Who Owns World s Forests? Implications for Forest Production, Management, and Protection

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1 Who Owns World s Forests? Implications for Forest Production, Management, and Protection Jacek P. Siry 1 and Frederick W. Cubbage Abstract: Many discussions in forest resource policy relate to whether decisions regarding the production of forest outputs are more appropriately made by the private or the public sector. At least in principle, public forests are managed for public goods, which include a range of productive and protective uses, while private forests are managed for even a wider range of objectives that are central to their owners. We examine recent data on global and regional forest ownership, production, and protection and identify possible links between forest ownership and management outcomes. The vast majority of global forests, 87%, are owned by governments and other public bodies. Deforestation and forest decline take place primarily in public forests. This results from the lack of resources, expertise and workable regulatory approaches for managing public and private forests. Private forests and free markets work well in supplying industrial roundwood, while there is little evidence of lower management standards or widespread environmental damage. While market failures are often used to justify government ownership, widespread losses in government owned forests suggest that public policy failures are equally serious factors behind forest decline. This indicates that government ownership, rules and incentives must adapt to produce more private and public forest goods and services more efficiently and equitably. Key Words: global forest resources, ownership, plantations, certification, sustainable forest management INTRODUCTION Ownership and tenure rights determine the ability to acquire, use, control and dispose a piece of property and product derived therefrom. They also greatly affect the ability of markets to allocate resources and to protect forests from destructive exploitation. Many discussions in forest resource policy relate to whether decisions regarding the production of forest outputs are more appropriately made by the private or the public sector. One must look at the values of market and nonmarket goods and services, and the success of the government or the private sector in providing them, in order to assess the merits of different ownership. Attempting to answer some of these questions, we examine the most recent data on global forest ownership and try to assess how well managed and protected are public and private forests across the world. Forest Ownership Types and Tenure Rights Arrangements Forests may be owned by firms or individuals in the private sector or by the public sector. Public ownership describes the case when a government body exercises ownership jurisdiction over lands. Private ownership describes the situation where individuals, firms, businesses, corporations, or even nongovernmental organizations possess ownership rights to forests. 1 Assistant Professor, Warnell School of Forest Resources, University of Georgia, Athens, GA jsiry@forestry.uga.edu. (706) (v); (706) (fax) 77

2 Ownership implies that an entity claims land tenure rights to a forest. Tenure rights are the ability to acquire, use, control and dispose of a piece of property either the land itself or the produce derived therefrom. They are fundamental in determining how forests will be managed, protected, or neglected. Tenure rights are often, but not always, exclusive. They are seldom absolute. The government has the power to determine the tenure rights to a piece of property. They may assign all control above and below the surface to the owner of a piece of land, or they may only allow partial uses, such as rights to the timber or nontimber forest products but not to the mineral or oil products. They may allow personal use only or selected commercial uses, and they may be restricted by zoning or tax controls. Landowners may be allowed to sell some development rights, so that the land remains in a natural state. The government may also choose the purchase of development, harvest and other rights where private owners are compensated for providing particular products and services. The government may also decide to pay for public goods and environmental services. It is possible for the government or the private sector to exercise strong tenure rights and control over forestland. On the one extreme, the government may rely on unregulated private ownership and free market, which is rare. Even in the United States where private forests dominate the sector that relies on free markets, the government regulates forestry. In order to promote the production of socially desirable services, the government may provide technical or financial assistance or both to private forest owners. The Forest Stewardship Program and the Stewardship Incentives Program are examples of such approaches in the United States. In the other extreme, the government may institute public ownership, management and production as is the case in some European countries and elsewhere. Tenure rights change periodically as governments evolve, such as actions to privatize forests in New Zealand and South Africa demonstrate, or increasing laws that restrict forest practices in the United States exemplify. Various intermediate forms of forestland, timber, or other product ownerships may exist. Nongovernment organizations often own forestland in order to maximize environmental benefits. Costa Rica has entered into agreements with pharmaceutical companies for prospecting and patent rights to medicinal plants. The USDA Forest Service owns public land, but leases it for ski resorts. Large individual investors and timber management organizations lease land to forest products firms. Hunting leases are common throughout Europe and North America. These intermediate mechanisms provide various means to allocate the rights to the use and disposition of forest goods and services in manners that compensate the various owners adequately for their capital, labor and entrepreneurial efforts. In addition to various ownership strategies, forestland owners may employ a variety of management approaches. Governments may employ their own forest managers to plan, monitor, manage and protect their land. So might individuals, at least on a parttime basis as needed for specific projects. Companies may employ their own personnel; hire consultants on a contract basis; or lease land to other management firms. Again, these various arrangements provide means for forestland owners to exercise adequate control over their land at reasonable costs. In some cases, control and management may be extensive, or even ineffective, if firms or governments do not have adequate capital or budgets. Forests have usually been less valuable than more intensive land uses, and harder to exercise control over at reasonable costs. 78

3 Global Forest Ownership The world s forests are owned primarily by governments and other public bodies (Table 1). We used data from the Temperate and Boreal Forest Resources Assessment 2000 (UNECE 2000), White and Martin (2002), and Hyde et al. (in press) as well as our own estimates to assess global forest ownership. We compiled forest ownership information for about 85% of global forest area. Community forests covering 200 million ha are classified as government, but they could be considered as large groups of private individuals less formal than most governments. Overall, about 87% of the forests (3.4 billion ha) are in public ownership. In Africa virtually all forests are in public hands. The share of private forests in other regions varies from 6% in Asia to 36% in North America. In total, private forest ownership comprises only about 500 million ha of forests. While public ownership predominates, forest ownership structure varies substantially throughout the world. In Europe, for example, all forests are publicly owned in the Russian Federation and other countries of the Commonwealth of Independent States (CIS). Public forests also dominate in many former communist countries in Central and Eastern Europe, including Czech Republic (84%), Poland (83%) and Romania (95%). Some countries in Western Europe also have large public forests, including Germany (54%), Greece (77%), Ireland (66%) and Switzerland (68%). Private forest ownership dominates in Austria, Denmark, Finland, France, Norway, Portugal, Slovenia, Spain and Sweden, which all have about 70% or more of their forests privately owned. Table 1. Forest Ownership Statistics by Region Total Forest in Ownership Forest Public Data Region Area Ownership 1 Coverage (000 ha) (%) (%) Africa 649, Asia 547, Oceania 197, Europe 1,039, North America 470, Central America 78, South America 885, World 3,869, Included in public ownership are 200 million ha of tribal and communal forests (5%). The United States is unique among countries with large forest resource endowments because of the dominant role of private forests. Forestland ownership in the United States can be classified into four broad classes: National Forest, Other Public, Forest Industry and Nonindustrial Private. National Forests contain 23% of all forests, primarily in the West where the majority of National Forests were established (Smith et al. 2001). Other Public ownership includes all forests managed by public agencies other than the USDA Forest Service. These include the Bureau of Land Management, states, counties, and municipalities, which together control about 12% of forests. Primary wood products manufacturers, classified as Forest Industry, own about 12% of forests. Nonindustrial Private Forest (NIPF) ownership includes individuals, trusts and 79

4 corporations, which control about 53% of forests. In total, then, private owners control 65% of forests in the country. Private ownership is even more important in the U.S. South where it covers 88% of forestland, with NIPFs accounting for 70% of forestland and Forest Industry for another 18%. Forest Ownership and Management Objectives Forest ownership is important because the owners usually determine the objectives for the use of forestland and its associated resources. The owner establishes management policies and provides the means to achieve them. Public ownership relies on government agencies in formulating and implementing policies affecting these forests. Private ownership gives management responsibility to individual owners or corporations or trusts. The government relies mostly on the policy-making process where decisions regarding programs and budgets are politically determined, although market prices and costs of goods and services are considered in decision-making. Public forests are managed, at least in principle, for public welfare. Multiple uses and environmental services often receive more emphasis than wood production. The focus is on common and toll goods such as open range or recreation in national parks. Goods characterized by joint consumption are less likely to be satisfactorily allocated in markets because there is no market price. Therefore, larger government involvement may be appropriate for making decisions with respect to these goods and services. Private forests are managed for financial or utility benefits of their owners. The private sector relies on prices determined in markets, along a good bit of governmental regulation. Private and toll goods such as timber or hunting leases dominate, while environmental services are produced as external benefits or costs. Still, private forests provide a wide range of uses and benefits, including timber, watershed maintenance, soil retention, range potential, wildlife habitat and recreation opportunities. In the United States, for example, private industrial owners manage their land primarily for timber. Despite timber management s predominance, nontimber uses are recognized in forest management through best management practices and forest certification. In the end, these industrial forests produce timber while supporting a range of nontimber uses. NIPF owners are much less uniform in their approaches to forest management. They have multiple objectives and their actions are more complex than industrial owners. NIPF management approaches range from very intensive timber management, similar to the industrial owners, to an entire disregard of forest management for any purpose, productive or protective. NIPF owners who value nontimber benefits are less likely to manage their forests for timber production if it reduces these uses. NIPF owners may extend rotations if nontimber services increase with forest age and volume. Forest management and protection in private forests As often implicitly assumed, public forests management is geared towards environmental services and important social objectives, while private forests management is more frequently geared towards timber production and private owner objectives. Private forest management is also often perceived as less socially responsible and characterized by lower environmental standards. Information about management and protection in private and public forests across the world is scarce. Fairly reliable statistics published for the private forestry sector in the United States permit some comparisons with the rest of the world. In 2000, the 80

5 United States accounted for only 6% of global forestland area, 8% of timber inventory, and 12% of forest plantations (Smith et al. 2001, FAO 2001). These resources produce 27% of global industrial roundwood. The information for the U.S. South is even more telling; the region that accounts for only 2% of each global forestland and timber inventory, supplied about 18% of global industrial roundwood, much of it grown in plantations. This indicates that private forests may be more efficient in supplying timber outputs than public forests and that free markets may work well in providing industrial roundwood as well as other private goods and services. The existence of forest management plans indicates various levels of planning and management activities. The Forest Resource Assessment (FRA) 2000 defines the area under forest management plan as the area managed for various purposes, such as productive or protective uses, in line with approved national plans covering 5-year periods or more (FAO 2001). For developed countries, this category also includes informal management plans. Overall, FRA data suggest that about 43% of all forests across the world have some type of management plan. The U.S. share is higher and equals 56%. FAO forest protection data as well as certification information allow some inferences about how private and public forests management addresses a range of environmental issues. In order to estimate protected forest area, FAO overlaid global forest cover maps and maps of protected areas with a legal protection status (FAO 2001). Protected areas include nature preserves, wilderness areas, national parks, natural monuments, protected landscape and managed resource protection areas. The objectives for managing protected lands focus on conservation and protection of natural functions, values and biodiversity. In total, FAO estimates that about 12% of the world's forests are legally protected, but the statutory levels of protection surely have different levels of enforcement. By comparison, in the United States about 40% of forestland, mostly public, receives some form of protection. Forest certification may also indicate a drive towards more sustainable forest management and better forest protection. We collected information on certified forest area from the web sites for each of major certification organizations in the world (which encompass forest management systems and third party auditing), including American Tree Farm Program (ATFP), Canadian Standard Association (CSA) National Standard for Sustainable Forest Management, Forest Stewardship Council (FSC), Pan-European Forest Certification Council (PEFCC), Sustainable Forest Initiative (SFI), Malaysian Timber Certification Council (MTCC), and Green Tag (GT). In 2000, only 2% of forests were certified worldwide. At the same time, 11% of U.S. forests, mainly private, were certified. In summary, the data indicate that at least in the case of the United States private forests are well managed as measured by their production, the existence of management plans and extent of forest certification. There is little or no evidence of lower management standards and widespread environmental damage. However, private forests managed for timber production probably are less biologically diverse and provide fewer environmental benefits. How well does government ownership protect forests? While public forest management, at least in principle, aspires to high environmental standards and important social objectives, global data on the status of forest resources do not entirely support this point. 81

6 FAO data indicate that despite growing conservation efforts, the decline in global forest area has continued. It is estimated that between 1980 and 1995 about 180 million ha of forests were lost, which represents an area larger than Mexico or Indonesia (FAO 1997). The current net annual deforestation rate (natural forests loss offset by planted forests gain) is estimated at 9 million ha annually (FAO 2001). The total loss of the world's natural forests, which comprises deforestation and conversion to planted forests, is larger and estimated at about 16 million ha. Most natural forests, 94%, are lost in the tropics, where public forest ownership is dominant. Major causes include growing populations and income resulting in ever increasing demand for wood and land for agriculture and for development. Forest decline has a broader meaning that goes beyond forestland loss and encompasses the decline in quality of existing forests resulting from overexploitation, fragmentation, and human set fires. The extent of this process is largely unknown. Since the vast majority of forests are government owned, deforestation and decline also take place primarily in government owned forests. These problems are exacerbated by wood output structure in which fuelwood, frequently produced from natural forests under public ownership, dominates. The link between government ownership and forest decline may result from a variety of reasons. The government may convert forests to other uses to promote the achievement of social and development goals, which in some cases are justified and increase social welfare. In many situations, the government simply lacks resources and expertise to adequately manage its forest resources. Yet in other cases, poor government policies or corruption lead to forest destruction. Forestland loss and degradation clearly point to the continued need to examine the role of government ownership, policies and management approaches, and their success or failure in promoting sustainable forest management. While market failures are often used to justify government ownership, widespread losses in government owned forests suggest that government policy failures are equally serious factors behind forest decline. In situations where governments lack resources and are unable to develop workable approaches to managing their forests, a greater reliance on private or communal property and free markets may be considered. When considering forest ownership changes, the whole process should amount to more than just a transfer of property rights; it should improve the quality of forest management. To date, the results of such ownership changes have been mixed. In Central and Eastern Europe, forest restitution (the return of nationalized private forests to their former owners) has sometimes resulted in neglect and forest overexploitation, due to unfavorable regulations and lack of management incentives, and created very fragmented ownership with limited potential for improved management (Siry 2002). In China, the results are also mixed, depending on the quality of local regulations and incentives for better management (Hyde et al., in press). These are fairly recent efforts and more time will have to pass before evaluating their long term effects. Present outcomes only underlie the importance and need to develop effective legal, institutional, and economic framework for forest conservation and sustainable management, which remains a challenge in many countries. CONCLUSION The vast majority of global forests, 87%, are in public ownership. In the United States 65% of the forests is private, and in the U.S. South the share of private forests reaches 88%. Private forests role in industrial roundwood production is increasing. 82

7 Much of wood volume is harvested from planted forests, where sustainability of harvest is generally accepted, although long-term multiple rotations still need evaluation. Fuelwood, on the other hand, is primarily produced from publicly owned natural forests, making the sustainability of harvest and forest management a major concern. There is little evidence of lower management standards or widespread environmental damage in private forests. Private forests geared towards industrial roundwood production probably provide less biodiversity and environmental benefits. Financial incentives may be required to induce private forest owners to produce more desired environmental benefits. Public forests tend to focus their management on dispersed recreation, amenities and fuelwood. While public ownership has protected large areas from exploitation, in many regions poor management, overexploitation and environmental damage remain a problem. Public forest management is often impeded by government agencies seeking to maximize their budgets and influence, while public oversight and market and business checks are modest. Further, even if laws, management and intentions are good, budgetary and personnel constraints remain a problem. It is apparent that markets work well in providing industrial forest products and other private goods and services, while public lands can ensure access and rights for local people and national interests. While market failures are often used to justify government ownership, widespread losses in government owned forests suggest that public policy failures are equally serious factors behind forest decline. This indicates that government ownership, rules and incentives must adapt to produce more private and public forest goods and services more efficiently and equitably. LITERATURE CITATIONS FAO (Food and Agriculture Organization of the United Nations) State of the World s Forests, Food and Agriculture Organization of the United Nations. Available at: FAO Global Forest Resources Assessment Food and Agriculture Organization of the United Nations. Available at: Hyde, W., B. Belcher, and J. Xu (eds.). In press. China s Reforms and Its Forestry Sector: Lessons for Global Forest Policy. Resources for the Future Press. Siry, J Today and tomorrow of private forestry in Central and Eastern Europe. P in Forest Policy for Private Forestry: Global and Regional Challenges, Teeter, L., et al. (eds.). CABI Publishing, Wallingford, UK. Smith, B., J. Vissage, R. Sheffield, and D. Darr Forest Resources of the United States, St. Paul, MN, U.S.D.A. Forest Service, North Central Forest Experiment Station. General Technical Report NC p. UNECE (United Nations Economic Commission for Europe) Forest Resources of Europe, CIS, North America, Australia, Japan and New Zealand. Geneva Timber and Forest Study Papers, No. 17. United Nations Economic Commission for Europe, Timber Section. Available at: 83

8 White, A., and A. Martin Who Owns the World's Forests? Forest Trends. Washington, D.C. 30 p. 84