research institutes including genetics, plywood, coastal and marine management, wildlife and forestry. It also supports environmental and natural resource training programs and curricula development and the training programs for Indian Forest Service. 20 Figure A3.3. Budget shares,forestry andwildlife, MOEF Strengthen Forest Forest Protection 9% Forest Policy 4yo Forest Survey 4% Education, Training Source:MOEFAnnual reports, various years. Real state budgets are rising slowly but mainly cover recurrent costs. InMadhya Pradesh6, forest department real expenditures from state allocations (1993=100), increased from Rs2.8 billion ($61 million) in 1992 to Rs3.0 billion ($66 million) in 2002 (figure A3.4). The rising trend to 1999 was due to budget support from the World Bank JFM project in the state. As Figure 8 illustrates, since the closure of the project, real expenditures are not much higher than they were in1995.About 75 percentofthese nonplanexpenditures are for recurrent costs offieldoperations (Territorial and Production) and commercial harvesting. By contrast, research and training account for less than two percent o f the total recurrent expenditures funded by the state. A high proportion o f the recurrent expenditures in Madhya Pradesh cover staff salaries and benefits, which has doubled every five years to stay in line with inflation (JPS 2002). National transfers through central programs averaged about Rs2.4 billion $53 million) from 1997-98 to 2001-02. In Assam, real state budget allocations for forestry peaked in 1999, declined and then have slowly increased to 1999 levels. Most nonplan expenditures are for recurrent costs and mainly cover salaries. The state has few funds for capital investment; virtually all investment resources come from national forestry programs. InJharkhand', the allocation o f annual state budget to forestry in undivided Bihar forest department was less than 0.7 percent; this figure i s now three percent. Non-plan operating budgets are about Rsl billion ($22 million), with 70 percent spent on forest management. This would include forest establishment and production. Salaries, overheads and travel are funded through a separate nonplan budget o f about Rsl billion through the Principle Chief Conservator o f Forests. The focus o f expenditures i s clearly on field activities linked with forest establishment and rehabilitation. A worrying feature, common to the other two states, i s the 'Detailedbudgetfigures data were available from the Forest Department Detailedbudget were only available for 2002-03 21 relatively small budget allocations to critical supporting forest management functions such as inventory, planning and research. Figure A3.4. Realstate forestry expenditures, Assam and Madhya Pradesh 1995-2002 4500 4000 3500 3000 v) tf 2500 c E 2000 0 K 1500 1000 500 0 1995 1996 1997 1998 1999 2000 2001 2002 1-Madhya Radesh -Assam 1 Source: JPS Associates 2002 andWorld Bank2005b. 22 Appendix 4. Nationaland StateLegal andPolicyFrameworks Key National Legal and Policy Milestones Indian Forest Act, 1878 The expansion o f the Indian railway system at the turn o f the 19th century led to the development o f the Indian Forest Act in 1878. Inthe Act, individual states were recognized as sole proprietors o f classified forest lands. State forest lands were defined as lands not falling under `continuous' cultivation or `permanent' settlement. Traditional forest practices, including grazing, forest-based gathering, and forest-based shifting cultivation were generally rejected as a basis for allocating private property rights when forests were demarcated. According to a Forest Department resolution in 1890, previously defined rights o f access and use were to be redefined by Government as `privileges' for specific tribes, castes, villages and organizations. This marks the beginning in a long history o f alienation o f traditional rights, which has persisted to the present. The Act i s generally viewed as vesting exceptionally strong powers inthe government for control over forest resources. Indian Forest Act, 1927 The new Act incorporated few substantive changes over the 1878 Act and it remains the primary legislative basis for state forest management today. After Independence in 1947, the Government o f India formally adopted the 1927 Act. Under the new Indian Constitution, forests were placed within a `state list', which gave state legislatures a primary right to make forest laws. It also gave the state wide powers to control forests and land not under government ownership, including use o f expropriation. One main objective o f the 1927 Indian Forest Act' was to consolidate laws relating to forests, transit o f produce, and duty levied on timber and nontimber forest products. A striking feature in the Act i s the absence o f any definition of forest or forestland. The recent attempt by the Supreme Court to assign a meaning to the term `forest' as per the dictionary definition has seen a spate o f legal interventions due to its wide ambit. Recent interpretations could even cover trees on private lands. Forest may include private, common pastureland or cultivable land.g The Act also reinforced the three classes o f forests established in the 1878 Forest Act; namely reserve, protected and village forests. Of the three forest categories established by the Indian Forest Act 1927, the most restricted to communities for local use i s reserved forest, identified as having high commercial values and amenable to sustained commercial timber exploitation. Stronger state control of reserved forests was sought, which involved either the relinquishment, or transferal of other claims and rights through a settlement process, although very occasionally, limited access was granted (Lawbuary 1999). Reserved forests may be constituted by the State government on any forestland or wasteland, which i s the property o f the government or over which the government has proprietary rights. Most uses by local people were prohibited unless specifically allowed by a forest officer in the course of settlement.lo National Forest Policy, 1952 The National Policy o f 1952 promoted the colonial goals o f industrial forestry. The 1952 policy also classified the forest of India, whether state or privately owned, into four categories; Protection Forests, National Forests, Village Forests and Tree Lands. The policy also declared that village communities should not be permitted to use forests at the cost o f "national interest," * Along with amendments made to Ss. 2 (4A), 26 (l), 42, 52,66A, 67, 68 and 79 33(1), See Upadhyay S. andUpadhyay V; 2002; HandBook on Forestand Wildlife Laws andthe Environment; LexisNexisButterworths loIndianForestAct 1927, Sections 3-26. 23 which was identified with defense, communications and vital industries. Emphasis was laid on conversion of low value mixed forests to high value plantation o f commercial species. Commercial exploitation and degradation o f India's forests increased dramatically after 1947 in a post-independent India. The 1952 National Forest Policy guidelines were largely directed toward the supply o f cheap timber and nontimber forest products for state-sponsored industrializationand modernization. Concessions were leased to large contractors at low rental rates and encouraged highrates o fharvestingoften at unsustainablerates. Given the status o fmonitoring systems at the time, the authorities were hard pressed to track forest loss with any precision. The policy also emphasized scientific conservation, which involved further regulation o f local rights and restrictions o f privileges o f users o f the forest. The policy supported the need to restrict forest rights for communities, which may have had traditional rights prior to the Forest Acts o f 1878 and 1927. Indian Wildlife (Protection) Act I972 This Act lays out the legal framework governing India's system o f protected areas such as national parks. With respect to forests, it defines very tight restrictions pertaining to the removal o f specified plants from protected areas. The legal framework under this Act i s much more restrictive for communities inside or adjacent to designated protected areas due to concerns over loss o f biodiversity. However, this gives rise to a dual system o f community rights and responsibilities. Those inside or adjacent to protected areas and participating in a community natural resource management program generally enjoy fewer rights and benefits than JFM communities outside 5 kilometers in reserved and protected forests. Confusion arises when communities are on or close to the 5-kilometer boundary. National Commission on Agriculture, 1976 The National Commission on Agriculture 1976 also supported industrial use o f forest" with a focus on clear felling o f valuable mixed forests and planting cleared areas with suitable fast growing species yielding higher returns. The 1976 Commission also identified the need to provide small timber, fuelwood and fodder for the rural population. However, this was subject to some qualification (box A4.1). In 1976, forestry was added to the concurrent list o f the Constitution o f India, meaning that the Centre and States would share responsibility and control over forest matters. Although the Government o f India retains the power to legislate on forestry issues, this can only occur after consulting the states. The responsibility o f administering the forests remained primarily with the state government. Forest Conservation Act, 1980 The Forest Conservation Act 1980, allowed the Government o f India, through Ministry o f Environment and Forests (MOEF) to fight growing deforestation and indiscriminate timber harvesting (Khan and Pillai 2001). Timber leases were gradually phased out. The Act also sought to regain further control over forests by restricting the state government's power to de-reserve" a forest. It also restricted the use o f forest land for nonforestry purposes without the prior approval o f the central government. In 1988 two more important provisions were added where clear felling '* Report o f the National Commission on Agriculture, 1976, Divan andRosencranz (2001) To remove a designatedforest from the "reserved" category to allow use ofthe landfor other purposes 24 of natural forests were prohibited without the permission o f the Central Government. Further leasing o f forest land to private individual, community or corporations were also brought within the purview of the Central Government. The Act prevents states from allocating forest title to encroachers. Subsequent moves to regularize encroachment have been limited to people moving into forest areas prior to 1980. Contravention o f the provisions o f the Act could entail simple imprisonment extendable to fifteen days; The Act i s also provided for punishment for offenders from government department^.'^ The Forest Conservation Act becomes critical inthe context o f participatory management o f forests. While it provides some important accountability measures with respect to State government actions, narrow interpretations of the Act's restrictions on nonforest uses could limit the types o f activities that could be initiated under JFM. National Forest Policy, 1988 The National Forest Policy o f 1988 was a total paradigm shift vis-a-vis the earlier two policies. Unlike the industrial use oriented policy statements o f 1952 and 1976, the 1988 policy gives major emphasis on the ecological roles o f forests, and envisages that the rights and concessions from forests are to be primarily for bona-fide use o f communities living within and around the forest areas, especially tribals. Such communities are required to be motivated to protect and develop such forests from which they derive their benefit~.'~The policy also stipulates that the rightsand concessions relating to forest produce o f tribal community and other poor livingwithin and near forests must be fully protected. The domestic requirements o f fuel-wood, fodder, minor forest produce and construction timber should be the first charge on forest produce. It i s also envisaged that these and substitute materials shall be made available through appropriate means." With domestic energy, fuelwood would be substituted as far as practicable with alternative sources like biogas, solar energy, liquid petroleum gas, etc.16 The policy further stipulated that any diversion o f forestland should be subject to careful scrutiny by specialists and consider social and environmental costs. The policy i s a strong guiding document that influences the executive as well as the judiciary through decisions o f the courts." Notwithstanding the laudable objectives o f the policy, the necessary corollary changes are not yet fully reflected in formal law. The policy also discourages clear felling in well-stocked natural forests, but not in plantations (Khan and Pillai 2001).l8Therefore, working plans based on accepted silviculture models for managing natural forests, and which could be implementedby communities, become ineffective instruments for addressing the broader range o f community needs. Plantations, while providing a source o f commercial timber, do not have the ecological basis to support the richer mix o f timber and nonforest timber products that are often desired by communities. The policy has been criticized for calling for forest conservation without offering practical options for implementation, and sustaining the all-encompassing role o f the forest departments, including the contradictory functions o f being both the forest authority, and operating as a public enterprise in commercial forest production. Additional Policy Circularsfrom MOEF MOEF has issued a number o f important and very positive policy changes through government orders, or "circulars," but in many cases implementation has been fragmented and uneven. For example, a 1990 policy circular made it possible for state governments to engage communities in l3See Section 3-A and 3-B o f the Forest ConservationAct, 1980. l4Section 4.3.4.2 o fthe Forest Policy, 1988 15Section 4.3.4.3 o fthe Forest Policy, 1988. l6Section 4.3.5, Forest Policy 1988 l7A case inpoint is the on-going T.N.Godavarman case inthe Supreme Court where the mainpetitionhas been filed inorder to give effect to the forest policy o f 1988. '*The policy was given legal footing by amending the Forest Conservation Act 1980. 25 shared forest management (making JFM a reality), but states were not mandated to do so. As a result, progress with JFM across India has been uneven. Another 1990 circular provided guidance on resolving tenure disputes at the state level, but this has not been fully implemented. As another example, in February 2000, MOEF issued a circular requesting that JFM committees be registered under the Societies Registration Act in recognition that JFM committees had weak legal standing in most states. Another circular provided for special dispensations for tribals. Further, the guidelines called for 50 percent o f the JFM committee general members, and 1/3 o f the executive be women. The guidelines also indicated that JFM should be extended from degraded forests to include good forest areas. The guidelines also requested JFM to be supported by micro-plans prepared after detailed PRA exercises, and with clear market linkages, especially for nontimber forest products. State governments were requested to constitute divisional and state-level representative forums or working groups as conflict resolution bodies. The guidelines also provided mechanisms for benefit-sharing and indicated that these schemes should be transparent. Finally, the guidelines called for concurrent monitoring programs. While these kinds o f guidelines represent a clear recognition o f key legal and policy issues in community forestry, implementationhas been weak at the field level. Central Issues with State Legal Frameworksfor JFM The concept o f JFM i s a central feature o f the 1988 National Forest Policy, and was accordingly initiated and endorsed by all State and Union Territories. However, there have been no accompanying changes in the national legal framework for JFM. Instead, JFM i s operational through administrative orders (government orders) that have little legal underpinning; this i s the situation inJharkhand and Madhya Pradesh. The government order (or circular) i s simply a set o f guidelines that are to be followed to carry out the JFM program, following the direction in the national JFM circular and any subsequent circulars. Therefore in case o f any conflict with the Indian Forest Act 1927 or Forest Conservation Act 1980, the national JFM circular and state-level government orders may be overriddenby these legislations. These resolutions are easy to modify, which on one hand lends flexibility, but on the other, deprives them o f being certain and legally secure. Since JFM has not been formalized under any law in states such as Jharkhand and Madhya Pradesh, its provisions cannot be challenged in, or be enforced by a court o f law. Ina few states including Uttar Pradesh, Himachal Pradesh, Jammu & Kashmir and Assam, JFM i s linked to state legislation through an amendment. The draft JFM resolution attempts to formalize the process under the Assam Forest Regulation, 1891, This may give the JFM program inAssam a stronger legal footing at the state level. However in all three states including Assam, most forests continue to be looked upon as property o f the State and management responsibilities are delegated to local communities through JFM as an administrative arrangement; therefore JFM falls far short o f any real devolution o f power to local communities. Another legal issue at the state level i s the actual process o f constituting a JFM committee. While the process i s well- defined in the JFM resolutions o f each state, it needs to be reviewed based on legal analyses. All three states have a range o f historic resource rights held by tribals that are not well-recognized by current JFMpolicy and legal frameworks. One fall-out o f the uncertain legal status i s the difficulty in addressing encroachment issues. It i s very difficult to prosecute people encroaching on forests allocated under a JFM Resolution. Also, where JFM i s initiated with only one village in a small forest area supporting several villages, the other villages may be excluded fkom accessing the forest, even where they may have historic forest rights to these resources. In Madhya Pradesh, evolving state legislation raises potential conflicts with historic "nistar" rights, which are historic rights to gather basic needs for rural life 26 form the forest, and can include timber, fuelwood, grazing lands and fodder (box A4.2).19It i s not clear if villages converting to JFM keep their nistar rights.Ifso, there i s potential for conflict with broader forest management goals o f the forest department. While the nistar rights are protected under law, in reality the JFM resolution without legal foundation appears to take precedence in the field. The resolutions also generally state that once a committee i s constituted, the jurisdiction o f the committee shall be decided by the district forest officer on deliberations with the committee. Yet the discretion o f the officer to decide the jurisdiction can run contrary to the existing rights regimes o f the people livinginthe particular area. It is also unlikely the district forest officer will have the legal competence to address certain tenurial securities, especially in protected forest areas where JFM i s prevalent. The binding instrumentto be concludedbetween the forest department and the community participating inthe JFM program i s the Memorandum o f Understanding(MOU). The MOU i s not a legal contract. It i s also heavily weighted in favor o f the government. For example, the right to recall, the right to proceed with or disband a JFM program tends to vest exclusively with the district forest officer. A joint program implies an equal sharing o f power but this i s missingin the MOUs used in all three states. Under current JFM resolutions in each state, the district forest officer i s usually the competent authority for registration o f the committee with Forest Department, but there are 16. Section237 (l), PradeshLandRevenueCode, 1959. Madhya 27 serious legal questions about this process. Registration i s a legal process, which i s normally done under the Indian Registration Act, or other institutional registration acts such as the Society Registration Act, The Cooperative Society Act, and the Trust Acts. Any such power given to the district forest officer for committee registration without proper legal authority would not be tenable in law. Therefore any such registration process by an incompetent authority vis-a-vis registration would be legally invalid. The MOEF Guidelines o f 2000 suggests the registration o f JFM committees as societies under the Societies RegistrationAct, 1860. But, legal questions arise from this suggestion. The Societies Registration Act 1860 i s an Act to improve the legal condition o f societies for promotion o f literature, art, science and for diffusion o f knowledge as well as for charitable purposes. This fundamentally i s at variance with the basic objective o f JFM, which i s an incentive-based management strategy. Legal and Policy Conflicts Part o f the problem with the current legal framework for JFM i s contradictions between progressive policy intentions and existing law. As an example, the amended Forest Conservation Act 1980 and the National Forest Policy 1988 contain a number o f conflicting articles (table A4.1). improved and their production enhanced horticulture crops, palms, oil bearing and medicinal (section 3.5). plants on forest lands, unless prior permission o f the Government o f India has been taken. Degraded lands should be made available Forest Conservation Act bans assignment or lease o f on lease or o n the basis o f a tree patta forest land to the people or institutions not wholly scheme to individuals and institutions owned by government. (section 4.2.4). Rights and concessions enjoyed by the Rights and concessions, including grazing, should tribals should be filly protected (section always remain related to the carrying capacity o f forests 4.3.4.3). (section 4.3.4.1). Domestic requirement o f tribals should be MFPs and substitute materials should be made the first charge on forest produce (section available through conveniently located depots at 4.3.4.3). reasonable prices (same section). Land laws should be modified to facilitate Appropriate regulations should govern the felling o f individuals to undertake tree farming on trees on private holding (same section). their own land (section 4.2.4). I Source: Saxena 2005 -personal communication. At the state level, the case o f horticulture inJharkhand illustrates the complexities o f the current legal framework. Under subsection 1 o f Section 6 o f the Bihar Land Reforms Act 1950, all lands used for horticulture and, which were in Khas possession o f a tenure holder are deemed to be settled by the state as Raiyati. Land used for horticultural purposes includes growing h i t s , flowers, or vegetables. Therefore, such lands which are in Khas possession o f the landlord and which were used for growing fruits, flower and vegetables have to be treated as Raiyati land. As per Clause A o f section 23A o f the Bihar Tenancy Act 1885, they are entitled to cut down trees or bamboos standing on such lands, and to appropriate the flowers, fruits, or other products. 28 However, on lands which are used for growing nonfmit-bearing trees, the state still has control over such trees. Subject to local customs or usage, the incidents o f homestead tenancy which are provided under section 182 o f the Bihar Tenancy Act 1885, are to be regulated by the provisions applicable to Raiyati lands. Even here, the provisions o f clause 23A o f that Act comes into play, especially with respect o f trees on such lands. The trees standing on such lands thus belong exclusively to the outgoing landlords irrespective o f whether these are h i t or nonfmit-bearing ones. PESA-Panaceafor Community-BasedForestry? Another key legal and policy initiative was the 73rd Constitutional Amendment o f 1992, which specified three levels o f local institutions; village level (gram sabha); block level, and district level.20 The amendment supports the government o f India's goal for decentralization o f governance and gives panchayat raj institutions a statutory mandate, potential to raise local finances through taxation. Under the Panchayat Extensionto Scheduled Areas Act, 1996 (PESA), gram sabha or village assemblies in Scheduled Areas were endowed with powers over community resources generally and more specifically with ownership o f minor forest produce. The Panchayats along with the gram sabha has been further empowered, among other things to prevent alienation o f land in the Scheduled Areas and to take appropriate action to restore any unlawfully alienated land o f a Scheduled Tribe; and the power to manage village markets. The 731damendment also provided for a more inclusive body at the village level; namely gram sabha, which consists o f all the adult villagers. While the Panchayats are administrative and political bodies, the gram sabha i s the real representative o f the village community. The Panchayat Raj Act i s based on the Indian Constitution and as such, has a stronger legal footing than JFM circulars, government orders or even legislation that may be inconflict. It is imperative to understand the implications of the newpanchayat regime, through the original Constitutional amendment and the subsequent PESA 1996, especially on tribal self-rule law and marketing o f nontimber forest products. One o f the basic tenets o f the PESA 1996 i s that state legislations on Panchayats shall be in accordance with customary laws, social and religious practices, and traditional management practices o f community resources, which includes forests. Further, the PESA emphasizes the competence o f gram sabha in safeguarding and preserving traditions and customs o f the people, their cultural identity, community resources, and customary mode o f dispute resolution. It can be safely assumed that such community resources would invariably include forest resources especially on community land. Panchayats inScheduled Areas have due legal backing through the PESA, while JFM committees originate from government orders or resolutions, which are revocable. The JFM committees are specific natural resource management bodies with no legal standing, while the Panchayats, being institutions o f self governance and supported under both the constitution o f India and supporting legislation, have strong legal backing to perform a variety o f functions like village administration, and social and economic development, which logically could include management o f natural resources. In general, while the intention o f many states has been to implement PESA in its full spirit, the ground reality i s that they are subject to rules framed by the state government, availability o f funds, and other laws in force. It is entirely possible for Panchayats to override the decisions of JFM committees, for example with distribution o f benefits. While PESA has been greeted in some circles as a panacea for accelerating community forestry, the reality i s far different. 2o IamindebtedtoN.C.SaxenaforprovidingawealthofexamplesofconflictsbetweenPESAandforestry legislation and policy. These are included directly inthe following section as identified. 29 Examplesof Conflicts andContradictionswith PESAandForestry According to PESA, Panchayats and gram sabhas are the owners o f nontimber forest products, but Forest Departments often contend that villages do not have control over reserved forests, as these are outside village boundaries, and therefore PESA i s not applicable to reserved forests. This is a legal issue, and even the two Ministries inGovernment of India, RuralDevelopmentand Environment and Forests hold different viewsz1 about the applicability o f PESA over reserved forests, about the inclusion o f Kendu and bamboo in the nonforest timber products to be controlled by Panchayats. Secondly, there are contradictions between JFM and PESA too, as JFM encouraged small community based informal groups, whereas PESA recognizes formal Panchayats and gram sabhas. Even the revised JFM guidelines issued by the Ministry o f Environment and Forests in 2000 do not specifically mention PESA, indicating the low importance given to its provisions and their potential bearing on the JFM framework in Schedule V areas by the central Ministry. Several NGOs working on JFM have preferred JFM committees over Panchayats as the organizational unit for managing the resource and sharing benefits. It i s undoubtedly easier for them (and also for Forest Department) to deal with new and informal organizations that they create and find rather than contend with the rough-and-tumble o f `political' and statutory Panchayats. Operationalizingthe provisions o f PESA has thus several practical problems, and no definitive answers have yet been obtained to the question o f ownership o f nonforest timber product by gram sabhas. The third set o f problem has arisen because many states, such as Orissa, have tried to dilute the provisions o f PESA, though it had no legaljurisdiction to do so, as PESA i s a Central Act. Following the Central PESA Act, the Government o f Orissa enacted the Orissa Act for the State. However, the Orissa Act appears to want to circumscribe the constitutional provisions o f the Central Act by adding a clausez2'consistent with relevant laws in force' while incorporating the constitutional provision concerning the competence o f the gram sabha to manage community resources and dispute resolution as per the customs and traditions o f the people. Thus, tribals can have ownership rights over Minor Forest Produce, but only if the relevant laws in force allow for it. This is a clear violation o f the Constitutional Provision of the Central Act since incase of any inconsistency the relevant state laws have to be changed instead o f negating the rights granted to gram sabha as per the Central Act inthis regard. Section 4 (m) (ii) o f this Act provides that- "while endowing Panchayats in the Scheduled Areas with such powers and authority as may be necessary to enable them to function as institutions o f self-government, a State legislature shall ensure that the Panchayats at the appropriate level and the gram sabha are endowed specifically with the ownership o f minor forest produce." Further, PESA required that state government would change its existing laws wherever these were not in consistent with the central legislation. However, Orissa government has done just the opposite. "MOEFtriedtoreconcilethedifferencesin1999throughapolicycircular,butthishashadlittleeffectin the field. 22 Many other states have also diluted the Government o f India PESA Act. Boththe Gujarat and Maharashtra Acts make ownership subject to the relevant state acts o n nontimber forest products. The Maharashtra state Act leaves bamboo and cane out o f the list o fnontimber forest products over which ownership is granted to the panchayats. 30 Despite the fact that the Central Act clearly provides ownership (not just control) o f nontimber forest products to gram sabhas, the Ministry o f Environment and Forests set up an `expert committee' to consider what comprises nontimber product and what does `ownership' mean. The expert committee recommended that ownership meant revenue from sale o f usufructory rights, that is, the right to net revenues from nontimber product, after retaining the administrative expenses o f the department, and not right o f control. The committee also argued that bamboo and cane, two important products for the poor, are not forest timber products. InAndhra Pradeshtoo, there is a clear contradiction between PESA and GOM 173 dt. 7/12/96 of the Environment, Forest, Science and Technology Department. The usufructory rights o f user groups called Vana Samrakshana Samitis (VSS) prescribed therein include, "(a) All Non-Timber Forest Produce except those for which the state holds monopoly rights. However the right to collection shall remain with the VSS members, if they so desire. The members shall be paid the collection charges upon delivery o f the produce as per the rates fixed by the Government." It can also be seen that there i s a contradiction between the `ownership' vesting in gram Panchayats/sabhas clause and the monopoly rights vested in GCC. GOMs 173 also entitles VSS to 100 percent share in timber and bamboo harvested as prescribed in the microplan. Whether bamboo constitutes major or minor forest produce i s also an unsettled question. Another problem with the Orissa legislation i s that instead o f giving clear rights to gram sabha, space has been kept in the state law for involvement o f higher order panchayati raj institutions instead. Thus the spirit o f the Government o f India Act with focus on empowerment o f the gram sabha has not been followed in Orissa. This i s again a violation o f the Central Act which explicitly forbids usurpationo f powers o f a lower levelpanchayat by a higher levelpanchayat. Such indifference to PESA can be seen in many other states too. The irony i s that while PESA remains unimplemented, Government o f India has proposed amending Schedule V o f the Constitution itself to open up tribal areas for commercial exploitation by national and multi- national corporate interests. In Jharkhand, panchayat elections have yet to take place. Jharkhand is the only state in India without Panchayats. When election take place, local authorities may find that the Bihar Forest Produce (Regulation o f Trade) Act 1984, folded into Jharkhand at bifurcation, presents a State marketing monopoly inthe trade o f nationalizedtimber and nontimber forest products. Under the 1984 Act, the State may appoint agents to purchase and trade o f forest produce on its behalf. N o person other than the Government or its agent shall purchase, transport, import or export the specified forest produce.23Thus all the primary collectors24who gather the designated forest produce have to sell it to the designated agent o f the State, at depots established by the State and at a price determined by the State. Thus, there i s a clear conflict between the Bihar Forest Produce (Regulation o f Trade) Act 1984, and the PESA as the latter vests local authorities in Scheduled Areas with `marketing' rights over forest produce, while the former legislation seeks to regulate by creating a state monopoly. InMadhya Pradesh, soon after the 73rd amendment, the State Panchayat Raj Adhiniyam, 199325 was enacted. While the gram panchayat26 was made responsible for the plantation and preservation o f panchayat forests, it was subject to the availability o f funds within the Gram Panchayat, which in practice have been limited. Control and management o f such forests were 23Sec 5 of The Bihar Forest Produce (Regulation o f Trade) Act, 1984 24Sec 2 (4) o f The Bihar Forest Produce (Regulation o f Trade) Act, 1984 25Act 1of 1993 26(Act 3 of 2001). This Act renamed the MP PanchayatiRaj Act as Madhya Pradesh (Panchayat Raj Avam Gram Swaraj) Adhiniyam, 1993. 31 clearly state's responsibility. Various amendments have been made inthe principal Act. By 1997, amendments gave the Zilla Parishad an advisory role to the state government in respect to protection o f environment and social forestry. In 1999 (Madhya Pradesh Act 5 o f 1999), the gram sabha was entrusted with the management o f natural resources including water, land and forests. However, in case o f a conflict, the specific laws dealing with the natural resource take precedence. The Madhya Pradesh Transit (Forest Produce) Rules, 2OOOZ7 empower the Gram Panchayat to issue passes for the transit o f forest produce, within or outside the state o f Madhya Pradesh, but these passes can also be issued by the district forest officer. There i s enough legal space available in the PESA to allow Panchuyats a greater role in forest management but the contradictions and limitations brought by the existing forestry legal framework must be addressed. Assam stands on a different legal footing. PESA i s not applicable to Assam, as it i s only applicable to fifth schedule areas and not sixth schedule which encompasses the autonomous districts o f Assam. The Assam Panchayat Act 1994 extends to the whole of Assam in rural areas except the Autonomous Districts under the sixth schedule o f the constitution.28 Some important functions assigned to PRIs include development o f wastelands, village grazing lands and preventing their unauthorized alienation and use, promotion o f social forestry, farm forestry, fuel plantation, and fodder development. Zilla Parishads are responsible for marketing o f minor forest produce raised in community lands. However the JFM Resolution does not make this distinction o f Autonomous Districts and the rest o f the Districts and makes it universally applicable. This i s bound to create conflict with the District Council in the scheduled districts. Although as regards nonforest timber product there i s less possibility o f conflict in this functional role with forest department, because Assam does not have a state marketingboard for nonforest timber products. It is critical that the institutional links between government decentralization policy (through Panchayats or local authorities) and administrative decentralization such as through JFM and its user groups be better understood and strengthened. Panchuyats, being elected bodies have a strong vertical and horizontal reach. Yet Panchayats lack capacities, are often plagued with internal politics and domination by elites. Experience in other parts o f India (World Bank 2004a) suggest that fiscal decentralization through local authorities can create problems o f local expenditure discretion, revenue generation and collection, and mandates that exceed capacity to deliver. Many local organizations do not perform as quickly or effectively as anticipated, raising questions about their viability, fairness, and sustainability (World Bank 2004). However, a global study o f natural resource decentralization identified many positive outcomes to decentralization involving natural resources Ribot (2004). These include local governments demonstrating capacity and initiative in natural resource management; empowering local people to protect their forests; increased revenues to local councils and local people; stronger roles for disadvantaged groups innatural resource management; and cases o f sustained forest management 27Enacted under IndianForest Act, 1927 28North Cachar Hills and Karbi Anglong District and Bodoland Territorial Council; 32 Appendix 5. CommunityLivelihoodsinAssam, Jharkhand, andMadhya Pradesh Background Assam, Jharkhand, and Madhya Pradesh share a number o f common socio-economic features (table A5.1). First, the three states are poor based on income per capita and human development indices falling well below the national average. In addition, the percentage o f people below the poverty line i s much higher than the national average. Second, the share o f agriculture out o f total state gross domestic product i s higher than the figure for all India, suggesting a relatively high dependence on agriculture for economic activity. Average land holdings inJharkhand and Assam are less than the national average. Population densities in Jharkhand and Assam are slightly higher than the national average. Madhya Pradesh's population density i s 66 percent lower than the national average. Literacy rates among people over 15 years o f age are higher than the national average, with the exception o f Jharkhand. Forest cover per capita in Jharkhand and Assam i s just slightly below the national average, while Madhya Pradesh i s significantly higher. On its own, Madhya Pradesh accounts for almost 12percent o f the national forest cover. TableA5.1. Kev socioeconomic indicators. focal states MadhyaPradesh 195 11,438 I 0.394 37 64 35 0.95 0.13 Assam 339 11,755 I 0.386 36 64 27 I1 0.55 0.09 All India 324 I 18,912 I 0.472 I 26 I 61I 21 I 0.75 0.10 These broad statistics are useful for comparisons, but may understate the actual poverty situation inrural areas. As an example, in Jharkhand, poverty is higher inrural areas and is an important factor in forest encroachment. An estimated 76 percent o f rural people (mostly from tribal groups) live under the poverty line. The phenomenon o f chronic poverty, including a high degree o f uncertainty about the livelihood base, often coincides with two particular ago-ecological and socio-economic conditions: first, dry land regions characterized by frequent failure o f crops and sporadic employment opportunities, leading to high level o f unprotected risks o f livelihood security among the poor; and second, forest-based economies, especially in hilly regions with predominance o f tribal populations who have limited access to natural resources, information and markets (2004; 2005). Jharkhand provides a good example, where tribal people are closely connected with forests for livelihoods, and where agriculture i s often characterized by single crop paddy rice dependent on rainfall. Agriculture opportunities are constrained by the highpercentage of marginal farmers with very small land holdings (table A5.2).*' Almost 70 percent o f all rural households inJharkhand are limited to an average o f 0.37 hectares o f land, which i s inadequate to sustain family nutrition with rice paddy, restricts mixed farming and ecologically sound cultivation, and does not allow for fields to be shared with children as they grow up and marry. The small average land holding, l o w productivity o f agriculture, and limited opportunities to earn nonfarm income from other resources such as forests, leads to migration as an important coping 29 Source:Mishra 2001. 33 strategy for people in many rural areas o f Jharkhand. Rural people are vulnerable to periods o f shortfalls in income. At the same time, vulnerability inpoor, rural areas i s a function o f both the probability and size o f income, and the ability to cope with 2 exogenous shocks such as crop failure and/or loss o f health. These factors can lead to high- interest private debt from money lenders to meet costs of purchasing food, or social and customary expenses, for Source: TERI 2004. example with a funeral or wedding. Due to lack o f access to institutional credit, private money lenders constitute the only available source for credit (see Mosse and others 2002). Tribals andTribal CharacteristicsinIndia About 742 million people, or 72.2 percent of India's population live inrural areas. Of these, 88.8 million belong to scheduled tribes. The Indian Constitution identifies scheduled tribes according to criteria like geographical isolation, cultural traits and "backwardness." From 1971 to 2001, the ST population in India has increased by an average o f 4.5 percent per year, compared to the general population increase o f 2.9 percent over the same period. Tribals now comprise 8.6 percent o f the national population. They are distributed across the country, encompassing 10 neighboring states (table A5.3). The scheduled tribes are mainly concentrated in the so-called `Tribal Belt' o f central India, with a second concentration in the Northeast. The Tribal Belt represents a distinct geo-cultural region and i s home to the main tribal groups throughout India (Gonds, Santhals, Oraons, Mundas, and Khonds) as well as hundreds o f subtribes, each with distinctive dialects, specific customs and traditions. Tribals represent a significant share o f the total state population, particularly in Chattisgarh, Table A5.3. PoDulation characteristics. main tribal states Jharkhand, Orissa, Madhya Pradesh, Gujarat and Rajasthan. Also, with one exception (Maharashtra), more than 90 percent o f the tribal population lives in rural areas. Of interest to this report is the linkage between tribals and forests. The Chota Nagpur plateau running east to west across theses tribal states, contains the majority o f the forest area in India, and includes much o f Chattisgarh, Jharkhand, Orissa, Madhya Pradesh and smaller areas-of Maharashtra, and West Bengal. For example, out o f the 45 districts in Madhya Pradesh, 14 are forest-rich districts inhabited by almost 80 percent o f the tribal population (Census o f India 1991). Tribals generally dwell inforested and hilly areas, and depend on forests for their cultural and spiritual needs, and to varying degrees, their economic needs. 34 There i s a fairly strong link between chronic rural poverty and natural forests (Sunderlin and others 2004). The tribal communities in Jharkhand, Madhya Pradesh and Assam are among the poorest groups in society (table A5.4), although there i s wide variation in the percentage o f people below the poverty line compared with state averages, In Madhya Pradesh, there i s a 19 point variation, while in Assam the difference i s only 3 points. South-West Madhya Pradesh, dominated by tribals, represents one o f the seven regions having the highest incidence o f rural poverty in India. In 1993-94 over 60 percent o f the rural households in the region were poor, o f which about 42 per cent were severely Source: Census o f India (2001 census). poor. According to Shah and Sah (2004), the following are the key factors explaining the highest incidence o f poverty in tribal regions: (1) tribals' low bargaining capacity; (2) their low degree o f political representation and poor quality o f local governance; and (3) constrained access to forest, land, and water. The issue o f control, power and access to natural resources i s contentious both at economic and political level for tribal groups. At the economic level, there tends to be increasing resentment among tribals that outsiders and nontribal people (including industrialists, merchants, traders, mine-owners, government employees and contractors) can often access water and forests that historically used to be theirs. This manifests itself to the political level with several tribal activist groups not content with the loss o f historic rights over forest land, which they see as a compromise of their demand o f self-rule or autonomy. Inturn, this i s a major factor contributing to insurgency, particularly inAssam and Jharkhand. Among some o f the tribes common to Jharkhand and Madhya Pradesh, a distinction i s often made between adivasi (tribal people), sadan (long-settled other backward castes o f nontribal origin) and diku (outsiders). Adivasi societies are considered different from caste Hindusocieties as they are based on equality and not on hierarchy, they have remote habitation, have a intimate relationship with the natural habitat, and that have animistic forms o f religion (see Kothari 2000; Mandelbaum 1970; Sharma 2001; Weiner 1978). Neighboring nonadivasis like blacksmiths (Lohar), potters (Karnar), shepherds (Gau), basket makers (Mahali) and others, can "transform into adivasi' (adivasi-hokotanako) by marrying tribal women, adopting tribal clans and takmg part in (and contributing to) tribal religious festivals. By doing so, they are said to acquire the right o f beingburied inthose lands, that is, they acquire land inheritance rights. Conversely, any adivasi can become diku, if helshe behaves in a manner that i s unacceptable (diku:e baiotana). Mundas who leave their villages and migrate to cities for seasonal or permanent work do become diku ifthey neglect and disrespect their own people and their ancestral practices by not going back to the village for religious festivals, by ignoring the teaching of the ancestors (hararn hoko ora), changed way o f thinking (diku uru:) and by treating their tribal fellows in a dishonest way. Tribals are attached to their land economically, spiritually and culturally (box A5.1). The memorial stones o f the Mundas in 35 Jharkhand and Madhya Pradesh are a symbol o f belonging to the tribe and o f owning land in the village (Verardo 2003). The tribal, regardless o f his wealth and social position, i s not fully integrated in the community unless he owns some land in its area. Only land ownership and farming seem to give the feeling o f a full integration into the tribe (Van Exem 1992). Traditional socio-political systems extend from the village to the cluster and regional levels. Village and cluster leaders belong to the clan o f the pioneers o f the area. When a new settlement i s founded, the eldest among the pioneers becomes the specialist o f the sacred and the one younger to him becomes the village-head. Although their position i s hereditary, downward accountability i s ensured by the fact that they are primus inter pares and villagers can at any time nominate a different person in case they misbehave. Village councils are often responsible for a number o f traditional tasks (box A5.2), many o f which could be adopted as part o f greater legal responsibilities for community natural resource management. Clusters o f 10-20 villages constitute the next level o f socio-political organization. In Oraon areas, these clusters are called Parhas and are headed by a Parha-raja; in Santhali areas, they are called pargana, headed by a maji parda, in Ho areas they are calledpir, headed by a Manki, and in Munda areas they are called Parha or Manki-patti and headed by a Manki. Historians and sociologists have argued that the clusters marked an advance from socio-political hunting groups and grouped men o f several clans together (Roy 1912), or that they constitute unions o f a number o f villages o f the same clan located around the original village, that is, they were kin based and that an increase in population caused the formation o f these groupings (Sachidananda 1979). It i s argued that these socio-political systems have been a feature o f all tribal areas since "the beginning o f time." Kin-based clusters have in certain areas being replaced by administrative boundaries that do not reflect the social reality on the ground. This i s especially true in areas with a mixed tribal and nontribal population. While the economic exploitation, land alienation, and displacements have all affected the scheduled tribes in the state, a further complicating influence in local decision making i s the decline in traditional institutions. Many tribals have a very long tradition o f Tribal-Governance Systems, which conflicts with the conventional wisdom o f recognizing them as a homogenous group. Government devolution programs to panchayat raj institutions through PESA, or sector- driven programs such as JFM do not usually recognize the unique characteristics o f forest dwellers including tribals. This can reduce the effectiveness o f these program thrusts and the impact on poverty. This can reduce the effectiveness o f these program thrusts and the impact on poverty. 36 37 Livelihood Patterns in the Focal States Jharkhand-smallholder farming withforests as a safety net The six case study villages selected for Jharkhand provide certain village-specific and some general idea o f the socio-economic situation of forest-dependent communities in the state o f Jharkhand (table A5.5). Tribals account for between 80 and 100percent o f the village population; the one outlier i s Munam Kalen with 25 percent. In terms o f infrastructure and development, villages in all the regions were found to be backward. Inadequate provision of water, both for drinking purposes and irrigation, is a common feature across all the villages. The livelihood system inthese villages i s mainly agrarian, complemented by income from labor. Inthe Porahat area of West Singhbhum, "Bir-horoko" are the people (Horoko)who live inthick forests (Bir),and practice hunting- gathering activities; "Buru-horoko" are the people who live in the secondary forest (Bum), and practice slush-and-burn cultivation; and "Hoko" are the people who live inpermanent villages and practice mixed, settled cultivation. Landholding size i s very small in the villages with about two-thirds o f the farmers falling in the category o f marginal, with less than 1 hectare. As a result, agriculture can only provide sustenance for six to seven months; for rest of the year people have to look for other sources of income. People usually migrate to work inmines or factories in villages that are situated close to industrial towns. On average, agriculture was the primary occupation in 60 percent o f all households, and various forms o f labor (unskilled, skilled) in 32 percent o f all households. Community variations in livelihood patterns can be explained on the basis o f ethnic characterization, resource endowment and access, and use o f productive resources. All villages were interacting with degraded forests o f variable quality, usually from illegal harvesting in the past, The average forest area per capita i s 0.09 hectares, equal to the state average slightly below the national average o f 0.1 hectares. The average i s heavily skewed by the figure of 0.18 hectares from West Singhbum district (Thakura Guutuvillage). Two o f the districts (Seraikela and Dumka) have very low per capita forest cover (0.06 hectares and 0.03 hectares respectively). Based on the evidence from the field, forests in the six villages were used mainly for seasonal subsistence, and also as a safety net to augment poor agriculture performance. As could be seen in some villages, with the availability of alternative opportunities (particularly wage labor), people have shifted away from the use o f forest products. Ingeneral, all communities used the forest, but primarily for subsistence fuelwood and fodder. Fuelwood supplied an average o f 86 percent o f energy needs, and ranged between 50 and 100 percent. On the other hand, fodder from the forest provided about 55 percent o f input requirements for domestic livestock. On average, gross values were Rs2,356 (fuelwood) and Rs8,507 (fodder) per household per year. Gross values ranged from Rs982-Rs3,367/household (fuelwood) and Rs7,665-Rs14,042/household (fodder). Poles played a minor role in forest livelihoods with an average household using between 6-10 poles every three years for minor construction. Bamboo was used in only one o f the six villages surveyed for domestic construction. The surveys clearly found that the use o f nontimber forest products was mainly for subsistence. While some villages reported periodic sales o f a few products in local markets, people could not specify the quantity collected or sold. In general, the village surveys infer a low level o f commercial sales o f forest products, due in part to poor access to markets from degraded roads, isolated and low levels o f production, and l o w awareness o f markets outside o f local trading areas. 38 The average distance to a larger town was 17 kilometers, a long distance for people without transport and wishing to sell products characterized by high collection times and low market prices. Tribal villages in the areas close to forests were found to have a higher dependence o f forest produce, and inparticular, subsistence fuelwood and fodder. Assam: Smalllzolderfarmers and shifting cultivation are dominant The tribal groups in Assam have traditionally been located in specific parts o f the state and their resource use practices have varied based on their socio-cultural preferences. Hill tribes continue to be engaged in slash and bum agriculture and all their economic and cultural practices have traditionally revolved around this. In the Barak valley, the Khasi tribe i s associated with the practice o f `panjhum' o f harvesting betel leaves (pan) and shiftingcultivation (jhum).Bodos, one o f the major plain tribes in the northeast, are involved mainly in agriculture. Rabhas live in the jungle tracts where the Himalayan Mountains meet the plains o f Bengal. The eight case study villages surveyed are a mix of smallholder farmers, shifting cultivation, and landless (table 5.5). Tribals were only recorded in five o f the eight villages surveyed. The level o f infrastructure and development i s very similar to the results from Jharkhand, although villages are about one-third the population. Across the eight villages, 76 percent o f households reported agriculture as the primary occupation, significantly higher than in Jharkhand. Agriculture i s mostly rainfed but some areas have a traditional method o f irrigation through a network o f canals called Dongs. The main agricultural crops grown are paddy, pulses, mustard, vegetables and jute. Besides agriculture, the villagers also collect fuelwood, mushroom, nontimber products, and fishing for subsistence. Most villagers keep livestock such as cows, bullocks, buffaloes and goats. Due to low returns from agriculture, livelihood from labor was the primary occupation o f 17 percent o f all households surveyed, and forms an important secondary form o f income for many farmers as opportunities arise withinthe seasonal farming system (table A5.6). Source: Discussions with villagers during backgroundstudy field surveys. Forest department, oil companies and stone quarries are the main sources o f employment. The daily wage rate for the men varies from Rs 40-50 per day. In addition, during February, March and April some men from landless households migrate to nearby urban areas, in particular Guwahati, in order to work as daily wage laborers. All eight villages were adjacent to degraded forests, but the observation was made that forest quality in these villages was much worse than in Jharkhand. Two o f the four districts (Kohrajhar - 0.15 hectares and Tinsukia - 0.13 ha) had per capita forest cover well above the state average o f 0.09 ha. The remaining two districts were significantly lower than the state average. All eight communities used the forest, but again, primarily for subsistence fuelwood and fodder. Fuelwood supplied an average o f 79 percent o f energy needs, and ranged between 57 and 100 percent. Fodder from the forest provided about 64 40 percent of the feed requirements for domestic livestock. On average, gross values were Rs2,440 (fuelwood) and Rs10,992 (fodder) per household per year. Gross values ranged from Rs975- Rs3,780/household (fuelwood) and Rs2,563-Rs l9,495/household (fodder). Poles also played a minor role in forest livelihoods. On the other hand, the gross value o f bamboo was almost nine times that o f poles for domestic construction. Most communities collect a variety o f nontimber forest products, mainly for subsistence use. Women are mostly engaged in collection o f nontimber forest products. Exploitation by middlemen and no value addition were cited as the main reasons for low financial returns and poor incentives to engage in commercial activities. In addition, people lacked information about markets for specific products. The average distance to a larger town was the same as in Jharkhand (17 kilometers). In general, agriculture (including shifting cultivation) i s the predominant source o f livelihood, however the forest offers a safety net for many villagers, due to small landholdings, low productivity and credit unavailability. Madhya Pradesh: Low levels of forest dependence across income groups The tribal relationship with forests in Madhya Pradesh can be roughly classified according to the landscape and livelihood system: upland systems, mixed systems, and lowland systems. Tribal communities inupland systems live in small, scattered settlements located near or within reserve or protected forests, and are under transition from pure forest dependence to a mixed forest/agriculture/wage labor system due to resettlement, and declining forest productivity. Mixed systems, located in middle watersheds, are partially hilly areas with communities having a higher reliance on agriculture. Farming i s mainly single crop with some paddy and vegetable cultivation. Lowland systems are located in lower watersheds and communities have relatively little forest access. They tend to be more multi-ethnic, have smaller but more intensively farmed landholdings and own more bullocks. Double cropping i s more common and, where irrigation is available, even a third crop may be grown. Forest-based communities in Madhya Pradesh, and in particular tribal communities, are among the poorest and least developed in the state. The literacy percentage among tribal groups in Madhya Pradesh i s 22 percent compared to 64 percent for the state as a whole. Southwest Madhya Pradesh, home to a significant share o f the state's forest cover and a concentrated area o f tribals, represents one o f the seven regions having highest incidence o f rural poverty in India. In 1993-94 over 60 percent of the rural households in the region were poor, o f which about 42 percent were severely poor. Whereas the incidence o f poverty has declined both in the state as well as in Southwest region, as many as 65 percent o f rural households still remain below the poverty line. Tribal groups dominate forest communities inMadhya Pradesh. An intensive survey o f 40 villages in the forest districts o f Krishna and Kurnool (Alsop and others 2002) found that tribals constituted 68 percent o f the village population, well above the rate in Assam and slightly higher than the communities surveyed in Jharkhand. About 55 percent o f the villagers surveyed had no education, and an additional 28 percent only primary education. Average land holdings were very small, with 55 percent o f respondents being marginal farmers with less than 1hectare. Agriculture, forests and labor constitute primary livelihood systems, with livestock and fish rearing being closely integrated in the farming systems. Service provision and small-scale processing and marketing also seem to play an important role among a number o f artisan castes and tribal groups. Women's work i s regarded as crucial for the survival o f tribal households in terms o f provisioning for food, income earning, as well as management o f resources. Agriculture in the study area is predominantly rainfed and monocropped, with only about four percent being under irrigation. Less than 25 percent o f the gross-cropped area i s double cropped. Paddy i s the major crop accounting for about 60 to 70 percent o f the cultivated land during the kharif season. Cultivation practices among tribals remain primitive, even though most tribes are familiar with 41 wet rice as well as shifting cultivation. Agriculture generally provides household food security for two to six months o f the year for the majority o f farming households. It i s estimated that average households in upland systems are only able to meet 20- 40 percent o f their food requirements; those in the middle system 30-40 percent and those in lowland systems 50-70 percent o f their needs. Inadequate food security i s compelling tribals, especially those in the upland and mixed systems, to depend increasingly on purchased foods to meet their minimum survival needs. Impoverished villagers have to choose between migrating for wage work or resorting to unsustainable harvesting of firewood for survival income. With planning horizons in tribal societies being short, agriculture i s aimed at short-term food sufficiency for a few months. Exploitation by market forces has impactedlivelihoods from nontimber forest product inthe past, These stand threatened further with increased deforestation. Food insecurity peaks in the post- sowing monsoon period (August-September) and again in March when the kharif harvest has been exhausted. In the past, most tribals were able to cover most o f the shortfall with foods gathered from the forests. Forest degradation and curtailed forest access has reduced the availability o f natural foods on which they depended. Many tribals have become caught ina debt trap because o f the precariousness o ftheir food security situation. A seminal study by Narain and others (2005) examined livelihood patterns in 550 households in forest fringe communities in the Jhabua district o f Madhya Pradesh, and more importantly, measured specific components of household income and subsequent dependence on natural resources, including forests (table A5.7). 30The Jabhua district i s characterized by literacy rates o f 37 percent. Agriculture i s predominantly rainfed and i s the primary occupation o f 91 percent o f villagers surveyed. The district's land base i s 54 percent agriculture land, 19 percent forest cover, and 27 percent degraded land. Based on estimates o fpermanent income across household income quartiles, it i s apparent that the disparity in income levels i s quite significant across the top and bottom income quartiles. Inparticular, the total permanent income o f the richest quartile i s almost seven times that o f the lowest group. Agriculture, natural resources, home enterprises, wage employment and transfer income increase directly with household income. Livestock income increases over the first Livestock 125 I 184 1 218 I 179 three income quartiles and then I I declines in the top quartile. Of NaturalResources I 187 II 354 I 490 I 1,136 more interest i s the share o f Enterprises 51 144 246 1,216 household income and how this Employment 597 1,466 2,087 4,630 changes over the four income I Financial Business I -243 -227 I -446 I -131 1 quartiles (figure A5.2). The Transfers 134 148 250 1357 figure shows that as household Total I 2,401 IIII 4,515 11 6,689 16,202 income increases, the share o f Source:Narain and others 2005. income from agriculture declines, being offset by increases in wage employment and home enterprise income. For the lowest quartile, which could include the poorest marginal farmers and landless, agriculture 30 Permanent income sources include income from agriculture, livestock rearing, common property resource collection, household enterprises, wage employment, financial transactions and transfers. Income i s measured as the difference between total revenue (market based or imputed for subsistence goods) and total input costs incurred, mainly for agriculture. Common property resources included fuelwood, construction polesitimber, fodder, mahua flowers and seeds, kendu leaves, and dung. For the majority o f households, the income from these activities i s simply the gross revenue. 42 accounts for more than 60 percent o f permanent household income. Employment accounts for another 25 percent. Natural resources from common areas accounts for only 8 percent o f permanent income. Figure A5.2. Permanentincome shares, Jhabua Lowest 25% 25-50% 50-75% Top 25% Permanent Income QuartiIes rn Agriculture Livestock Natural Resources Enterprises Employment Financial Business Transfers Source: Narain and others 2005. It is interestingto note that the share of permanent income from natural resources is fairly stable across the four income quartiles at 7-8 percent. An interesting result i s that natural resource dependence (the share o f total income from natural resources) does not decline as household income increases. The patterns infigure A5.2 tend to support the more general findings from field surveys in Jharkhand and Assam that agriculture and wage employment are the primary occupations and income sources in communities bordering forests. With respect to natural resources alone, the analysis from Jhabua (figure A5.3) shows that the share o f fuelwood income from total natural resources income declines as household income increases. This i s due largely to other forms o f energy (LPG, electric generators) becoming more affordable and the opportunity cost o f time spent collecting fuelwood becoming too high. These findings are shared by other studies showing that fuelwood collection will decrease with wealth because o f increased opportunity costs o f labor and changes in preferences (Banyopadhyay and Shyamsundar 2004; Bardhan and others 2002). A similar pattern i s found for "other" natural resources, which would include nontimber products. For the most part, these products require intensive collection efforts to yield what i s usually a low value product, in the absence o f value addition and access to more efficient markets. The share o f fodder income from natural resource income increases with household income largely because richer families own more assets inthe form o f livestock. H o w do these results fit with broader global experiences? Vedeld and others (2004) synthesized research case studies on forest dependency from East Africa, South America, Asia and Latin America. The results show a range o f average relative shares o f environmental incomes out o f total household incomes, from 5 percent as a low outcome, and 42 percent as the higher outcome (table A5.8). The Jabhua case study in Madhya Pradesh found the share o f permanent natural resource income from total household income at 7-8 percent, slightly above the lower values suggested intable A5.1. On the other hand, the forest environmental income in the lower case o f 43 $173 i s equivalent to about Rs7,8OO, far above the values found by Narain and others (2005) in the Madhya Pradesh studies. FigureA5.3. Naturalresource permanentincomeshares,Jhabua 60 m c i 50 v) -E8m 40 - 30 !E I 20 10 0 Lowest 25% 25-50% 50-75% Top 25% Permanent Income Quartile 1 W Fuelwood Poles Fodder Other 1 0 0 Source: Narainand others 2005. In summary, a combination of resources (agriculture, forests, and labor) contributes to rural livelihoods in forest fringe areas inthe Indian states examined. Experiences from the field suggest that the degree and nature o f dependence on forests and livelihood options differs from one community to another (table A5.9). Villages closer to towns will rely less on forest for livelihoods and more on agriculture and wage labor. On the other hand, villages inmore remote areas will have to rely more on agriculture and forestry. The communities examined inthis study earn very little cash income from forests. Subsistence minor products, as well as fuelwood and fodder are the main :st income ($ PPP) I 173 I 743 I 837 I evels (vears) 4.8 I 4.4 I market (km) 7.9 I 34.7 I 's (2004). Jharkhand and Assam, but in terms o f total household income, nontimber products play a very minor role at present. Of note, none o f the communities surveyed mentioned timber as a contributor to household welfare. This i s due to several reasons. First, the main priority i s food security and forests are valuable to them as they provide subsistence food products to satisfy their immediate needs. Second, they know that Sal trees are necessary for forest products to flourish. Third, tribal people may not be keen inusingthe some species for commercial purposes as they are by nature, adverse to trade and commerce. Finally, there i s opposition between the state's 44 interest intimber as opposed to communities' interest in forest products, and the insensitivity and lack o f cultural awareness o f state policies inthis matter. Near urban towns/industrial towns/mining I ++ I + I + I + + - With predominantly tribal population and +++ ++ + + at distant location from town (traditional) Predominantly tribal population, close to a ++ + ++ ++ town (nontraditional) Withpredominantly nontribal population +++ + ++ + (withNGO support) With JFM activities ++ + ++ With self-initiated forest protection ++ ++ ++ ++ activities (+LOW; ++Moderate; +++High) Source: TERI 2004,2005. Field experience suggests that even where communities are interested in pursuing commercial timber production, inJFM programs they view timber as belonging to the state. Where there i s no JFM, communities may feel the resources belong to them, but have no access to efficient marketing channels. For some communities, Sal trees are sacred and should not be cut down. Moreover, they realize that Sal trees are necessary for the growth o f minor forest products critical for their survival during the lean season. Sustained and legal timber harvesting i s where significant revenues could accrue to some communities. It i s clear that in the communities surveyed, forests do contribute to rural livelihoods but primarily through seasonal collection o f low-value subsistence products. The few which are sold commercially attract low market prices inreturnfor highcollection costs. Where forests are highlydegraded, this situation is exacerbated as people have to travel further to collect products. In a study o f Chhattisgarh areas that were heavily forested a few decades ago, the distance required to collect fuelwood, fodder and minor nontimber forest products has increased four-fold in 20 years (Saxena, 2002). The critical issue, which needs to be emphasized i s that from the communities examined inthe three focal states, the livelihood potential o f forests remain underutilized and provide little hope to communities as a pathway out o f poverty. Lessons can be learnt from other Asian countries like China where community/farm forestry has been very successful. In 158 counties o f Southern China, farmers get as much as 40 percent o f their total income from the forest industry through commercial sales o f timber, poles and pulpwood (People's Daily Online 2004). At the same time however, improving forest livelihoods in most communities in India must be integrated into broader rural livelihood initiatives such as agriculture intensification and marketing. 45 Forest Livelihoods and Linkages with Rural and Tribal Development in the Three Focal States Inthe three states surveyed, priorities for rural development assistance made by members of village communities were remarkably similar. Inparticular, communities generally want: 0 Improved agricultural production mainly through irrigation (check dams, ponds, water pumps) to allow two crops to beharvestedeach year and diversificationinto cash crops 0 Safe drinkingwater and simple handpumps 0 Assistance with village-based income generating activities (sewing, weaving) 0 Access to the electricity net 0 Improved roads and better transport facilities 0 Better access to education and health facilities It is clear from the previous analysis that the majority o f forest-fringe communities are primarily dependent on agrarian-based economies, with forests playing an important supporting role through provision o f subsistence fuelwood, fodder and limited nontimber forest products on a seasonal basis for some people, and as a safety net for others. From field experience, the current JFM model, based primarily on rehabilitating degraded forests, will have a limited immediate impact on rural development and poverty alleviation. Until communities are able to access better quality forests for timber and commercial nontimber forest products, and/or degraded forests mature, agriculture development i s key to lifting the poorest segment o f the population out o f poverty. But agriculture and forest development initiatives in remote forest fringe communities must also be complemented by infrastructure development (roads, electricity), health and education improvements, and development o f social capital in communities. Following Falconer and Arnold (1988), forests are elements o f complex rural environments, and forestry alone cannot always alter basic social, economic and political factors at the root o f poverty and inequity. The importance o f trees and tree products inrural economies will vary from community to community and also between households within a community. Their use and role within the household economy are changing as rural areas become increasingly commercialized, forest resources are progressively degraded, and farm productivity declines. Field surveys suggest that other rural development agencies (aside from forest department) are not always reaching remote forest fringe communities and providing effective service delivery. This raises some difficult policy issues. State government agencies such as Agriculture, Minor Irrigation, Rural Development, and Tribal Welfare have specific rural development mandates but are not always well-integrated with forest development, nor do they have the necessary structures or human resource capacity to reachremote forest-based communities. A study inNortheast India (Darlong and Roy 2005) found weak linkages between the indigenous community institutions, local authorities, forest department and external organizations. In addition, there was minimal coordination between government agencies dealing with natural resource management and community forestry. Financial resources do not appear to be the main problem; in Jharkhand for example, state agencies such as Rural Development and Tribal Welfare are consistently underspending annual budget appropriations. Nationally only 55 percent o f central allocations to the Association o f Scheduled Tribes and Rural Poor are actually disbursed. At the same time, state forest departments do have a field presence (albeit spread thinly) in remote forest areas but lack the mandate, resources and training to deliver broader rural development programs. Field evidence suggests that forest department i s gradually building trust and respect in more remote forest areas through FDA programs that include modest entry point activities such as check dams. Communities have in some cases, raised expectations that forest department will deliver a wider range o f development needs. Yet forest department i s limited in how well they can address 46 broader development needs. This situation presents a paradoxical service delivery issue; forest department has a stronger comparative advantage in field "reach" but lacks the necessary budget, rural development expertise, and mandate to effectively provide a wider range o f needed development options to Forest-based communities. At the same time, because o f its higher visibility in more remote areas, villagers often expect the forest department to provide for rural development needs (Tiwary 2004). Conversely, state agencies with a clear mandate for rural development, have the expertise and larger budgets than forest department, but are challenged to provide effective service delivery. Compounding the service delivery issue i s poor integration between Forestry Departments and more traditional rural development agencies. Forest development to remote forest communities i s through the Forest Development Agency (FDA) system. FDAs can be constituted as a registered society under Societies Registration Act. The executive body o f the FDA i s chaired by the Conservator o f Forests with the Divisional Forest Officer as Member Secretary. Experts from other line agencies are usually represented but have no voting rights, and may not always take part inmeetings. JFM committees are represented through 15 nominees from the general body, o f which seven must be women. On average, one FDA will represent 25-50 JFM committees. In addition there are specific provisions for undertaking entry point activities for the community throughout the project period and beyond. The FDA executive committee also includes representatives from PanchayatslDistrict Councils. Concurrently, broader rural development funds flow mainly to communities in less remote areas through the District Rural Development Agencies (DRDA) system. Concerns were expressed by forest department staff about the limited involvement o f rural development agencies within the FDA structure. At the same time, rural development agencies expressed concern that collaboration with the Forest Department and i s not as strong as desired. Having in essence, two parallel systems for rural development incurs major transaction costs and limits communities on both "sides" from accessing investment funds and expertise for broader rural development that includes both forestry and nonforestry initiatives. 47 Appendix 6. Community Forestry InstitutionsinMaharashtra A study by Ghate (2003) shed light on the functioning o f three maintypes o f community-based forest institutions. These are a self-initiated committee that shifts to JFM; a self-initiated committee established with the help o f a CSO; and finally a community that only had a formal JFM committee (table A6.1). Population 173 393 161 ST percent 70 96 100 Landholding (ha) 0.8 to 1.1 0.4 to 2.8 0.8 to 1.1 Forest (halcapita) 2.4 2.1 History The community i s located on In1995, a CSO worked withthe rhisis a sparselypopulatedvillage prior to JFM revenue land. After a land survey community to buildsocial with good quality forest but it was in1989, the community initiated capital through self-help groups inder pressure from other villages informal steps to protect forests and capacity building.Forests Nhile local forest guard looked the within its revenue boundaries. It were degraded and a decision ither way. A neighboring village adopted rules for protection and was made to join a JFMprogram iad initiated a JFM approach and harvesting. Over the next 10 in2001, The CSO continuedto Markegaonvillagers felt t h s years, the community forestry work with the community to 3pproach was worthwhile. A local institution finctioned well, but develop its own rules for forest forest protectioncommittee was lack o f finds and poor technical use, protection and conflict xeated in 1997 and became a knowledge spurred linkages with management. The committee has registered JFM committee in2000. the forest department, leading to male and female members from JFM beginning in 1998. every household. Post JFM More secure rights to harvest Flexible rules are perceived as Forest related work has provided Benefits nontimber product; 85 hectares fair and legitimate. 60 hectares local employment by forest plantation was established; rules plantation was established. department. Fundsare available for self-made and well-understood; Improved awareness o f rights, development work by forest timber revenues to be shared responsibilities and knowledge authorities. JFM has provided equally between village and systems.More confident better clarity over boundaries and forest department dealings with forest department. stronger legal protection against Tree nursery set up and an incursionby outsiders. agreement reached with forest department for seedling purchase. Post JFM Poor communication and Growing dependence o n CSO. Community has little Weaknesses coordination between village and The CSO approach is to placate understanding o f JFM rules and forest department; no system o f all groups inthe village, leading regulations. Forest department has auditing community financial to poor adherence to, and small role inframing rules, fixing records; village has lost implementation o f rules inthe penalties or dealing with autonomy for many forestry absence o f strong sanctions. infractions. Committee meetings decisions; female participation in rarely attendedby Forest Guard. decision making is low. Sustainability Possible, based on historic Likely, basedo n support from Unlikely. Weak controls over commitment. Need to be stricter CSO and forest department. But illegal harvesting. Committee not on sanctions. Forest department dependence on CSO must be functioning properly. Lack o f must improve coordinationand reduced. Good coordination with community and forest department support. forest department. interest. Source: Gha 2003. 48 Appendix 7, Forest ManagementPlanningSystems Sustainable forest management depends on a strong underlying policy and legal framework, efficient property rights, clear management goals with provision for stakeholder consultations, competent management institutions, and effective long-term planning. In particular, long-term planning requires a good understanding o f the state o f the forest resource for a specific area, and how and why it i s changing over time. Basing forest policy and management planning decisions on weak resource inventory information can result inunsustainable resource use, with long-term consequences on forest health, biodiversity conservation, and the socio-economic welfare of Forest-based communities, both large and small3' Forests are dynamic ecosystems comprising of different vegetative and nonvegetative species, ages and quality. Impacts from human (encroachment, harvesting, grazing) and natural causes (fire, insects and disease) all contribute to the shifting quantity and quality of forest resources in any particular area. Considering a forest managed primarily for timber and nontimber prod~cts,~'an effective resource assessment system would normally incorporate a number o f important features (box A7.1). Resource assessment systems should provide information to satisfy a range o f stakeholders. Communities need local forest resource information for micro-planning and monitoring. Forest management agencies need forest resource information for management planning at division level, which can also be aggregated to the state or even national level to provide an overview for outlook studies, policy formulation and analysis, and long-term strategies. Central government planning and finance agencies require macro-level infomation for economic planning, revenue forecasting, policy development and sector outlook studies. The scientific community needs resource assessment information to support applied research and development. Finally, where forests are largely under public ownership, the general public has a right to timely and accurate information about the state o f the forest and how it i s changing. 31 Large communities, highly dependent on industrial forestry enterprises, are quite vulnerable to socio- economic impacts from unsustainable forest extraction, collapse o f resource stocks and closure o f forestry operation. This is also the case where forests support valuable biodiversity and a large eco-tourism industry.In small communities, where forests are part o f a mix o f livelihoods, people can fall back on agriculture and continue to use the forest for fuelwood, grazing, and minor produce as survival ''mechanisms.be As would the case with the majority o f community-based forest operations inIndia 49 Management plans facilitate articulation and execution o f forest sector policy and development objectives at different levels, from community micro-plans to a large forest division. Management plans are important for four reasons. First, they are an administrative and economic necessity, given the large potential values inherent in forests. Second, management planning focuses analyses to inform decision making about short, intermediate and long-term forest sector and development goals. Third, the plans provide a public record o f proposed forest management actions. Finally, management plans give evidence o f stewardship, particularly with public forests and public forest management agencies. Management planning should be responsive to changing goals, conditions, and resource pressures and incorporate mechanism for meaningful public participation. Forest managers require information on current and forecast demand for timber and nontimber forest products for commercial and noncommercial uses from forests under their jurisdiction. This implies that forest management agencies have access to timely and accurate market statistics and trends (domestic and foreign), relevant economic analyses, changing technologies in wood product applications and substitutes, and so forth Further, this kind o f information must be available to forest officers involved in implementing management planning at division and community levels. Forests can take a generation to mature, and silviculture decisions made early in stand development can determine the future structure, composition and product mix available to harvest for domestic and commercial use. A simple decision about what species to plant, or choosing between planting, coppice management or managing natural regeneration, can have major long-term economic implications. Indian forest policy33requires that 10-year working plans are prepared and approved for each Forest Division before any harvesting operation can take place. Each working plan covers all reserve and protected forests under its jurisdiction and describes the bio-geo-physical features, forest resources, management objectives, the work to be executed during the period covered by the plan, and proposed costs. Objectives generally relate to: increasing forest cover and improvement o f its quality; protection and rehabilitation o f degraded forests; soil and water conservation; wildlife protection; and fulfilling the demand for minor forest products o f local people, mainly through EM.Working Plans tend to be quite comprehensive and can take up to 2- 3 years to reach approval stage. There are no formal mechanisms for public consultation. Once approved by MOEF, the working plans form the basis for all forestry work to be undertaken in the Division over the next decade. Collectively, the plans inform forest sector budget allocations from State and Central governments. Forest resource information i s gathered from a variety o f sources including low-intensity state forest inventory assessment (conducted as part o f the bi- annual Forest Survey o f India surveys o f forest cover), and growth and yield data o f mixed quality. The quality o f this information varies from state to state.34 To achieve various management objectives, state forests are divided into working circles, which define management interventions for specific forest types. Working circles can overlap to provide flexibility for management treatments within each forest division. Some common working circles are: Improvement (thinning existing forests), Rehabilitation (managing natural regeneration, enrichment planting), Plantations (major planting operations); Protection (from fire, grazing); Bamboo (managing bamboo stands); and Reclamation (reforesting old mining areas). The concept and approach to developing and applying working plans and working circles has a long history and tradition in India. 33 Although not a legal document, certain aspects o f Working Plans have a legal status through recent Supreme Court rulings, for example the MOEF review and approval process. 34A few states such as Madhya Pradesh andAndhra Pradesh, are now developing more intensive and fairly progressive inventory and mapping systems to provide better quality forest inventory information. 50 With the advent o f formal35JFM in India, forest departments now prepare micro-plans with participating c~mrnunities.~~These plans are also prepared on a 10-year cycle and generally include basic socio-economic information about the village, local forest resources to be shared with the community, development needs, and proposed forest management treatments over the planning period. Local inventory assessment i s usually quite limited, with little or no field measurements. Prescribed silviculture treatments such as planting, thinning, and where permitted, harvesting, are guided by the management regimes identified for the division-level working circles. Non-timber forest products are often included in the micro-plan, but this may range from a simple listing o f species used by the community, to an assessment o f market potential and development strategies for emerging products. The micro-plans are usually prepared by the district forest officer, with assistance from local Foresters and Range Officers over a period o f 1-3 weeks, depending on the level o f interaction with the JFM committee and Executive Committee. The plan i s approvedby the regional forest department Conservator o f Forests. The 10-year forest management goals are then translated into annual work plans by the local district forest officer and staff for implementation. As funds become available from State and central sources, forest- based activities identified inthe annual plan are delivered. 35 As opposed to informal systems where some communities were managing surrounding forests without forest department assistance and without a formal JFM framework 36 According to most JFM Resolutions, these plans are supposed to be prepared with the cooperation of community members through the JFM Committee. The level of community participation varies however, by state and by the interest o f the local forest department officer; in some states, the forest department writes the plans without much local input. Inothers, communities are more active participants. 51 Appendix 8. LinkingOverstoryManagementto Nontimber ForestProduction A study inOrissa (Bhattacharya and Prasad 1998) suggested that longer term forest sustainability can be put at risk from both a traditional focus on managing a Sal dominant m o n o ~ u l t u r efor ~ ~ timber, and an alternative where communities may be following inappropriate management practices for other nontimber forest products (figure AS.1). Figure A8.1. Sustainability issues with Sal management Sal Forest (Fragmented and Coppiced) Forest Resource u s e a n d perceptions o f + the l o c a l people N o T i m b e r C o n t r o l against felling N o n - s a l trees 1 I Sal M o n o c u l t u r e Frequent Sal seed Rate establishment o f the non- collection b y l o c a l p e o p l e sal species as m a t u r e trees R a r e natural regeneration I L e a f litter sweeping Forest tree diversity reduced to Heart-rot in t i m b e r almost nil at the canopy level C o p p i c e v i g o r n o t c o n f i r m e d E x t e n s i v e S a l l e a f harvesting Unsustainable Sal Forest Ecosystem ource: (Bhattacharya and Prasad 1998). Adhering to traditional Sal closed canopy management with controls against felling can eventually result in a lack o f natural regeneration and poor coppice vigor that will reduce Sal timber yields. On the other hand, where Sal forests are deemed to have low timber potential inthe first place, poor management o f non-Sal species can reduce forest diversity and nontimber forest 37Although Sal i s not the dominant tree species inAssam, it presently forms the majority o f sawlogs. The lessons o f the Orissa study inFigure A8.1 could relate to other forest stand types such as Teak where certain nontimber forest products grow inthe understory of mature and semi-mature stands. 52 product. Inboth cases, longer-term ecological sustainability i s at risk and sustainable livelihood opportunities diminished. Management prescriptions for other species that may provide ecological support to important nontimber forest products are usually given little prominence (Bhattacharya and Prasad 1998). Many field and senior forest department staff recognize the importance o f these "nontraditional" forest species. Yet forest management goals directly expressed through traditional rehabilitation and plantation working circle silviculture prescriptions are often to develop a forest suitable for pole and timber production with crown closure greater than 40 percent and where the dominant trees comprise over 80 percent o f the stocking (Kumar 2002). The problem with nontimber forest products i s that many species can flourish in forest openings (where crown closure i s less than 40 percent. A strong case can be made therefore, that following traditional management regimes for commercial poles and timber, may ultimately reduce the quantity o f nontimber products available to villagers for subsistence or commercial sale. It i s also important for traditional knowledge o f forest management to be integrated into forest management components o f micro-plans. Over time, local people will often devise their own silviculture and forest production systems that in many instances lead to biologically sustainable outcomes (Foppes and Ketphanh 2000). Field studies seemed to suggest that few foresters had any knowledge o f traditional silviculture practices, nor were mechanisms in place to systematically record local management approaches, link them to ongoing research programs for field testing and refinement, and ultimately disseminate this knowledge to both field foresters and other communities. 53 Appendix 9. MarketAnalysis for SelectedProductsand States SAW TIMBER Jharkhand andMadhyaPradeshCase Study - Market Structures In terms of market structure in India, timber is a relatively undifferentiated commodity, with competition for domestic markets from overseas suppliers such as Indonesia, Malaysia and Nigeria. The domestic industry i s characterized by low vertical integration, with small and inefficient sawmills processing a mix o f local and imported logs. State monopolies on highvalue timber marketing provide effective barriers to private sector log supply through legal harvesting. InMadhya Pradesh, Teak and Sal account for about 41percent ofthe total growing stock indense forests. The state i s the largest producer o f natural forest timber in the country; and its Teak timber i s o f exceptional quality. Teak and Sal account for over 60 percent and 80 percent respectively o f the sales value o f timber harvested in the state. The sustainable cut for the next five years has been estimated by the Forest Department at about 190,000 cubic meters per year.38 About 40 percent o f log sales are to other states. Inaddition, a large but nonquantified proportion o f the timber sawn within the State by 2,400 sawmills, i s sold in semi-converted form to out-of- state buyers. Total revenues from timber harvesting by the Forest Department each year are about Rs3.8 billion ($84 milli~n).~' As indicatedearlier inthe report, about 75 percent of total nonplan expenditures are to support timber harvesting and marketing. From 2002 budget figures, this works out to roughly Rs2.7 billion ($59 million). Another organization, the Madhya Pradesh Rajya Van Vikas Nigram Limited (State Forestry Development Corporation (FDC)) i s the second largest owner o f teak plantations in India. The FDC has 232,000 hectares o f forestry land and i s currently planting 4,000-5,000 ha/year. It i s currently obtaining thinning revenue from sales o f poles and small sawlogs. In 2002/03, sales revenue was Rs173 million ($3.8 million). The FDC logs and poles are auctioned using the same system and upset pricing levels as those set by the forest department. The FDC has been a relatively innovative financier o f plantation forests inthe State. The Central and State Governments have contributed Rs98 million o f equity funds to establish and expand the FDC. InMarch 2003, it borrowed a further Rs400 million o f bank funds to finance expansion. It i s now able to raise loans without government guarantees and repay loans from thinningrevenue. In effect it has been a useful vehicle to augment State budgetary funding available for rehabilitation o f degraded forest department forestry land. InJharkhand, the dominant timber species is Sal. The state's climate and soils can produce very high quality, large diameter Sal logs for the sawmill industry. At present however, only 3,000 cubic meters o f logs are legally harvested from salvage cutting operations in the state, with an additional 2,000 cubic meters estimated to be cut illegally.40A small part o f the domestic supply originates from private farms in the state. Out o f the about 150 licensed sawmills and wood cutting shops in the state, only 60 are currently operating full-time and produce about 20,000 38Currently augmented by another 200,000 cubic meters from harvesting operations ahead o f dam projects. 39 Statistics relating to production from private farms, sales o f logs and sawn timber to other states, and the import o f timber from other states and from overseas, although obtainable from transit permit data, i s not compiled. 40Prior to the 1997 Supreme Court restrictions on clear felling inIndia, annual log production inJharkhand was estimated at 30,000 cubic meters. Log production i s constrained pending approval o f working plans by MOEF 54 cubic meters o f rough lumber.41Logs from Jharkhand's forests represent about 30 percent o f total input for the 60 full-time mills.The remainingbalance of log input (27,000 cubic meters) is from overseas (mainly Nigeria, Malaysia and Indonesia), and neighboring states where sawlog production i s occurring. The economic hauling distance for logs in India i s an estimated 500 hlometers, which provides a log source to Jharkhand mills from an areas covering all o f West Bengal and Bihar, most o f Chhattisgarh and Orissa, and about one-half o f Uttar Pradesh and Madhya Pradesh. Foreign logs tend to be shipped through Calcutta. Local lumber production o f 20,000 cubic meters meets only 20 percent o f the domestic demand in Jharkhand. The remaining lumber demand o f 80,000 cubic meters i s met through imports from other states. In addition to timber for lumber production, an estimated 25,000 poles are produced from local forests, mainly Sal but also species such as eucalyptus from private farms. Market Conduct In Madhya Pradesh harvesting is seasonal, normally undertaken from September to June.42 Selling i s mainly by auction through 38 major commercial depots in the State. Material available for auction i s graded in to lots varying from 0.5 cubic meters to 5 cubic meters. Attendance at auctions i s normally in the range o f 100 to 300 potential buyers, many from other states such as Jharkhand. Minimumor "upset" prices are set based on an average o fprevious sale prices. At this time, 80 to 90 percent o f product i s sold at auctions with the balance sold at upset prices after auctions. The Forest Department auction system appears to be worhng well. From interviews undertaken with sawmillers, there i s general acceptance and satisfaction with the auction system. Several complained that upset prices were too high.Recent changes inthe auction rules allow the department to sell unsold logs at less than the upset price after three auctions has helped substantially reduce the incidence o f unsold old and decaying logs. Log prices vary considerably between species, depots and grades due to wide ranging differences in product length, diameter and quality. Over the past three years Teak log prices have remained relatively stable. The weighted average price for teak logs i s Rs13,550 per cubic meter (within a range o f Rs5,275 per cubic meter to Rs28,133 per cubic meter), about three times that o f Sal logs, and 7.5 times that o f miscellaneous species. In Jharkhand, prices along the Sal loghmber value chain vary considerably between suppliers and producers due to wide ranging differences inproduct length, width and quality. For example, the price o f Sal logs purchased on the open market (FOB mill) from domestic, other states or other countries ranges from Rs7,800 per cubic meter to Rs16,OOO per cubic meter. The Forest Department depot price ranges from Rs5,164 per cubic meter to Rs17,OlO per cubic meter. Field data show that prices from logs supplied from department depots were significantly higher than logs imported from other states or even overseas suppliers like Nigeria or Malaysia. Prices for Sal logs and lumber in Ranchi markets appear to be 20-40 percent higher than in most other regions o f India. The Indian Council o f Productivity and Research publications show that prices reported for Ranchi for Sal logs and sawn timber, are above average prices for the other eight centers for 41Calculations are based on an estimated lumber recovery factor o f 60 percent. This means that 1cubic meters o f logs yields 212 foot board measure o f lumber (1.2 cubic meters). The remainder o f the log remains as sawdust, slabs and ends. Mill owners suggested a LFW o f as much as 80 percent, but this did not match with the antiquated equipment and wide saw kerf observed. Efficient sawmills inNorthAmerica with the best technology canusually only achieve LFWs o f 60-75 percent. 42The work was hampered by limiteddata available ineach state o n the timber product market structure, for example volumes, origins and prices o f log supply, lumber production, sales volumes and market demand. This reinforces the problem cited inthe previous chapter o f inadequate forest sector information. 55 which they collect prices. Ranchi appears to have the highest log prices and i s second only to Kolkata for Sal sawn timber prices. Market Performanceand Impact on Livelihoods:Key Issues In comparison with Jharkhand, the production and marketing of timber in Madhya Pradesh is performing well and i s a net exporter o f sawn timber. Most o f the wood that can be sustainably cut from state commercial forests i s being marketed. There i s also little evidence o f illegal wood inthe market.43Significant supply expansion will occur from commercial plantations owned by the government in the next several decades. A critical point with the Madhya Pradesh system i s whether an approach that accounts for Rs2.7 billion in operating costs for harvesting and marketing operations, financed by state budget allocations, and generating Rs3.8 billion in gross revenues, i s the most efficient approach from a public policy perspective. If the state were to gradually ease itself out o f the commercial timber harvesting and marketing business, three principal questions arise; first, what could the Rs2.7 billion in state transfers to the forest department be used for; second, how could the state generate an equivalent net revenue o f Rsl.1 billion from alternative marketing systems; and third, what alternative systems could be used? In Jharkhand and Assam, the same questions apply, but on a much smaller scale. InJharkhand, there i s a significant imbalance between local sawmill capacity, active production levels, local log supply, and local lumber demand. Inboth states, log and lumber prices from the open market and government depots have become more aligned in the past decade as the volume o f imported logs and lumber has increased, particularly in Jharkhand. Government harvesting and marketing structures carry high overhead costs. In Jharkhand for example, the fixed harvesting overheads for one coupe could be as high as Rs51,000 over nine months for wages, and small structures on site. With small marketing depots, the fixed costs for a year could be as much as Rs195,OOO for staff wages, land rental, and maintenance. As indicated earlier in this report, 76 percent o f Madhya Pradesh's recurrent nonplan budget (or $65 million) i s supporting timber production, harvesting, and territorial structures, a highproportion o f which i s for staff costs. Two key issues need to be addressed with respect to improving community livelihoods through timber market systems. First, communities need space to engage in timber marketing. Timber provides a huge opportunity for communities to generate forest revenues. At present however, neither state provides mechanisms for JFM communities to easily engage in commercial timber marketing for nominated species outside o f government structures with its inherent restrictions and opaque revenue sharing systems. In Madhya Pradesh, plantations o f the Forest Department and Forest Development Corporation are integrated with JFM operations, but committees in dense, high quality forests generally only provide protection functions inreturn for minor forest produce, the chance to be employed in forest operations, and a share o f final net timber revenues.44The Forest Department presently sees little space for communities in these forests to assume more management and marketing responsibilities. There i s general resistance to upset an existing marketing system that i s competing reasonably well with imported logs, albeit with state subsidies. Committees in degraded forests however, may have more flexibility in forest design through the micro-planning process, but timber marketing i s still constrained by the legal and regulatory framework. In Jharkhand, there i s almost no legal timber harvesting at present. The ~~~ 43 Indiscussions with sawmillers, they estimatedthat the level ofillegal wood inthe Bhopal market was less than 10 percent 44 It was understood from field exercises that only one community hadshared intimber revenues from high quality forests. Details on the volume o f timber, quality and net revenue shared with the community were not available from the Forest Department. 56 future could offer a much different scenario however, as more working plans are approved and assuming communities are given greater opportunities for harvesting and marketing timber from forests. The current JFM resolution allows an option for communities to market nonlisted timber, however, there are presently no structures or institutions in place to provide effective market intelligence, access to marketing channels within and outside the state, and technical assistance to improve log quality. Also, the legal framework restricts sales to lower-valued nonlisted timber species. The opportunity for value addition, where communities group together and operate a small sawmill to capture economies o f scale and higher resource rents, has not been given serious attention within the government. Inboth states, a transition period will occur over the next decade with JFM committees having gained additional institutional experience and, timber from formerly degraded forests beginning to enter the market as poles and small sawlogs. The challenge i s to establish market systems that allow communities to choose marketing channels for all timber species, and values the efficiencies o f community managed timber (flexibility o f volumes, multiple delivery points and low costs associated with harvesting and protection o f logs) as well as low cost value addition to cater to differentiatedclientele. Second, restrictions on timber felling and transport need to be relaxed. This issue affects timber supply from bothcommunities and private farms. Part o f the problem i s the ambiguity that still exists over the ownership o f trees on private land and Forest Department land. The laborious permitting system to remove privately grown trees provides a strong disincentive to private commercial growing o f trees on private land (box A9.1). InJharkhand, private farmers can sell Sal logs under the terms o f the Bihar Forest Produce (regulation and Trade) Act, 1984. However, they must be offered for sale to the Forest Department first at the scheduled rates less a 15 percent commission for marketing. If the department does not wish to handle the sale it can give clearance for the private grower to harvest and sell on his or her own behalfbut transit permits are still required. In both states, a point will eventually be reached where JFM committees become the principle tenure form on forest land and in providing many forests management functions. The transit permit system together with the rules governing the hours o f operation o f sawmills and the elaborate perpetual inventory record system that sawmills have to keep are all examples of outdated regulations that should be reviewed in the light o f JFM and enlightened regulatory development. KENDULEAF JharkhandandMadhyaPradeshcase study - Market Structures The leaves o f Diospyros melanoxylon, popularly known as kendu (or tendu), are o f high economic value because o f their use in rolling bidi (country cigarettes). Throughout India, kendu 57 leaves and bidis are estimated to provide 106 million person days in collecting activities and 675 million person days in processing o f products. The Kendu leaves sought by the market are normally collected over a 15- to 20-day period between late April and early June, depending on when the first monsoon rains fall. The long term prospect for Kendu leaf trade (and bidi cigarettes) i s considered by traders to be stable to slowly reducing, with a longer term outlook o f further slow reductions in volume, because o f increasing competition from regular cigarettes, chewing tobacco, pun masala and government publicity to reduce smoking (International Labor Office 2003). Both Madhya Pradesh and Jharkhand regulate the trade in Kendu leaves (box A9.2). In 2003, Jharkhand production represented about 10 percent o f the Indian market with an estimated 90 to 95 percent sold to manufacturers in neighboring states. Madhya Pradesh State i s the largest producer o f tendu leaves in India with about 25 percent o f the Indian market. Although local producers and forest department officials feel the trend in bidi production i s declining, data on bidi tobacco production do not support this view. On the other hand, the longer- term domestic demand outlook i s not optimistic due to anti-smoking, tobacco-free programs, and competition from chewing tobacco gradually taking hold in India (International Labor Office 2003). The Kendumarket structure in Jharkhand involves interactionbetween the Jharkhand State Forest Development Corporation, licensed traders who operate as middlemen between the corporation and communities and manufacturers, and insurgents. The collection begins at village level with the Jharkhand State Forest Development Corporation nominating collection villages in designated forest areas. A number o f collection villages are then aggregated into lots, which are tendered out to a small and well-established group o f licensed traders in the private sector. During the collection season, the leaves are plucked manually by the forest dwellers, sorted and tied in small bundles. The leaves are delivered to collection centers and wages paid by traders to the collectors at the rate per bag fixed by the corporation at the beginning o f the year. Leaf bundles are then dried and packed in gunny bags. These are then stored in an official bonded warehouse for grading and forward sale to bidi manufacturers outside the state. A system o f advance auctioning has been inplace since 1994. Naxalites allow villagers and traders to operate ininsurgent areas in return for a share o f the traded value. The Madhya Pradesh State Minor Forest Produce (Trading and Development Cooperative Federation) oversees a supporting structure o f cooperative unions and primary cooperative societies who handle collection and storage of leaves. Membership o f these societies comes only from leaf pluckers. One cooperative society generally serves 10 to 15 villages. At the secondary level, 83 district forest produce unions were formed mainly as a conduit for financing and for auctioning leaves. The Federationi s the apex level institution. After the formation o f the separate Chhattisgarh State in 2000, the new Madhya Pradesh State remained with 58 district unions and 1066 primary forest produce societies. Up until 2003, all leaves were transferred from the cooperative societies to cooperative union rented warehouses, where the leaves were auctioned. In2003, 302 out of the 1,033 selling unitsmovedto a system of advance tenderinghelling of the 58 whole production o f a unit prior to the commencement o f the season with the purchaser being responsible for storage and transport. Under the new pre-season bidding system the purchaser bids for an agreed fixed quantity o f bags and can be required to purchase up to a further 25 percent o f bags if available at the tender price per bag. Payment for both methods i s by installment or (if sooner than uplifting dates) when the leaves are removed from the warehouse. The reason for the change in methods was to encourage greater competition, and increase efficiency indrying and transport. Market Conduct InJharkhand, the value chain for Kenduleaves involves critical stages and a wide range ofcosts. The first main payment i s made to the primary collector (that is, villagehousehold collectors) by the trader and i s set by the Jharkhand State Forest Development Corporation annually in advance for the whole state as an averaged fixed amount per bag irrespective o f quality. In2003, this fixed collection cost was Rs425hag. The second main cost component i s the royalty payable by the trader to the JSFDC. In 2003, the average royalty per bag was Rs168. The third major step inthe value chain i s the sale o f the product by the traders to bidi manufacturers. The selling prices depend on grade and quality, and ranges from about Rsl,120htandardbag to zero. Traders bear a highriskwith no assurance o f profit. Inbetween the initial purchase ofKendu leaves inthe field and the final sale to bidi manufacturers, a number o f formal and informal taxes exist, ranging from state taxes at Rs40 per bag, extortion payments to Naxalites o f about Rs60 per bag.45While some traders suggest they can earn an average 15 percent profit per bag, the data suggest that on average, the total cost structure adds up to about Rs908 per bag, which i s near the highend o f the price range. Clearly, some traders would have lost money on their sales. InMadhya Pradesh? cooperative societies receive Rs518 per bag fi-om the apex federation, of which Rs400 i s paid to collectors. The remaining R s l l 8 are used to offset society costs, 20 percent o f which are for administration and overheads. Since 1995, the Federation has also been returning 20 percent o f its net income to societies, who in turn pay out the amount as a bonus to collectors after deducting administration expenses. In 2003 this payment was Rs82.2 million or equivalent to a further Rs40 per standard bag. In addition the Federationoperates a life insurance scheme for collectors. The Federation pays a 20 percent o f net income into a fund for "Development o f Nonwood Products and Regeneration o f Forests." In 1999, Rs124 million was distributed with 6 percent spent on various nontimber forest product related projects and the balance on forest pr~tection.~'The remaining 30 percent o f Federationnet income i s placedinto a fund designated as being for infrastructuralprojects including, warehouses, schools, cooperative society offices, office equipment, road construction/maintenance, residences, water supplies, medical centers, irrigation, and similar works. Market PerformanceandImpacton Livelihoods There are five critical inefficiencies inthe current Kendu marketing system inboth states. M a r k e t signals do not reach collectors. First and foremost, the current system does not allow market forces to operate at all points along the value chain, where quality would be rewarded 45Insome insurgent areas, traders are "asked" to pay an additional surcharge per bag to collectors for high quality leaves. This can be as much as Rsl75ibag. 46A full value-chain cost analysis was not possible for Madhya Pradesh, given the data available. 47The most recent year where a breakdown o f expenditure from this fund could be obtained was 1999 59 with higher prices, and signals would be sent to villagers that quality is important, with an incentive to improve quality. Collectors are simply paid a wage per bag and are pure price takers in a monopsony where they must sell their product to the designated trader (in Jharkhand) or Society (Madhya Pradesh). InJharkhand particularly, most villagers are totally disconnected from market information about price and quality relationships; interviews with communities suggest most people have little or no idea about market trends and price structures based on grade and quality. Given low education and literacy levels, the collectors are also in a very weak position to ensure they receive even the listed price per bag from traders. The system o f an average fixed payment to all collectors does not encourage quality differentiation and quality improvement by the collector. The current system encourages maximum quantity collection at village level with the main concern o f the villager being to ensure that the leaves are only above minimumreject quality. It ensures the villager a guaranteed price, but these prices bear no relation to the wider market trends inIndia for Kendu leaves and bidi manufacturing. Limited technical services are available to communities. On the supply side, there are very limitedtechnical advisory services available to villagers on how to improve product quality. The current system o f fixed payment with no premiums for quality to the collectors does not encourage better management of coppicing of Kendu bushes. Cutting o f coppices about 45 to 50 days before harvesting i s recognized as the main mechanism for improving leaf quality. The best quality leaves only appear 2 to 3 years after coppicingi s commenced. Neither the Jharkhand State Forest Development Corporation nor Madhya Pradesh Federation have been consistently promoting and training collectors in coppice management in recent years. There i s a need for more systematic capacity buildingat the community level. Unsold lots result in high wastage. An outcome o f the current market system i s that in some years a proportion o f the crop goes unsold by traders to bidi manufacturers. In2003, an estimated 51 percent o f all Kendu lots in Jharkhand remained unsold by traders after collection from villagers due to poor quality and subsequent low prices from bidi manufacturers relative to the cost structures involved. This represents about 400,000 bags purchased from villagers at a cost o f Rs170 million ($3.8 million) that were not onward sold by traders to bidi manufacturers. The problem also exists inMadhya Pradeshbut at a much smaller scale. Trading organizations are overly dependent on Kendu. Although Jharkhand State Forest Development Corporation and the Madhya Pradesh Federation have a legislated marketing monopoly over several nontimber forest products (Kendu leaves, Sal seed, mahua seed, harra nut and mahulan leaves), they are totally dependent on Kendu leaf marketing for operating revenues. On average, these organizations generate close to 100 percent o f their total revenues through Kendu marketing. In the case o f Jharkhand, the JSFDC employs between 600 and 700 staff throughout the state, and for the 2003 fiscal year generated a net profit o f only Rs300,OOO ($6,700), which represents less than a one percent return on sales revenue. InMadhya Pradesh, the market structure appears to be dominated by Forest Department influence with no clear plans to further empower and ultimately let community producers manage their business affairs. At the union and society level, a Forest Department Range Officer or Forest Guard i s signatory to all bank accounts and a member o f the respective uniodcooperative management committee. The current collection and marketing system, in the eastern tendu patta belt o f the state deploys virtually all department field staff duringthe six-week collection season, which i s a questionable use o f department field staff relative to more appropriate core business functions such as forest monitoring and protection. Recent changes in the tendering system will likely reduce direct involvement by department staff, but even after these changes, the structure leaves primary collectors with only a passive role in the collection and marketing system, and few incentives to improve product quality. 60 Collectors could receive a higher share of total revenue. A central issue in Jharkhand i s the share o f total revenue going to community collectors. In 2003, village collectors receivedRs425 per bag, or about 46 percent o f the total costs o f Rs908 per bag along the value chain (figure A9. 1). In terms o f local livelihoods, it means that an Figure A9.1. Cost allocations for Kendu leaf, Jharkhand average adult collector can earn about Rs2,000 per season.48 Surveys in Naxalites communities suggested that the average net returns to people, after allowing for time for collection and carrying to depots, ranged from Rs70 to Rs150 per Trader bag, or between 16 percent 24% and 35 percent o f the farm gate price. The average royalty paid to corporation Source: Background studies, Jharkhand by traders for the allocation o f licenses in 2003 was Rs168, which represents a loss o f Rs168 per bag that communities could have received in the absence o f the royalty, or an additional 28 percent in gross income per bag under a different marketing system. Based on 800,000 bags auctioned under lots in 2003 and assuming they would all be filled, this represents a potential incremental gain o f Rs134 million ($3 million) that could have flowed to participating communities as additional income. A counterpoint however, i s that even ifprivate traders could deal directly with communities without having to pay the Jharkhand State Forest Development Corporation a royalty, how much o f the Rs168 would actually be captured by communities as opposed to higher margins for the traders? The answer to this question would depend on the marketing system used, for example an auction by communities (perhaps through a marketing cooperative) with strong competition from private traders where higher market prices might result, versus a system with little competition, or worse, collusion by buyers where market prices would likely be lower. In contrast, the systems used in Madhya Pradesh provide a lower base price Rs400 per bag but also allow for a share o f overall Federation profits, which for the previous season were Rs40 per bag. Interms o f which system i s better for collectors, the Madhya Pradesh approach o f creating cooperative societies and unions provides similar payments per bag, and the added benefits o f subsidized life insurance, plus modest technical input from department staff. On the other hand, there i s still a considerable way to go to fully empower villagers at the society and union levels to manage the collection, distribution and finances associated with Kendumarketing. BAMBOO Assam Case Study - Market Structure The North East region has the largest reserves o f bamboo inIndia but little has been done to fully commercialize its potential. Assam has 29 species o fbamboo, covering an estimated 8,213 square 48 A person, on an average, can collect 100 to 200 bundles per day, depending uponsupply ofthe leaves (Prasad and Bhatnagar, 1991). Usually the whole family is involved inleaf plucking but o n an average an adult can make up to Rs 100 a day inthe season. For a 20 day season, this represent about Rs2,000. 61 kilometers representing about 10 percent o f the area o f the State, or 35 percent o f the forest area. The current growing stock has been estimated by the forest department as 13 million metric tons. The annual harvest o f bamboo in the State i s estimated at 7.5 million green metric tons. Some 2.5 million households are engaged inthe production o f bamboo inthe state. Technically the trade in bamboo grown inreserve forests i s governed by the Assam Forest Regulations, 1891. The Assam DEF does not enforce its legalrightto control bamboo trade frombamboo grown onprivate land. Inaddition it does not enforce its right to require transit permits under the powersvested to it for the transport o f privately grown bamboo. Assam has a diversified and a slowly growing market for bamboo, but no comprehensive end-use analysis has ever been done for bamboo in the state. The largest single market for bamboo i s the manufacture o f pulp and paper. Other important markets in order o f importance are housing construction (including temporary structures), rural fencinghmplements, fuel, packaging and baskets, and nonresidential construction. The 100 percent Government owned Hindustan Paper Corporation has two medium sized pulp and paper mills in the State located at Nagaon and Cachar, utilizing about 800,000 metric tons o f green bamboo. About 450,000 metric tons or 55 percent o f this input i s supplied from reserve forests in Assam (45 percent for the Nagaon mill and 60 percent for the Cachar mill). The remaining 45 percent i s drawn from private fanners. The Hindustan Paper Corporation harvests about 60 percent o f the reserve forest bamboo volume that i s currently available and economically viable. The remaining 40 percent is regarded as sub-economic when compared with private household bamboo that can be purchased. Market Conduct Bamboo from reserve forest areas, although technically available for sale on a tender system to any market, has been harvested in the past under lease agreements and "Industry Orientated Plans" between the government and the corporation as fiber for their two pulp and paper mills in the State. Bamboo i s purchased on a stumpage basis with the corporation arranging harvesting and transport. The stumpage was revised from Rs62.50/metric tons to Rs300 per metric ton in September 2003. The revised price agreement applies until 2007, and allows for an annual 5 percent stumpage increase from 2003 until 2007. An examination o f the corporation pulp mill at Nagaon shows an 11 percent return on historical investment and a 10 percent return on sales. Both these ratios are regarded as above average in the international pulp and paper markets. The mill has an historical investment cost o f Rs.2,870 million and the 2002/03 sales turnover was Rs3,100 million. Its profit return in term o f paper sold i s Rs2,890 (about $65) per metric ton; in the current depressed world paper market this i s also regarded as reasonably high.49It has recently announced plans to increase capacity and output by 30 percent over the next two years. A brief Strengths-Weaknesses-Opportunity-Threats analysis in terms o f future outlook for the mill indicated a relatively strong outlook (table A9.1). Growing and marketing of farmer grown bamboo for pulp and paper production i s an important source o f farmer income in the State. In 2003 about 200,000 metric tons o f green bamboo to the Nagaon Mill was farmer grown. About 150,000 metric tons o f privately grown bamboo was supplied to the Cachar Mill.Privately grown bamboo i s preferred as it i s from species that have a higher basic density (yielding a higher weight o f fiber) and using the buying systems applied by the mills it i s marginally cheaper than bamboo from Reserve Forests. The corporation operates a relatively complex collection and buyingsystem for farmer grown bamboo. For the NagaonMill,the corporation operates a system of 10 "checkpoints" or delivery centers through the state. The operation o f these delivery points i s tendered every two years and minimumvolumes to be supplied to each checkpoint are contracted 49 Pulp and paper m i l l s inIndia are shielded from international competition by import tariffs, which at 35 percent, are the highest inthe South Asia region 62 out to a single bidder who organizes "Working Agents" at each checkpoint to manage the cash payments to farmers/village headmen and also the transport to mill. Located in the centre o f a favorable bamboo Expansion o f the Nagaon mill to take advantage o f resource growing area. the abundant Reserve Forest and increasing farmer- Monopoly access to bamboo in an oversupplied grown resource. resource situation. An opportunity to rapidly increase resource through By international standards the weighted average the promotion o f fast growing hardwoods in cost o f pulpwood landed at mill (currently about conjunction with JFM support activities o n degraded Rs1170 per metric ton ($26) for a weighted forest land. average transport distance o f 200 kilometers) i s Privatization should allow greater autonomy in below average. decision makingiless political interference, ease o f Self sufficiency in electricity and not subject to the raising increased capital, greater responsiveness to unreliable electricity situation being faced by most market signals and probable longer term cost industries inthe state. efficiencies. Strong domestic markets for its production. Paper and paperboard demand in India is expected to Twenty years o f experience and established grow at about 7 percent a year from the current 7 production infrastructure inthe state. million metric tons a year to 10 million metric tons a year by 2010. An opportunity to increase the quality and unit value o f paper production through the incorporation o f fast Seasonal resource supply resulting in the need for A relatively old, small and low technology mill by large stockpiling for the wet season from April to international standards. October. An urgent need for refurbishment, expansion and State ownership with the inherent political greater mechanization if the mill is remain interference and bureaucracy. internationally competitive. Poor roads and logistical problems with raiVriver Reduced tariffs and increased competition in the transport. future from imported paper as India reduces its 0 Heightened unrest inregion. protectionto local industries. A need to import from other states all production inputsexcept wood fiber and coal. Market PerformanceandImpacton Livelihoods The commercial market for bamboo reveals some interesting anomalies: The system for purchasing bamboo for pulp supports farmers, but has cross-subsidies. A system o f cross-subsidization i s used to purchase private bamboo; higher cost supplies from the more distant parts of the state are subsidized by lower cost bamboo closer to the mills. The pricing system i s aimed at securing an adequate volume o f bamboo to meet production targets, from the closest sources to the mill, but at the lowest weighted average cost. The average landed cost o f reserve forest bamboo at the Nagaon mill i s Rs1,275/metric ton. Growers within 5 kilometers o f the Nagaon mill receive Rs979 per metric ton (paying their own transport) while growers 85 kilometers from the mill receive Rs1,175 per metric ton. From the viewpoint o f farmers and JFM communities involved inbamboo production, the current pricing system allows more distant suppliers o f bamboo to receive a fair price covering the cost o f production. On the other hand, in common with most subsidies, it distorts normal market pricing signals and creates anomalies. The total costs for delivered bamboo from both suppliers are Rs773 per metric ton and 63 Rs336/metric ton respectively. Based on notified millprices for bamboo from these distances, the net revenue for the grower 5 kilometers away i s Rs64 per metric ton, and for the growers 85 kilometers away it i s Rs402 per metric ton (table A9.2). Ifboth growers received the average mill price of Rs1,275 per metric ton, the net revenue position o f the growers would change Growers 85 kilometers would have a net revenue o f Rs502/metric ton and those 5 kilometers Rs939 per metric ton away respectively. Compared to the actual situation, the growers close to the mill are "losing" Rs296 per metric ton while growers 85 kilometers away are losing RslOO per metric ton. If a highly competitive market for bamboo existed and prices paid to farmers actually reflected cost differentials, the growers closer to the mill would have a stronger incentive to produce bamboo, while farmers further from the mill mightlook more carefully at their decisions to invest inbamboo. Table A9.2. Bamboo Supply ChainPricingAnalysis: Comparisonof GrowersBased5kmand 85 km Value Chain Process Grower 85 km from mill -traders Grower 5 km from mill -direct supply Rs402 Net revenue Rs643 Net revenue Rs120 Felling and cleaning Rs120 Felling and cleaning Grower household in village Rs30 Loading local transport Rs30 Loading local transport Rs53 for 8.8% purchase tax Rs86 For 8.8% purchase tax t Designated headmanlorganizer Rs20 for headmanlorganizer RslOO for transport to checkpoint 1 RslOO for transport to mill Working agent at checkpoint t Rs20for working agent I Contractor for mill Rs350 for transport Rs80 for contractor 1 t Pulp mill Rsl,175/tonne delivered at mill Rs979 delivered at mill Source: Backgroundstudies, Assam New market opportunities for bamboo exist but are difficultto exploit. Three examples from Assam illustrate this point and highlight key lessons (box A9.3). First, Timpack Private Ltd, set up a bamboo basedpanelproduct mill in2001 across the border inMeghalaya. Mainproducts are woven bamboo mat board, woven bamboo mat composite with wood veneer plywood, bamboo mat corrugated sheet, and bamboo particle board utilizing fines o f bamboo from the Nagaon pulpmill. It is an exciting attempt to use modern equipment for bamboo products that can compete directly with wood based products. It has an investment o f Rs140 million ($3 million) in the plant and working capital and currently employ 75 staff but i s yet to return a profit. Some o f their main challenges to date have been market resistance to bamboo based products as a quality product; bamboo i s more difficult and expensive to process than wood; e) the species o f bamboo available in the North East Region are relatively difficult to utilize compared with species available in China. Second, a small bamboo processing industry manufactures raw joss sticks for sale to industries that make incense sticks for religious and cultural purposes. It has invested about Rs1.5 million and employed a staff of 30 people. It purchases bamboo stems directly from local farmers within a 5-kilometer radius. The business i s one year old and only marginally profitable. It sells mainly to manufacturers in Kolkata with reasonably strong markets. Its main challenges are a lack o f 64 reliable machinery (it was using small-scale Indian and Taiwanese manufacturingequipment) and unreliable electricity (the area was prone to lose electricity supply for three to five hours a day). Third, a bamboo cottage industry makes small seats (stools) at a refugee camp at Lampara about 1.5 hours to the west o f Guwahati. The small operation employs 400 people. Stool makers purchase their bamboo stems from farmers within a radius o f 1.5 kilometers of their camp. The average return on labor for a person day of input is Rs30-Rs40. Village craft workers sell partly to wholesalers in Guwahati, and partly at a local "haat." Wholesalers provide transport and mark up their stools by 40 to 50 percent. Prices for their stools have gone up by about 30 percent over the past 5 years, however over the same period they claimed that the price o f bamboo hadrisen by 50 percent. The business i s seasonal with low demand and low prices duringthe dry season and vice versa. MEDICINAL PLANTSAND AROMATIC OILS -MadhyaPradeshandAssam Background India has 16 agroclimatic zones, 45,000 different plant species and 15,000 medicinal plants. The "Indian Systems o f Medicine" have identified 1,500 medicinal plants, o f which 500 species are widely used in the preparation o f drugs. The effectiveness o f these drugs mainly depends upon the proper use and sustained availability o f genuine raw materials. The domestic market o f Indian systems o f medicine and homoeopathy has been estimated at about Rs40,OOO million ($890 million). There i s also a growing demand for natural products including items o f medicinal value/pharmaceuticals, food supplements and cosmetics in both domestic and international markets. According to ICS-UNIDO (2004), the international market o f herbal products i s estimated to be $62 billion. Yet India's share in the global export market o f medicinal plants related trade i s just 0.5 percent. Aromatic oils are another potentially important forest product, with expanding global markets and limited supply. The market structures for medicinalplants and aromatic oils in most states o f India are generally weak and largely focused on local trading. External market channels are not well identified and communities have little information about how to exploit them. There are inherent complexities involved in managing harvesting and marketing o f these products. First, the supply varies from year to year and i s usually seasonal. Second, products often have a lack o f uniformity in color and quality. Third, people gathering these products from the forest can usually produce small volumes, raising a number o f collection, pricing, and transport challenges. Fourth, the supply chains tend to be long and the primary collector often gets only a fraction o f the final price due to monopsony situations with middlemen. The middlemen are also usually the moneylenders that provide credit to the villagers duringlean season with the crop or land as collateral. Fifth, lack of grading mechanisms, storage 65 facilities, market information, and restrictions on harvesting, transport and marketing o f some nontimber forest products reduces the incentive for people to invest time and resources in sound management. Untilrecently, most forest departments took little interest in these products as they fell outside the traditional nationalized timber and nontimber forest products (such as kendu), and appeared to have little revenue potential. As such, most o f these products fall outside the restrictive legal and regulatory framework associated with so-called listed or nationalized species such as Teak or Kendu. Of the three states examined, Madhya Pradesh has made the most progress in reforming market systems for medicinal plants. For aromatic oils, Assam has developed a model that shows good promise. New Approachesfor MarketingMedicinalPlants:The Case of MadhyaPradesh In 1995 the Madhya Pradesh State Minor Forest Produce (Trading and Development) Cooperative Federation took a leading role in the development o f minor forest products and in particular important developments in the marketing o f medicinal and aromatic plants. The Federation began by assisting primary collection societies in selling nonnationalized nontimber timber product by offering fixed purchasing rates for a small selection o f plants with market potential including aonla, mahul patta, mahua seeds and achar. Taking the example o f aonla, prior to the intervention o f the Federation, collectors were receiving Rs0.50-Rs1.00 per kg from market traders. Payment rates by the Federation were fixed at Rs2.50-Rs6.50, depending on location and market demand. The range o f nontimber forest products was then gradually widened. The state government has recently approved a "Strategy for Development o f Medicinal and Aromatic Plants (MAPs)from 2004/05 to 2008/09." The strategy plans an increase in area under cultivation o f MAPSfrom the present 10,000 hectares to 50,000 hectares, and the production o f MAPS from the present 20,000 metric tons to 40,000 metric tons. Related to this i s the desire to increase employment by about 2 million person days/year and attract herbal industries to the State. The strategy has several main elements relating to MAPs: Develop People's Protected Areas (PPAs) in 12 locations in 10 districts. These would utilize funding from the 20 percent net income redistributed from Kendu trading. At present, PPAs are protecting about 45,000 hectares o f forests for M A P collection. Harvesting o f MAPs from these areas is linked to other Federation-funded processing, and marketing initiatives to increase the income o f collectors and other rural people involved in adding value. A center i s being developed inthe Katni" district for conservation and development o f medicinal plants as well as providing health cover to people o f the area utilizing traditional medicines. Initiate a funding scheme for farmers. The National Medicinal Plants Board (NMPB) in 2002 started a contestable funding scheme o f financial assistance to farmers for cultivation o f medicinal plants. With assistance from the Federation, 367 proposals have been approved by the N M P B with financial assistance o f Rs87 million ($2 million) flowing to small fanners. Establishmarketingoutlets. To improve marketing o f MAPs, the Federation has funded a series o f retail outlets known as Sujeevuni Ayuwed. The first outlet was set up in Bhopal in 2002 and has been followed by similar outlets in Balaghat, Chhindwara, Satna, Katni and Seoni. Currently 80 different herbal products are being sold. The centers also have ayurvedic doctors providing low cost consultations and medical advice to customers. Products produced by the primary societies are being marketed under the brand name Vindhya Herbal, which is being promoted by the Federation as an umbrella brand and with distinctive packaging and Katni i s inthe Amarkantak plateau region that i s richly endowed with medicinalplants - some of which are exclusive to the region 66 labeling. The Federation i s also participating in national and international trade fairs with its branded range o f products. Facilitate value addition through processing. Ten value addition initiatives have been supported by the Federation including incense sticks, honey processing, bamboo handicrafts, traditional medicine manufacturing, and aromatic oil distillation. A state-of-the-art processing plus training centre was completedinDecember 2004 at Barkheda Pathani on the outskirts of Bhopal. This center i s planned to act as a model for other similar centers inthe State. Promote private farmer participation. The NMPB has sanctioned four promotional projects with the twin objectives o f development and conservation o f medicinal plants. The Federation has been designated to coordinate these four projects, which aim to promote private participation in on-farm cultivation o f medicinal and aromatic plants to reduce the pressure on natural forest extraction where sustainability i s at risk. The Federation i s providing a 30 percent subsidy on the total project cost. Following preparation o f district plans, soft loan funding i s provided to primary societies to take up identified opportunities. By the end of2004, Rs20millionhadbeen lentby the Federation. Improve market information. A Marketing Information System for 37 medicinalplants and 44 other nontimber forest product i s being operated by the State Forest Research Institute. Fundingassistance has been provided by the Federation. Price information is collected from about 100 markets through the State and published quarterly. Unfortunately no email or website system for distributingdata has yet been established. The institute has also supported MAP developments through: a) identification of endangered species; b) mass multiplication o f commercially important MAPS;c) studies on the variability o f aonla fruit; d) processing techniques for various MAPSand other nontimber forest product. New Approaches for MarketingAromatic Oils: The Case of Assam Patchouli (Pogostemon cablin) i s a perennial herbaceous plant o f the Lamiaceae family and grows ina number o f South East Asian countries. The dry leaves o f the species can be distilled to yield aromatic oil used in perfumes, medicine and processed food. Patchouli oil has remarkable staying power and i s an important fixative ingredient in the manufacture o f fine perfumes and cosmetics. Consumption o f patchouli worldwide i s about 2000 metric tons per year with the U S A being the largest market (about 500 metric tons per year). InIndia, consumption o f patchouli oil has reached 300 metric tons per year. India has an import requirement for about 290 metric tons per year and currently produces the balance o f 10 metric tons per year. India's production level i s expected to rise to 20 metric tons in 2004. Indonesia remains the world's largest producer and exporter at about 1,500 metric tons per year and thus supplies about 75 percent o f the world requirement. Indonesia however, has continued to source most o f its supply from wild uncultivated sources and i s seeing a decline in production and oil quality. Up to the year 2002, patchouli oil had a world market price o f about Rs800/kg. ($17-$18 per kilogram). After a sharp increase in 2002, prices have remained stable at between $35-$40 per kilogram. (Rs1,500- 1,800). The plant i s suited to Assam's climate and soils, and as an aromatic plant, it can be established on reserve forest land as part o f accepted forest management activity. Also, as a nonindigenous plant to the State there are no issues o f royalties or possible restrictionsrelating to endangered species status. There are many positive attributes relative to modest risk factors (box A9.4). Once in production, one hectares o f patchouli can generate an average o f Rs44,OOO each year in net revenue for three years. A strong partnership between the State and the private sector has been developed to plan and strategically develop patchouli production and marketing. The partnership has the following features: 67 0 Forest department takes a lead role in applied research. The forest department Silvicultural Division i s conducting trials as part of its research into germination, propagation and standardization o f nursery techniques for patchouli. It also works closely with the Research and Development Centre for Medicinal and Aromatic Plants, at Khetri, established recently by the NorthEast DevelopmentFinance Corporation (NEDFI). NEFDIisthe main networkingand developmentpartner.NEDFIhas the mandateto both provide credit and facilities for promotion, expansion and modernization industrial, certain agricultural, fisheries, and agrihorticultural activities. Its prime objective i s to attract new investment into the region. Their interest started with feasibility studies o f 43 products/processes that appeared to have prospects in the region. Medicinal and aromatic plants were ranked very highinthis analysis. More detailed work on medicinal and aromatic plants identified Patchouli as one of six prospects that should be further researched and promoted. This was followed by independent market research including visiting the U S A and then planting two pilot patchouli projects. Once they were convinced that patchouli had high potential, further steps were initiated (box A9.5). The AJMAL Group establishes local processingfacilities.AJMAL has core businesses in aganvood and perfumes, and the largest buyer o f patchouli in India. It has set up a research centre, part o f its Flower Valley Agrotech Ltd. subsidiary, at Hojai for a range o f medicinal and aromatic plants. It has 20 hectares o f its own plantings, and a distillation plant for extracting oil. It i s also actively promoting contract production. A community support organization works with small farmers to help build local capacities. The Shanti Sadhana Ashram i s active with patchouli farmers to provide training. 68 Patchouli i s a case study that has a number o f interesting lessons for the development and marketing o f other plants that could benefit forest fringe communities. The work being undertaken by the Government, development banks, research and promotion agencies and the private sector to find a new, profitable and appropriate crop for small farmers i s an excellent model o f what can be achieved through collaboration between State and the private sector. The development o f patchouli has been market lead and then followed by intensive research o f all factors affecting production and profitability; Its need for shade makes it ideally suited as an intercrop under tree crops, or suitable for growing under programs for reforesting degraded forest areas. Under JFM, patchouli appears to have a potential to be a significant future source o f income to forest-dependent communities. The above program i s still operating at a very small scale. The challenge in Assam i s to extend the patchouli model to other highpotential nontimber forest products, where the forest department role i s supportive, around a core business function o f applied research and development in an environment that empowers communities, rather than focusing on appropriating marketing functions, rents and decision making. FUELWOOD At the national scale, the fuelwood business is estimated to have an annual turnover o f about $17 billion (MOEF 2000) and i s a source o f livelihood for over 11 million people, making it largest employer (formal and informal) in the Indian energy sector. About half the fiber supply i s obtained from timber plantations; the other half fi-om natural forests, both as log removals and lopping o f branches and sweeping forest residue (Mahapatra 2003). Fuelwood i s the primary drain on forests in India. InAssam for example, the estimated sustainable harvest o f fuelwood i s 1.5 million metric tons per year versus consumption o f 5.2 million metric tons. The community surveys in Jharkhand and Assam revealed that households relied on fuelwood for about 80 percent o f their energy needs, primarily for cooking. National surveys suggest a figure of 75 percent among all rural households for cooking (UNDP/World Bank 2003). An estimated 59 percent o f rural households obtained their wood from home grown sources or free collection, Only 21percent paid for their wood, with the balance a combination o f the two sources. Fromthe same study, nearly one-quarter o f households reported nobody purchasing fuelwood, which suggests a lack o f commercial markets. A household will purchase fuelwood if the cost of collecting and transporting it to their homes by themselves i s greater than the local market price. Households selling fuelwood will do so when the cost o f transport to markets i s fairly low, based on distance and road condition. Markets are generally o f two forms. One i s a semi-commercial market through forest department channels where plantation supplies are sold to large commercial 69 buyers,The second and more common approach is with individuals (usually women) engaged in smaller-scale fuelwood trading to other households or middlemen. The women usually receive very low returns on investments o f time and energy. An example from Orissa highlightedthe case o f one woman who walked an average o f nine kilometers each day to collect and deliver 35 kilograms o f fuelwood for a net return o f Rs15 ($0.33). This i s about 20 percent o f the official wage rate for unskilled labor (Mahapatra 2003). Meeting fuelwood demands in states such as Assam and improving livelihood opportunities requires innovative solutions. The lack o f organized community institutions, particularly for women, means that collection and sales are left to individuals with little market power when dealing with commercial collectors who will transport the wood to more distant urban markets. There i s virtually no private sector investment in fuelwood plantations with communities at present but for a state like Assam, the need for investment i s overwhelming. It i s estimated that it will take up to one million hectares o f fuelwood plantations in Assam to satisfy the domestic demand and completely eliminate the pressure put onto natural forests. Financing these investments and incorporatingthe plantations into a community forest model are pressingneeds. 70 Appendix 10. Forest Fiscal Systems andAnalysis What I s aForestFiscal System? An efficient forest fiscal system, coupled with resource tenure and security, should underpin the allocation and use o f public forest resources by communities and the private sector. Forest resources have an inherent economic value, defined as economic rent (see box. A1O.l). The fiscal system will identify a range o f measures governing the capture and distribution o f this initial resource value, for example, by identifying various taxes, fees and royalties on the resource, and/or the underlying forest land. In addition, the fiscal system will identify where revenues can be captured further along the value chain as primary products are transformed and value added. As an example, mature saw timber on government land could be harvested by a private contractor or community under some form o f license or permit in return for a royalty on every cubic meters cut and hauled to the roadside. The royalty and any permit fees would capture a portion o f the economic rent value. These logs would then be sold to sawmills, which would then transform the logs to lumber and sell it to distributors or tertiary producers such as furniture manufacturers. Along the value chain, governments could assess various sales taxes, additional permit fees, etc, to generate further public revenues from the wood products. In addition, the income tax system can capture more revenues from downstream production. The fiscal system will identify how these revenues are then distributed, to whom, and for what purpose. Experience shows that a well designed and effectively implemented forest fiscal system can be more progressive instrument to increase the forest sector contribution to growth and development than a narrow regulatory-based approach (Oksanen 2004). What Are the MainIssues in India? The system is not efficient. With respect to JFM, the current forest fiscal system in India can be described as highly regulated, with high transaction costs, and focused on a narrow range of revenue generation. Considering the primary forest resources, under JFM Resolutions the DEF returns a percentage o f net revenues from commercial timber and pole sales to communities after accounting for their own harvesting, marketing and certain overhead costs. Benefit-sharing schemes are promotedby DEF in every state as an incentive for communities to participate inthe JFM program. In some ways, the system i s similar to a traditional calculation o f stumpage, however there are a number o f anomalies. First, the states are not trying to derive stumpage estimates to charge the resource user; the principal goal i s more to recover operating costs and distribute part o f the surplus back to communities for forestry and social development. Second, costs usedinderiving the net returns to communities and the state are based on administered DEF averages rather than actual costs by division or block, which would vary by timber size, operating conditions, transport distances to the log yard, and so forth Third, the costs are based on government systems, which may be more inefficient than comparable operations in the private 71 sector, Calculating resource rents with inflated costs would reduce the rental value. Problems extend beyond commercial timber; the current fiscal system does not usually assess royalties or other forest products such as medicinal plants, which may have fairly high commercial values. Only modest permit charges may be assessed, which would likely not capture the rent value o f these resources. Finally, subsistence products are provided free o f charge to communities. m Current benefit-sharing schemes need to be more transparent. Most states are gradually improving the share o f benefits from forest production to communities over time, but in the absence o f a national policy, individual states apply Tablc different share ratios (table A1O.l). As mentioned earlier in this report, allocating communities free access to subsistence nontimber forest Assam products i s not really Free access 50 percent o f net revenues for providing new benefits, but it and thinning revenues and 25 percent consumption o fnet revenues from timber on does reduce potential conflicts existing highforest to individual with the forest department and community allows the community to 100percent o fnet revenues for protect their assigned forest second rotation to individual more vigorously. Commercial community products such as timber Jharkhand Free access 90 percent o f net revenues to provide financial benefits to and individual community communities but field surveys consumption indicated many villagers were Madhya Free access VFPC indegraded forests: 100 not clear on the actual sharing Pradesh and percent of net revenues at district ratio and virtually nobody consumption level shared by all JFM seemed to know how the communities indistrict actual revenue share would be FPC inhigh forest: 80 percent o f derived. A common practice netrevenues at district level shared by all JFM communities in across the three states (and in district all other states) i s for the forest department to calculate Source: B: ;ground studies for focal states. timber revenue shares based on net values, that is, the gross revenues less certain costs incurred by the forest department in the establishment, maintenance, felling, and marketing o f the timber strand over one full rotation, including department overheads. In theory, this i s reasonable. The state i s investing in timber production and may wish to recoup some or all o f its costs from final product revenues. At the same time, the community should be compensated for its costs (for protection and stand maintenance) through its share. But the process for deriving the actual net shares tends to be very complex and opaque. The team was unable to find documentation that presented a clear and consistent description o f how net revenues are derived and in particular, what costs are included. In the absence o f this kind of information, communities are in an exceptionally weak position to challenge revenue sharing results. It i s entirely possible that net revenues returned to communities could be very low, or even zero, depending on what costs are included. Providing better and more transparent information to communities would allow them to judge the merits o f any benefit-sharing scheme and gauge their level o f support. 72 Evaluating benefit-sharing on a year to year basis may not follow sound economics. Assam and Jharkhand pro-rate costs and revenues on an annual basis back to individual communities. Madhya Pradesh calculates net revenues on a district basis. These approaches may yield the wrong results. Costs and revenues flow over the entire rotation period. Ifa forest i s established on degraded lands, both the community and the forest department will bear costs for several years until revenues begin to flow, perhaps from certain nontimber forest products and bamboo. Revenues from timber thinning and poles could take as long as 20 years, and the final timber harvest 60 years or more. Evaluating benefit-sharing over one year ignores initial capital investments and subsequent maintenance costs that would have occurred. With costs, how are major capital investments (such as planting) that occur once in a selected forest handled, compared with annual costs such as plantation maintenance? An alternative approach i s to estimate the present value and distribution o f revenues and costs over the full rotation. To promote wider debate, Assam was used as an example based on the three models in the analysis of forest management options (Appendix 9); the scenario with the highest NPV was evaluated in terms o f present values o f net revenues. For all scenarios, communities were assumed to be responsible for forest protection costs. The forest department was responsible for forest establishment and maintenance costs, harvesting and overheads during felling and marketing. To simplify the analysis, an average revenue sharing of 50-50 was applied to all species, thinning, and final felling. The results (table A10.2) show that for the models and scenarios selected, none achieve a 50-50 ratio based on the present value o f net revenues. Model 1 comes closest to attaining the 50-50 ratio. In model 3, the community actually accrues more than 100 percent o f the net revenues (forest department accrues a negative percentage share). In all case, the community has the highest percentage o f net benefits and the trend shows that as forest management shifts from managing existing high forest to establishing new forests on degrade.d areas, the community share o f net revenues increases. The results are sensitive to changes in forest structure, costs and revenue contributions, and in particular timber prices. The analysis suggests that a blanket benefit-sharing scheme, while conceptually simple, may not represent the wide range o f forest conditions inany state whenbasic economic analysis i s applied. Table A10.2. Estimatednet revenueshares for alternative forest modelsand scenarios. Existing, regulated forest on 159 Timber plus subsistence hectares nontimber forests product Planting to restock degraded Mixed forest, balance with all Community 69 J forest o f 159 hectares products DEF 31 Manage regeneration to restock Mixed forest, balance with all Community 111 degraded forest o f 159 hectares products DEF -_ Forest revenues captured by state governments are low. Data for 1999-2000 suggest that the revenue generating capacity o f forest resources i s quite low in India (table A10.3). The data represent revenues collected by the forest department on behalf o f the state government; expenditures are state nonplan outlays. Revenues do not include those from marketing corporations, only from forest departments. While a range o f revenue flows are evident (from Rs4 per hectare in Manipur, to just over Rs1,000 per hectare in Kerala), the mean for all o f India is Rs277 per hectare ($6.16). Evaluating the selected states, the mean revenue per hectares i s Rs199 per hectare ($4.42 per hectare), and the median only Rs103 per hectare ($2.29). Assam and 73 Jharkhand are well below the all-India mean, as well as the mean and median for the selected states, Revenue flows are logically going to be variable across states, as it depends on factors such as the area o f productive forest within the total recorded forest area, actual forest productivity, the scale o f timber and nontimber forest product extraction, product mix, and level o f revenue capture by the forest department. Inthis regard, it i s easy to see why Madhya Pradesh has fairly highrevenues per hectare, given its large commercial Teak and Sal timber operations. IJharkhand 69 I 847 I -778 I 12.27 I Goa 74 798 -724 10.81 Karnataka 243 777 -534 3.20 Tamil Nadu 465 866 -401 1.86 Assam 54 277 -222 5.09 ~Andhra Pradesh 133 307 -175 2.32 Jammu and Kashrmr 224 386 -162 1.72 Rajasthan 70 208 -138 2.99 Kerala 1009 1137 -127 1.13 Manipur 4 127 -123 33.53 Madhva Pradesh 404 525 -121 1.30 Nagaland 19 127 -108 6.58 Arunachal Pradesh 30 59 -30 1.99 Meghalaya 65 72 -7 1.11 Orissa 164 160 4 0.98 m I n d & 277 I 388 I -111 I 1.40 I Mean selected states 199 515 -317 6.08 Medianselected states 103 347 -150 2.65 With expenditures, the mean for all Indiais Rs388 per hectare, while the meanand median for the selected states are Rs515 and Rs347 respectively. Jharkhand has one o f the highest expenditure figures, while Madhya Pradesh i s well above the mean for all India. Assam i s below the mean, reflecting the small budget allocations relative to its forest area. The net revenue per hectares figures show that with the exception o f one state (Orissa), all states spend more money on forest management than they earn. The negative states range from Rs-1,419 per hectare in Gujarat to Rs-7 per hectare inMeghalaya. Interms o f spending per rupee earned from the forest, the mean for all India i s Rs1.40. Madhya Pradesh i s close to the national average, while the ratios for Assam and Jharkhand are fairly high.These figures are meant to illustrate that at the state level, the forest departments are not covering their costs, representedby state government allocations. It i s important to emphasize that the "negative" figures are neither good nor bad. Such a judgment must be weighed against current state policy for fiscal performance o f line departments. If the current policy goal i s cost recovery or to earn positive net revenues then the states are in general, 74 failing miserably. Conversely, the state of the forest may limit revenue generation, while also demanding highlevels o f investment to improve sustainability. Inthis regard, if the central plan expenditures were taken into account, which for most states is the main source of capital investment funds, thenthe negative values would be significantly higher. 75 Appendix 11.PreliminaryEconomicAppraisal of JFM Forest ManagementOptions As a means o f encouraging debate, three simple models were developed for a Sal/Teak dominant forest using Assam cost and revenue data to compare financial returns from different traditional forest products across several alternative management scenarios (table A11.l)? 00, commercia I I r-- --- -- 53 I I I Model 3. Manage regenerationto restock degraded forest o f 159 hectares Commercial timber focus only 159 0 1 0 1 13.3 Mixedforest. bamboo focus II 95 1I 47 I 17 I 15.8 over nonforest timber products I Mixed forest, balance with all 53 53 53 13.2 products Source: Background studies. author's estimates '' The model i s based on a forest o f 159 hectares (the average size o f a JFM forest in Assam). Three management scenarios are used. One i s an existing, good quality, Teak dominant forest already under uneven-aged management for timber, poles, minor forest produce and bamboo production. Bamboo has a 10year rotation. Poles are assumed to be harvested when they reach 20 years o f age from nonteak species, teak timber at 60 years. The second scenario i s a degraded forest entirely planted for timber, poles and bamboo. The third scenario i s a completely degraded area where natural regeneration i s managed for poles, and timber. Bamboo i s also planted in gaps. With model 2, commercial teak poles are harvested from thinnings at ages 15, 20, and 30 years. nontimber products are available after 15 years, subsistence and nonteak commercial poles after 30 years. In model, 3 the comparative commercial thinning ages for teak are 10, 15, and 25 years. Other poles (from nonteak species) are harvested after 20 years. Nontimber forest product revenues flow from year 10. All scenarios are evaluated over a 60 year period. Costs include forest protection by the community, site preparation, planting, maintenance and harvesting. All costs and production estimates were derived from available DEF data in Assam, inferences from other states, and consultant reports. Revenues are based o n very conservative average farm gate prices. Teak commercial poles are Rs7,000 per cubic meter. Other nonteak poles for subsistence, are (Rs50 per stem), timber (Rsl1,OOO per cubic meter), and bamboo (Rs80,OOO per hectare). Subsistence poles and nontimber forest product values are accounted for in revenue calculations. The opportunity cost o f capital i s assumed to be 12 percent and i s used to calculate net present value. Information o n bamboo growth and yield supplemented from Mohamed and Appanah (1998). 76 Model 1 represents a situation where resource holders are managing an existing, good quality (dense) teak dominant forest already under effective regulation, and using uneven-aged stand management and selection harvesting. This model would certainly be close to some o f the high quality teak or mixed teak plantations under JFM management inMadhya Pradesh. Models 2 and 3 represent an alternative situation where JFM communities and DEF are faced with rehabilitating degraded forest land and need to establish a new forest. Inthese situations, greater flexibility exists to establish a new forest in terms o f species selection and distribution across the site. Model 2 i s the traditional approach o f afforestation with high investment costs for planting stock and planting operations. Model 3 offers an alternative approach o f managing the existing natural regeneration with enrichment planting on part o f the area. These situations parallel the case where degraded forests are assigned to JFM committees. The results illustrate a number o f interesting trends. First, model 1 shows that pure timber production yields a NPV o f Rs35.7 million, Manoharan (2000) suggests that managing multi-species forests for timber and nontimber products can increase annual revenue flows by between 20 and 32 percent compared with forests management solely for timber. By augmenting timber production with subsistence nontimber product inpart o f the forest understory, the NPV increases to Rs36.3 million. However, ifthe area o f timber production i s reduced to allow more intensive production o f nontimber product for commercial sales (at higher prices) mixed with a small amount o f bamboo, then the NPV declines. For a high quality forest managed primarily for teak sawlogs, under regulation on a selective cutting basis, commercial timber and pole production offers extremely high returns to the resource holder; the nontimber products under the managed forest can add incremental economic value. A clear policy recommendation i s to allocate participating communities a forest area already regulated and under sustainable forest management and timber and/or production (with enrichment planting or other minor treatments. Second, when faced with degraded lands, the most efficient option i s to try and manage the existing natural regeneration rather than undertake expensive forest planting operations. Third, with the last two forest models, bamboo i s a lucrative investment; but overall, a mixed forest with timber, and/or poles, bamboo and nontimber product offers the highest returns. The results suggest that during micro-planning, the JFMcommunities and DEF should consider puttingat least some ofthe allocated forest area into bamboo and nontimber product production. This would also provide diversity against forest product market fluctuations in any one product, and against species-targeted insect and disease attack. However, decisions about long-term forest structure should be market driven. The simple economic models used in these estimates illustrate the kind o f analyses that DEF should be undertaking to provide department field staff and communities with better information about forest management options inthe micro-planningprocess. 77 Appendix 12. CommunityForestryModels and Forest Poverty Pathways JFM represents one model for community-based forestry. A range o f community forestry approaches exist within a continuum where a government centered model i s on one side and a community centered model on the other (figure A12.1). The government centered model roughly represents the old command and control model in India a few decades ago with a focus on industrial forestry and commercial plantations. The community centered model approximates several examples o f community forestry that have developed in Latin America, particularly in Mexico where communities own the land and resource, develop management plans and market their own forest products (see GTF, GTZ and WWF 2001). The current JFM model in India appears to sit somewhere in between these two endpoints with shared roles, responsibilities and benefits. The primary focus o f JFM in India i s still largely around forest protection and conservation with the state retaining most o f the control over forest management, regulation, monitoring, timber harvesting, and forest product marketing. JFM i s a dynamic process however, and i s continuing to evolve. Generally, rural communities around the world use forest resources inthree ways (figure A12.2). Firstis exploiting forests as a safety net, where food and cashincome are obtained duringperiods o f short-term hardship such as cutting fuelwood or fodder to sell in local markets during a drought or when the household head loses his or her job. Second i s when forests support ongoing consumption through subsistence and cash income, for example nonforest timber products (fruits, medicinal plants, etc), fodder, or selling a few poles. Figure A12.1. Community-basedforest continuum State Centered CommunityCentered State ownership of landand forests Community owns landand forests State develops management plans Community develops management plans State harvesting,marketingsystems Community-ledharvestingandmarketing Focuson commercialplantations Communitiesmayhave minorprocessing State provides forest mostprotection Commercialand subsistence products State implementsmanagement Communitiesprovidemost protection Communitiesprovide local labor Communitiesimplementmanagement Limitedaccess to subsistenceproducts Communitiesprovidelabor Stateretainsall forest revenue State collects upstreamsales taxes JFM-India State owns most land and forests Communitieshave subsistencerights State harvestingandmarketing for major commercialproducts Revenuesharingfor commercialproducts Communitiesshare protection costs 78 These consumptive forest uses might be a seasonal activity as part of the household's normal livelihood pattern, mixed with agriculture or wage employment. Income may be limitedhowever, due to poor integration with open markets. Typically, most commercial sales o f minor forest products would be in local trading markets. The third way a community can use forests i s when the resource provides a major source o f household income. Forest activities would be maintained in economies with a high level of integration to more developed markets in the region and beyond, perhaps even offshore for specialized products. Figure12.2.The forest livelihoodpath and community forestry Where mostforest Whereforest based based communities communities in in India are now India should be ISource; Vedeldand others 2004. The broader goal o f community-based forestry i s to move from the left side o f Figure 12.2toward the right side, where forests are a major part o f the community's economic base and inaddition to subsistence products, commercial forest products are sold in local urban, national, and in some cases, even internationalmarkets. 79 Appendix 13. PovertyImpactMonitoringSystem To measure the success o f community-based forestry to deliver improved livelihoods to people, a monitoring system i s required. The current JFM system i s characterized by a fairly weak system for monitoring changes in livelihood and contributions to poverty reduction. Ongoing work by CIFOR, funded by the World Bank, i s developing a simple method and set o ftools for monitoring forest-based livelihoods and poverty impacts from community forestry. The pilot work i s being undertaken in Jharkhand, India. Poverty Impact Assessment of Joint Forest Management in Jharkhand India Rural Week hosted by PROFOR and ESSD ForestsTeam Session on "Forest Livelihoods and Vulnerability" Washington, D.C. March 31, 2005, 2:OO-4:OO pm Deep Narayan Pandey Centerfor International Forestry Research (CIFOR) Bogor, Indonesia d.pandey@cgiar.org Four conceptual positions on forests and livelihoods ... I. Livelihoods and forests as separate policy realms 2. Livelihoods insecurity as a constraint on forest conservation 3. Forest conservation must not compromise livelihoods 4. Livelihoods improvement depends on forest conservation But, more or less, the consensus is that: " ...apurely conservation approach to natural resources, including forestry, is not likely to work." India CAS 2004; Para 77. Sayer and Campbell 2004, Adams et al. 2004, Warner 2000, Pandey 1996) 80 But the synergies on ecological and human-wellbeing are required.. . o Bothforest conservation and livelihoods improvementare necessary. o Need to monitor livelihoodsimpact and operate in an adaptive and socially accountable manner. o Policiesand systemsthat ignorediverse- but inseparable relationshipsbetween forests and livelihoods,risk collapse. "In further scaling up Bank support for rural livelihoods it will be important to have a strong feedback loop to build lessons learned in to the design of new projects" --India CAS 2004; Para 81. ,.. But, how to find "win-win combinations for conservation and poverty reduction" as CAS, Para 77 desires? We need to learn and adapt ... Objectives of the CIFOR/PROFOR Study, Jharkhand 1. Develop livelihoods assessment tools l Livelihoods measurement (baseline and impact assessment) Livelihoods monitoring (indicators-based) 2. Conduct livelihoods assessment and analysis 3. Spatial analysis of poverty and forests 81 o 22.5% of the total state's population (26.91 million) are tribals o 28.5% of total geographic area (79,714 km2)is forested, o Forest-fringe communities represent 60% of the total population and over 90% of the tribal people. o More than 60% of state's population is placed below the poverty line. Yet, no studies on forest livelihoods; no monitoring systems to help stakeholders pursue adaptation Why Jharkhand? o Forest-fringe communities BIHAR h represent 60% of the total population and over 90% of the tribal people. o More than 60% of state's population is 1 1 placed belowthe '1 Source FSI, State of ForestReuort 2001 PA 1 1 Str'ahr*''"av poverty line. t, no studies on forest livelihoods; no monitoring systems to help stakeholders pursue adaptation - 82 Why Jharkhand? o Rural Infrastructure Development Index in Jharkhand is among the poorest compared to other states in India. o Thus, at least to begin with, there are limited omortunities for livelihoods awav from natural resources. I . o Therefore, forests will continue to play a crucial role in livelihoods. o The dynamics need to be studied. Livelihoods Focus of JFM in Jharkhand o JFM has great potential, but also strong critics o Working plans and Microplans have explicit livelihood objectives o Forest Department makes strong claims about their contributions to livelihoods, but no credible studies o Forestry and foresters are under increasing scrutiny - need to be able to monitor/evaluate impact and adapt o World Bank emphasizes poverty alleviation 83 Building a livelihoods monitoring tool o Vigorous attempts are being made to understand the contribution of natural resources to poverty reduction. o JFM is attempting to integrate forestry and livelihoods. o The achievements of these initiatives may be difficult to assess without a credible system for monitoring o If JFM is to meet the twin objectives of ecological and human well-being, monitoring holds great promise. Indicator-based monitoring tool o Quick, frequent, and low cost village-level assessment of livelihoods status and change. o Household level indicators are more difficult and much more costly to implement. o But, monitoring will be done in con'unctionwith the household-survey which will al 1ow: detailed, household level analysis of livelihood status and change, and calibration of the indicators-based monitoring tool. 84 "SMART" indicators o Simple and specific: to be collected by Forest Guards and/or VFMPC o Measurable: can be assessed with little effort and should allow for ranking or quantification. o Adapted to local conditions: locally meaningful and appealing to users o Relevant and Reliable: should have a direct link to the livelihoods model o Time-scale appropriate: indicate changes on the appropriate time scale Financial capital o Forest Dept.wagedcapita (3 year rolling average) . o Forest revenuekapita (3 year rolling average) o Number of kiosks selling consumer goods 86 o Number of pukka houseslcapita o Number of houses with electrical servicelcapita o Number of motorcycleslcapita o Number of Functioningwellslcapita o Average travel time(or cost?) to nearest market o Area of irrigated landlcapita o Number of functioning tractorslcapita o Number of functioning water pumpslcapita Natural Capital o Standing volume of timberlcapita o Area of productivefruit tree plantation/capita o Area of key NTFP/capita o Number of livestock (in cattle equivalents)/capita o Average time spent collecting fuelwood per household per month o Average time spent collecting water per household per month o Value of annual timber production (3 year rolling average)/capita? o Value of annual firewood production/capita o Value annual NTFP (nationalized NTFPs) productionlcapita o Annual rice production (kg.)/capita 87 Human capital 0 Infant mortality/capita 0 Number of deaths during dry season/capita 0 Percentage of school age children attending school 0 Average age of school leaving 0 Number of people that work outside village on a daily basis per capita 0 Number of people that leave village to work outside for extended periods per capita Social capital o Proportion of adult population participating in VFMPC o Proportion of VFMPC members that are women o Number of VFMPC meetings and attendance o Number of other citizens' groups active in the village o Collective selling of agricultural or forest products results in improved prices (yh) 88 I / I I AdaptationI ModificationI improvement Y A 7 Resilientlhrellhoods [- -L 7 ,Sustainableforest$ Reducing vuInerabiIity/increasing resiIience Source: Pandey 2005 Pre-conditionsfor implementationof the monitoringtool o The key challenge is a lack of accountability and motivation to apply sciencehew learning. o Donors action to build innovative mechanisms of accountability in lending projects for monitoring livelihoods impact of JFM o Large investments of time and money for capacity- building,for both: enhancing the understanding about the inseparable relationship between the ecological and livelihoods dimensions of forestry, and training in the implementation of the livelihoods monitoring tool. 89 Caveats and caution! o Indicators-based tool is useful to get quick and comprehensive (large number of villages) overviews of conditions and directions of change at the village scale, but the detail will be limited. o Household survey will give details, but it is sample- based and so also not appropriate for monitoring. o We need a trade off to balance the need of knowledge production through monitoring and household survey tools. o Finally, livelihoods monitoringtool is not something that will meet all needs related to the production of knowledge, but as one element of that. Emerging Opportunities o CIFOR has developed and pre-tested the tool incorporating the science and local knowledge. o The World Bank is planning major, multi-state investment in forestry and livelihoods o Monitoring tool may provide baseline and subsequent studies to know the status and impact of interventions . o Learning in Jharkhand will provide critical insights for the effective implementation of multi-state projects. 90 l--- + Table A14.2. Proposedkey functions of forest department to supportcommunity-basedforestry Forest management, Providing community liaison and general support services technical advisory and Reviewing and approve micro-plans extension services 0 Providing targeted extension services to communities (possibly shared with outsourced agencies, or eventually on contract to communities) Delivering field demonstrations, technology transfer focused on community needs Supporting community enforcement efforts against illegal access and cutting Providing support for major conflict management Delivering applied researchand development on silviculture inkey species development identified inmicro-plans, especially nontimber forest products, and building links with regional and national institutes Maintaining forest inventory baseline and change data from micro-plans, mapping and working plans, Forest Survey o f India and other sources information Maintaining functional geographic information systerms to support community management level and division level management planning and mapping Forest marketing Facilitatinglinkages with strong researchorganizations, development banks and technical services private sector for marketing and value addition, quality improvement Gathering regular local and external market data 0 Disseminating market data to communities through mass media, web based services Policy, planning, and Informing forest management planning and decision-making at community and economics division level, and guide forest policy development. Undertaking economic analyses o f alternative silviculture models for non- traditional livelihood species, agro-forestry options, fuelwood plantations, mixed cropping systems, bamboo plantations, and so forth Maintaining a data base o f forest statistics, Producing annual reports, and publishingperiodic statistical reports on forestry for public dissemination, Developing and maintaining a web site to provide another medium for public access to this information 92 Appendix 15. What I s the Potentialfor IncreasedRevenuesfrom Community-BasedForestry? Background Major opportunities exist for achieving the livelihood potential from the forest through appropriate reforms. It i s important to see how the long-term productive potential o f the forest can be achieved, identifying the appropriate institutional arrangements, what species and products are best suited for the forest eco-types in the State, and how product flows can be increased to meet market demands. It must be remembered that the economic contribution from JFM forests at present i s minimal, reflecting the original program goals o f forest protection and rehabilitation. But, as these forests mature, especially on formerly degraded areas and for nonlisted forest species that are not subject to restrictive marketing arrangements, the scope for increased forest revenues i s felt to be fairly high. Case Study fromJharkhand An example from Jharkhand illustrates the potential gains in total income from increasing forest productivity and market access. The stated objective o f the forest department Vision 2010 i s to increase the number o f JFM committees to 10,000. Currently, the average forest area under a JFM committee i s about 252 hectares. Extending this average to 10,000 JFM committees would put virtually all o f the recorded forest area under co-management. This expansion i s unlikely to happeninthe next six years. A more conservative and perhaps, realistic scenario mightbe to have 6,000 committees operating by 2012 and 10,000 committees operating effectively through community-based management by the year 2020. Also, the projected increase in well-stocked forest from Vision 2010 could be assumed to occur over a longer time period, say to 2020 as well. Based on these conservative assumptions, average community forest area o f 252 hectares, and the estimated number o f committees, the projected total forest area and area o f well-stocked forest could see very significant increases inthe next 16 years (table A15.1). d Source; JharkhandForestDepartment. These projections o f forest growth can be used to develop various scenarios o f forest production and income growth for communities and the state to the year 2020. Each scenario i s based on a modest area of well-stocked forest assigned to a commurtity that would be under active management for timber and nontimber forest products as well as a certain area o f forest land under bamboo production. Not all the forest i s assumed to be used for timber production due to slope, poor quality sites in some areas, and so forth Also, communities may set their own priorities for forest production, conservation, and so forth Timber production i s based on a selective felling regime. Nontimber forest products are produced under the timber cover and/or 93 degraded forest land. Bamboo i s grown on degraded forests. Fuelwood and fodder are gathered from the timber production forest. A scenario o f low growth assumes that communities manage andmarket 20 percent of their forest for sawlog production, 20 percent for nontimber forest product, and a 5 percent for bamboo production. The remaining half o f the forest i s held for broader conservation. A moderate growth scenario assumes with better market access, communities manage and market 35 percent o f their forest for timber, another 35 percent for nontimber forest product, and 10 percent for bamboo production. A highgrowth scenario assumes fairly highmarket integration allowing 50 percent o f the forest i s managed and sold for sawlogs, 50 percent for nontimber forest product (under the timber cover), and 15 percent for bamboo on degraded forest land. Given the average community forest size of 252 hectares inJharkhand, these percentages are not unrealistic. For sawlogs, a real stumpage value o f Rs7,500 per cubic meter i s assumed. For nontimber forest products, an average value o f Rs2,000 per hectare i s used, based on Chopra and others (2002). With bamboo, it i s assumed the material is used for pulping, with an average stumpage value o f Rs300 per metric ton and an average o f 8 metric tons per hectares harvest. Timber stumpage i s based on average log price at mill of Rs15,000 per cubic meter and allowing 50 percent deductions for harvest and transport costs. For bamboo, average production i s 20 metric tons per hectare, with felling volumes o f 40 percent, and farm gate prices for pulp o f Rs300 per metric ton. No value addition i s assumed for nontimber forest product so the prices are very conservative. Timber quality i s average and reflects reasonable prices for Sal logs for timber. Bamboo i s for pole production rather than pulp and paper. Subsistence fodder and fuelwood are not included to simplify the analysis. Environmental service values such as carbon sequestrationare not included. For simplicity, it i s assumed that communities retain 90 percent o f commercial revenues and pay the state a 10 percent tax on income on all commercial sales. Subsistence production i s free o f charge. The three scenarios are not meant to be precise but rather should be viewed as a tool for stimulating debate, indicating the magnitude o f potential revenues that can be unlocked, even with very conservative assumptions. The mix o f species, farm gate prices, etc, can all be revised inmany combinations. But, usingthe models and assumptions chosen, the results are instructive for longer-term forest policy inJharkhand. Based on the three scenarios, the total potential annual income from the forest ranges from Rs710 millionto Rs13,200 million (figure A15.1). Depending on the scenario, total revenue per community ranges from about Rs190,OOO to Rs1,200,000 per year, Finally, the total revenue for the state (based on a 10 percent share o f total income) and income per hectare increase significantly both over time, and as a higher proportion o f the forest i s under active community management. These projections should be viewed as highly conservative. Actual potentials could be many times higher ifnontimber forest products are more aggressively managed and marketed, including value addition and local processing. Similarly, bamboo production and income could increase significantly if local processing capacity was established in some communities or groups o f communities. Further, the estimates only refer to potential commercial values. Subsistence values of fuelwood, medicinal plants and forest foods are not included. The main message i s that the asset value o f Jharkhand's forest resources has great upside potential as community forestry expands and forest productivity improves. Communities could conceivably be earning commercial incomes o f an average o f half a million rupees per year under fairly modest growth and market assumptions, and well over a million rupees annually under more optimistic 94 assumptions. Finally, the state could increase the current average revenues per hectares from the present Rs69 to several hundred rupees per year. In the longer-term, the annual incremental production from community co-managed forest areas could far exceed local state demand projections. This raises the opportunity to develop export markets for forest products (other Indian states and for some products offshore markets), which in turn would generate increased local direct and indirect incomes. Even with this simple analysis, it i s clear that community forestry, coupled with investments in increasing forest productivity could be a mechanism to substantially expand rural incomes and provide enhanced revenues to the state through downstream taxes. Yet this potential will not be realized until state governments begin to address a number o f fundamental issues and constraints that are hindering more effective development o f community forestry livelihood opportunities. Figure A15.1. Income projectioi for Jharkhand case studv Total potential forest income Potential forest income per community 14COO 1200 003 12000 1 000 OCO 13000 800 000 a" 8000 1 0 IRs) 600000 6003 4CO 000 40CO 203 000 2030 0 2004 2012 2020 2004 2012 2020 IOLOW SCENARIO .MODERATE SCENARIO OHIGH SCENARIO 1 0-Oh SCEhAR 0 .MODERATE SCEhAR 0 On Grl SCEhAR.0 Total potential state forest revenues Potential state forest revenues per hectare 700 600 500 400 (R*J 330 203 100 C 2004 2012 2020 2C04 2012 202c IElLOW SCENARIO .MODERATE SCENARIO DHIGH SCENARIO1 IULOW SCENARIO .MODERATE SCENARIO DHIGH SCENARIO 1 ~ Extending The Model To A National Level Applying the same assumptions to a national level is possible from data inVolume I, I1 Chapter on national JFM. The same percentages o f dense forest and improvements in mean annual increment are used from the Jharkhand case. However, the number o f committees remains static at just under 85,000; inthe national case, the analysis will therefore eliminate growth effects from increasing scale (Table A15.2). Inthis case, growth i s due only to improved forest productivity and access to markets for basic timber, bamboo and nontimber forest product commodities. Results are shown intable A15.3 and following charts (Figures A15.2 -A15.4). 95 Table A15.2. Potential forest product supply from reformed JFM programs - Numberof CFM committees operating effectively 84,632 84,632 84,632 Estimated co-managed area (ha) 17,331,950 17,331,950 17,331,950 Percentage dense, well-stocked forest ( percent) 51 63 75 Area o f well-stocked forest under comanagement (ha) 8,839,295 10,919,129 12,998,963 Mean annual increment (cubic meters per hectare per year) 0.75 1.oo 1.50 Potential sustainable fiber Droduction (cubic meters Der vear) 6.629.472 10.919.129 19.498.446 Table A15.3. Data and assumptions for national projections of revenue from reformedJFM Jharkhand National Number of CFM Committees 3358 6000 10000 84,632 84,632 84,632 Area of well-stocked forest 431571 952540 Iagoooo 8839295 10919129 12998963 mean annual increment forest 0.75 1 1.5 0.75 1 1.5 2004 2012 2020 2004 2012 2020 LOW SCENARlO Sawlog income (million Rs) 486 1429 4253 9944 16379 29248 Bamboo income (million Rs) 52 114 227 1061 1310 1560 NTFP income (million Rs) 173 381 756 3536 4368 5200 Total income (million Rs) 710 1924 5235 14541 22057 36007 Average income per ha (Rs) 1645 2020 2770 1645 2020 2770 Total revenue per community (Rs) 190274 288620 471177 154629 234556 382910 Total revenue for state (million Rs) 71 192 524 1454 2206 3601 Average state revenuelha 165 202 277 165 202 277 MODERATE SCENARlO Sawlog income (million Rs) 850 2500 7442 17402 28663 51183 Bamboo income (million Rs) 104 229 454 2121 2621 3120 NTFP income (million Rs) 302 667 6188 7643 9099 921a 1323 Total income (million Rs) 1255 3396 25711 38927 63402 Average income per ha (Rs) 2909 3565 4878 2909 3565 4878 Total revenue per community (Rs) 336450 509371 829663 273421 413957 674239 Total revenue for state (million Rs) 126 340 922 2571 3893 6340 Average state revenuelha 291 357 488 291 357 488 HlGH SCENARlO Sawlog income (million Rs) 1214 3572 10631 24861 40947 73119 Bamboo income (million Rs) 155 343 680 3182 3931 4680 NTFP income (million Rs) 953 i890 8839 10919 12999 iaoi 432 Total income (million Rs) 4867 13202 36882 55797 90798 Average income per ha (Rs) 4173 5110 6985 4173 5110 6985 Total revenue per community (Rs) 482626 730122 1188149 392213 593358 965568 Total revenue for state (million Rs) 1a0 487 1320 3688 5580 9080 Average state revenuelha 417 511 699 417 511 699 Price assumptions Logs (Rslm3) 7500 NTFP (Rslha) 2000 Bamboo (Rsltonne) 300 96 Figure A15.2. Total forest income projections, reformed national JFM 2004 2012 2020 10Lon Scenaro Mooerate Scenar o 0 ngn Scenano Figure A15.3. Total State revenue projections, reformed national JFM 2004 2012 2020 [ 19 Low Scenario Moderate Scenario 0 High Scenano1 97 FigureA15.4. Incomeper communityprojections,reformed nationalJFM 2004 2012 2020 10LowScenario Moderate Scenario 0 High Scenario ~ The results show significant increases in total forest income, revenue per community, state revenue and state revenue per hectares when forest productivity i s improved and communities have access to direct markets. Simply by considering the low scenario as one where JFM reforms are limited, and the high scenario where reforms are broader and market potential i s being more fully exploited, the benefits o freforms are clear. Total forest income could rise from an estimated $222 million in 2004 (with the lowest scenario) to about $2 billion per year in 2020 (under the most optimistic scenario). Further, with a 20 percent increase in nonforest timber product prices due to local quality improvements and modest value addition, and 10 percent increases in timber and bamboo prices from quality enhancements, annual market-based incomes increase by just over 11 percent or $220 million in 2020 in the most favorable scenario. Communities will continue to enjoy subsistence benefits from the forest. The imputed net subsistence values o f fuelwood and fodder would continue and i s valued at $1.1 billion per year.'* Conservation values are also important. From Chopra and others (2002) ecological and eco-tourism benefits increase net income from 1.07 percent to 2.40 percent o f GDP; this represents a difference o f $6.2 billion from the entire forest cover in India. Given that JFM forests currently represent 27 percent o f total forest cover, a simple assumption i s that 27 percent o f these gains ($1.7 billion) could be derived fi-om JFM forests as they mature and begin to generate these conservation values. This model i s very simple and produces order o f magnitude estimates. More complex models could be based on refined growth and yield estimates, more precise data on prices and costs, and different assumptions about how the "typical" JFM forest i s allocated between various outputs. 52Based on 8.4 million families (or households) involved with JFM (from Bahuguna and others 2004); average gross subsistence value for fuelwood and fodder from case studies inJharkhand and Assam (see Appendix 5); and assuming net values are a conservative 50 percent o f gross values to account for collection time. 98 Commercial fuelwood could be another option for increasedvalue addition from the forest. Also, with better market access, villagers could be induced to increase forest stocking on their private land holdings. If some communities engage in lucrative aromatic oils or medicinal plants for international markets, net returns could rise dramatically. Another avenue that could open up to allow some communities to increase incomes would be secondary processing. There i s no reason why more progressive communities (or a small consortium o f communities) could not develop sawmilling capacity on site. Despite the simplicity o f the model, it shows the potential livelihood improvement and state revenues. As with Jharkhand, communities could earn up to Rsl million per year from sustainable production, based on very conservative assumptions about prices, markets, and so forth Assuming 200 households, this represents Rs5,OOO per householdper year from forestry, assuming revenues are shared equally. If land-owners got involved in agro-forestry to supply commercial pulp, fuelwood or timber markets, they could easily increase their net earnings by several thousand rupees per hectares per year. Another benefit i s the contribution to balance o f payments. Given the current timber deficit o f up to 39 million cubic meters, the potential timber production from existing JFM forests by 2020 could meet up to half this deficit. If community forestry continues to expand nationally, it i s possible for domestic production to meet most o f the domestic demand for timber, assuming it can be produced at competitive costs compared to imports. 99 References Adams, W. M.,Aveling, R., Brockington, D., Dickson, B.,Elliott, J., Hutton, J., Roe, D.,Vira, B. and Wolmer, W. 2004. Biodiversity conservation and the eradication of poverty. Science 306: 1146-1149. Alsop, R., D. Sjoblom, C. Namazei, and P. Patil. 2002. "Community-Level User Groups inThree World Bank-Aided Projects: Do They PerformAs Expected?" World Bank ESSED Social Development PaperNo. 40, Washington, DC. Bardhan, P, J. Baland, S. Das, D.Mookherjee, and R. Sarkar. 2002. "The Environmental Impact of Poverty: Evidence from Firewood Collection inRural Nepal." University of East Anglia, Norwich Banyopadhyay, S. and P. Shyamsundar2004. "Fuelwood Consumptionand Participationin Community Forestry inIndia." World Bank Policy ResearchWorking PaperNo. 3331, Washington Battacharya, P., and R. Prasad. 1998. "Integrated Options for Forest Management inIndia." Indian Institute of Forest Management, Bhopal. Belcher, B. 2005. MonitoringLivelihood Impacts of Community Forest Management: Definitions, Criteria and Indicators, February 2005, Center for InternationalForestry Research, Indonesia. Centre for International Forest Research. 2002. "Planning for woodcarving in the 2lStcentury." CIFOR Infobrief. April 2002. No.1. Bogor, Indonesia. Chopra, K.,B.Bhatttacharya, and P. Kumar 2002. "Contribution of Forestry Sector to Gross Domestic Product (GDP) inIndia." Institute of Economic Growth. DelhiUniversity Darlong, V., and I. 2005. "Improving Linkages: Local Government, forest department, and Roy IndigenousCommunities." InCommunityForestry in Northeast India: Recommendationsfor Action, ed. M.Poffenberger. Community ForestryAlliance for Northeast India and Community Forestry International, Santa Barbara, California Divan, S., and A. Rosencranz 2001. Environmental Law and Policy in India.New Delhi: Oxford UniversityPress. Falconer, J., and John Amold. 1988. "Forests, Trees and Household Food Security." Social ForestryNetwork Paper 7a., Foodand Agriculture Organization, Rome. Federation of Indian Plywoodand Panel Industry 2004. Industry statistics for 2001.New Delhi. Foppes, J., and S. Ketphanh 2000. "Forest Extraction or Cultivation? Local Solutions from Lao PDR." Paperprepared for seminar The Evolution and Sustainability of Intermediate Systems BetweenExtractivismand Plantations. CIFOR-FOREASIA, 28 June-1 July 2000, Lofoten Norway 100 Ghate, R.2003. "Ensuring Collective Action inParticipatory Forest Management." South Asia Network for Development and Environmental Economics, Working PaperNo. 3-03. August. Kathmandu, Nepal Government o f India. 1976. Report of the National Commissionon Agriculture, 1976,Part E, Forestry. New Delhi. . 2001, Census of India. Delhi. GTF, GTZ andWWF. 2001. "Toward Policies of Community ForestManagement and Certification inLatin America." Proposal for Santa Cruz Workshop. Indian A g o Paper MillsAssociation. Various years. Pulp and paper statistics, India. Indian Centre for Science and HighTechnology and UnitedNations IndustrialDevelopment Organization 2004. Regionalworkshop on quality control of medicinal plant products in South-East Asia. July 23-34, 2004, Kuala Lumpur. Indiastat.com. Various years. Available at www.Indiastat.com/. International Labour Office. 2003. "Making Ends Meet: Bidi Workers inIndia today: A Survey of Four States." ILO Working Paper, Geneva. JPS Associates. 2002. "Madhya Pradeshand Chhattisgarh Forestry Fiscal Trend Analysis." New Delhi. Khan, I., M.Pillai, eds. 2002. "India's Forestry Sector: A Review of Policy, Legal and and Institutional Framework." World Bank Technical Note, Washington, DC. Kothari, S. 2000. "To Be Governed or Self-Governed?' Adivasi, July 16.The Hindu.National Newspaper Kumar, S. 2002. "Does `Participation' inCommon Pool Resource Management Help the Poor?A Social Cost-Benefit Analysis of Joint Forest Management inJharkhand, India." World Development 30 (5): 763-82. Lawbuary, J. 1999. "Reclaiming the Forests? People's Participation inForest Management, East India." Thesis submittedinpartial fulfillment of Bsc. Honors, Human Environmental Science, King's College, London. Mahapatra, R.2003. "The Multi-Billion Dollar Fuelwood Trade I s the Last Resort for India's Poor." Infochange News and Features, June. m.infochangeindia.org Maps of India 2004. Politicalmap of Jharkhand. Mapsofindia.com Mandelbaum, D.G. 1970. Society in India. Vol.11:Change and Continuity.Berkeley and Los Angeles: University of California Press. Manoharan, T.R. 2000. "Natural Resource Accounting: Economic Valuation of Intangible Benefits of Forests." RIS DiscussionPaper No. 04/2000. Research and Information System for the Nonalignedand other Developing Countries, NewDelhi. 101 MinistryofEnvironmentandForests.2000. "National ForestActionPlan." Delhi. 2001a. Forest Statistics o f India. Delhi 2001b. Forest Survey o f India. Dheradun. Mishra, R.K.2001. SelectedPlan Statistics o f Jharkhand, Bihar and India at a Glance. Data Bank, BAU-ATCO. Mohamed, A., and S. Appanah 1998. "Bamboo Resources Conservation and Utilization in Malaysia." InA.N.Rao and V. Ramanatha Rao, eds. Proceedings of Training Course Cum Workshop,M a y 10-1 7, Kunmingand Xishuanbanna, Yunnan, China. Mosse, D., S. Gupta, M.Mehta, V. Shah, and J. Rees. 2002. "Brokered Livelihoods: Debt, Labour Migration and Development inTribal Western India." Journal of Development Studies 38 (5): 59-88. Narain, U,Gupta, S. and K.van? Veld. 2005. "Poverty and the Environment: Exploring the Relationshipbetween Household Incomes, Private Assets, and Natural Assets." Draft Working Paper. Resources for the Future, Washington, DC. National Planning Commission. Various years. "Budget Estimates for Government o f India." Delhi Oksanen, T. 2004. "Introduction to Forest Fiscal Systems." InReforming Forest Fiscal Systems: An Overview o f Country Approaches and Experiences." Proceedings o finternational workshop on "Reforming Fiscal Systems to Promote Poverty Reduction and Sustainable Forest Management," held October 19-21,2003, at the World Bank, Washington, D C Pandey, Deep. 2003. Livelihood Improvements through Multifunctional Forestry Systems in India. Unpublished researchbackground paper for World Bank Pandey, D.N. 1996. Beyond vanishing woods: participatory survival options for wildlife, forests and people. Himanshu Publications, Udaipur, India, pp 222. People's Daily Online. 2004. "China Becomes One o f World's Biggest FurnitureExporters." September 20. www.english.peopledaily.com.cn/ Pradhan, G. and K.Barik, 1999, `Total Factor Productivity Growth inDeveloping Economies: A Study of Selected IndustriesinIndia ',Economic and Political Weekly, July 31, 1999, pp. M92-M97. Prasad, R., and P. Bhatnagar. 1990. "Socio-Economic Potential o f Minor Forest Produce in Madhya Pradesh." SFRlBulletin No. 26, State Forest ResearchInstitute, Jabalpur, India. Rao, H.K.2001,. "A Study on Agrarian Structure, Agricultural Growth, and RuralPoverty Linkages." National Institute o f RuralDevelopment, Hyderabad. 102 Ribot, J. 2004. Waitingfor Democracy: ThePolitics of Choice in Natural Resource Decentralization. Washington, DC: World Resources Institute. Roy, S.C. 1912. TheMundas and Their Country. Calcutta: Thacker & Co. Sachidananda, P. 1979. The Changing Munda. New Delhi: Concept Publishing Company. Saxena, N.C. 2002. "Fuelwood ProductionthroughWasteland Development: Some Policy Issues." InInstitutionalizing Common Pool Resources,D.K.Marothia, ed. New Delhi: Concept Publishing Company. Sayer, J. A. and Campbell, B.M.2004.The Science of Sustainable Development: Local Livelihoods and the Global Environment.Cambridge UniversityPress, Cambridge, UK. Shah, Amita, and D.C. Sah. 2004. "Poverty among Tribal people inMadhya Pradesh: Has Anything Changed over Time?Journal of Human Development 5 (2): 241-63. Sharma, B.D.2001. TribalAffairs in India: A Crucial Transition.New Delhi: SahyogPustak Kuteer Trust. The EnergyResearch Institute 2004. Social and institutional assessment for Assam. Background paper prepared for World Bank. . 2005. "Socioeconomic and InstitutionalAssessment for Forest Sector Analysis in Assam." Report prepared for World Bank, October, Delhi. Tiwary, M.2004. Participatory Forest Policies, Politics and Institutions in India: Joint Forest Management in Jharkhand and WestBengal. Aldershot, UnitedKingdom: Ashgate Press. UNDP (UnitedNations DevelopmentProgramme)/World Bank. 2003. India: Access of the Poor to Clean Household Fuels. Washington, DC. Upadhyay, S., and V. Upadhyay. 2002. Handbook on Forest Laws, Wildlife Laws, and the Environment. Vol. 1.Delhi:Lexis Nexis Butterworths. Van Exem, A. 1991. Basic Socio-Economic Attitudes of Chotanagpur Tribalpeople. Ranchi: Catholic Co-Operative Society. Jharkhand, India Vedeld, P., A. Angelsen, E.Sjaastad, and G. Berg. 2004. "Counting on the Environment: Forest Incomes for the Rural Poor." World Bank EnvironmentalEconomics Series Paper No. 98, June, Washington, DC. Verardo, B.2003. "Rebels and Devotees of Jharkhand: Social, Religious and Political Transformations among the Adivasis of Northern India." UnpublishedPh.D. thesis, University of London. Vitebsky, P. 1993.Dialogues with theDead: TheDiscussion of Mortality among the Sora of Eastern India. Cambridge: Cambridge University Press. Weiner, M. 1978.Sons of the Soil: Migration and Ethnic Conflict in India. Princeton, NJ: PrincetonUniversity Press. 103 World Bank 2004. Fiscal decentralization to rural governments. South Asia Rural Development Unit.WorldBank. ReportNo.26654-IN. January 2004. Washington Dc. World Bank 2005a. Small-medium scale forest enterprises inIndia - Opportunities for IFC and World Bank engagement. Discussionnote. Agriculture and Rural Development Forest Team. Washington DC. .2005b. "Project Performance Assessment Report : Madhya Pradesh Forestry Development Project. Operations Evaluation Department, March 7, Washington, DC. World Wildlife Fund2003. Relevance o f Forest Certification to the Wood carving Industryin India, Discussionpaper. Delhi. wb13057 M:\GRANT\India ESW-Forestry\Jharkhand\FINAL DRAFT REPORT\Final Report Annexes-Edited V012 Nov30.doc 12/01/200510:47:00 P M 104