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Forests:Trackingtheeconomiccausesofdeforestation

Forestaccountingrevealedthatover95%ofdeforestationhappenedoutsideofthecontrolofgovernment institutions and that the use of fuelwood has a higher impact on forests thanpreviouslythought.

TableofContentsWhatisaforestaccount?..................................................................................................................................1What’sthestatusofforestsinGuatemala?...............................................................................................1WhatisthemonetaryvalueoftheGuatemalanforests?....................................................................3Howareforestproductsusedintheeconomy?.....................................................................................5Whatistheimpactofdepreciationofforestsoneconomicmeasures?.......................................8Finalremarks......................................................................................................................................................10

Whatisaforestaccount?The forest account of Guatemala is a framework that explains the relationship betweenforestsandtheeconomy.Itputstogetherinformationonthestatusofforestsandeconomictransactionsassociatedwiththeminasystematicmanner.Itrevealstherealcontributionofforeststothenationaleconomyandthepossibleimpactsthattheeconomymighthaveonthewell-beingofforests.

More specifically forest accountingmeasures the stocks of the national forest inventoryand the flowsassociatedwith it; it identifies the industriesandstakeholders thatbenefitdirectly or indirectly from forests; it records expenditures made by governmentinstitutions in order to mitigate damages to and restore the well-being of forests; andextendmacro-economic aggregates and indicators in order to reflect the depreciation oftheforestresources.

What’sthestatusofforestsinGuatemala?Inordertoanswerthisquestionweturntothechangeofforestlandstockincomparisonwith1970andtoanindicatorofthischangerelativetopopulation(forest landstockpercapita).Asforchangesinlandstock,by2005Guatemalahadlostcloseto40%ofits1970availability. More illustrative is the fact that due to high population growth rates,availabilityofforestspercapitahavedroppedinarelevantway.

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Figure1.Landstockchangefrom1970to2005(percentages,1970=100)

Another important indicator is the rate of deforestation, which helps to measure theimpacts of government policies on sustainable resource use. In the case of Guatemala,absolutedeforestationratesarestablebetween60,000and70,000hectaresperyear.Thisrepresentsanannualstocklossofabout1.5%peryear.Thehighestsince1950,andevengreater than1970s records,whenpopulation reallocationpolicies pushed for aggressivechangesofforestlandintoagriculturalland.Thatrateseemshighwhenputincontextwithothers from Latin America from the 1990-2000 decade, such as Brazil (0.4%), Bolivia(0.3%),Colombia(0.4%),Ecuador(1.2%),andMexico(1.4%).

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Figure 2. Deforestation rates 1950-2005 (thousands of hectares and percentages of stockrelativetothepreviousyear)

Thereareothercausesofreductionofforestvolume,suchastimberandfuelwoodselectiveextraction, de-branching, forest fires, plagues and diseases, as well as natural mortality.Uncontrolled logging and selective fuelwood extraction is one of the main reasons forforest volume reduction. By forest account estimates more than 95% of forest productflowsinthecountry(30.7millionm3)happenoutsidethecontroloftheforestgovernmentauthorities (National Institute of Forests—INAB—and theNational Council for ProtectedAreas—CONAP—).Forestaccountingestimatesattribute76%of thatuncontrolled forestuse to fuelwood extraction and24% to timber extraction.Up to two thirds of all timberprocessedbywoodprocessingindustriesisestimatedtocomefromuncontrolledsources.

Theriseuncontrolledtrafficofforestproductsisconsistentwith(i)alackofinstitutionalcapabilities for control, (ii) an ineffective control system for the transportation of forestproducts, (iii) the lack of an effective transportation permit issuing system, (iv) obscuremarketpracticesthatoperateunderthelegalumbrellaoffamilyforestallowances,and(v)alackofrawmaterialsorigincontrolwithinthewoodprocessingindustries.

WhatisthemonetaryvalueoftheGuatemalanforests?Theforestaccountassignedmarketvaluationstostandingtimberbetween2001-2006.Inthat period the value of forests went from 56,351.9 million quetzales (GTQ) to 83,467million. This is a behavior more consistent with non-renewables than with renewableresourcesandhintsthatforestsmightbeusedunsustainably.Undersustainablepractices,forestregenerationshouldprovideconstantavailabilityatstableprices.

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Evenwhenvaluating at constantpricesof 2001,monetary valuesof forests increased inspiteofthereductionoftheforeststock,whichwascloseto76millionm3between2001and2006.

Figure3.Forestvolumeandmonetaryvalueof forestassets for theyears2001-2006(cubicmetersandvaluationatconstantpricesof2001)

If we contrast forest growth with reduction due to either controlled or uncontrolledlogging, it is easy to see that the formerdoesnot compensate for the latter. In2006, forexample,thatresultedintheloss(ornetstockvariation)ofGTQ2,076million.Ontheotherhand,uncontrolledloggingrepresentedmorethanGTQ2billion,whichexceedsthevalueofcontrolledloggingbyfar.

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Figure4.Foreststockvariationinmonetarytermsfortheyear2006(millionGTQ)

Howareforestproductsusedintheeconomy?Intermsofvolume,householdsarethelargestusersofforestproducts,using22.6millionm3,whichrepresentedabout67%of totalnational consumption.Mostof thatuse (92%)correspondedtofuelwooduse.Theremainderismostlyusedbythesawmillindustryandtheproductionoffurniture.

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Figure5.MainusersofforestgoodsinGuatemalain2006(percentages)

On the other handwe have total supply of forest products inmonetary terms. Primaryoutput contributes 34% of total supply of wood products, with a strong component ofloggingproductsandfuelwood.

Historically, non-wood products have contributed less to total supply and in 2006 theyrepresented about a billion GTQ. In spite of the touted idea that non-wood productsrepresentahighpotential,inGuatemalathismarketisstillsmall.

Secondary output, consisting of sawn wood and furniture is responsible for the largestnumbers in totalsupply. In2006, theirvaluereachedGTQ8.2billion,correspondingtoalittleover40%oftotalsupplyofforestproducts.

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Figure6.Supplyofforestproductsin2006(percentages)

Demand of primary output of forest products (wood products, non-wood products,wildanimals and their products) is linked to final household consumption. Intermediateconsumptionorthatusedasinputsbyotherindustries,representsabout40%,andexports12%oftotaluse.Thesenumbersarehighlyinfluencedbytheuseoffuelwoodasasourceofenergyandbyasmallforestindustrywithlittleincidenceinexports.

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Figure7.Demandofforestproductsin2006(percentagesoftotaluseatpurchaserprices)

Whatistheimpactofdepreciationofforestsoneconomicmeasures?Oneimportantfindingoftheforestaccountisthattherealcontributionofforestproductsto the national economy circles around 3.15% and 2.57% for the years 2001 and 2006,respectively;whilenormalGDPmeasuresattributeonlycontributionsof1.02%and0.93%inthesameyears,respectively.

Anotherimportantfindingisthatthevalueofresourceexhaustion(oritsdepreciation)isequivalent to 0.9% of GDP for the year 2006. What this implies is that if we take intoaccount the forestry sector by itself, total contribution to the economywouldbe zero inpracticalterms.

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Figure8.Contributionofforeststotheeconomyin2001and2006(percentages)

WhenadjustingGDPforthedepreciationofforests,weseeonlyasmallreductionofabout1%,whichisevidenceofasmallover-estimationofthetrueperformanceoftheeconomy.Thiscouldbe larger ifunsustainableuseofothernaturalresourceswere includedinthiscalculation.

Figure9.GDPadjustedforthedepreciationofforestsin2001and2006(percentages)

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Whencomparingthedirectvalueofdepreciationofforestswithpublicinvestmentswhichare destined to the protection and regeneration of forests it is evident that they areinsufficient to cover the depreciation that we discussed earlier; i.e. the Budget of theNational Institute of Forests—INAB—, including theNational Forest IncentivesProgram,andtheNationalCouncilforProtectedAreas—CONAP—.Forestmanagementexpenditures(currentandcapitalexpenditure)representonlyabout10%ofthedepreciation.

Figure 10. Comparison between depreciation of forest resources and forest protectionexpenditurein2006(percentages)

FinalremarksWe have introduced the forest account of Guatemala; a framework that explains therelationshipbetween forestsand theeconomy,bringing together information inorder toreveal the real contribution of forests to the national economy and the possible impactsthat the economymight have on the well-being of forests. Some of themost importantfindingsinclude:

• In 2006, Guatemala had 5,694,561 hectares of forest land, including natural forests,forestplantations,forestland,andshrubs.Thisisequivalentto52.3%ofthenationalterritoryandto66.3%oftotalforestsin1950.

• Whencontrastingwithpopulationgrowth,available forest land in2006represented0.43hectaresperinhabitant,amere16%ofthatsameindicatorin1950.

• Ofthe4,015,749hectaresofnaturalforestsin2006,55%arelocatedinsideprotectedareas. The rate of deforestation of these forests is of about 1.6% annually, whichrepresents a net loss of 73,000 hectrares per year. Over 28,000 hectares were lostinsideprotectedareas.

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• In2006thetotalforestvolumewas695281.7millionm3,valuedatGTQ83.5billionatcurrentprices.

• Logging represented29,168,397m3 andother losses1,543.6millionm3.Of this lastgroup,forestfireswerethemostimportantandrepresentedalossof1.32millionm3in2006.

• The economy used a total of 33.6millionm3 of forest products in 2006. A total of67.3%oftheseflowswereusedbyhouseholds,9.36%wereusedfortheproductionoffurnitureandotherwoodproducts,7.63%byagricultural industries,3.55%becameexportsand4.05%wasreusedbytherecyclingindustry.

• Forest accounting estimates in2006place the flowsof forestproducts at a valueofGTQ14,980.4million, of which 35.5% correspond towood products, 7.81% to non-woodproducts,0.15%towildanimals,and0.07%totourismservices.Theremaining55.*% corresponds to the wood processing industries. Wood waste was valued at0.21%oftotalwoodflows.

• Of total forestproduct flows,53%wasusedby finalconsumption,35%wasusedasinputsbyotherindustries,and12%becameexports.

• EnvironmentalprotectionexpendituresforforestsreachedGTQ276.4million,whichisequivalenttoonly12.82%ofwhatisrequiredtorestoreforests.