Timber markets challenge Latin American forest communities

Some communities establish businesses to sell their timber, while others use the forest as a kind of savings account, where families may cut a few trees to pay for school expenses or a medical emergency. Tomas Munita/CIFOR

LIMA, Peru (12 June. 2013)_For indigenous communities and other forest dwellers in Latin America, reaping the benefits of timber depends not only on tenure rights, but also on how well they deal with markets, argues a new study.

The study undertaken in four communities – each with different characteristics, but representative of situations throughout the region – said everything from their proximity to markets and bargaining power to their level of dependency on wood for their livelihoods is critical.

That means policy makers must consider not just the communities, but all the players – including chainsaw operators, sawmills and intermediary buyers – when designing systems to strengthen forest management at the local level.

“Tenure is important for clarifying access rights to forest resources, but it is not the most important factor in determining how communities benefit,” said Center for International Forestry Research scientist Pablo Pacheco, author of Smallholders and communities in timber markets: Conditions shaping diverse forms of engagement in tropical Latin America published in a special issue of Conservation & Society.

Different communities have different characteristics and use their resources differently, Pacheco said. While some have established businesses to sell their timber, others use the forest as a kind of savings account, where families may cut a few trees to pay for school expenses or a medical emergency.

Markets vary, too, ranging from being formal and relatively transparent, with clear contracts from buyers in the cities, to informal and sometimes illegal markets in remote areas, more dependent on intermediaries who have the access to buyers.

Two sets of factors must be considered to understand the degree to which communities and smallholders benefit from their forest resources, said Pacheco.

One is the community’s access to markets, along with its degree of organization, negotiating power and knowledge of market dynamics. The other is related to market conditions, including price distortions, lack of information because of asymmetrical relationships between buyers and sellers, and regulations that govern markets.

Pacheco discusses that those components combined in different ways in four communities in Nicaragua, Bolivia and Brazil, affect how they manage their forests and the amount of income they receive.

In Layasiksa, in Nicaragua’s North Atlantic Autonomous Region, members of indigenous and ethnic communities established their own company and developed two forest management plans for an area of nearly 10,000 hectares. About half that was granted to an outside company in a 10-year concession, while the communal company, Kiwatingni, manages the rest, producing both logs and sawn wood.

Communities that can’t pay for management plans end up abandoning the process, but keep cutting wood.

In Guarayos, in the Bolivian department of Santa Cruz, the indigenous community of Cururú also developed a forest management plan and formed a timber company. Like Layasiksa, it received assistance from non-governmental organizations and forestry projects. Cururú obtained Forest Stewardship Council (FSC) certification for its timber operations and saw its profits increase.

Forests were less profitable for the other two communities Pacheco studied. Smallholders in Iturralde, in the northern part of Bolivia’s La Paz department, lack forest management plans because they are expensive to develop or because the land belongs to others. As a result, people generally sell the most valuable timber from the land they occupy or cut trees on public lands, including nearby protected areas. Much of the local timber market is illegal or informal, with traders advancing money to finance small-scale logging.

In Porto do Moz, in the northern part of the state of Pará, Brazil, conflicts between local residents and large timber companies in the 1980s and 1990s led to the creation of the Verde para Sempre Extractive Reserve in 2004. Timber companies were evicted and smallholders living in the area received tenure rights with some restrictions.

It took the communities several years to draft the required sustainable development plans for the reserve, and they were unable to develop forest management plans. As a result, informal timber markets expanded and smallholders were left with little negotiating power.

“The communities represent the range of situations that exist with regard to forest management capacity and interaction with markets, from communities that are not well organized and do not depend much on selling timber to those that are fully engaged with markets and have commercial operations,” Pacheco said.

The differences indicate the need to rethink regulations and ways of controlling forest resources, he said.

Communities that use their forests as “petty cash” reserves may not need – or want – to invest in large-scale management plans, he said. Requiring a commercial plan could drive them to informal or illegal markets. And most rural communities sell to informal markets to some degree, depending on conditions and demand, he said.

“Communities that can’t pay for management plans end up abandoning the process, but keep cutting wood,” he said.

“The (official) system is relatively expensive, so smallholders cut wood informally or illegally and sell it in the informal market. That has always been an option for them.”

Instead of trying to eliminate informal markets with regulations that may be too complicated or costly, Pacheco suggests that authorities design more flexible policies that make it easier for all the players in the market – including smallholders, chainsaw operators, sawmills and purchasers – to operate legally and more efficiently.

“There has been strong pressure for all communities to manage their forests commercially,” he said.

“I think the model needs to be more flexible, giving communities more options and implementing management practices that they can maintain over the long term.”

For more information about the issues discussed in this article, please contact Pablo Pacheco at p.pacheco@cgiar.org

This research is carried out as part of the CGIAR Research Program on Forests, Trees and Agroforestry and was supported by IDRC, the Ford Foundation, and PROFOR.