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The investment effects of forest rights devolution: How community tenure is facilitating investment in the commons for inclusive growth

PIM Webinar with Dr. Steven Lawry, CIFOR, presented on September 10, 2019. Full recording and more information available at http://bit.ly/2k2s6yQ.

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The investment effects of forest rights devolution: How community tenure is facilitating investment in the commons for inclusive growth

  1. 1. PIM Webinar The investment effects of forest rights devolution How community tenure is facilitating investment in the commons for inclusive growth Presenter: Steven Lawry, Center for International Forestry Research (CIFOR) September 10, 2019, 10-11 AM EST Photo:ChandraShekharKarki/CIFOR
  2. 2. The investment imperative • $4.5 trillion annually needed in public and private finance to meet SDGs. • Reducing global environmental degradation and mitigating climate change requires large amounts of private capital if sustainable land use is to become business as usual. • Private enterprises—from small farms to large corporations—must make fundamental changes in agricultural, forestry and land use practices if the AFLOU sector is to contribute to holding the global temperature increase to 1.5 degrees centigrade. • Alongside restructuring of land use practices, technological innovation, regulatory reforms and improved supply chain management will be required. • Importantly, there remain large barriers to investment in sustainable use of natural resources in developing countries, including in contexts where natural resources such as forest, pastureland and fisheries are held and used in common.
  3. 3. Commonly perceived barriers to investing in the commons 1. Commonly held resources are not subject to sale or purchase, hence resources cannot be used as collateral and outside investors cannot hold shares in common-pool resources (Antinori 2000, Feder and Feeney 1991). 2. The varying aims of right holders within a commons can complicate achievement of consensus about investment goals increasing transaction costs and levels of perceived risk and uncertainty on the part of investors. 3. Community institutions may lack the capacity, protocols and experience to negotiate and manage investment partnerships and commercial enterprises (Antinori and Bray 2005). 4. The social character of commons ownership requires that benefits be shared across the entire community of right holders, often in the form of investments in infrastructure, education and employment opportunities. The equitable distribution of benefits may be especially important to women and the poorer members of the community (Lawry et al 2017).
  4. 4. Four key conditions that, when present, can reduce risks and provide investors with the assurances they need to invest in Community Forest Institutions (CFI): 1. The presence of clear, secure, and sufficiently broad rights ((Elson 2012; Lawry et al., 2017; MacQueen, 2013), 2. Relations of trust and strong social networks within communities and between communities and external actors (Baynes et al., 2015, Dasgupta, 2005; Murtazashvilia et al., 2019). 3. Clear and enforceable rules and procedures governing the use and management of forests and associated enterprises (Dasgupta, 2005), and 4. Sufficient technological, negotiation, and management capacity within the community (Hewitt and Castro Delgadillo, 2009)
  5. 5. Successful country cases • “Successful” country case studies that 20 years ago devolved significant forest use, management and other rights to communities: 1. Guatemala - Community Forest Concessions (CFCs) 2. Mexico – ejidos and indigenous communities 3. Nepal - Community Forest User Groups (CFUGs) 4. Namibia – Community Based Natural Resource Management (CBNRM)
  6. 6. Methods • Review of scholarly and grey literature. • Collation of information from fieldwork visits, workshops, observation, interviews and document analysis. • Financial data (often “best-estimates”) including donor financial reports and annual reports of user group associations.
  7. 7. Source: Based on Lawry and McLain, 2012:56. Devolution of Forest Rights and Sustainable Forest Management. Volume 1. Types of devolution forest rights models by region
  8. 8. Evolution of collective tenure regimes and emergence of community forest management in the Mayan Biosphere Reserve Year Policy-relevant factors 1985 Constitutional reform incorporated environmental regulations Establishment of the national protected area system 1990 Mayan Biosphere Reserve established (Decree 5-90) 1994 New policy on forest concessions allowed emergence of community forest concessions within the MBR 1996 Peace Accords included a provision that 100,000 hectares should be turned over to organized communities within protected areas 1994–2002 Formalization of concessionaire contracts with community-based organizations Certification of community forest areas Source: Hodgdon et al., 2013; Monterroso, 2015; Monterroso and Barry, 2012; Gomez and Mendez, 2005
  9. 9. Patterns of investment in community forest institutions (CFI) in Guatemala Donors Government Community forestry institutions Private investment Non-governmental organizations (NGOs) Substantial financial investment beginning in the 1980s. Areas of focus include: * support for public institutions and concessionaire development and governance * technical assistance * support for secondary-level institutions Funding from donors is declining as concessionaires gain competency Recent donor investments shifting from capacity-building to value-added support and scaling up community forest enterprises (CFEs) Financial investment minor; most state funds originate from donors and development banks Areas of focus include: * forest governance and management capacity building of public institutions * policy implementation * enforcement Substantial financial investment (relative to revenues) as concessionaires have gained in competency. Areas of focus include: * capacity building to manage/administer concessions * forest management plans * value chain development* * rights strengthening * fire protection * jobs for concessionaire members and other households * health and education Secondary-level institutions (the Community Forest Association of Petén (ACOFOP) and Community Enterprise of Forest Services Ltd (FORESCOM)) are key to acquiring additional funding/expanding influence Limited financial investment thus far, but partnerships between development banks and commercial banks providing credit to forest enterprises are beginning to emerge Donors typically channel assistance to CFIs through NGOs * forest management skills * forest management plans * Forest Stewardship Council (FSC) certification * business management training * value chain development (timber and nontimber forest products (NTFP)) * policy reform advocacy
  10. 10. Selected investment outcomes in Guatemala • Community concessions in the Petén have been shown to have deforestation rates equivalent to those in state-managed protected areas (Bray et al., 2008). • Tobler et al. (2018: 251) determined that well-managed certified community logging concessions in Petén did not negatively affect large and medium-sized mammal populations. • Recent data from ACOFOP (2018) estimated 15,705 daily paid timber-related employment opportunities created between 2007 and 2017); non-timber activities created 15,549 daily paid employment opportunities between 2007 and 2017. • Between 2000 and 2010, income from commercial forests in two community concessions increased household income by 33% (Monterroso & Larson, 2013). • Stoian et al. (2015) showed in resident communities, household income from community forest enterprises ranged from 19% to 58%, dramatically reducing the incidence of poverty in forest-reliant households • CFE capitalization has enabled nine concessions to invest in a shared lumber mill, value-added processing, creating jobs, and diversifying livelihood opportunities (Stevens et al., 2014).
  11. 11. Evolution of collective tenure regime and emergence of community forest management in Nepal Year Policy relevant factors Pre-1970s - State control of forests - Exacerbated mistrust between state agencies and local communities - Accelerated deforestation Late 1970s - Introduction of the National Forestry Plan (1976) - “Handing over” of forest management to the local governments (Panchayat) 1982 - Decentralization Act (1982) - Increased international pressure further empowers the Panchayat to manage local resources and attracted donor support 1987 - Efforts to advocate for the transfer of forest rights to local communities gain momentum - First national community forestry workshop is organized to devise frameworks, policies and strategies to support community forest management Late 1990 - Panchayat system is overthrown - Multi‐party parliamentary system strongly supports rights devolution agenda 1993 - Parliament passes the Forest Act (1993) 1995/1996 - 1995 Forest Regulations and 1996 Community Forestry Guidelines specify circumstances under which CUGs can engage in commercial forest activities; requires a CUG operational plan Source: Fox, 1993; Hobley, 1996; Shrestha & Britt, 1998
  12. 12. Patterns of investment in community forest institutions (CFI) in Nepal Donors Government Community forestry Institutions Private investment Non-governmental organizations (NGOs) Substantial financial investment dating from 1980s Areas of focus: * technical training * CFI governance and forest management capacity building * infrastructure development Substantial financial investment but much comes through donors and development banks. Areas of focus: * technical training * CFI forest governance and forest management capacity building * infrastructure development Substantial financial investments (relative to revenues) as CFI have gained competencies. Areas of focus: * jobs for members * forest-based enterprises * forest management plans * forest protection/improvements * roads, water, education, health care The secondary institution, Federation of Community Forest Users Nepal (FECOFUN) plays a key role in strengthening community use rights to forests and building CFE capacity to manage and commercialize forest products. Limited external private sector involvement. Small and medium scale forest enterprises have begun to invest in timber processing, tourism activities, NTFP processing and marketing. A blended finance program involving multiple development banks, the Nepali government, and communities has recently emerged. Donors typically channel assistance to CFIs through NGOs * forest management plans * forest management skills * FSC certification for NTFPs * financial skills/business management training * NTFP value chain development * policy reform advocacy
  13. 13. Selected investment outcomes in Nepal • Positive associations between community forests in Nepal and forest product supply (Koirala et al., 2013), public environmental goods (Koirala et al. 2013), and biodiversity (Luintel et al. 2018). • A net positive relationship between community forest management and change in forest cover between 2000 and 2012. (Oldekop et al. 2019) • Koirala et al.’s (2013) study of 14,571 Nepalese CUGs estimated that annual income for all CUGs exceeded USD 49 million, amounting to USD 137 per CUG household. • Wealthier households are more likely to benefit from CUG investments in private and public goods, whereas poorer households were more likely to benefit from investments in common goods (Baral et al. 2019). • FECOFUN’s advocacy on behalf of CFIs has played a key role in creating an enabling environment for investments in CFIs. Chief among these reforms include: the 2014 Revised Community Forest Guidelines; the 2015 Forest Policy, which prioritizes forest enterprise development through private sector investment; and the 2017 Industrial Enterprises Act, which makes it easier and less costly to establish small enterprises.
  14. 14. Theory of change linking rights devolution to financial investments and environmental and social outcomes
  15. 15. Phase 1 – Investment in rights devolution and forest governance institutions Barriers to investment in community forest institutions • Insufficiently broad rights • Community skeptical of outside investment • Weak community capacity to manage commercial partnerships • Community-held lands can’t be used as collateral • Fear of traditional values eroding with market exposure • Tension between equity and maximizing profit Context • Poverty • Weak governance • Weak technical capacity • Few livelihood options • Degraded forests Rights devolution and community forest institution formation • Recognition of community rights to forests • Award and registration of title or certificate • Formation of community institution to receive title • Demarcation of community boundaries Key investors: Donors, government, NGOs
  16. 16. Changes in perceptions of risk and assurance • Tenure perceived as secure and adequately broad • Rules exist, are broadly understood, and are enforced • Increased confidence that agreements will be kept • Increased ability to negotiate effectively with external actors Investments in building forest/natural resource governance capacity of community forest institutions Phase 2 – Investment in administrative and management capacity building Development of forest management plan and use rules; implementation of enforcement system Development of administrative, financial, negotiation, and business management skills Formation of secondary- level organizations; advocacy for policy and legislative reforms Key investors: Donors, government, NGOs, CFIs
  17. 17. Investments in and by community forest enterprises Positive environmental, social and financial returns Enhanced forest conditions; increase in livelihood options; political empowerment; financial viability Phase 3 - Investment in enterprises Business/financial skills, markets and marketing, value chain development, certification Harvesting and processing equipment and facilities Forest enhancement/ protection; formation and participation in forest enterprise alliances Improvements to community infrastructure (roads, schools, health care); job creation Key investors: CFIs, donors, government, NGOs, local investors, banks, external investors
  18. 18. Barriers to investment in community forest institutions • Insufficiently broad rights (for example, commercial rights to nontimber forest products but not to timber) • Community skeptical of outside investment • Weak community capacity to manage commercial partnerships • Community-held lands can’t be used as collateral • Fear of traditional values eroding with market exposure • Tension between equity and maximizing profit Context • Poverty • Weak governance • Weak technical capacity • Few livelihood options • Degraded forests Rights devolution and community forest institution formation • Recognition of community rights to forests • Award and registration of title or certificate • Formation of community institution to receive title • Demarcation of community boundaries Changes in perceptions of risks and assurances • Tenure perceived as secure and adequately broad • Rules exist, are broadly understood, and are enforced • Increased confidence that agreements will be kept • Increased ability to negotiate effectively with external actors Investments in building forest/natural resource governance capacity of community forest institutions Investments in and by community forest enterprises Positive environmental, social and financial returns Enhanced forest conditions; increase in livelihood options; political empowerment; financial viability Phase 1 – Investment in rights devolution and forest governance institutions Donors, government, NGOs Phase 2 – Investment in administrative and management capacity building Donors, government, NGOs, CFIs Phase 3 - Investment in enterprise CFIs, donors, government, NGOs, local investors, banks, external investors Development of forest management plan and rules governing use and management of resources; implementation of enforcement system Development of administrative, financial management, negotiation, and business management skills Formation of secondary-level organizations; advocacy for policy and legislative reforms Business/financial management skills, markets and marketing, value chain development, certification Harvesting and processing equipment and facilities Forest enhancement/protection; participation in forest enterprise alliances Improvements to community infrastructure; jobs
  19. 19. Summing up • In the cases considered, devolution of rights to communities has catalyzed investment in collectively held forests and other natural resources. • “Investment readiness” is a process of internal and external social and economic development that unfolds through stages • Emergence of legitimate community-level governance organizations important pre-condition to attracting and retaining investor interest • CFEs as “social enterprises.” Where resources are collectively held, all rights holders benefit from investment. Significant revenue invested in public goods (roads, health, education). • Gains in local income observed, and strengthening of collective tenure has been shown to lead directly to household level investment in housing, education and health in some settings (Velez, M. A. 2011) • Forest cover improved in Guatemala and Nepal (wildlife populations grew in Namibia community conservancies) • Successful outcomes more likely where the roles of community, state and market are seen by all parties as linked in” systems of social innovation.” This is recognized in Mexico and Namibia, less so in Guatemala and Nepal.
  20. 20. Selected bibliography • ACOFOP, 2018. Database established based on information from 9 active community concessionaire organizations members. Guatemala. • Antinori, C., and Bray, D.B. 2005. Community Forest Enterprises as Entrepreneurial Firms: Economic and Institutional Perspectives from Mexico. World Development, Vol. 33 (9), 1529-1543. • Baral, S., Chhetri, B.B.K., Baral, H., Vacik, H., 2019. Investments in different taxonomies of goods: what should Nepal's community forest user groups prioritize? Forest Policy and Economics 100, 24–32. • Baynes, J., Herbohn, J., Smith, C., Fisher, R. and Bray, D.B. 2015. Key factors which influence the success of community forestry in developing countries. Global Environmental Change, 35, 226–238. • Bray, D.B., Antinori, C., Torres-Rojo, J.M. 2006. The Mexican model of community forest management: The role of agrarian policy, forest policy and entrepreneurial organization. Forest Policy and Economics 8, 470-484. • Bray, D.B., Duran, E., Ramos, V.H., May, J-F., Velazquez, A., McNab, R.B., Barry, D., Radachowsky, J., 2008. Tropical deforestation, community forests, and protected areas in the Maya forest. Ecology and Society 13(2), 56. [online] ww.ecologyandsociety.org/vol13/iss2/art56/. • Carter, J. with Gronow, J. 2005. Recent experience in collaborative forest management. CIFOR Occasional Paper No. 43, CIFOR, Bogor, Indonesia. • Cronkleton, P., Pulhin, J., and Saigal. 2012. Co-management in community forestry: How the partial devolution of management rights creates challenges for forest communities. Conservation and Society. Volume 10 (2), 91-102. • Dasgupta, P., 2005. Common property resources: Economic analytics. First teaching workshop on Environmental Economics for the Middle East and North Africa, 5-16 December 2005. Trieste: ICTP. • Elson, D., 2012. Guide to investing in locally controlled forestry, Growing forest partnerships in association with FAO, IIED, IUCN, The Forests Dialogue and the World Bank. IIED, London, UK. • Fox, J., 1993. Forest resources in a Nepali village in 1980 and 1990: The positive influence of population growth. Mountain Research & Development, 13(1), 89. • Gómez, I., Méndez, E., 2005. Análisis de contexto: el caso de la organización de comunidades forestales de Petén (ACOFOP). El Salvador: PRISMA. • Hatcher, J. and Bailey, L. 2011. Tropical forest tenure assessment: Trends, challenges, and opportunities. ITTO Technical Series no. 37. RRI: Washington DC/ITTO: Yokohama. • Hewitt, D., Castro Delgadillo, M., 2009. Key factors for successful community-corporate partnerships – results of a comparative analysis among Latin American cases. Richmond, Vermont, USA, Rainforest Alliance. • Hobley, M., 1996. Participatory forestry: the process of change in India and Nepal. London: Rural Development Forestry Network, Overseas Development Institute. • Hodgon, B., Lowenthal, A., 2015. Evaluating the results of our work: Expanding access to finance for community forest enterprises: A case study work with forestry concessions in the Mayan Biosphere Reserve (Petén, Guatemala). Community Forestry Case Study No. 10/10. New York: Rainforest Alliance, OMIN, IADB. www.rainforest-alliance.org/sites/default/files/2016- 08/expanding-access-finance-CFEs.pdf [Accessed August 19, 2019]. • Holland, M.B., Jones, K.W., Naughton-Treves, L., Freire, J-L., Morales, M., Suárez, L. 2017. Titling land to conserve forests: The case of Cuyabeno Reserve in Ecuador. Global Environmental Change 44, 27-38. • Koirala, G., Acharya, R. P., Dhakal, S., Karki, G., 2013. A rapid assessment of forest-based enterprises in Nepal. Kathmandu: Multi Stakeholder Forestry Programme (MSFP). • Lawry, S., McLain R., 2012. Devolution of Forest Rights and Sustainable Forest Management. Volume 1. USAID.
  21. 21. Selected bibliography • Lawry, S, Samii, C, Hall, R, Leopold, A, Hornby, D, Mtero, F., 2017. The impact of land property rights interventions on investment and agricultural productivity in developing countries: a systematic review. Journal of Development Effectiveness 9(1), 61-81. • Luintel H., Bluffstone R.A., Scheller, R.M., 2018. The effects of the Nepal community forestry program on biodiversity conservation and carbon storage. PLoS ONE 13(6), e0199526. https://doi. org/10.1371/journal.pone.0199526. • MacQueen, D., 2013. Enabling conditions for successful community forest enterprises. Small-scale Forestry 12(1),145-163. • Monterroso, I., Barry, D., 2012., Legitimation of forests rights: the underpinnings of the forest tenure reform in the protected areas of Petén, Guatemala. Journal of Conservation and Society 10(2), 136-150. • Monterroso, I., Larson, A., 2013. The dynamic forest commons of Central America: new directions for research. Journal of Latin American Geography 12(1), 87-110. • Murtazashvilia, I., Murtazashvilia, J., Salahodjaev, R., 2019. Trust and deforestation: a cross-country comparison. Forest Policy and Economics 101, 111–119. • Nagendra, H. 2008. Do parks work? Impact of protected areas on land cover clearing. Ambio, 37, 330–337. • Oldekop, J.A., Bebbington, A.J, Brockington, D., Preziosi, R.F., 2019. Understanding the lessons and limitations of conservation and development. Conservation Biology 24(2), 461–469. • Pena, X., Velez, M.A., Cardenas, J.C., Perdomo, N., and Matajira, C. 2017 Collective Property Leads to Household Investments: Lessons From Land Titling in Afro-Colombian Communities. World Development 97, 27-48. • Reyes Rodas, Renaldo, Justine Kent, Tania Ammour, Juventino Galvex. 2014 “Challenges and opportunities of sustainable forest management through community forest concessions in the Maya Biosphere Reserve, Peten, Guatemala, In, Forests under pressure-Local responses to global issues. In Pia Katila, Wil de Jong, Pablo Pacheco, Gerardo Mery (eds) IUFRO World Series Volume 32. Vienna. • Robinson, B.E., Holland, M.B., and Naughton-Treves, L. 2014. Does secure land tenure save forests? A meta-analysis of the relationship between land tenure and tropical deforestation. Global Environmental Change, 29, 281-293. • Runsheng, Y, Zulu, L., Jiaguo, Q., Freudenberger, M. and Sommerville, M. 2016. Empirical linkages between devolved tenure systems and forest conditions: Primary evidence. Forest Policy and Economics 73, 277-285. • Schlager, E., Ostrom, E., 1992. Property-rights regimes and natural resources: A conceptual analysis. Land Economics 68, 249–262. • Sciberras, M., Jenkins, S.R., Kaiser, M.J., Hawkins, S.J., & Pullin, A.S. 2013. Evaluating the biological effectiveness of fully and partially protected marine areas. Environmental Evidence, 2(4). • Sharma, B.P., Lawry, S., Paudel, N.S., Adhikari, A., Banjade, M.R. 2017. Has devolution of forest rights in Nepal enabled investment in locally controlled forest enterprises?, Paper prepared for presentation at the “2017 World Bank conference on land and poverty”, The World Bank - Washington DC, March 20-24, 2017. • Shrestha, N. K., Britt, C., 1998. From pilot to policy: Community forestry comes of age in Nepal. World Bank/WBI’s CBNRM Initiative. Washington: World Bank. • Stevens, C., Winterbottom, R., Springer, J., Reytar, K., 2014. Securing rights, combating climate change: How strengthening community forest rights mitigates climate change. Washington: WRI. www.wri.org/securing-rights. [Accessed August 19, 2019]. • Stoian, D., Rodas, A., Arguello, J., 2015. Beneficios socioeconómicos y condiciones habilitadoras del manejo forestal comunitario en Guatemala y Nicaragua. Rome: Bioversity International. • Thanh, T.N. and Sikor, T. 2006. From legal acts to actual powers: Devolution and property rights in the Central Highlands of Vietnam. Forest Policy and Economics 8(4):397-408. • Tobler, M.W., Anleu, R.G, Carrillo-Percastegui, S.E., Santizo, G.P., Polisar, J., Hartley, A.Z., Goldstein, I., 2018. Do responsibly managed logging concessions adequately protect jaguars and other large and medium-sized mammals? Two case studies from Guatemala and Peru. Biological Conservation 220, 245–253. • Velez, M.A. 2011. Collective Titling and Process of Institution Building: The New Common Property Regime in the Colombian Pacific. Human Ecology. Vol. 39, 117-129.
  22. 22. Useful resources A guide to investing in collectively held resources Video: Rights shaping landscapes and livelihoods in Nepal
  23. 23. Thank you! Q&A PIM Webinars The PIM Webinars aim to share findings of research undertaken as part of the CGIAR Research Program on Policies, Institutions, and Markets (PIM), discuss their application, and get feedback and suggestions from participants. Webinars are conducted by PIM researchers in the form of research seminars. Each webinar is a live event consisting of a presentation (30 min) and a facilitated Q&A session (30 min). Recordings and presentations of the webinars are freely available on the PIM website: https://pim.cgiar.org/knowledge-center/webinars/

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