Professional Documents
Culture Documents
EXECUTIVE SUMMARY
For Indigenous Peoples and communities around the CONTENTS
globe, forests provide food, shelter, income, and employ- Executive Summary.......................................................1
ment. Forests may also be historically, culturally, and Section 1: Introduction..................................................5
spiritually significant to the people who have lived in
Section 2: Background..................................................6
and around them for generations. But, while Indigenous
Peoples and communities occupy and use a significant
Section 3: Study Area....................................................9
portion of the world’s forests, only a small fraction of com- Section 4: T he Costs of Community Forest-Tenure
munity forestland is recognized by national law, and even Security.......................................................11
less is protected and securely held. In 2013, Indigenous Section 5: T he Value of Community Forest-Tenure
Peoples and communities held legal rights to only about Security.......................................................14
15.5 percent of the world’s forests (RRI 2014). Section 6: Economic Analysis Method and Results.....18
Section 7: Results and Conclusions.............................23
Tenure security—defined as the certainty that a com-
munity’s land rights will be recognized and protected if Annex..........................................................................25
challenged—is linked to numerous benefits, both for com- Appendix.....................................................................28
munities and for society more broadly. Evidence is grow- References...................................................................34
ing that tenure-secure community forests are associated Endnotes.....................................................................37
with avoided deforestation and other ecosystem-service
benefits. There are also economic and social benefits
Working Papers contain preliminary research, analysis,
connected to communal management. Of course, secur-
findings, and recommendations. They are circulated to
ing community forest tenure also involves costs. A key stimulate timely discussion and critical feedback and
question for policymakers and funding agencies is how do to influence ongoing debate on emerging issues. Most
these benefits and costs compare? working papers are eventually published in another form
and their content may be revised.
The Economic Costs and Benefits of Securing Community
Forest Tenure: Evidence from Brazil and Guatemala
addresses this question through benefit-cost analyses of Suggested Citation: Gray, Erin, Peter G. Veit, Juan Carlos
Altamirano, Helen Ding, Piotr Rozwalka, Ivan Zuniga, Matthew
community forest tenure in Brazil’s Indigenous Territories Witkin, Fernanda Gabriela Borger, Paula Pereda, Andrea Lucchesi,
and Guatemala’s Maya Biosphere Reserve. Although data Keyi Ussami. 2015. “The Economic Costs and Benefits of
limitations prevented a full accounting of all benefits and Securing Community Forest Tenure: Evidence from Brazil and
Guatemala.” Washington, DC: World Resources Institute. Available
costs, the results of the analyses suggest that, in the study
online at http://www.wri.org/forestcostsandbenefits.
areas, the economic benefits of securing community forest
tenure outweigh the costs.
Figure ES-1 | ategories of Benefits and Costs Associated With Establishing and
C
Maintaining Secure Community Forest Tenure
BENEFITS COSTS
ECOSYSTEM-SERVICE BENEFITS TENURE-SECURITY ESTABLISHMENT COSTS
Forest ecosystems provide extractive benefits as well Costs associated with establishing or changing the institutional and legislative frame-
as non-extractive benefits. Extractive benefits include work to support community forest tenure. They include investment and transaction
timber and non-timber forest products and recreation costs associated with legislative or regulatory changes.
(e.g., hunting and fishing); non-extractive benefits
include climate change mitigation, water regulation,
habitat and biodiversity, protection of local and COMMUNITY FOREST ESTABLISHMENT COSTS
regional climate systems, and tourism.
Upfront or initial investment and transaction costs for identifying and securing lands
as community forests, including identification, demarcation, registration, titling, and
COLLECTIVE ACTION & CONFLICT RESOLUTION establishing forest-management plans.
2 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
How do the economic benefits of securing Table ES-1 | razil Benefit-Cost Analysis and
B
community forest tenure compare to the costs? Cost/tCO2 Results
Our benefit-cost analyses focused on the increased ben-
efits and costs of a tenure-secure scenario compared to a DISCOUNT RATE 6% 2%
tenure-insecure scenario in the two study areas. Total net present value
$161,681,533,000 $193,915,358,000
(US$ 2015)
Recent analyses for both areas (Blackman 2015; Nolte Net present value per hectare $1,454 $1,743
et al. 2013; Nepstad et al. 2006) show that deforestation Mitigation cost ($/tCO2) $0.39 $0.52
rates are lower in tenure-secure community forests than
in similar areas without tenure security. When trees are In Guatemala, the net present value per hectare ranges
left standing, carbon is stored and communities are able to from $1,715 to $2,280 and from $605 million to $805
extract value from forest resources. For our analyses, we million dollars for all nine active community concessions.
considered only the benefits associated with this avoided The carbon-mitigation cost per tonne of CO2 emissions
deforestation, including carbon mitigation (for both Brazil removed from the atmosphere through a 20-year tenure-
and Guatemala) and timber and non-timber production security investment is estimated to range from $7.37 to
(for Guatemala only). We estimated carbon-mitigation $8.50 (Table ES-2).
benefits using a social cost of carbon value of $41/tCO2,
based on guidance from the U.S. Interagency Working
Table ES-2 | uatemala Benefit-Cost Analysis
G
Group on the Social Cost of Carbon (2015). We compared
and Cost/tCO2 Results
benefits and costs of tenure security using the “net present
value” for the study period: in other words, we calculated
the present value of benefits minus present value costs DISCOUNT RATE 6% 2%
over a 20-year period using a 2 percent and 6 percent Total net present value
discount rate. We also estimated the mitigation cost per $605,368,000 $804,649,000
(US$ 2015)
tonne of CO2. Net present value per hectare $1,715 $2,280
Mitigation cost ($/tCO2) $7.37 $8.50
Our analyses show that the estimated annual per hectare
costs of securing community forest tenure are low com-
Figure ES-2 compares 20-year present value benefits and
pared to the benefits from carbon mitigation and timber
costs (per hectare) for both countries using a 6 percent
and non-timber production. For Brazil, annual costs
discount rate and demonstrates the large gap in values.
average $1.57 per hectare (ha) while carbon-mitigation
The difference between the benefits and costs is $1,454 per
benefits range from $230/ha to $38/ha per year over
hectare in Brazil and $1,715 per hectare in Guatemala.
the analysis period. For Guatemala, annual costs are
estimated at $16.85/ha while carbon-mitigation benefits
Because some degree of uncertainty is inherent in any
range from $187/ha to $120/ha, and timber and non-
benefit-cost analysis, we conducted a sensitivity analysis
timber production benefits are $12.51/ha and $0.91/ha.1
to examine how our analyses might be affected by changes
in our assumptions. Specifically, we created lower-bound
In Brazil, the net present values results (benefits minus
and upper-bound net present value estimates by vary-
costs) range from $1,454 to $1,743 per hectare and $162
ing the discount rate, the price of carbon, carbon-storage
billion to $194 billion for all Indigenous Territories in
values, and other cost and benefit assumptions. Even
the Brazilian Amazon. We estimated the cost of carbon
when we used a much lower carbon value of $6/tCO2
mitigation (per tonne of CO2 emissions removed from the
and upper-bound estimates for costs and lower-bound
atmosphere) through a 20-year investment in forest-ten-
estimates for benefits, the benefits of securing community
ure security to be between $0.39 and $0.52/tCO2 (Table
tenure continued to outweigh the costs. Sensitivity analy-
ES-1). The cost-of-carbon-mitigation metric is useful for
sis results are available in the paper’s Appendix.
comparing climate-change mitigation measures in terms
of cost-effectiveness.
$2,000
$1,920
$1,500
$1,473
$1,000
$500
$205
$19
$0
BRAZIL GUATEMALA
Costs Benefits
Note: Costs are likely underestimated due to data constraints on tenure-security establishment and opportunity costs. Likewise, benefits are also likely underestimated due to data constraints.
4 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
in forest cover and ecosystem health. It could also enrich Research Objective
our understanding of social investments and community
This Working Paper builds upon the Securing Rights
conflicts—two categories of benefits and costs that are
report by asking, what are the costs compared to the
currently hard to gauge because of data limitations.
benefits of securing and maintaining community
Making stakeholder budgetary data more transparent
forest tenure for community forest areas in Brazil and
would also contribute to more robust evidence regarding
Guatemala? We answer this question by:
the costs of securing community forest tenure.
6 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
The Rights and Resources Initiative (RRI) estimates that The Importance of Secure
Indigenous Peoples and communities held at least some
Land Rights and Forest Tenure
legal or official rights (i.e., rights recognized under statu-
tory law) to at least 511 million hectares of forest in 2013— The rights that Indigenous Peoples and communities hold
about 15.5 percent of the world’s forests (RRI 2014). This over their land vary by customary and statutory law. The
figure, which recognizes 52 countries containing nearly bundle may include rights of access, withdrawal, manage-
90 percent of the global forest cover, includes forestland ment, exclusion, and alienation. Each right provides the
legally recognized as community land, as well as state land holders with certain authorities and legal security over
to which Indigenous Peoples or communities have some their land. For example, the right of exclusion allows
formal, conditional rights (see Figure 1). The 15.5 percent communities to refuse access to and use of the land. Large
represents an important increase over the last decade: in bundles of rights, therefore, commonly provide Indig-
2002, Indigenous Peoples and communities had formal enous Peoples and communities with considerable control
rights to 11.3 percent of the world’s forest (RRI 2014). over their lands. Land rights may also include rights to
While governments are increasingly recognizing com- some or all of the natural resources on or below the land
munity rights to forests, in 2013, an estimated 73 percent surface (Veit and Larsen 2013). When Indigenous Peoples
of the world’s forests was state controlled—down from and communities have rights over these resources,
77.9 percent in 2002 (RRI 2014). Much of the community there is a reduced risk that government will allocate
forests held under customary tenure systems are legally resource rights to outsiders (e.g., mining licenses, timber
government forests. concessions).
100%
90% 2002 2013
80%
77.9%
70% 73%
60%
50%
40%
30%
20%
10%
1.5% 2.9% 9.8% 12.6% 10.9% 11.5%
0%
Administered by Designated for Owned by Owned by
Government IPs & Communities IPs & Communities Firms & Individuals
Factors that Can Create Secure Tenure ▪▪ Weak Laws and Regulations. While many governments
now recognize customary tenure systems, few have
Factors that contribute to tenure security vary by context established the strong legal protections needed to
and circumstances. Whether land rights are legally recog- secure indigenous and community land. In Cameroon
nized, and whether they are protected when threatened, and other countries, the law formally recognizes
are two determinants of tenure security. only the portion of community land that is “used
▪▪
and occupied”—such as homesteads and farmland—
Legal Recognition of Land Rights. Supportive statu- but not the community land managed as common
tory laws can help secure tenure. Laws are supportive property. In Zambia and other countries, the law
when they recognize all rights customarily held by In- provides just a small bundle of land rights. In most
digenous Peoples and communities as lawful forms of of Africa, legal rights to land do not include the rights
land ownership, and protect customary tenure to the to many of the natural resources on and below the
same degree as other forms of tenure (e.g., freehold). land, such as water, wildlife, natural trees and forests,
Supportive laws also require the state to, for example, minerals, and hydrocarbons (WRI 2013).
▪▪
provide Indigenous Peoples and communities with a
formal title to their lands; recognize the indigenous Poor Implementation of Supportive Legislation. Even
group or community as having legal authority over when customary land rights are recognized by statu-
their land; recognize that customary rights are held tory law, governments often fail to protect indigenous
in perpetuity; and require consent before an outside and community land from encroachment or expro-
actor may acquire indigenous or community land. priation. Many governments lack the human and
▪▪
financial resources needed to map or document indig-
Protection of Rights. While supportive laws provide enous and community lands, or to protect them from
Indigenous Peoples and communities with a layer of outsiders. Some governments threaten tenure security
tenure security, the laws must be effectively imple- by allocating long-term concessions for agricultural
mented if they actually are to protect land rights when plantations, large-scale mining operations, and oil
those rights are threatened. Implementation and and natural gas extraction. Governments justify these
enforcement can be achieved in various ways. Well- industrial concessions as a means to decrease depen-
resourced government agencies with explicit respon- dence on development assistance, generate formal
sibilities to protect land rights can help to ensure that employment, increase national incomes, and generate
scarce foreign exchange (RRI 2014).
8 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
▪▪
tected area for biodiversity conservation. In recent
years, however, many governments have exercised Community forests are relatively secure in both coun-
these powers more broadly through compulsory land tries (Stevens et al. 2014).
acquisition, zoning regulations, and other land-use
restrictions. Few governments in Africa and elsewhere ▪▪ Spatial data were available on community forestlands
and carbon-storage values.
have enacted clear enabling regulations or prepared
implementation guidelines for these powers, leav-
ing officials with broad discretion over how they are
▪▪ The countries represent diverse tenure arrangements
in terms of tenure-security establishment processes,
exercised. When these authorities are exercised, even land uses, forest types, and benefits and costs.
for genuine public purposes, they can create insecure
tenure for Indigenous Peoples and communities. Based largely on data availability, we narrowed down the
study areas for each country as described below.
Brasilia
State Capital
Amazonia Legal
State Limit
Source: Based on data from Project BCIM 3rd version 20102/IBGE and FUNAI.3
MEX ICO
Land-Use Zones
MEXICO
Core Protected Area G UAT E M A L A
Buffer Zone BELIZE
Multiple-Use Zones
Biological Corridor and Land
with No Concessions
Community Concession
GUATEMALA
Suspended/Cancelled HONDURAS
Community Concession 0 100 200km
Industrial Concession
EL SALVADOR
10 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
parks, biotopes, and archeological sites; it allows only for monitoring and enforcement activities on these lands
scientific research and tourism (Hodgdon et al. 2015). The to ensure that rights are protected; transaction costs
multiple-use zone permits extractive activities (e.g., tim- associated with handling disputes over community for-
ber and non-timber harvesting) and is currently home to ests; production costs for timber and non-timber forest
biological corridors (without concessions), two industrial products; and recurring investments in programs or
concessions, and nine community concessions (Rodas et activities to support and strengthen community rights
al. 2014). The buffer zone is a 15-kilometer strip along the and livelihoods on these lands.
southern border of the MBR; agricultural activities and
human settlements are allowed in the buffer zone. 4. Opportunity costs: Foregone income from alterna-
tive land uses that benefit landowners. Opportunity
There are currently nine active community concessions in costs are strongly associated with deforestation pres-
the MBR, covering 332,000 hectares. All are located in the sures (e.g., urban development, agriculture, cattle
multiple-use zone. The concessions were established to pastures) because these pressures often represent the
allow local communities to benefit economically from sus- highest-value alternative land uses.
tainable forest management, and to prevent agricultural
encroachment into the protected core zone. Communities These costs may accrue to a variety of actors. Accord-
have management, use, withdrawal, and exclusion rights ingly, in this paper, we consider the primary, secondary,
over their concessions (Larson et al. 2008), allowing for and external stakeholders involved with securing and
sustainable timber and non-timber extraction, tourism maintaining community forest tenure. Primary stakehold-
development, and limited agriculture (Gomez and Mendez ers are people who directly experience the impacts of
2005; Gretzinger 1998). forest-tenure policy changes: the Indigenous Peoples and
communities, or other local groups that may be resettled
or affected by changes in forest rights. Secondary stake-
SECTION 4: THE COSTS OF COMMUNITY holders are generally the people within a country who can
FOREST-TENURE SECURITY make and shape decisions; they include local and federal
government agencies, and natural-resource managers.
Processes for establishing and maintaining tenure vary
External stakeholders include people with the power to
within and across countries, depending, among other
influence decision-making; they include the bilateral and
matters, on governmental infrastructure, institutional
multilateral development organizations that support gov-
capacity, land management, and ownership regimes.
ernment agencies, and non-governmental organizations
Furthermore, land tenure may be composed of different
(NGOs) (Waite et al. 2014).
bundles of rights and therefore the processes for
establishing and maintaining those rights may vary
(Robinson et al. 2014). Yet, despite these variances, we Evidence from Brazil
identified four general categories of costs to consider in The Brazilian Constitution recognizes the inalienable
an economic benefit-cost analysis: rights of Indigenous Peoples to lands they traditionally
occupy, and gives them permanent possession of these
1. Tenure-security establishment costs: Costs asso- lands. Although the Constitution guarantees Indigenous
ciated with establishing or changing the institutional Peoples exclusive use of their lands, including soil
and legislative framework to support community forest and water rights, the national government maintains
tenure. Costs include investment and transaction costs ownership of the land and all subsurface natural resources
associated with legislative or regulatory changes. (e.g., mineral rights). The Brazilian Constitution defines
lands traditionally occupied by Indigenous Peoples as
2. Community forest establishment costs: Upfront
lands “inhabited by them permanently, those used for
or initial investment and transaction costs for identify-
their productive activities, those indispensable to the
ing and securing lands as community forests, including
preservation of the environmental resources necessary
identification, demarcation, registration, titling, and
for their well-being, and those necessary for their physical
management-plan establishment costs.
and cultural reproduction, in accordance to their habits,
3. Community forest management, operating, customs and traditions.” (ISA 2015a). The Constitution
and monitoring costs: Annual or recurring costs required the Fundação Nacional do Índio (FUNAI)—the
associated with protecting community forest tenure; government body responsible for policies related to
Table 1 | Tenure-Security Establishment and Maintenance Costs for Brazilian Indigenous Territories
Community forest management, 1. Development of management plans National and local government agencies;
operating, and monitoring costs 2. Ongoing management and monitoring NGOs; Indigenous Peoples
3. Subsidies and technical support for capacity building
4. Compensation for relocation
Opportunity costs Foregone income from soybean production, cattle Landholder (national government)
pastures, roads, and/or urban development
12 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
Evidence from Guatemala historical use and the capacity to sustainably manage
forest resources (Radachowsky et al. 2012). Additionally,
The Maya Biosphere Reserve (MBR) was established
they must:
in 1990 by Congressional Decree (Decree 5-90, later
updated by Decree 04-2006). The government’s aim in
creating the reserve was to protect the biodiversity and
cultural heritage of the Petén region, and to promote
▪▪ present a CONAP-approved general forest-
management plan;
sustainable natural-resource use (Carey 2008). External
▪▪ develop an environmental impact evaluation;
▪▪
stakeholders, particularly the United States Agency for
International Development (USAID), played a significant present annual operations plans;
role in financing the MBR (Hodgdon et al. 2015; Carrera
et al. 2006). The National Council of Protected Areas
(CONAP) administers and manages the concessions and
▪▪ achieve third-party certification by the Forest Stew-
ardship Council (FSC) within three years of conces-
sion establishment and undergo periodic audits;
was initially responsible for approving each concession’s
establishment. Conflicts surfaced in the MBR’s early days,
▪▪ pass annual certification audits;
▪▪
but they have largely been settled (Carrera et al. 2006).
fulfill an annual CONAP evaluation;
▪▪
With the creation of the MBR, many communities found
themselves within the boundaries of the reserve with no undergo environmental-regulation evaluations (by the
legal land rights. With the support of international NGOs, Guatemalan government and sometimes USAID);
the local communities eventually persuaded the govern-
ment to provide them with formal concessions (Larson et ▪▪ implement mitigation measures required by the envi-
ronmental impact evaluation; and
▪▪
al. 2008). In 1994, the Guatemalan government, backed
by USAID, legalized the community concession system monitor impacts on ecological integrity and archaeo-
in the multiple-use zone (Monterroso and Barry 2012). logical sites (Rosales 2010).
Between 1994 and 2002, 12 community concessions were
established, although only nine are still active.4 A commu- Community concession members and CONAP both under-
nity forestry concession “is an administrative mechanism take fire prevention and monitoring activities (Rosales
whereby the government, through CONAP, grants state 2010).
lands to legally established organizations for a 25-year
renewable period, giving them the right to integrated External funding from bilateral agencies, domestic and
resource use, involving such activities as forestry and international NGOs, and other donor groups have played
ecotourism.” (Rosales 2010). a significant role in the establishment and maintenance
of community concessions. For example, USAID and the
In 1995, community leaders formed the Association of Ford Foundation provided technical and financial support
Forest Communities of Petén (ACOFOP) to resolve con- for establishing the community concessions (Hodgdon et
flicts by negotiating greater community rights (Hodgdon al. 2015). USAID, the Tropical Agricultural Research and
et al. 2015). ACOFOP comprises 23 local organizations Higher Education Center (CATIE), the Rainforest Alliance,
that represent 30 rural communities and over 2,000 and others have funded and supported the FSC forest
families (Rosales 2010). ACOFOP created Empresa Comu- certification costs (Carrera et al. 2006). NGOs, including
nitaria de Servicios del Bosque (Community Forestry Centro Maya, Conservation International, Naturaleza
Services Enterprise or FORESCOM) to provide commer- para la Vida, and the Rainforest Alliance, have provided
cial support to its member communities, especially with technical and financial assistance to concessions, includ-
marketing, pricing, payments, and forest-product devel- ing enterprise and market development (Hodgdon et al.
opment (Rosales 2010). FORESCOM has also invested 2015), and international organizations fund ACOFOP.
substantial amounts in wood-processing infrastructure
and equipment. Table 2 summarizes the costs of establishing and main-
taining community concessions in the MBR and notes the
To be granted a concession, communities must establish key stakeholders to whom many of the costs accrue.
a legal entity to assume responsibility for the concession
(Rosales 2010). Communities must also demonstrate
Community forest 1. Establishment and legalization of the community concession National and local government agencies; supporting
establishment costs system agencies (CONAP and ACOFOP); domestic and
2. Establishment of supporting agencies (CONAP and ACOFOP) foreign donors; community members
Community forest 1. Development of forest-management plans, environmental National and local government agencies; domestic
management, operating, impact evaluations, and annual operations plans and foreign donors; NGOs and supporting agencies;
and monitoring costs 2. FSC certification community members
3. Annual certification audits and CONAP evaluations
4. Periodic environmental-regulation evaluations
5. Monitoring and enforcement of concession boundaries and
concessionaires’ activities
6. Timber and non-timber production costs for commercial sales
7. Tourism-production costs
Opportunity costs Foregone income from commercial timber, and/or cattle pastures Landholder (national government)
SECTION 5: THE VALUE OF COMMUNITY 3. Social benefits: Secure tenure can encourage job
creation and actions that strengthen capacity within
FOREST-TENURE SECURITY local communities (e.g., community reinvestment in
Just as the costs of secure community forest tenure vary, education and health programs).
so too do the economic benefits associated with establish-
ing and maintaining secure tenure. Here, we consider Many studies have explored the impact of tenure security
three categories of benefits that we identified in Brazil on forest-ecosystem conditions. Robinson et al. (2014)
and Guatemala based on a literature review and expert conducted a meta-analysis of 36 publications that linked
consultation. land-cover change to tenure conditions. They found that
communal land-tenure impacts on forest-ecosystem
1. Ecosystem-service benefits: Forest ecosystems conditions varied regionally, possibly due to the effects
provide extractive benefits and non-extractive ben- of regional conflict and/or weak governance (important
efits. Extractive benefits include production of timber enabling conditions identified in Section 2 of this paper
and non-timber forest products and recreation (e.g., and by Stevens et al. 2014). Communal and customary
hunting and fishing). Non-extractive benefits include tenure impacts on forest-ecosystem conditions were low in
climate-change mitigation, water regulation, habitat Africa, moderate in Central America, and mixed in South
and biodiversity, protection of local and regional America. Overall, however, the study found that com-
climate systems, and tourism. munal land tenure was associated with less deforestation.
Recent studies in Brazil and Guatemala, which we explore
2. Collective-action and conflict-resolution ben- in depth below, also show avoided deforestation benefits
efits: Clearly defined land rights and roles can result associated with secure community forest tenure (Black-
in behavioral changes among primary and secondary man 2015; Nolte et al. 2013; Nepstad et al. 2006).
stakeholders. Behavioral changes can avoid the trans-
action and conflict-resolution costs associated with The Millennium Ecosystem Assessment (2005)
insecure forest rights. categorizes ecosystem services into four categories:
14 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
Regulating Air quality regulation; climate regulation; water-flow regulation; water filtration; erosion prevention
Provisioning Food; water supply; raw materials (e.g., timber products); medicinal products; genetic resources
Cultural Recreation and tourism; sacred ritual and burial sites; habitat for important totem animals; educational uses
16 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
Ecosystem-service benefits 1. Direct use (extractive) benefits Community members; tourists/recreationists; regional stake-
a. Subsistence forest products holders (e.g., agricultural producers); global society
b. Hunting/fishing
c. Recreation
d. Handicrafts
2. Indirect use (non-extractive) benefits
a. Biodiversity/pharmaceuticals
b. Climate-change mitigation
c. Fire suppression
d. Local/regional climate regulation
Social benefits Job creation (handicrafts) Community members; local and national governments; other
stakeholders that interact with forest communities
Collective-action and 1. Avoided transaction costs Community members; local and national
conflict-resolution benefits 2. Improved land productivity/ governments; other stakeholders that interact
forest management with forest communities
Communities also benefit from investing the profits gener- maintaining community forest-tenure security requires
ated by concessions back into the community—in infra- that we first understand the processes and costs of tenure-
structure, health care, and education. These investments security change. It also requires that we understand the
not only improve local standards of living, they can have a forest-cover change that will result from establishing and
high positive spillover effect. Based on 2014 data, annual maintaining tenure security, how forest-cover changes
social investments in the community concessions are esti- affect the provision of ecosystem-service benefits, and how
mated to have been as high as $425,000 (ACOFOP 2015). tenure security results in changes in community and other
stakeholder behavior. We compare benefits and costs
Benefits related to collective action and the clarification using benefit-cost analyses.
of rights have not been as well documented; however,
conflicts that were initially associated with MBR’s estab- The benefit-cost analyses focus on the incremental
lishment appear to have been largely settled (Carrera et al. benefits and costs of a “policy” or tenure-secure scenario
2006). over a “no-policy” or tenure-insecure scenario. The policy
scenario assumes that a policy change does occur, so it
A summary of major economic benefits derived from considers all costs associated with securing and maintain-
Guatemalan community concessions and the respective ing tenure. In contrast, the no-policy scenario assumes
beneficiaries is presented in Table 5. that no policy changes occur and that no incremental costs
of policy changes are incurred. Because of data limitations
SECTION 6: ECONOMIC ANALYSIS (see Box 2), only a subset of benefits presented in Section
5 is included in the benefit-cost analyses. Specifically, we
METHOD AND RESULTS consider carbon-mitigation benefits (for both countries)
This section describes the method we used to assign and timber and non-timber production benefits (for
monetary values to the benefits and costs associated with Guatemala only). In addition, the analyses estimate only
establishing and maintaining secure community forest benefits associated with avoided deforestation impacts
tenure for Brazilian Indigenous Territories and commu- predicted to result from establishing and maintaining
nity concessions in the Guatemalan MBR. Understand- tenure security; this impact is best documented in the
ing the economic benefits and costs of establishing and literature.
18 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
The research question, what are the costs com- • Ecosystem-service benefits: The • Uncertainty regarding benefit and
pared to the benefits of securing and maintain- benefit-cost analyses include only ecosys- cost data: Benefit and cost data are often
ing community forest tenure? presents multiple tem-service benefits for which data were not disaggregated by stakeholders in ways
economic valuation challenges, due largely readily available, either in the literature or that permit easy estimation of individual
to data availability. While Sections 4 and 5 market values. Carbon-mitigation and timber benefit and cost components associated with
describe the benefits and costs that would ide- and non-timber production benefits were securing and maintaining tenure security (as
ally be considered in an economic analysis, the included because these data were available. listed in Section 3). In Brazil, for example,
analyses here do not capture all benefits and Many relevant indirect use or non-extractive government cost data were not available
costs because of the following data limitations ecosystem-service benefits (e.g., biodiver- by cost component (e.g., demarcation vs.
and knowledge gaps: sity and water filtration) are often valued registration vs. titling) or by individual
based on preferential or willingness-to-pay indigenous territory. Rather, annual federal
• Opportunity costs of alternative land data. To appropriately transfer these benefit and local government budgetary data for
uses: The benefit-cost analyses assume values from the policy sites to the study Indigenous Territories were available for
that deforested lands in the no-policy sites, site-specific data to help identify local broad categories. In Guatemala, it is clear
scenario are degraded and thus not in use. preferences (e.g., gross domestic product, that a good deal of foreign aid, combined
However, in reality, these lands may be population) would be required. However, with domestic financial support and NGO
converted to another income-producing this was beyond the scope of our study. In technical and financial assistance, went into
land type, such as agriculture or pasture. general, extractive-use benefits are easier to establishing the MBR and the community
The foregone income from the alternative value than non-extractive benefits: produc- concessions. However, a detailed registry
land use would ideally be considered in the tion and market-value data for forest prod- of these costs is not available, making it
benefit-cost analyses because this repre- ucts are more easily tracked and published. difficult to discern the exact investment total
sents an opportunity cost to the landholder. In the case of Brazil, however, we could and the percentage of costs for the MBR
The calculations for estimating opportunity find no quantitative evidence, of sales of that went into the concessions alone. On
cost are complex, however, and require an forest materials or subsistence uses of forest the benefits side, timber and non-timber
understanding of what the deforested area products from Indigenous Territories. revenue data were available for Guatemala
could be converted to, and the expected from 2007 through 2015, but production-
financial returns from that land. Further- • Collective-action and conflict-resolu- cost data were available for only three
more, while opportunity costs may exist for tion benefits: Collective-action and con- concessions. While data employed for the
individual landowners, it is not clear that flict-resolution benefits are often difficult to benefit-cost analyses are thought to be
broader aggregate-scale opportunity costs quantify because they necessitate an under- representative of the scale of costs, more
exist. Due to the complexity of this question, standing of the number of conflicts occur- transparent and accurate data from relevant
opportunity costs were excluded from the ring, and the transaction and other costs stakeholders would be helpful for conduct-
benefit-cost analyses. associated with these conflicts (e.g., number ing a more robust economic analysis. Given
of deaths/injuries, cost of establishing these difficulties, benefit and cost data and
• Tenure-security establishment costs: conflict-resolution programs or initiatives, analysis assumptions were verified with
Valuing the costs associated with establish- and wages for staff who work to address secondary and external stakeholders in both
ing tenure security (via policy and institu- conflicts). Additionally, while communities Brazil and Guatemala to ensure that they
tional changes) necessitates an understand- may be better able to organize and work with were representative. Additionally, a sensitiv-
ing of the transaction costs associated with secondary and external stakeholders, it is ity analysis was undertaken to provide a low,
these changes, including, for example, also difficult to capture transaction costs that average, and high range of potential benefits
staff time spent drafting tenure reforms and may include, for example, a reduction in the and costs (see Appendix).
working with communities. For Guatemala, number of meetings or hours spent working
tenure-security establishment costs could be with communities. Finally, it is also difficult
approximated based on estimates of foreign to capture forest production-improvement
and domestic expenditures to establish the data that may result from behavioral changes
community concessions within the MBR. via collective action and conflict resolu-
For Brazil, however, the available data are tion. These data are often not collected by
unclear on the financing that supported relevant stakeholders or disaggregated from
the constitutional reform of 1988 and other government budgetary data in a way that
governmental decrees and policy changes. enables a proper interpretation of scale of
benefits. As a result, collective-action and
conflict-resolution benefits are excluded
from the benefit-cost analyses.
The valuation method for costs follows a two-step pro- Development of management plans $0.23
cess. First, we identify the costs associated with the policy
change, based on the cost categories defined in Section 4. Total Annual Cost $1.57
Second, we monetize (assign a dollar value to) these costs
(where data are available). Cost data were collected pri- For Guatemala, the costs of tenure-security establishment;
marily from government and other stakeholder websites, community-forest establishment; and community-forest
peer-reviewed and grey literature, and solicitation of data management, operating, and monitoring are based on
from relevant stakeholders and country experts (where evidence in the literature regarding domestic and foreign
data were not available online). Additionally, cost data contributions to the MBR and the percentage of funding
were verified with in-country experts and stakeholders to attributable to the community concessions. Total domestic
ensure that they were representative. and foreign support for the MBR between 1990 and 2005
is estimated at roughly $131 million (Gomez and Mendez
The benefit-cost analyses assume that deforested land 2005). The analysis assumes (based on Bray et al. 2008)
is converted to degraded land, so opportunity costs are that 30 percent of this amount went toward community
zero (see Box 2 for more information on opportunity-cost concessions, for an average of $4 per hectare per year. The
considerations for alternative land uses). analysis further assumes that domestic and international
support will continue into the future following histori-
Monetizing Costs for Brazil and Guatemala cal data trends from 1990–2005. Additional costs that
are assumed not to be included in domestic and foreign
For Brazil, tenure-security establishment cost data associ- investments include community expenditures on FSC
ated with the constitutional change in 1998 and govern- certification ($0.29/ha/yr), community monitoring and
mental decrees were not available. Community forest enforcement ($0.55/ha/yr), and CONAP expenditures
establishment costs and community forest management, on monitoring and enforcement ($0.30/ha/yr). Finally,
operating, and monitoring costs are based on FUNAI and because the community concessions are known to sell tim-
local government budgetary data for Indigenous Ter- ber and non-timber forest products, production expenses
ritories; they are estimated at $1.31/ha/yr and $0.03/ha/ associated with these products are also included based on
yr, respectively (see Appendix for more detailed FUNAI data from Stoian (2015). These production expenses are
budget data). Management-plan costs were assumed not estimated at $10.89/ha/yr for timber products and $0.79/
to be included in government expenditures because these ha/yr for non-timber products (equivalent to 87 percent
plans are often developed in coordination with NGOs of total revenue from timber and non-timber products),
or other external stakeholders. An average annualized or $11.68/ha/yr total. Total estimated annual costs are
cost per hectare of $0.23 was estimated based on a $5.2 $16.85 per hectare (see Table 7).
million grant given to The Nature Conservancy (TNC) to
develop plans for six Indigenous Territories in the states
of Amapá and Pará (Amazon Fund 2015). Total estimated
annual costs for Brazilian Indigenous Territories are $1.57
per hectare (see Table 6).
20 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
COST COMPONENT VALUE The annual avoided deforestation impact is then applied
to the total area of community forest for each study area
Domestic and international support $4.04 to estimate the annual area of avoided deforestation.
FSC Certification $0.29 The area to which the deforestation-rate impacts can be
applied shrinks every year for both the policy and no-
Community monitoring and enforcement costs $0.55 policy scenarios9 and, as a result, carbon-storage values
decrease slightly over time, but remain positive.
CONAP monitoring and enforcement costs $0.30
Timber and non-timber production expenses $11.68 Identifying and Monetizing Benefits
Total Annual Cost $16.85 The benefits that could be monetized for the economic anal-
yses include carbon mitigation and timber and non-timber
production. The analyses assume that these benefits apply
Valuing Benefits of Securing and Maintaining only to the area of avoided deforestation for each year.
Community Forest Tenure
The valuation method for benefits follows a three-step The estimate of the total carbon stored through avoided
process. First, we identify the forest-cover change impact deforestation is based on the difference in carbon-stock
that relates to community forest-tenure establishment values (the above- and below-ground biomass content in
and maintenance. Second, we identify site-specific ben- a given biome) between intact forest and partially defor-
efits that relate to forest-cover change impacts, based on ested or deforested areas (i.e., a carbon-storage gap). To
the benefits categories defined in Section 5. Third, we calculate total carbon storage based on avoided deforesta-
monetize, or value, ecosystem-service benefits that relate tion, for example, the annual area of avoided deforestation
to this forest-cover change. As stated previously, we do is multiplied by the per hectare carbon-storage value. For
not include collective-action, conflict-resolution, and Brazil, the carbon-storage gap is equal to 120.4 tonnes of
social benefits in the benefit-cost analyses because of data carbon per hectare (tC/ha); for Guatemala, the carbon-
constraints (see Box 2). storage gap is equal to 75 tC/ha.10
22 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
Figure 4 | 2 0-Year Present Value Comparison of Per Hectare Benefits to Costs for
Brazil Indigenous Territories and Community Concessions in the Guatemalan
Maya Biosphere Reserve (6 Percent Discount Rate)
$2,000
$1,920
$1,500
$1,473
$1,000
$500
$205
$19
$0
BRAZIL GUATEMALA
Costs Benefits
Note: Costs are likely underestimated due to data constraints on tenure-security establishment and opportunity costs. Likewise, benefits are also likely underestimated due to data constraints.
24 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
Even with data limitations and the uncertainty inherent in ments in forest cover and ecosystem health. It could also
benefit-costs analysis, our research supports three impor- contribute to a more robust understanding of the benefits
tant findings: and costs associated with conflicts and social investments.
More transparent stakeholder budgetary data would also
1. Analysis results for Brazil’s Indigenous Territories and help to fill some of the data gaps that researchers and
community concessions in the Guatemalan MBR sug- policymakers face when trying to compare the full range
gest that efforts to secure community forest tenure are of benefits and costs associated with secure community
low-cost, high-benefit investments from an economic forest tenure.
perspective. The community concessions in Guate-
mala demonstrate slightly higher gains despite higher Beyond improving data availability and transparency,
per-hectare costs, largely because the concessions are conducting similar analyses of other community forests,
allowed to manage for sustainable timber and non- and comparing results for forests with secure and inse-
timber production, and data on extractive benefits for cure tenure rights, would also build understanding of the
Brazil are patchy. Our sensitivity analysis also demon- economic case for secure community forest tenure. WRI
strates positive economic gains in both countries even is working with local experts to extend this work to other
when we used a much lower value of carbon of $6/tCO2. countries in South America, including Bolivia and Colom-
bia.. This will allow us to extrapolate the results to the
2. Community forests can generate a wide variety of eco- Amazon basin. Findings, conclusions, and policy recom-
nomic benefits by providing ecosystem services (e.g., mendations will be captured in a WRI Research Report
biodiversity and climate regulation) and encouraging that will be published in 2016.
behavioral changes (e.g., collective action) that sup-
port conflict resolution and social benefits. Our results
suggest that a better understanding of the multiple ANNEX 1: CASE STUDY—
economic benefits of community forests could help COMMUNITY FOREST ENTERPRISE
demonstrate even higher net benefits and the high
value of tenure security in improving forest-resources
IN SAN BERNARDINO DE MILPILLAS
management and conservation. Economic valuation of CHICO, MEXICO
community forest benefits could help policymakers to Mexico has a long history of community lands, known as
better target policies and investments. ejidos and comunidades. Ejidos are communally owned
and governed on the basis of rural and indigenous tra-
3. From a financial perspective, investing in forest-tenure
ditions, while comunidades are owned by Indigenous
security can be a relatively cost-effective measure for
Peoples who hold land titles dating back to the colonial
climate-change mitigation when compared with other
period (Zuniga et al. 2012; Bray et al. 2005). Together, eji-
mitigation measures. However, while we believe our
dos and comunidades hold roughly 60 percent of Mexico’s
cost data are representative of tenure establishment
forests (see Figure 5). As of 2007, there were 31,514 ejidos
and maintenance costs for both study areas, we faced
and comunidades in Mexico (over 92 percent of them were
data availability limitations in our analyses. Conse-
ejidos), covering 106 million hectares. Roughly 65 percent
quently, while our mitigation cost estimates can be
of that land is designated as a common-pool resource of
useful for demonstrating the cost-effectiveness of com-
the community.
munity forests as a carbon-mitigation measure, they
should not be interpreted as the price that would need
The ejido and comunidad governance systems provide the
to be paid to avoid a hectare of deforestation in these
structure and support for Community Forestry Enterprise
regions.
(CFE) management institutions. CFEs are forest industries
owned and operated by local and indigenous communities.
Addressing some of the data constraints we describe in
Today, there are approximately 2,300 CFEs in Mexico (19
this paper could improve collective understanding of the
percent located within comunidades and 81 percent within
potential net economic gains from community forests.
ejidos) (Bray et al. 2010). Of these 2,300 CFEs, more than
Investing in improved monitoring and evaluation of com-
200 have the capacity for industrial processing, sawnwood
munity forests would be an important first step. Improved
production, and the commercialization of products with
monitoring and evaluation could support a more thorough
added value, such as furniture, moldings, and flooring
understanding of the benefits associated with improve-
(Bray et al. 2007). Well-run CFEs that practice sustainable
Ejido
Comunidad
Source: National Agrarian Registry (RAN), Agency of the Ministry of Agrarian, Land and Urban Development. “Núcleos Agrarios.” Downloaded from
http://busca.datos.gob.mx/#/conjuntos/nucleos-agrarios, 29 January, 2015.
forest operations are generating jobs, decreasing defor- pine-oak forest are managed for commercial production
estation rates, and increasing the provision of valuable under a common property regime; this area could expand
ecosystem services, such as biodiversity and water. to ~47,000 hectares in the future.
Overall, the experience of CFEs in Mexico is showing that
communities can successfully compete in international In 1961, a presidential decree recognized Milpillas as
markets and generate positive economic gains both for the being under a communal-property regime. Over the past
communities and for society. 20 years, the community has expanded operations and
restructured its financing by moving away from financial
San Bernardino Milpillas Chico (Milpillas) is a communal- support from private forest companies toward self-finance
property located in Pueblo Nuevo, Durango. It presents and government subsidies on the order of $65,000 to
a case study of a successful CFE operation. Milpillas has $80,000 a year. The community has installed four saw-
just over 5,000 inhabitants; 20 percent belong to the mills, drying ovens, a pallet factory, and a furniture factory
ethnic group, Tepehuanos of the South (Tepehuanos del (CCMSS 2015). In 2004, the community received forest
Sur), and 80 percent to the Mestizo population. The total management certification from the Forest Stewardship
area of Milpillas is 159,925 hectares, and it has 1,148 Council (FSC) with support from the Rainforest Alliance
co-owners.14 Approximately 18,000 hectares of mixed (Hernandez et al. 2010).
26 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
▪▪
switch to community ownership in 1961 was a decrease
FSC initial certification cost of $13,365 in conflicts associated with earlier government efforts
▪▪
to promote private timber management in the 1940s.
Establishing a community management plan at a cost Today, the CFE produces 40,000 cubic meters of certi-
of $346,500 fied pinewood under the FSC, an increase of 54 percent
BENEFIT-COST ANALYSIS MODEL forest management, operating, and monitoring costs based on the average
expenditure from 2005 to 2014 (Finbra 2015). Table A1 provides an overview
The Benefit-Cost Analyses for Brazil and Guatemala compare a policy sce- of national and local government expenses from 2005 to 2014. Local
nario to a no-policy scenario. As a result, the paper calculates the net present government expenses include support to Indigenous Peoples in order to
value (NPV), that is, the difference between the benefit and cost streams for guarantee their rights. This expense is included in a subgroup called “right
the analysis period of 20 years by: of citizenship.” Expenses in this subgroup aim to guarantee the rights of
minorities and to assist them inside the municipalities. These expenses are
20 assumed to be indicative of local support for all the initiatives regarding
NPV = ∑ Bi – Ci
(1 + r)i
Indigenous Peoples’ rights.
i=1
20 Finally, the cost estimation also includes the cost of establishing a man-
Ci = TEi + CFEi + Mi Average annual cost estimates are assumed to remain constant for the 20-year
analysis period. However, it is possible that this approach may over- or under-
Where: B = CMi + TFPi + NTFPi estimate costs because it appears likely that the budget for national programs
TEi = Tenure-securityi establishment costs in year i
Ci = TEestablishment
CFEi= Community-forest i
+ CFEi +costsMi in year i will be reduced in coming years (Borger et al. 2015). Lower- and upper-bound
values shown in Table A1 are used for the sensitivity analysis (lower bound
Mi = Management, operating, and monitoring costs in year i assumes maximum costs; upper bound assumes minimum costs).
Bi= CMi + TFPi + NTFPi
Benefits (Bi) were calculated in US$/ha/yr using the equation: The only benefit that could be calculated for Brazil was carbon mitigation
based on matching analyses by Nepstad et al. (2006) and Nolte et al. (2013)
Bi= CMi + TFPi + NTFPi for 1997 through 2000, and 2000 through 2010 respectively. Nepstad et al.
(2006) found that indigenous lands in the Brazilian Amazon strongly inhib-
Where: ited deforestation, especially near agricultural areas. The study estimated the
CMi = Carbon-mitigation benefits in year i (US$/ha) deforestation of indigenous lands using satellite data and land-cover maps.
TFPi = Revenue from timber forest-products sales for year i (US$/ha) As a metric of indigenous land performance, the study estimates the ratio
NTFPi = Revenue from non-timber forest-products sales in year i (US$/ha) of deforestation outside the indigenous land boundary versus inside the
indigenous land boundary (using 10 km wide strips), from 1997–2000. De-
forestation was detected based on forest replacement by cattle pastures and
DATA ASSUMPTIONS agricultural land, and by detecting fires that are used in the forest-clearing
process and in maintaining cattle pastures. The annual deforestation rate for
Brazil areas outside the buffer zone from 1997–2000 was roughly 1.45 percent,
To estimate community forest establishment and community forest manage- whereas the annual deforestation rate inside the buffer zone for the same time
ment, operating, and monitoring costs, federal and local government budget- period was roughly 0.17 percent.
ary data were collected by researchers from the University of São Paulo,
who verified that this estimate provides a general approximation of costs. Nolte et al. (2013) also estimated the inhibitory effect of indigenous lands
As FUNAI is the official indigenous agency of Brazil, costs are based on the on deforestation in the Brazilian Amazon. Control groups were identified
average annual FUNAI budget for working with/managing indigenous lands by repeatedly sampling forested parcels from within the boundaries of the
from 2005 to 2014. These costs are broken out into three cost categories: indigenous lands and matching them to forested parcels that had never been
ethnic identity/cultural heritage expenses, administrative expenses, and pro- protected up to 2010 but were similar in terms of key covariates associ-
tection/land-management expenses. FUNAI’s annual budget for working with/ ated with the likelihood of protection and deforestation. The study used two
managing indigenous lands is available at the government online platform satellite datasets (PRODES and GFCL) and estimated a range of deforestation
Transparência Pública (CGU/ Transparência Pública 2015). impacts between 2000 and 2010. The study found that indigenous lands
were effective in avoiding deforestation, but that this impact decreased over
Additionally, local government expenditures for Indigenous Territories time between the first and second half of the decade due to a decrease in
were also included in community forest establishment and community- deforestation rates on unprotected forest parcels in the Amazon.
28 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
Table A1 | National and Local Government Expenditure Data for Indigenous Territories in Brazil (US$/ha 2015)
Based on these two studies, the Benefit-Cost Analyses for Brazil assumes the by the carbon-storage value, to estimate the difference between carbon stor-
following deforestation rates (Table A2): age (above- and below-ground) that is possible in a hectare of intact forest
versus a hectare of deforested land. The difference is estimated at 120 tC/ha
Table A2 |Deforestation Rates for the Benefit-Cost (see Table A3). The deforested area is assumed to be degraded and no longer
in use, so the starting area for subsequent years is equal to 1 hectare minus
Analyses for Brazil the area deforested for the policy scenario. The total annual value of carbon
stored is then multiplied by the social cost of carbon value of $41/tCO2 (or
$149/tC).
YEARS YEARS YEARS
1–4A 5–9B 10–20C
(%) (%) (%) The total benefits and costs are then multiplied by the total area of
Indigenous Territories in Brazil, to estimate Amazon-wide benefits.
Average annual deforestation rate— 1.45 0.80 0.26
no-policy scenario
Guatemala
Average annual deforestation rate— 0.17 0.03 0.02 The costs of tenure security and establishment; community forest establish-
policy scenario ment; and community forest management, operating, and monitoring are
Deforestation impact 1.28 0.77 0.24 based on domestic and foreign investments in the MBR and community
concessions between 1989 and 2005, as shown in Table A4. USAID appears
Sources: to have contributed the most during this period, but other funders include the
a. Nepstad et al. (2006) estimate from 1997–2000 Guatemalan government, KfW Bankengruppe (German Development Bank),
b. Average estimate from Nolte et al. (2013) using value from 2001–2005 using PRODES Inter-American Development Bank, the ICCO Cooperation, Ford Foundation,
dataset and value from 2000–2005 from GFCL dataset and Scandinavian countries. Bray et al. (2008) estimate that between 20 per-
c. A verage estimate from Nolte et al. (2013) using value from 2006–2010 using PRODES cent and 40 percent of USAID funding was used to establish the community
dataset and value from 2005–2010 using GFCL dataset concessions. Based on this finding, the analysis assumes that 30 percent of
total funding ($131 million) was used for community concession establish-
The deforestation rate for each scenario is multiplied by a starting area ment and ongoing maintenance expenses. Using this number, an average an-
of 1 hectare to estimate the area deforested in year one. The difference in nual value per hectare of $4 was calculated, assuming the investments apply
deforested area between the policy and no-policy scenario is the area of to the original 12 concessions, or 400,829 hectares. The analysis assumes
avoided deforestation. The area of avoided deforestation is then multiplied that investments continue to be made at this rate into the future.
Note: Carbon storage estimates per forest condition category for each area were calculated at WRI using the following GIS datasets: WWF 2001; Potapov et al. 2011; and Saatchi et al. 2001.
Table A4 | Domestic and Foreign Investments in the MBR and Forestry Concessions in Guatemala, 1990–2005
The analysis assumes that costs covered by these domestic and foreign FSC annual audit, membership, and compliance costs are based on data
investments include: provided by Carrera et al. (2006) and equal $0.29/ha/yr. Community and
▪▪ FSC assessment costs (Carrera et al. 2006) Timber and non-timber production costs are based on data from Stoian
(2015) for three concessions (Chosquitan, Carmelita, and Cruce a la Colora).
▪▪ ACOFOP’s budget (Rosales 2010) Stoian estimated that production expenses are equal to roughly 87 percent of
total revenues from timber and non-timber sales.
The analysis further assumes that costs not covered by these investments
Carbon-mitigation benefits are calculated using the same process as for
include:
Brazil. The deforestation impact is based on matching analysis results from
▪▪ FSC annual audit, membership, and compliance costs (assumed to be
paid for by communities)
Blackman (2015). Blackman’s matching study of deforestation in the MBR
used 2001-2006 forest loss data and controlled for land characteristics in
order to isolate the actual effect of different management regimes. The study
▪▪ Community and CONAP monitoring and enforcement costs found that the average predicted probability of deforestation in matched
unprotected lands outside of the reserve was 2 percent per year. This
▪▪ Timber and non-timber production costs value is assumed to be equal to the counterfactual annual deforestation
30 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
Table A5 | Timber and Non-Timber Product Sales from Community Concessions in the MBR in Guatemala
COMMUNITY CONCESSION TIMBER PRODUCT SALES ($) NON-TIMBER PRODUCT SALES ($)
rate. Blackman’s model predicts that the average deforestation rate per year Carbon-storage value:
▪▪ For
inside community concessions is approximately 0.44 percent per year, so
the deforestation impact (the difference between the counterfactual and the lower-bound estimate, the carbon-market value is based on the
community concession deforestation rates) is 1.56 percent per year.15 value communities might expect to receive in a voluntary market of $6/
tCO2—based on the average historical carbon-market price from the 2014
The carbon-storage value is based on the difference in above- and State of the Voluntary Carbon Markets Report from Forest Trends (Peters-
below-ground biomass found in intact forest versus that found in Stanley and Gonzalez 2014).
partially deforested and deforested areas (average value). The value is
estimated at 75 tC/ha (see Table A3). ▪▪ reflects
For the average estimate, a SCC value of $41/tCO is used that better
2
the global benefits of carbon mitigation. This value is based on the
Timber and non-timber revenues are based on data provided by ACOFOP most recent United States Interagency study (Interagency Working Group
(2015) for 2007–2015, as shown in Table A5. on Social Cost of Carbon 2015), which recommends that U.S. government
agencies use this value in their calculations for the year 2015. While the
While ACOFOP (2015) reports that tourism generates revenues of $37,500 interagency report shows that SCC values increase from 2015 through
per year for two communities within the community concession area, the 2050, the SCC value is held constant over time to be more conservative.
production expenses associated with tourism, and who incurs these costs,
are not clear. As a result, tourism benefits are not included in the Benefit- ▪▪ For the upper-bound estimate, a higher SCC value of $119/tCO is used,
based on the 95th percentile upper-bound SCC value recommended by
2
LOWER BOUND YEARS 1–4A (%) YEARS 5–9B (%) YEARS 10–20B (%)
Source:
a. Based on Nepstad et al. (2006)
b. Based on Nolte et al. (2013)
NPV PER HECTARE ($/HA) TOTAL NPV (MILLION $) CARBON MITIGATION COST ($/TCO2)
DISCOUNT RATE
2% 6% 10% 2% 6% 10% 2% 6% 10%
Lower 132 115 102 14,686 12,750 11,303 1.12 0.85 0.69
Average 1,743 1,454 1,254 193,815 161,682 139,385 0.52 0.39 0.31
Upper 5,522 4,544 3,875 613,886 505,165 430,861 0.29 0.22 0.17
32 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
Table A11 | Benefit-Cost Analyses Results for Guatemala Including Sensitivity Results
34 |
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The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
ENDNOTES
1. While we consider the cost data presented to be representative of tenure 10. Carbon-storage estimates per forest condition category for each area
establishment and maintenance costs, the data are limited. For example, were calculated at WRI using the following GIS datasets: WWF 2001.
the Brazil analysis does not include tenure-establishment costs, so “Ecoregions.” Available at: http://worldwildlife.org/biomes; Potapov, P.,
the costs presented will be an underestimate. For Guatemala, there L. Laestadius, and S. Minnemeyer. 2011. “Global map of forest condi-
are no detailed inventories of funding for the MB (and specifically, the tion.” Washington, D.C.: World Resources Institute. Available at www.
community concessions), especially for years after 2005. Additionally, wri.org/forest-restoration-atlas; and Saatchi, S.S., N.L. Harris, S. Brown,
production expenses for timber and non-timber extraction were available M. Lefsky, E. Mitchard, W. Salas, B. Zutta, W. Buermann, S. Lewis, S.
only for three concessions and may overestimate these costs. As a result, Hagen, S. Petrova, L. White, M. Silman, and A. Morel. 2011. “Benchmark
the cost estimates are uncertain. The sensitivity analysis described in the map of forest carbon stocks in tropical regions across three continents.”
paper’s Appendix was designed to address these uncertainties. Proceedings of the National Academy of Sciences (108)24: 9899–9904.
2. Available from <http://downloads.ibge.gov.br/downloads_geociencias. 11. In a benefit-cost analysis, SCC can be interpreted as the value of avoided
htm>; Download date: 2013 climate damages at the margin or Marginal Damage Cost (MDC)—in
other words, a marginal benefit to the society—in association with one
3. Available from <http://www.funai.gov.br/index.php/shape>; Download
tonne CO2 emissions reduction, to be compared with Marginal Abate-
date: July 2015
ment Cost (MAC), which is derived from the global MAC curve that
4. As of 2015, two concessions have been cancelled, one suspended, and aggregates the costs of different technologies to reduce one tonne of
one suspended but later reinstated (Hodgdon et al. 2015, Rodas et al. emissions (Ding 2011; Pearce 2003). If MDC and MAC curves are pre-
2014). Concessions can be revoked if the community does not follow its cisely defined, then the estimated carbon price (i.e. the interplay between
management plan or lacks operational or financial sustainability (Hodg- the MDC and MAC curves) shall indicate the social optimum level of
don et al. 2013; Gretzinger 1998). All cancelled or suspended community emissions reduction control (Perman et al. 2003).
concessions experienced a similar rapid increase in population and
12. For Brazil, the deforestation impact is assumed to decrease over time
turnover, as well as rampant illegal land appropriations affecting between
based on evidence from Nepstad et al. (2006) and Nolte et al. (2013).
30 percent and 50 percent of the concession area. Additionally, these
For both Brazil and Guatemala, the area to which carbon-storage benefits
concessions lacked a historical tie to the land (Radachowsky et al. 2012).
can be applied shrinks over time as deforested area is assumed to be
5. Ecosystem services valued included food, water, raw materials, genetic converted to degraded area.
resources, medicinal resources, improvement of air quality, climate
13. A 6 percent discount rate is the average discount rate based on Cubbage
regulation, regulation of water flows, waste treatment/water purification,
et al.’s (2013) finding that forestry studies tend to use a discount rate
erosion prevention, and recreation and tourism.
between 2 percent and 10 percent.
6. Ecosystem services include carbon benefits and 15 other services
14. A co-owner or comunero is a person with land rights and who is a
including water regulation, pollination, and food production.
landowner in common with other comuneros. Comunero status is legally
7. OECD (2013) defines collective action as “action taken by a group to recognized by presidential decision or judgment of the corresponding
achieve common interests.” Agrarian Court (Tribunal Unitario).
8. This value does not represent a net revenue number because the staffing, 15. This assumption was verified by Dr. Allen Blackman in a personal com-
administrative, and other costs associated with ecotourism are not clear. munication on August 4.
9. For both countries, the matching analyses (Blackman 2015, Nolte et al.
2013, and Nepstad et al. 2006) found that, whereas deforestation rates in
Brazilian and Guatemalan community forests are lower than in matched
areas without tenure security, they still exhibit some deforestation.
We would like to acknowledge those involved with graphic design, editing Helen Ding is an environmental economist with the World Resources
and layout as well as communications and outreach: Hyacinth Billings (WRI), Institute’s Economics Center, USA.
Michelle DeCesare (WRI), Carni Klirs (WRI), Emily Matthews (WRI), Michael
Oko (WRI), Emily Schabacker (WRI), Madaleine Weber (WRI), and Lauren Contact: helen.ding@wri.org
Zelin (WRI). We also receive communications support from Burness, a global
communications firm that supports nonprofit organizations. Piotr Rozwalka is a graduate student in economics at the Stockholm School of
Economics, Sweden, and a Wallenberg Fellow at Georgetown University, USA.
For this working paper, WRI is indebted to the Climate and Land Use Contact: prozwalka@gmail.com
Alliance, Good Energies Foundation, Ministry of Foreign Affairs of the
Netherlands and Irish Aid for their generous financial support. Iván Zúñiga is the Forest Policy Coordinator at the Mexican Civil
Council for Community Forestry (Consejo Civil Mexicano para la
This working paper represents the views of the authors alone. It does not Silvicultura Sostenible), Mexico.
necessarily represent the views of the World Resources Institute or its
Contact: izuniga@ccmss.org.mx
funders.
Matthew Witkin is a student in Environmental Studies at Middlebury
College, USA.
Contact: mattwitkin@gmail.com
38 |
The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala
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