public private partnership in forestry management

Ani Adiwinata Nawir (CIFOR) presentation in ‘Course on Governance of Landscapes, Forests and People’

(Amazon Room, CIFOR Campus Bogor, 27 August 2015)This PPT is protected by CIFOR Intellectual Property Right Policy,

proper citation is required for any use(s) partially or all of the information provided here

Public-Private Partnership in Forestry Management:Case of partnership scheme in forestry management

in Indonesia

Ani Adiwinata Nawir, PhDSocioeconomics Scientist, Forests and Livelihoods Research (LIV Portfolio)

Center for International Forestry Research (CIFOR)

Presented in Course on Governance of Landscapes, Forests and PeopleAmazon Room, CIFOR Campus Bogor, 27 August, 2014

Scope of presentation:

1. Public-Private Partnership (PPP) –some understandings

2. Why does Public-Private Partnership Scheme become an option?

3. Effectiveness of the partnership4. Trade-offs & challenges to consider5. Ensuring the effectiveness of

public-private partnership at the landscape level

1. Public-Private Partnership (PPP) – some understandings

1. There is no overarching definition for public-private partnerships:PPP is an umbrella notion covering a wide range of economic activity and is in constant evolution(Source: Speech by Commissioner Frits Bolkenstein, DG Internal Market)

2. PPP is the private sector’s involvement in developing/managing facilities & services for the economy & society to function (Yescombe, 2007)

3. Such partnerships are characterized by the sharing of investment, risk, responsibility and reward between the partners.

4. PPP ≈ Privatization 5. More common in infrastructure development (e.g. roads, public water

facilities)6. Less developed in natural resources management (including forests)

TFA 2020 was catalyzed by The Consumer Goods Forum (CGF) commitment to mobilize resources within their respective businesses to help achieve zero net deforestation by 2020.

TFA 2020 is engaging with governments around the world, a range of civil society organizations active in both producer and consumer nations, smallholder farmers and indigenous representatives and multinational corporations (Source:http://www.tfa2020.com/index.php/about-tfa2020)

Other initiatives: Responsible Business Forum, & TEEB Business Coalition

Example:Tropical Forest Alliance (TFA)

New Buzzwords: Public-Private-People Partnership

Source: Presentation at Tropical Landscape Summit by Felipe Calderon–Former President of Mexico and Chair, Global Commission of the Economy and the Climate, 2015

Presenter

Presentation Notes

Tropical Forest Alliance: One of the example P4 initiative at the global level; and other initiatives include: Responsible Business Forum, TEEB Business Coalition

http://www.tfa2020.com/index.php/about-tfa2020

Case of community-company partnership scheme in forestry plantation management

One of the strategy for forestry plantation developmentAlternative mechanism to

acknowledge community rights

Access to benefits transferred from commercialised forestry management based on contract with clear responsibilities and rights

Cooperative

Alternative to: resolving conflicts securing wood supply strategy for risk management

Company

State

Contract agreement

Presenter

Presentation Notes

For different reasons, key stakeholders of forestry plantation are now seeking an alternative in forest management to address social concerns by trying to accommodate more involvement of communities in the forest management


(1) An alternative approach in CF responding to governance failures

in forest management

Negative ecological impacts &

socioeconomic benefits disparity:local community

& industry

Sharp increases in fuel prices

Sustainable development paradigm and the

Sustainable Livelihoods Approach (SLA)

Common Property Resource Management

Regime

Collaborative management

concept

Decentralisation & devolution policies

Economic globalization through trade liberalisation

‘Forest for people’Objectives:

Releasing the pressures on natural forests and meeting the peoples’ subsistence needs

Focused onafforestation programs

The balance between conservation &

development objectives for sustainable forest

management

Focussed on livelihood strategies

Shift from passive to active participation: combining collaborative and adaptive management

Management principles have not been robust enough to

face new challenges: economic globalization

Collective actions through collaborative management (co-

management)

Diversity of income generation options: Payment for Environmental Services (PES) & REDD

Key d

river

s infl

uenc

ing

the ev

olving

appr

oach

esEv

olving

appr

oach

es

1970s 1980s 1990s 2000s - presentPeriods

Climate Change & REDD+ Regimes

Presenter

Presentation Notes

The current CF system has resulted from more than three decades of an evolution of practices and conceptualisation of the relationship between people and forests, specifically under the changing conditions within the communities and external influences. There are at least five key aspects that have shaped the direction of and approaches in the current CF. First, during the 1970s, there was a common understanding of the counter-productive impacts of industrial-based forest management based on logging, which resulted in ecological destruction and gaps in socioeconomic benefits for local communities Second, during the 1980s, there was a conceptualisation of the Sustainable Livelihoods Approach (SLA) as the mainstream of the development policy agenda driven by the Brundlant Commission Report in 1987 Third, during the 1990s, there was a reformulation of the Common Property Resource Management Concept based on Hardin’s ‘tragedy of the commons’ The last one during the late 1990s to 2000s and present, the decentralisation and devolution policies have influenced forest management since the late 1990s, in responding to increasing illegal logging and uncontrolled deforestation due to the failures of centralised government-based forest management And fifth, during all periods, the international donor agencies, such as WB (World Bank) and FAO (Food and Agriculture Organization of the United Nations) have always provided financial and technical assistance for community-based forest management programmes Important lessons learnt: limited community participation & exclusive rights Defined externally by all stakeholders but not local communities Benefits focus mainly on natural forest-based products for household subsistence, compared to rights for private and state-owned companies The slow pace of community empowerment efforts compared to the rapid development of the globalized economy & commercialized market Implemented as the last option in managing the forests and improving the forest condition, mainly aims to enforce the state property status: E.g. reforestation programmes with limited access to the end benefits Nevertheless, the CF movement gained voices for communities’ greater access & rights to utilise the resources in the 1980s, �& stimulated by the shift towards decentralisation & devolution policies in 1990s

Implemented in various forms to involve communityManagement

of forestry resources

Types of control or ownership of resources

Private Communal State

Communal

Private lands organised by community institutions

Communal on community lands

State land allocated for community-based forestry

projects (e.g. reforestation projects)

Private

Privately managed forestsaround households (e.g. farm forestry)

Privately-managed on community lands

(e.g. Customary land in Borneo: tembawang)

Public land allocation schemes to be individually managed

Co-management

Co-management on privately-owned lands

(e.g. outgrower schemes)

Co-management on communal lands

(e.g. Joint Forest Management)

State lands allocated to community group

(e.g. CBFM in Nepal & the Philippines)


(2) As an approach in conflict resolution

Conflict management cycle

Sumber: Yasmi et al., 2010

The dynamics of tenurial conditions behind the partnership scheme initiatives (case of Indonesia)

Company right: state-nested systemCommunity partner:

Company-nested system

Commercialization: towards more market-oriented production processes

Globalization: a close association between ‘global’ and ‘local’ or ‘glocalization’ (Robertson,1995 in Haan, 2000)Promoted as a way to reduce poverty bycreating new niche markets and potential buyers of scarce forest products: multilateral agreements – AFTA, NAFTA

2. Why does Public-Private Partnership Scheme become an option?:(3) Empowering (community bargaining power) in facing challenges under

globalized and commercialized economics - so can benefit local communities

Direct and indirect land use changes driven by foreign companies’ investments in agricultural and forestry plantations: Moratorium in Indonesia: Oil palm companies look for lands in new regions

Source: Nawir et al., 2011

CF management principles have not been robust enough to face the new challenges coming from trade liberalisationThe slow pace of development for community empowerment, communities involved in CF do not have: adequate management and financial capacity the business knowledge and skills required to deal with

international investors and tradersImpacts of globalisation & trade liberalisation – which partnership with

company might be crucial local products cannot compete with imported mass-produced

products a drop in prices and profits received by local producers; increased pressure on forests:

they have to switch to unsustainable practices to compensate the decreasing returns from the drop in price and profits

Bundle of rights Ownership position

Owner Proprietor Claimant Authorised user Authorised entrant

Access √ √ √ √ √

Withdrawal √ √ √ √

Management √ √ √ √

Exclusion √ √

Alienation √

State forests Public-Private Partnership

Scheme

Common cases

3. Effectiveness of the partnership: Bundle of rights

Collaborative arrangements Relevant schemes 1.

A pure state-nested system, with the community rights granted

directly by the state

Community-based forest management schemes

inside state forests

2.

Company is part of a state-nested system and community is one

layer down, embedded in rights granted for the company

Community-company

partnership scheme inside state forests

3.

An exchange system between company and community

Community-company

partnership scheme on household-owned lands (outside state forests)

Notes: S-State, Comp-Company, and C-Community. Sources: Analysed from case studies using the framework adapted from Carlsson and Berkes (2005).

S

C

S

C

Possible co-arrangements under partnerships

Categories of land status Requirements and implications for rights assurance 1. Communal land belongs to the

village (including adat lands, but not tembawang b)

• Community members respect the land status as required by adat or customary rules

• May not be administered within the land status categories according to state law

2. Individually-owned land based on paper from the Head of Village on land status or SKT- Surat Keterangan Tanah

• Approved by the Head of the Village and respected by communities in neighbouring villages

• Can be upgraded to obtain land certificate from the office of National Land Agency (BPN – Badan Pertanahan Nasional) at provincial level

3. Individually-owned land based on paper from the Head of Dusun (sub-village) or SPH-Surat Pengakuan Hak

• Approved by the Head of Dusun (sub-village) and may be respected between villages

• May be upgraded to obtain land certificate with additional administration procedures

4. Individually-owned land based on land certificate

• Legalised land status and approved by all levels of government authorities

• Respected by all parties 5. Paper on right over

transmigration areas

• Secured land status under government resettlement/transmigration program

• Respected by all parties

Challenges for effective bundle of rights: a range of land status affecting the rights assurance

(Case of Indonesia)

Introducing the programme

Ground survey & land delineation

Communities submit the proposal to company

Verifying the status of land legality

Signing the contract agreement

Implementation(Land preparation, planting, maintenance & thinning)

Feasibility study

Processes in partnership development: important in clarifying land boundaries

Clarifying land boundaries

Contractual agreement: rights & responsibilities(Case of partnership scheme in forestry plantation mgm, Indonesia)

Companies Communities (as a group)Responsible for managing lands and plantation, including paying expenses for land clearing, planting, and maintaining plantations

• To form a Forest Farmer Co-operative• Co-operative members bounded by a contract

agreement• Will not prevent company from having access to the

areas managed under partnership schemes

Companies Communities (as a group)• Has full rights and access over the

land under the period of contract• Right to harvest planted trees• Decide the royalty under benefit-

sharing agreement

• First priority to be employed as a labourer • Receiving incentives: land value & infrastructure• Royalty paid to community partners based on total

volume or weight of timber harvested, varies based on distance and type of land)

• Benefit from community development programs: rubber, agroforestry, native species, & credit facilities

Responsibilities

Rights

4. Trade-offs & challenges to consider

Comparison of the proportions of the different cost components: partnership scheme and industrial plantation (BAU) – Case of Indonesia

Cost components

Proportion of cost

Partnership schemesIndustrial plantation

A B

1. Investment 17% 23% 22%

2. Plantation development costs 11% 51% 59%

3. Timber harvesting and transporting 7% 1% 1%

4. Overhead 37% 23% 17%

5. Transaction costs 29% 2% -Total 100% 100% 100%

File: Compilation Jambi & Sanggau 220611.xls - Comparison Kemitraan & HTI (2)

Example of high transaction costs: Requirements for harvesting & transporting timber applied to

partnership schemes ≈ industrial plantations

Transit logyard/logpond

Logs landing Logyard/logpond Felling compartment

Concession areas

FA-FKB

FA-FKB

FA-FKB

DKB-FA (Logs inspection &

verification register)

PSDH Payment

LHP (Felling report)

FA-FKB

RKT

(Annual Work plan)

LHC (Timber cruising report)

Wood based primary industry

5. Ensuring the effectiveness of public-private partnership at the landscape level:

(1) Identifying & dealing with the complexities of problems

Upstream forests: honey trees (Boan:Tetramales nudiflora)

Downstream area: City of Sumbawa

Sumbawa island

Conserving watersheds: upstream forestsMain program of FMU in eastern Indonesia (Sumbawa) - 32,776 Ha

(Limited production forest – 55%, production forest – 23%, protected forest – 22%)

Main watersheds

Presenter

Presentation Notes

Sumbawa district as our case study site is located in Sumbawa island In Sumbawa district, watershed is the specific ecosystem that has been the focus of local government activities by conserving the upstream forests – the red line in the map shows the main river passing the FMU area. In the upstream forests, one of the conservation program is focussed on maintaining the honey trees, such as Tretamales sp. That is also important for income generation for local people, so they can produce forest honey commercially – at least 3 times a year

(1) Managing protected forest while enhancing livelihoods

(4) Rehabilitating degraded area while enhancing livelihoods

District capital city:Sumbawa Besar

(3) Illegal logging in state-own company rehabilitated forests

(2) Forest encroachment

Presenter

Presentation Notes

Firstly, at the upstream: how protected forest can be maintained for ensuring the carrying capacity of the watershed in fulfilling the water needs of the community along the river and in the downstream area of district capital city. Secondly, forest encroachment due to high needs for land by local community for cultivating food and cash crops. Thirdly, forest encroachment and illegal logging in state-own company rehabilitated forests Lastly, due to high area of degraded area, there is a greater challenge on how rehabilitating this area while enhancing livelihoods.

(2) Dealing with competition with other investment alternative, such as oil palm plantations developed under partnership scheme

Tree growing partnership schemes Oil palm plantation partnership schemes

Sources of vulnerability for land owners:Low productivity and quantity harvestedTimber buying prices are set under market price Fires – partnership scheme can reduce the risksTheft (illegal logging in planted acacia)

Sources of vulnerability for land owners:High risk of losing the land partiallyInternational price fluctuationsToo many brokers/middle-menImproper post-harvesting treatment - low buying

price Over-repayment of credit by land owners due

lack of transparency mechanism for records on paid credit

Companies also bear some risks due to:Paying high transaction costsAbandoned tree grower commitments - due to

more interesting economic optionsSocial conflicts hit timber plantation companies

harder than oil palm companies

Companies also bear some risks due to:Paying high transaction costsInternational price fluctuations & boycott by

international consumersIncreasingly low quality of products – no

company assistance, mainly after credit payments finish

Risks should be communicated to prospective community partners

Household income portfolio

Timber uses & trading

Privately-owned lands

Protected forestsor nature reserve

Domesticated NTFPs: e.g. candle nuts

Policy regulating access to utilize the forests

(Limited) extractive NTFPs: honey

Timber management permit

Verifying timber legality

NTFPs Processing & Market

Timber processing & marketing

Transporting timber

Transporting NTFPs

Regulated locally based national policy

Customary norms & rules

Regulated locally based national policy

(3) Effectiveness at the landscape level: opportunities for scaling-upIntegrated along the supply chain (production, marketing & processing

(4) Ensuring the effectiveness at the landscape level: A framework for strengthening policy and economic incentives

(Case of community-company partnership scheme for timber plantation development in Indonesia)

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