the economic costs and benefits of securing community forest tenure
Transcription
the economic costs and benefits of securing community forest tenure
WORKING PAPER THE ECONOMIC COSTS AND BENEFITS OF SECURING COMMUNITY FOREST TENURE: EVIDENCE FROM BRAZIL AND GUATEMALA ERIN GRAY, PETER G. VEIT, JUAN CARLOS ALTAMIRANO, HELEN DING, PIOTR ROZWALKA, IVAN ZUNIGA, MATTHEW WITKIN, FERNANDA GABRIELA BORGER, PAULA PEREDA, ANDREA LUCCHESI, KEYI USSAMI EXECUTIVE SUMMARY For Indigenous Peoples and communities around the globe, forests provide food, shelter, income, and employment. Forests may also be historically, culturally, and spiritually significant to the people who have lived in and around them for generations. But, while Indigenous Peoples and communities occupy and use a significant portion of the world’s forests, only a small fraction of community forestland is recognized by national law, and even less is protected and securely held. In 2013, Indigenous Peoples and communities held legal rights to only about 15.5 percent of the world’s forests (RRI 2014). Tenure security—defined as the certainty that a community’s land rights will be recognized and protected if challenged—is linked to numerous benefits, both for communities and for society more broadly. Evidence is growing that tenure-secure community forests are associated with avoided deforestation and other ecosystem-service benefits. There are also economic and social benefits connected to communal management. Of course, securing community forest tenure also involves costs. A key question for policymakers and funding agencies is how do these benefits and costs compare? The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala addresses this question through benefit-cost analyses of community forest tenure in Brazil’s Indigenous Territories and Guatemala’s Maya Biosphere Reserve. Although data limitations prevented a full accounting of all benefits and costs, the results of the analyses suggest that, in the study areas, the economic benefits of securing community forest tenure outweigh the costs. CONTENTS Executive Summary.......................................................1 Section 1: Introduction..................................................5 Section 2: Background..................................................6 Section 3: Study Area....................................................9 Section 4: T he Costs of Community Forest-Tenure Security.......................................................11 Section 5: T he Value of Community Forest-Tenure Security.......................................................14 Section 6: Economic Analysis Method and Results.....18 Section 7: Results and Conclusions.............................23 Annex..........................................................................25 Appendix.....................................................................28 References...................................................................34 Endnotes.....................................................................37 Working Papers contain preliminary research, analysis, findings, and recommendations. They are circulated to stimulate timely discussion and critical feedback and to influence ongoing debate on emerging issues. Most working papers are eventually published in another form and their content may be revised. Suggested Citation: Gray, Erin, Peter G. Veit, Juan Carlos Altamirano, Helen Ding, Piotr Rozwalka, Ivan Zuniga, Matthew Witkin, Fernanda Gabriela Borger, Paula Pereda, Andrea Lucchesi, Keyi Ussami. 2015. “The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala.” Washington, DC: World Resources Institute. Available online at http://www.wri.org/forestcostsandbenefits. WORKING PAPER | November 2015 | 1 Research approach To weigh the benefits and costs of securing community forest tenure, we focused our research on two tasks. First, we identified and described the benefits and costs associated with establishing and maintaining secure community tenure. Next, we conducted benefit-cost analyses that estimated the net economic benefits realizable from community forests, as well as the cost per tonne of carbon dioxide ($/tCO2) mitigation realized through securing forest tenure that, in turn, avoids deforestation. The benefit-cost analyses focus on Indigenous Territories in the Brazilian Amazon and community concessions in the Guatemalan Maya Biosphere Reserve, although we also describe benefits and costs for a community forest-enterprise operation Figure ES-1 | in Durango, Mexico in the Annex. We conducted our research over three months, relying primarily on literature reviews and expert consultations. To our knowledge, this working paper is the first analysis to develop a benefit-cost analysis model comparing the economic benefits and costs of securing community forest tenure. What are the benefits and costs associated with establishing and maintaining community forest tenure? The benefits and costs associated with establishing and maintaining secure community forest tenure vary according to country contexts. Nevertheless, we identify three general categories of benefits and four general categories of costs, shown in 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 as non-extractive benefits. Extractive benefits include timber and non-timber forest products and recreation (e.g., hunting and fishing); non-extractive benefits include climate change mitigation, water regulation, habitat and biodiversity, protection of local and regional climate systems, and tourism. Costs associated with establishing or changing the institutional and legislative framework to support community forest tenure. They include investment and transaction costs associated with legislative or regulatory changes. COLLECTIVE ACTION & CONFLICT RESOLUTION The clarification of land-use rights and roles can lead to behavioral changes by community members, which in turn can result in avoided transaction and conflict-resolution costs associated with insecure forest rights. SOCIAL BENEFITS These include benefits related to capacity-building efforts that strengthen local communities (e.g., job creation and community reinvestment in education and health programs). 2 | COMMUNITY FOREST ESTABLISHMENT COSTS Upfront or initial investment and transaction costs for identifying and securing lands as community forests, including identification, demarcation, registration, titling, and establishing forest-management plans. COMMUNITY FOREST MANAGEMENT, OPERATING, & MONITORING COSTS Annual or recurring costs associated with protecting community forest tenure; monitoring and enforcement activities on these lands to ensure rights are protected; transaction costs associated with handling disputes over community forests; production costs for timber and non-timber forest products; and recurring investments in programs or activities to support and strengthen community rights and livelihoods on these lands. OPPORTUNITY COSTS These include foregone income from alternative land uses. The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala How do the economic benefits of securing community forest tenure compare to the costs? Our benefit-cost analyses focused on the increased benefits and costs of a tenure-secure scenario compared to a tenure-insecure scenario in the two study areas. Recent analyses for both areas (Blackman 2015; Nolte et al. 2013; Nepstad et al. 2006) show that deforestation rates are lower in tenure-secure community forests than in similar areas without tenure security. When trees are left standing, carbon is stored and communities are able to extract value from forest resources. For our analyses, we considered only the benefits associated with this avoided deforestation, including carbon mitigation (for both Brazil and Guatemala) and timber and non-timber production (for Guatemala only). We estimated carbon-mitigation benefits using a social cost of carbon value of $41/tCO2, based on guidance from the U.S. Interagency Working Group on the Social Cost of Carbon (2015). We compared 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 over a 20-year period using a 2 percent and 6 percent discount rate. We also estimated the mitigation cost per tonne of CO2. Our analyses show that the estimated annual per hectare costs of securing community forest tenure are low compared to the benefits from carbon mitigation and timber and non-timber production. For Brazil, annual costs average $1.57 per hectare (ha) while carbon-mitigation benefits range from $230/ha to $38/ha per year over the analysis period. For Guatemala, annual costs are estimated at $16.85/ha while carbon-mitigation benefits range from $187/ha to $120/ha, and timber and nontimber production benefits are $12.51/ha and $0.91/ha.1 In Brazil, the net present values results (benefits minus costs) range from $1,454 to $1,743 per hectare and $162 billion to $194 billion for all Indigenous Territories in the Brazilian Amazon. We estimated the cost of carbon mitigation (per tonne of CO2 emissions removed from the atmosphere) through a 20-year investment in forest-tenure security to be between $0.39 and $0.52/tCO2 (Table ES-1). The cost-of-carbon-mitigation metric is useful for comparing climate-change mitigation measures in terms of cost-effectiveness. Table ES-1 | razil Benefit-Cost Analysis and B Cost/tCO2 Results DISCOUNT RATE 6% 2% Total net present value (US$ 2015) $161,681,533,000 $193,915,358,000 Net present value per hectare $1,454 $1,743 Mitigation cost ($/tCO2) $0.39 $0.52 In Guatemala, the net present value per hectare ranges from $1,715 to $2,280 and from $605 million to $805 million dollars for all nine active community concessions. The carbon-mitigation cost per tonne of CO2 emissions removed from the atmosphere through a 20-year tenuresecurity investment is estimated to range from $7.37 to $8.50 (Table ES-2). Table ES-2 | uatemala Benefit-Cost Analysis G and Cost/tCO2 Results DISCOUNT RATE 6% 2% Total net present value (US$ 2015) $605,368,000 $804,649,000 Net present value per hectare $1,715 $2,280 Mitigation cost ($/tCO2) $7.37 $8.50 Figure ES-2 compares 20-year present value benefits and costs (per hectare) for both countries using a 6 percent discount rate and demonstrates the large gap in values. The difference between the benefits and costs is $1,454 per hectare in Brazil and $1,715 per hectare in Guatemala. Because some degree of uncertainty is inherent in any benefit-cost analysis, we conducted a sensitivity analysis to examine how our analyses might be affected by changes in our assumptions. Specifically, we created lower-bound and upper-bound net present value estimates by varying the discount rate, the price of carbon, carbon-storage values, and other cost and benefit assumptions. Even when we used a much lower carbon value of $6/tCO2 and upper-bound estimates for costs and lower-bound estimates for benefits, the benefits of securing community tenure continued to outweigh the costs. Sensitivity analysis results are available in the paper’s Appendix. WORKING PAPER | November 2015 | 3 Figure ES-2 | 2 0-Year Present Value Comparison of Per Hectare Costs to Benefits 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 $0 $19 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. Overall Findings 1. Our benefit-cost analyses of Brazil’s Indigenous Territories and the community concessions in Guatemala’s Maya Biosphere Reserve suggest that securing community forest tenure is a low-cost, high-benefit investment that benefits communities, countries, and global society. Even when we used a much lower value of carbon ($6/tCO2), the economic benefits of tenure security outweighed the costs. 2. Community forests can generate a wide variety of economic benefits through ecosystem services and behavioral changes that support conflict resolution and social benefits. Economic valuation can enhance our understanding of the multiple benefits of community forests by demonstrating even higher net benefits. Economic valuations can also demonstrate the high value of tenure security in terms of improving forest-resource management and conservation, and help policymakers to better target policies and investments. 4 | 3. The results of the benefit-cost analyses suggest that investing in strong community forest-tenure security can be a cost-effective measure for climate-change mitigation when compared with other mitigation measures. However, while we consider the cost data representative of tenure establishment and maintenance costs for the study areas, complete data were not available. Accordingly, the mitigation-cost estimates should not be interpreted as the actual price that would need to be paid to avoid a hectare of deforestation in the study areas. Rather, they help to demonstrate the cost-effectiveness of community forests as a carbonmitigation measure. Addressing data-collection constraints could lay the groundwork for a deeper understanding of the net economic gains from community forests. Investing in improved efforts for monitoring and evaluation of community forests could be an important first step. Enhanced monitoring and evaluation could shed light on the benefits associated with improvements 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 our understanding of social investments and community conflicts—two categories of benefits and costs that are currently hard to gauge because of data limitations. Making stakeholder budgetary data more transparent would also contribute to more robust evidence regarding the costs of securing community forest tenure. Extending the benefit-cost analysis approach to other community forests around the world could also advance understanding of the economic case for secure community forest tenure. WRI is currently collaborating with local experts to extend this work to other countries in South America, including Bolivia and Colombia. This will allow for extrapolating the results to the Amazon basin. Findings, conclusions, and policy recommendations will be captured in a WRI Research Report to be published in 2016. SECTION 1: INTRODUCTION Evidence is mounting that secure community forest tenure is linked to avoided deforestation and that community forests can generate economic benefits for forest communities and society more broadly. Securing Rights, Combating Climate Change (Stevens et al. 2014) found that, in many countries, deforestation rates were significantly lower in legally-recognized and protected community forests than in forests outside those areas. It follows that tenure-secure community forests represent a vital tool for climate-change mitigation. Community forests can also generate a multitude of other benefits. Community forests with secure tenure can support sustainable forest management, which can result in numerous ecosystem-service benefits. Additionally, community forests can help society avoid costs associated with conflict, and provide social benefits in the form of job creation and community reinvestment in health and education programs (Larson et al. 2010; Sandler 2000). Yet, despite these benefits, questions remain about whether securing community forest tenure provides positive economic gains. To assess the benefits compared to the costs of securing community forest tenure—and to secure investments in protecting community forest tenure—more evidence is needed. Research Objective This Working Paper builds upon the Securing Rights report by asking, what are the costs compared to the benefits of securing and maintaining community forest tenure for community forest areas in Brazil and Guatemala? We answer this question by: ▪▪ ▪▪ identifying and describing the applicable benefits and costs associated with securing and maintaining secure tenure; and conducting benefit-cost analyses that estimate the net economic benefits possible from community forests, as well as the mitigation cost per tonne of carbon dioxide ($/tCO2) saved from avoided deforestation under securing forest tenure. We focus on the societal benefits achievable from community forests in Brazil and Guatemala; we do not engage in a cost-effectiveness analysis that compares land-management regimes. We conducted our research over three months, with literature reviews and expert consultations as the primary research methods. The benefit-cost analyses quantify those benefits and costs for which data were readily available, such as for carbon mitigation, and timber and non-timber production. Why Now? Community forests can promote and deliver social justice, local development, economic prosperity, and environmental sustainability at the local, national, regional, and global scales. Strong land and forest rights and secure tenure provide communities with the confidence, incentives, and authority they need to effectively manage their forests (RRI 2014; Byamugisha 2013; Place 2009; FAO 2002). 2015 may be a pivotal year in global efforts to address development and environmental challenges. In September, the international community launched the Sustainable Development Goals as the blueprint for development for the next 15 years. In December, the Conference of the Parties of the United Nations Framework Convention on Climate Change will convene in Paris to finalize a new agreement to tackle the changing climate. These milestones provide unique opportunities to press for global action to secure land and forest rights for Indigenous Peoples and communities. WORKING PAPER | November 2015 | 5 Research on the impacts of securing forest tenure, particularly the economic consequences, can help governments improve existing forest policies and maximize broad social welfare. This Working Paper aims to reach and inform technical leads in the land, forest, and financial sectors of governments and funding agencies on the economic gains achievable from community forests. It is intended as a work in progress. Data collection and analysis constraints are discussed in the paper (Box 2) as a means to support ideas for future research. Following this introduction (Section 1), Section 2 provides a brief background on community land and forest rights, including the geographic extent of community forests, an overview of the importance of secure tenure for generating economic benefits, and some common risks and enabling conditions for promoting secure tenure. Section 3 provides an overview of the study area. Sections 4 and 5 provide an overview of the economic benefits and costs associated with securing and maintaining secure community forest tenure. Section 6 presents the economic valuation methodology and results of the benefit-cost analyses for Brazil and Guatemala. Finally, Section 7 discusses the results and key conclusions. SECTION 2: BACKGROUND Forests are a primary source of livelihood, nutrition, income, wealth, and employment for Indigenous Peoples and local communities in much of rural Africa, Asia, and Latin America. Forest resources provide security, status, social identity, and a basis for political relations. For many rural people, forests are historically, culturally, and spiritually significant (FAO 2014; RRI 2014, 2012). Many Indigenous Peoples and communities have lived on and around forestlands for generations. Forests cover 31 percent of the world’s land surface, or just over 4 billion hectares (FAO 2014). Indigenous Peoples and communities occupy and use a considerable portion of the world’s forests. However, only a small fraction of this community forestland is officially recognized by national law, and even less is protected and securely held by them. As a consequence, most Indigenous Peoples and communities have weak rights and insecure tenure over their forests. Many community forests have been lost to outsiders and much of the remainder is under threat. 6 | Box 1 | Definition of Common Terms Community Forests are forests on indigenous or community land. In some countries, the law recognizes that community or indigenous property includes the rights to all trees on the lands. In other places, the law provides that certain trees (naturally occurring trees) or forests belong to the state. Community Lands cover all lands governed by communities, whether or not this is recognized in national law. This means that the community decides the type of rights allocated within its area and upholds these rights through community-based mechanisms (customary or modern). Indigenous Lands or territories refer to the collectively-held and governed lands (and natural resources, including trees and forests) of Indigenous Peoples. Some indigenous lands may be allocated, with group consent, for use by individuals and families. Other indigenous land is managed as common property. Traditional indigenous territories alone encompass up to 22 percent of the world’s land surface (Nakashima 2012; Sobrevila 2008). Land Rights are the rights of individuals or groups, including Indigenous Peoples and communities, over land. The bundle can include the rights of access, withdrawal, management, exclusion, and alienation. The source of these rights can be statutory law or customary law. Land Tenure is the statutory or customarily-defined relationship among people—as individuals or groups—with respect to land. It includes the full range of social relationships between people and communities with regard to accessing, possessing, and controlling land and natural resources (FAO 2002). Customary Tenure Systems refer to land governance and administrative systems that operate in accordance with local custom, including traditional institutions and rules (or customary law) for accessing, possessing, and controlling land and natural resources. Community- and Indigenous Peoples-based systems of landholdings are usually traditional or customary. Alden Wily (2011) estimates that customary tenure extends over at least 8.54 billion hectares (an estimated 65 percent of the global land area) involving 1.5 billion people. However, only about 18 percent of the world’s land is formally recognized as owned by or designated for Indigenous Peoples and communities (RRI 2015). Land Tenure Security is the certainty that an individual’s or community’s rights to land will be recognized by others and protected in cases of challenges (FAO 2002). The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala The Rights and Resources Initiative (RRI) estimates that Indigenous Peoples and communities held at least some legal or official rights (i.e., rights recognized under statutory law) to at least 511 million hectares of forest in 2013— about 15.5 percent of the world’s forests (RRI 2014). This figure, which recognizes 52 countries containing nearly 90 percent of the global forest cover, includes forestland legally recognized as community land, as well as state land to which Indigenous Peoples or communities have some formal, conditional rights (see Figure 1). The 15.5 percent represents an important increase over the last decade: in 2002, Indigenous Peoples and communities had formal rights to 11.3 percent of the world’s forest (RRI 2014). While governments are increasingly recognizing community rights to forests, in 2013, an estimated 73 percent of the world’s forests was state controlled—down from 77.9 percent in 2002 (RRI 2014). Much of the community forests held under customary tenure systems are legally government forests. Figure 1 | The Importance of Secure Land Rights and Forest Tenure The rights that Indigenous Peoples and communities hold over their land vary by customary and statutory law. The bundle may include rights of access, withdrawal, management, exclusion, and alienation. Each right provides the holders with certain authorities and legal security over their land. For example, the right of exclusion allows communities to refuse access to and use of the land. Large bundles of rights, therefore, commonly provide Indigenous Peoples and communities with considerable control over their lands. Land rights may also include rights to some or all of the natural resources on or below the land surface (Veit and Larsen 2013). When Indigenous Peoples and communities have rights over these resources, there is a reduced risk that government will allocate resource rights to outsiders (e.g., mining licenses, timber concessions). Forest Ownership, 2002–2013 (millions of hectares) 100% 90% 2002 2013 80% 70% 77.9% 73% 60% 50% 40% 30% 20% 10% 0% 1.5% Administered by Government 2.9% Designated for IPs & Communities 9.8% 12.6% 10.9% 11.5% Owned by IPs & Communities Owned by Firms & Individuals Source: RRI 2014 WORKING PAPER | November 2015 | 7 Strong land rights and secure tenure are central to communities maintaining their land and natural resources. Secure tenure underpins a broad range of human rights and is at the foundation of economic development, social equity, poverty reduction, women’s empowerment, environmental sustainability, peace, and stability (RRI 2014). Land tenure substantially affects people’s ability and incentive to use and manage their land. Incentives depend upon expectations of rights over the returns on investments and, therefore, on the nature of land and resource tenure. Clear and secure land tenure can encourage or induce a range of investments of labor, resources, and other assets (Goldstein and Udry 2008; Cotula et al. 2006; Deininger 2003). These investments can help ensure that forests are well managed and continue to provide vital ecosystem services and economic benefits. For example, the forests to which Indigenous Peoples and communities have legal rights—about one eighth of the world’s total—contain approximately 37.7 billion tonnes of carbon (Stevens et al. 2014). Factors that Can Create Secure Tenure Indigenous Peoples and communities realize their land rights. Indigenous Peoples and communities that know their rights and have capable village institutions can monitor and protect their lands. Civil society organizations and development assistance agencies can support the development of indigenous and community land maps, the acquisition of formal land documents, and other measures to help secure tenure. Factors that Can Create Insecure Tenure Weak tenure leaves Indigenous Peoples and communities vulnerable to losing their land and natural resources. Insecure tenure discourages people from investing in their lands and commonly results in the exploitation of the land to maximize short-term benefits. Three common sources of insecure tenure are weak laws and regulations, inadequate implementation of supportive law, and the overuse of government authority to restrict or extinguish land rights. ▪▪ Factors that contribute to tenure security vary by context and circumstances. Whether land rights are legally recognized, and whether they are protected when threatened, are two determinants of tenure security. ▪▪ ▪▪ 8 | Legal Recognition of Land Rights. Supportive statutory laws can help secure tenure. Laws are supportive when they recognize all rights customarily held by Indigenous Peoples and communities as lawful forms of land ownership, and protect customary tenure to the same degree as other forms of tenure (e.g., freehold). Supportive laws also require the state to, for example, provide Indigenous Peoples and communities with a formal title to their lands; recognize the indigenous group or community as having legal authority over their land; recognize that customary rights are held in perpetuity; and require consent before an outside actor may acquire indigenous or community land. Protection of Rights. While supportive laws provide Indigenous Peoples and communities with a layer of tenure security, the laws must be effectively implemented if they actually are to protect land rights when those rights are threatened. Implementation and enforcement can be achieved in various ways. Wellresourced government agencies with explicit responsibilities to protect land rights can help to ensure that ▪▪ Weak Laws and Regulations. While many governments now recognize customary tenure systems, few have established the strong legal protections needed to secure indigenous and community land. In Cameroon and other countries, the law formally recognizes only the portion of community land that is “used and occupied”—such as homesteads and farmland— but not the community land managed as common property. In Zambia and other countries, the law provides just a small bundle of land rights. In most of Africa, legal rights to land do not include the rights to many of the natural resources on and below the land, such as water, wildlife, natural trees and forests, minerals, and hydrocarbons (WRI 2013). Poor Implementation of Supportive Legislation. Even when customary land rights are recognized by statutory law, governments often fail to protect indigenous and community land from encroachment or expropriation. Many governments lack the human and financial resources needed to map or document indigenous and community lands, or to protect them from outsiders. Some governments threaten tenure security by allocating long-term concessions for agricultural plantations, large-scale mining operations, and oil and natural gas extraction. Governments justify these industrial concessions as a means to decrease dependence on development assistance, generate formal employment, increase national incomes, and generate scarce foreign exchange (RRI 2014). The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala ▪▪ Broad Authorities to Extinguish Land Rights. All governments have the power to restrict or extinguish land rights, primarily to meet public purposes, such as road or dam construction, or to establish a protected area for biodiversity conservation. In recent years, however, many governments have exercised these powers more broadly through compulsory land acquisition, zoning regulations, and other land-use restrictions. Few governments in Africa and elsewhere have enacted clear enabling regulations or prepared implementation guidelines for these powers, leaving officials with broad discretion over how they are exercised. When these authorities are exercised, even for genuine public purposes, they can create insecure tenure for Indigenous Peoples and communities. Figure 2 | SECTION 3: STUDY AREA We selected Brazil and Guatemala as our focus areas for three reasons: ▪▪ ▪▪ ▪▪ Community forests are relatively secure in both countries (Stevens et al. 2014). Spatial data were available on community forestlands and carbon-storage values. The countries represent diverse tenure arrangements in terms of tenure-security establishment processes, land uses, forest types, and benefits and costs. Based largely on data availability, we narrowed down the study areas for each country as described below. Indigenous Territories in Brazil, 2015 Brasilia State Capital Amazonia Legal State Limit IT’s Administrative Process Phase In Study Conducted as Indigenous Reserves Delimination Declaration Homologation Registration 0 1,000km Source: Based on data from Project BCIM 3rd version 20102/IBGE and FUNAI.3 WORKING PAPER | November 2015 | 9 Brazil: For this paper, community forests in Brazil include Indigenous Territories in the Amazon region (111,177,224 hectares) (see Figure 2). Indigenous Territories are inhabited exclusively by Indigenous Peoples and are recognized legally as conservation or sustainableuse protected areas. While Indigenous Territories are public property, the Brazilian government recognizes the indigenous communities’ soil and water rights, their right to exclude others, and their right to manage and use the forest sustainably. Communities do not have subsurface rights, but the government generally does not allocate mineral rights in these areas (Davis 2013). with a total area of 113,518,234 hectares (FUNAI 2015a). This represents roughly 13 percent of the total land area in Brazil (Survival International 2015; ISA 2011) and approximately 25 percent of the Amazon biome (Garzon 2009). Around 98 percent of Indigenous Territories are in the Amazon region. Guatemala: The study area for Guatemala includes community concessions within the Maya Biosphere Reserve (MBR), a tropical forest reserve established in the Petén district in 1990 (see Figure 3). The MBR covers 2.08 million hectares and consists of three management zones: a core zone (39 percent), a multiple-use zone (38 percent), and a buffer zone (23 percent). Each zone has its own purpose and management strategy. The core zone encompasses 12 protected areas, including national There are currently 588 Indigenous Territories in Brazil (545 are traditionally occupied lands, 31 are indigenous reserves, and 12 are proprietary or interdicted lands), Figure 3 | Map of Land-Use Zones in the Maya Biosphere Reserve of Guatemala MEX ICO Land-Use Zones Core Protected Area G UAT E M A L A MEXICO Buffer Zone BELIZE Multiple-Use Zones Biological Corridor and Land with No Concessions Community Concession Suspended/Cancelled Community Concession Industrial Concession Source: CEMEC-CONAP, 2007. 10 | GUATEMALA 0 100 200km HONDURAS EL SALVADOR The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala parks, biotopes, and archeological sites; it allows only for scientific research and tourism (Hodgdon et al. 2015). The multiple-use zone permits extractive activities (e.g., timber and non-timber harvesting) and is currently home to biological corridors (without concessions), two industrial concessions, and nine community concessions (Rodas et al. 2014). The buffer zone is a 15-kilometer strip along the southern border of the MBR; agricultural activities and human settlements are allowed in the buffer zone. There are currently nine active community concessions in the MBR, covering 332,000 hectares. All are located in the multiple-use zone. The concessions were established to allow local communities to benefit economically from sustainable forest management, and to prevent agricultural encroachment into the protected core zone. Communities have management, use, withdrawal, and exclusion rights over their concessions (Larson et al. 2008), allowing for sustainable timber and non-timber extraction, tourism development, and limited agriculture (Gomez and Mendez 2005; Gretzinger 1998). SECTION 4: THE COSTS OF COMMUNITY FOREST-TENURE SECURITY Processes for establishing and maintaining tenure vary within and across countries, depending, among other matters, on governmental infrastructure, institutional capacity, land management, and ownership regimes. Furthermore, land tenure may be composed of different bundles of rights and therefore the processes for establishing and maintaining those rights may vary (Robinson et al. 2014). Yet, despite these variances, we identified four general categories of costs to consider in an economic benefit-cost analysis: 1. Tenure-security establishment costs: Costs associated with establishing or changing the institutional and legislative framework to support community forest tenure. Costs include investment and transaction costs associated with legislative or regulatory changes. 2. Community forest establishment costs: Upfront or initial investment and transaction costs for identifying and securing lands as community forests, including identification, demarcation, registration, titling, and management-plan establishment costs. 3. Community forest management, operating, and monitoring costs: Annual or recurring costs associated with protecting community forest tenure; monitoring and enforcement activities on these lands to ensure that rights are protected; transaction costs associated with handling disputes over community forests; production costs for timber and non-timber forest products; and recurring investments in programs or activities to support and strengthen community rights and livelihoods on these lands. 4. Opportunity costs: Foregone income from alternative land uses that benefit landowners. Opportunity costs are strongly associated with deforestation pressures (e.g., urban development, agriculture, cattle pastures) because these pressures often represent the highest-value alternative land uses. These costs may accrue to a variety of actors. Accordingly, in this paper, we consider the primary, secondary, and external stakeholders involved with securing and maintaining community forest tenure. Primary stakeholders are people who directly experience the impacts of 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 stakeholders are generally the people within a country who can make and shape decisions; they include local and federal government agencies, and natural-resource managers. External stakeholders include people with the power to influence decision-making; they include the bilateral and multilateral development organizations that support government agencies, and non-governmental organizations (NGOs) (Waite et al. 2014). Evidence from Brazil The Brazilian Constitution recognizes the inalienable rights of Indigenous Peoples to lands they traditionally occupy, and gives them permanent possession of these lands. Although the Constitution guarantees Indigenous Peoples exclusive use of their lands, including soil and water rights, the national government maintains ownership of the land and all subsurface natural resources (e.g., mineral rights). The Brazilian Constitution defines lands traditionally occupied by Indigenous Peoples as lands “inhabited by them permanently, those used for their productive activities, those indispensable to the preservation of the environmental resources necessary for their well-being, and those necessary for their physical and cultural reproduction, in accordance to their habits, customs and traditions.” (ISA 2015a). The Constitution required the Fundação Nacional do Índio (FUNAI)—the government body responsible for policies related to WORKING PAPER | November 2015 | 11 Indigenous Territories—to demarcate all Indigenous Territories by 1993. However, even today, this task has not been completed. The government has revised its demarcation procedures for Indigenous Territories multiple times, with the latest guidance announced in Decree 1775 in 1996 (ISA 2015b). In 2012, the Brazilian government published “The National Policy of Territorial and Environmental Management of Brazilian Indigenous Lands.” The policy establishes Indigenous Territories as protected areas that allow sustainable use of natural resources by Indigenous Peoples. Additionally, it required that Indigenous Peoples should participate in building territorial and environmental strategies to manage their lands by developing management plans that detail the communities’ land-use aspirations (Comandulli 2012). NGOs like the Nature Conservancy are assisting communities with developing their management plans (Amazon Fund 2015). FUNAI is also responsible for monitoring Indigenous Territories. Its monitoring and management expenses include supervision; surveillance; combat and prevention of illicit activities; monitoring and expulsion of non-Indians on indigenous lands; and locating and protecting isolated Indigenous Peoples (Verdum 2015). Numerous organizations partner with FUNAI to monitor and manage these Table 1 | lands, including the Ministry of Justice, the Federal Police, the Federal Highway Police, the National Public Security Force, the Ministry of Defense, the Armed Forces, the Operations and Management Center of the Amazonian Protection System, the Ministry of Environment, the Brazilian Institute of Environment and Renewable Natural Resources, the Chico Mendes Institute for Biodiversity Conservation, and the Environmental Military Police of the state and federal prosecutors (FUNAI 2015b). Local governments provide financial and technical support to Indigenous Peoples to help secure and guarantee their rights (Borger et al. 2015). The Brazilian Ministries of Health, Education, Agrarian Development, and Environment also conduct activities in Indigenous Territories, including health, education, rural development, and environmental programs (Verdum 2015). Finally, community members incur investment and transaction costs associated with working with local and federal government agencies to establish and maintain tenure. Communities may also incur costs from monitoring and managing their land, and defending it from loggers, ranchers, and other intruders (Nepstad et al. 2006). Table 1 summarizes the costs of establishing and maintaining tenure in Brazil’s Indigenous Territories and notes the key stakeholders to whom many of the costs accrue. Tenure-Security Establishment and Maintenance Costs for Brazilian Indigenous Territories COST CATEGORY COST COMPONENTS KEY STAKEHOLDERS Tenure-security establishment costs 1. Constitutional reforms 2. Governmental decrees National government Community forest establishment costs 1. 2. 3. 4. 5. Delimitation Declaration of Indigenous Territories limits Demarcation Presidential approval Registration National and local government agencies; Indigenous Peoples Community forest management, operating, and monitoring costs 1. 2. 3. 4. Development of management plans Ongoing management and monitoring Subsidies and technical support for capacity building Compensation for relocation National and local government agencies; NGOs; Indigenous Peoples Opportunity costs Foregone income from soybean production, cattle pastures, roads, and/or urban development 12 | Landholder (national government) The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Evidence from Guatemala The Maya Biosphere Reserve (MBR) was established 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 sustainable natural-resource use (Carey 2008). External stakeholders, particularly the United States Agency for International Development (USAID), played a significant 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 was initially responsible for approving each concession’s establishment. Conflicts surfaced in the MBR’s early days, but they have largely been settled (Carrera et al. 2006). With the creation of the MBR, many communities found themselves within the boundaries of the reserve with no legal land rights. With the support of international NGOs, the local communities eventually persuaded the government to provide them with formal concessions (Larson et al. 2008). In 1994, the Guatemalan government, backed by USAID, legalized the community concession system in the multiple-use zone (Monterroso and Barry 2012). Between 1994 and 2002, 12 community concessions were established, although only nine are still active.4 A community forestry concession “is an administrative mechanism whereby the government, through CONAP, grants state lands to legally established organizations for a 25-year renewable period, giving them the right to integrated resource use, involving such activities as forestry and ecotourism.” (Rosales 2010). In 1995, community leaders formed the Association of Forest Communities of Petén (ACOFOP) to resolve conflicts by negotiating greater community rights (Hodgdon et al. 2015). ACOFOP comprises 23 local organizations that represent 30 rural communities and over 2,000 families (Rosales 2010). ACOFOP created Empresa Comunitaria de Servicios del Bosque (Community Forestry Services Enterprise or FORESCOM) to provide commercial support to its member communities, especially with marketing, pricing, payments, and forest-product development (Rosales 2010). FORESCOM has also invested substantial amounts in wood-processing infrastructure and equipment. To be granted a concession, communities must establish a legal entity to assume responsibility for the concession (Rosales 2010). Communities must also demonstrate historical use and the capacity to sustainably manage forest resources (Radachowsky et al. 2012). Additionally, they must: ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ present a CONAP-approved general forestmanagement plan; develop an environmental impact evaluation; present annual operations plans; achieve third-party certification by the Forest Stewardship Council (FSC) within three years of concession establishment and undergo periodic audits; pass annual certification audits; fulfill an annual CONAP evaluation; undergo environmental-regulation evaluations (by the Guatemalan government and sometimes USAID); implement mitigation measures required by the environmental impact evaluation; and monitor impacts on ecological integrity and archaeological sites (Rosales 2010). Community concession members and CONAP both undertake fire prevention and monitoring activities (Rosales 2010). External funding from bilateral agencies, domestic and international NGOs, and other donor groups have played a significant role in the establishment and maintenance of community concessions. For example, USAID and the Ford Foundation provided technical and financial support for establishing the community concessions (Hodgdon et al. 2015). USAID, the Tropical Agricultural Research and Higher Education Center (CATIE), the Rainforest Alliance, and others have funded and supported the FSC forest certification costs (Carrera et al. 2006). NGOs, including Centro Maya, Conservation International, Naturaleza para la Vida, and the Rainforest Alliance, have provided technical and financial assistance to concessions, including enterprise and market development (Hodgdon et al. 2015), and international organizations fund ACOFOP. Table 2 summarizes the costs of establishing and maintaining community concessions in the MBR and notes the key stakeholders to whom many of the costs accrue. WORKING PAPER | November 2015 | 13 Table 2 | Tenure-Security Establishment and Maintenance Costs for the Guatemalan Maya Biosphere Reserve COST CATEGORY COST COMPONENTS KEY STAKEHOLDERS Tenure-security establishment costs 1. Congressional decrees National government; domestic and foreign donors Community forest establishment costs 1. Establishment and legalization of the community concession system 2. Establishment of supporting agencies (CONAP and ACOFOP) National and local government agencies; supporting agencies (CONAP and ACOFOP); domestic and foreign donors; community members Community forest management, operating, and monitoring costs 1. Development of forest-management plans, environmental impact evaluations, and annual operations plans 2. FSC certification 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 National and local government agencies; domestic and foreign donors; NGOs and supporting agencies; community members Opportunity costs Foregone income from commercial timber, and/or cattle pastures Landholder (national government) SECTION 5: THE VALUE OF COMMUNITY FOREST-TENURE SECURITY Just as the costs of secure community forest tenure vary, so too do the economic benefits associated with establishing and maintaining secure tenure. Here, we consider three categories of benefits that we identified in Brazil and Guatemala based on a literature review and expert consultation. 1. Ecosystem-service benefits: Forest ecosystems provide extractive benefits and non-extractive benefits. Extractive benefits include production of timber and non-timber forest products and recreation (e.g., hunting and fishing). Non-extractive benefits include climate-change mitigation, water regulation, habitat and biodiversity, protection of local and regional climate systems, and tourism. 2. Collective-action and conflict-resolution benefits: Clearly defined land rights and roles can result in behavioral changes among primary and secondary stakeholders. Behavioral changes can avoid the transaction and conflict-resolution costs associated with insecure forest rights. 14 | 3. Social benefits: Secure tenure can encourage job creation and actions that strengthen capacity within local communities (e.g., community reinvestment in education and health programs). Many studies have explored the impact of tenure security on forest-ecosystem conditions. Robinson et al. (2014) conducted a meta-analysis of 36 publications that linked land-cover change to tenure conditions. They found that communal land-tenure impacts on forest-ecosystem conditions varied regionally, possibly due to the effects of regional conflict and/or weak governance (important enabling conditions identified in Section 2 of this paper and by Stevens et al. 2014). Communal and customary tenure impacts on forest-ecosystem conditions were low in Africa, moderate in Central America, and mixed in South America. Overall, however, the study found that communal land tenure was associated with less deforestation. Recent studies in Brazil and Guatemala, which we explore in depth below, also show avoided deforestation benefits associated with secure community forest tenure (Blackman 2015; Nolte et al. 2013; Nepstad et al. 2006). The Millennium Ecosystem Assessment (2005) categorizes ecosystem services into four categories: The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Table 3 | Forest Ecosystem Services ECOSYSTEM SERVICE TYPE EXAMPLES OF GOODS AND SERVICES 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 Supporting Habitat for species; genetic diversity Cultural Recreation and tourism; sacred ritual and burial sites; habitat for important totem animals; educational uses Source: Based on TEEB (2009). supporting, regulating, provisioning, and cultural. Examples of forest-ecosystem goods and services for each category are described in Table 3. Some studies have attempted to estimate the value of forest-ecosystem services to society. A report by The Economics of Ecosystems and Biodiversity (TEEB 2009) estimates that the average value of ecosystem services from tropical forests (including climate regulation) is $6,120 (US$ 2007) per hectare per year, but the maximum value ranges to $16,362 per hectare per year.5 Costanza et al. (2014) estimated an average net value of forest-ecosystem services at $3,800 per hectare in 2011.6 Many of these benefits are lost because of deforestation. Additionally, fragmentation of forests may reduce the scale of benefits achievable. Secure tenure for forest communities can also produce economic benefits by reducing conflict and enhancing mechanisms for collective action.7 When communities have clear rights, they may be better able to work with each other as well as with secondary and external stakeholders to manage their forests. This can reduce some of the transaction costs of forest management (e.g., reduced need for meetings and staff), both for communities and for secondary and external stakeholders. Clear land rights and land governance roles can also reduce conflict costs for communities and secondary and external stakeholders. Most forest-related conflicts result from differing interpretations of rights and tenure; these conflicts can sometimes turn violent. Examples include disputes between forest communities over village boundaries and disputes between forest concessionholders and local communities over access to forest products, decision-making, and benefit sharing (De Koning et al. 2008). Conflicts from weak land rights can disrupt economic growth in many ways. Community members may spend resources guarding and protecting their land rather than using them for productive activities. Furthermore, communities may have less incentive to produce goods and services if their lands and resources are at risk (Sandler 2000). Communities with clear tenure that act together to manage forests can also help reduce transaction costs of coordinating actions and communications with secondary and external stakeholders (Larson et al. 2010). Community forest networks are known to increase their access to forest resources and markets, build capacity of community groups, and expand their interface with decision-makers (Larson et al. 2010). Finally, a multitude of other social benefits is possible when forest productivity is increased and ecosystem services are maintained through avoided deforestation. For example, when communities are better able to manage their forests and increase the provision of ecosystem-service benefits, they can create more jobs and generate more revenues to support education, health, or other social programs. In Mexico, community forestlands often serve as regional employment centers, supporting livelihoods not only for local communities, but also for migrants who come seeking work. Often, community forestry enterprises will reinvest a portion of their profits from timber sales into education, health, or other social programs (see Annex for more detailed information on Mexico). WORKING PAPER | November 2015 | 15 As with costs, benefits can accrue to a variety of stakeholders. Moreover, benefits may range from the community to the global level. For example, forest ecosystems may benefit local communities that generate income from selling forest products. These same ecosystems can also generate regional and global benefits because some services, such as carbon mitigation, contribute to global climate-change mitigation. Collectiveaction and conflict-resolution benefits, in contrast, accrue mostly to local communities and the local and national stakeholders that interact with them directly. Social benefits as we define them also apply mostly to local communities, which benefit from improved education and health care. However, social benefits may also be felt regionally and nationally, because governments may need to invest less in health care and education subsidies. The following sections provide results from a literature review of benefits found for Indigenous Territories in Brazil and community concessions in the Guatemalan MBR. Evidence from Brazil Recent matching analyses for the Brazilian Amazon found that Indigenous Territories demonstrate lower deforestation rates than similar matched areas (Nolte et al. 2013; Nepstad et al. 2006). They also show lower incidences of fire. Nepstad et al. (2006) identified four major types of fire in the Amazon: fire that burns felled forest, fire that burns standing forests, fire used to improve forage quality in cattle pastures, and accidental cattle-pasture fires. The study found that the average density of fires (fires/km2) was roughly twice as high along the outside perimeter of indigenous areas as it was inside protected indigenous areas. Indigenous lands were also found to strongly reduce fire incidence near agricultural areas. The Amazon contains more carbon in tropical forest trees than any country—47±9 billion tonnes in 3.3 million square kilometers of forest (Nepstad et al. 2007). This makes Indigenous Territories an effective carbon-mitigation tool. In terms of direct-use ecosystem-service benefits, the largest extractive uses of forest products from Brazil’s Indigenous Territories are food, medicine, handicrafts, and personal use, as well as fishing and hunting (Global Forest Atlas 2015). 16 | Amazonian forests also generate a multitude of nonextractive ecosystem services, including climate regulation, biodiversity and traditional knowledge, protection of local and regional climate systems, and water supply and filtration benefits. A significant benefit of Indigenous Territories is their stock of biodiversity and traditional knowledge about the Amazon’s plants and animals. Biodiversity and local knowledge of this biodiversity are thought to have economic value: they provide access to genetic resources, including some with pharmaceutical value. For example, a study by Simpson et al. (1996) estimated the value of biodiversity for pharmaceutical research by estimating the willingness to pay (WTP) of pharmaceutical companies for biodiversity. The study estimated the WTP to protect a hectare of land in a biodiversity hot spot along the Atlantic Coast of Brazil to be $6.71/ha (US$ 2015). Another benefit of Indigenous Territories stems from changes in local and regional climatic conditions in relation to forest cover. A recent report by Nobre (2015) found that the impacts of deforestation and fires in the Amazon include widespread decreases in forest transpiration, changes in the dynamics of clouds and rain, and an extended dry season. These impacts affect the regional climate and could be contributing to drought conditions in São Paulo (Watts 2014). Thus, local and regional climate regulation, including protection of the local and regional climate system, is an important benefit of Amazonian forests. The collective-action benefits and social benefits from Indigenous Territories are not as well documented. The potential avoided transaction costs associated with establishing Indigenous Territories, and the amount communities are reinvesting in health and education programs through income generated by extractive or other activities (e.g., payments for ecosystem services), are not well known. More evidence is needed to better understand whether Brazil’s Indigenous Territories are generating these types of benefits. A summary of major economic benefits derived from Brazil’s Indigenous Territories, and their respective beneficiaries, is presented in Table 4. The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Table 4 | Summary of Economic Benefits from Indigenous Territories in Brazil BENEFIT EXAMPLE BENEFIT COMPONENTS BENEFICIARIES Ecosystem-service benefits 1. Direct use (extractive) benefits a. Subsistence forest products 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 Community members; tourists/recreationists; regional stakeholders (e.g., agricultural producers); global society Social benefits Job creation (handicrafts) Community members; local and national governments; other stakeholders that interact with forest communities Source: Literature review Evidence from Guatemala As with the case of Brazil, recent analyses from Guatemala show that tenure security established by community concessions is linked to avoided deforestation. A recent matching analysis by Blackman (2015) compared community concessions in the MBR with matched areas outside of the MBR, and found that these areas were effective in curbing deforestation. Extractive ecosystem-service benefits that relate to avoided deforestation benefits (as shown by Blackman 2015) include timber and non-timber forest production, as well as ecotourism benefits. Community concessions have been able to increase the production of timber products and non-timber forest products, including xate (a frond used in floral arrangements), allspice, and chicle (a natural gum) (ACOFOP 2015; Hodgdon 2015). Currently, the nine community concessions generate over $4.4 million in timber revenues and over $300,000 in non-timber revenues per year. The communities also extract non-timber forest products for subsistence or to replace commercial items, and practice subsistence hunting (Radachowsky et al. 2012). Community concessions are popular for tourism, especially focused on Mayan archeological sites such as the Uaxactún and El Mirador (Radachowsky et al. 2012). Some communities have been able to organize and manage tourism activities. Two tourism organizations within the concessions, Chachaklum and Asodesty, have been able to generate at least $37,500 per year in tourism revenues (ACOFOP 2015).8 In terms of non-extractive ecosystem-service benefits associated with avoided deforestation benefits, forests protected by community concessions provide climate regulation, fire suppression, and biodiversity benefits. In the Petén Department, where the MBR is situated, locals set fires during the dry season to transform the land either to agriculture or pasture. CONAP (2015b) found that as many as 1,350 hotspots or fires were recorded in MBR, but only 12 fires were located within the community concessions. In terms of biodiversity benefits, the MBR is an invaluable part of Selva Maya, the largest broadleaf tropical forest in Mesoamerica. Selva Maya encompasses forests in Guatemala, Belize, and Mexico, and is home to over 3,400 vascular plants, 571 bird species, 163 mammal species, 121 reptile species, 60 freshwater fish species, and 42 amphibian species. It also serves as a temporary home to one billion migratory birds from North America each year (Nations 2010). Social benefits have also been documented for community concessions. Local communities have benefited from job creation related to timber and non-timber production. Between 2007 and 2015, timber production in the community concessions generated around 2,500 permanent and 6,400 temporary jobs (ACOFOP 2015). Sawmilling activities provided the most employment, followed by timber harvesting, and pre-harvest activities (Radachowsky et al. 2012). At the same time, non-timber production provided around 850 permanent and 2,600 temporary jobs (ACOFOP 2015). WORKING PAPER | November 2015 | 17 Table 5 | ummary of Economic Benefits from Community Concessions in the S Guatemalan Maya Biosphere Reserve BENEFIT EXAMPLE BENEFIT COMPONENTS STAKEHOLDERS Ecosystem-service benefits 1. Direct use (extractive) benefits a. Timber and non-timber production b. Recreation 2. Indirect use (non-extractive) benefits a. Climate-change mitigation b. Fire suppression c. Biodiversity d. Tourism Community members; tourists/recreationists; regional stakeholders (e.g., agricultural producers); global society Collective-action and conflict-resolution benefits 1. Avoided transaction costs 2. Improved land productivity/ forest management Community members; local and national governments; other stakeholders that interact with forest communities Social benefits 1. Job creation 2. Community reinvestment in capacity building Community members; local and national governments; other stakeholders that interact with forest communities Source: Literature review. Communities also benefit from investing the profits generated by concessions back into the community—in infrastructure, health care, and education. These investments not only improve local standards of living, they can have a high positive spillover effect. Based on 2014 data, annual social investments in the community concessions are estimated to have been as high as $425,000 (ACOFOP 2015). Benefits related to collective action and the clarification of rights have not been as well documented; however, conflicts that were initially associated with MBR’s establishment appear to have been largely settled (Carrera et al. 2006). A summary of major economic benefits derived from Guatemalan community concessions and the respective beneficiaries is presented in Table 5. SECTION 6: ECONOMIC ANALYSIS METHOD AND RESULTS This section describes the method we used to assign monetary values to the benefits and costs associated with establishing and maintaining secure community forest tenure for Brazilian Indigenous Territories and community concessions in the Guatemalan MBR. Understanding the economic benefits and costs of establishing and 18 | maintaining community forest-tenure security requires that we first understand the processes and costs of tenuresecurity change. It also requires that we understand the forest-cover change that will result from establishing and maintaining tenure security, how forest-cover changes affect the provision of ecosystem-service benefits, and how tenure security results in changes in community and other stakeholder behavior. We compare benefits and costs using benefit-cost analyses. The benefit-cost analyses focus on the incremental benefits and costs of a “policy” or tenure-secure scenario over a “no-policy” or tenure-insecure scenario. The policy scenario assumes that a policy change does occur, so it considers all costs associated with securing and maintaining tenure. In contrast, the no-policy scenario assumes that no policy changes occur and that no incremental costs of policy changes are incurred. Because of data limitations (see Box 2), only a subset of benefits presented in Section 5 is included in the benefit-cost analyses. Specifically, we consider carbon-mitigation benefits (for both countries) and timber and non-timber production benefits (for Guatemala only). In addition, the analyses estimate only benefits associated with avoided deforestation impacts predicted to result from establishing and maintaining tenure security; this impact is best documented in the literature. The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Box 2 | Data Collection Constraints The research question, what are the costs compared to the benefits of securing and maintaining community forest tenure? presents multiple economic valuation challenges, due largely to data availability. While Sections 4 and 5 describe the benefits and costs that would ideally be considered in an economic analysis, the analyses here do not capture all benefits and costs because of the following data limitations and knowledge gaps: • Opportunity costs of alternative land uses: The benefit-cost analyses assume that deforested lands in the no-policy scenario are degraded and thus not in use. However, in reality, these lands may be converted to another income-producing land type, such as agriculture or pasture. The foregone income from the alternative land use would ideally be considered in the benefit-cost analyses because this represents an opportunity cost to the landholder. The calculations for estimating opportunity cost are complex, however, and require an understanding of what the deforested area could be converted to, and the expected financial returns from that land. Furthermore, while opportunity costs may exist for individual landowners, it is not clear that broader aggregate-scale opportunity costs exist. Due to the complexity of this question, opportunity costs were excluded from the benefit-cost analyses. • Tenure-security establishment costs: Valuing the costs associated with establishing tenure security (via policy and institutional changes) necessitates an understanding of the transaction costs associated with these changes, including, for example, staff time spent drafting tenure reforms and working with communities. For Guatemala, tenure-security establishment costs could be approximated based on estimates of foreign and domestic expenditures to establish the community concessions within the MBR. For Brazil, however, the available data are unclear on the financing that supported the constitutional reform of 1988 and other governmental decrees and policy changes. • Ecosystem-service benefits: The benefit-cost analyses include only ecosystem-service benefits for which data were readily available, either in the literature or market values. Carbon-mitigation and timber and non-timber production benefits were included because these data were available. Many relevant indirect use or non-extractive ecosystem-service benefits (e.g., biodiversity and water filtration) are often valued based on preferential or willingness-to-pay data. To appropriately transfer these benefit values from the policy sites to the study sites, site-specific data to help identify local preferences (e.g., gross domestic product, population) would be required. However, this was beyond the scope of our study. In general, extractive-use benefits are easier to value than non-extractive benefits: production and market-value data for forest products are more easily tracked and published. In the case of Brazil, however, we could find no quantitative evidence, of sales of forest materials or subsistence uses of forest products from Indigenous Territories. • Collective-action and conflict-resolution benefits: Collective-action and conflict-resolution benefits are often difficult to quantify because they necessitate an understanding of the number of conflicts occurring, and the transaction and other costs associated with these conflicts (e.g., number of deaths/injuries, cost of establishing conflict-resolution programs or initiatives, and wages for staff who work to address conflicts). Additionally, while communities may be better able to organize and work with secondary and external stakeholders, it is also difficult to capture transaction costs that may include, for example, a reduction in the number of meetings or hours spent working with communities. Finally, it is also difficult to capture forest production-improvement data that may result from behavioral changes via collective action and conflict resolution. These data are often not collected by relevant stakeholders or disaggregated from government budgetary data in a way that enables a proper interpretation of scale of benefits. As a result, collective-action and conflict-resolution benefits are excluded from the benefit-cost analyses. • Uncertainty regarding benefit and cost data: Benefit and cost data are often not disaggregated by stakeholders in ways that permit easy estimation of individual benefit and cost components associated with securing and maintaining tenure security (as listed in Section 3). In Brazil, for example, government cost data were not available by cost component (e.g., demarcation vs. registration vs. titling) or by individual indigenous territory. Rather, annual federal and local government budgetary data for Indigenous Territories were available for broad categories. In Guatemala, it is clear that a good deal of foreign aid, combined with domestic financial support and NGO technical and financial assistance, went into establishing the MBR and the community concessions. However, a detailed registry of these costs is not available, making it difficult to discern the exact investment total and the percentage of costs for the MBR that went into the concessions alone. On the benefits side, timber and non-timber revenue data were available for Guatemala from 2007 through 2015, but productioncost data were available for only three concessions. While data employed for the benefit-cost analyses are thought to be representative of the scale of costs, more transparent and accurate data from relevant stakeholders would be helpful for conducting a more robust economic analysis. Given these difficulties, benefit and cost data and analysis assumptions were verified with secondary and external stakeholders in both Brazil and Guatemala to ensure that they were representative. Additionally, a sensitivity analysis was undertaken to provide a low, average, and high range of potential benefits and costs (see Appendix). WORKING PAPER | November 2015 | 19 A brief overview of the methods we used to value and compare benefits and costs follows. The Appendix provides a more detailed overview of the benefit-cost analysis model, key data assumptions, and results from a sensitivity analysis. Table 6 | ummary of Economic Costs for Brazilian S Indigenous Territories ($/ha/yr) COST COMPONENT VALUE Valuing Costs of Securing and Maintaining Community Forest Tenure FUNAI expenditures $1.31 Local government: total expenditures $0.03 The valuation method for costs follows a two-step process. First, we identify the costs associated with the policy change, based on the cost categories defined in Section 4. Second, we monetize (assign a dollar value to) these costs (where data are available). Cost data were collected primarily from government and other stakeholder websites, peer-reviewed and grey literature, and solicitation of data from relevant stakeholders and country experts (where data were not available online). Additionally, cost data were verified with in-country experts and stakeholders to ensure that they were representative. Development of management plans $0.23 Total Annual Cost $1.57 The benefit-cost analyses assume that deforested land is converted to degraded land, so opportunity costs are zero (see Box 2 for more information on opportunity-cost considerations for alternative land uses). Monetizing Costs for Brazil and Guatemala For Brazil, tenure-security establishment cost data associated with the constitutional change in 1998 and governmental decrees were not available. Community forest establishment costs and community forest management, operating, and monitoring costs are based on FUNAI and local government budgetary data for Indigenous Territories; they are estimated at $1.31/ha/yr and $0.03/ha/ yr, respectively (see Appendix for more detailed FUNAI budget data). Management-plan costs were assumed not to be included in government expenditures because these plans are often developed in coordination with NGOs or other external stakeholders. An average annualized cost per hectare of $0.23 was estimated based on a $5.2 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 | For Guatemala, the costs of tenure-security establishment; community-forest establishment; and community-forest management, operating, and monitoring are based on evidence in the literature regarding domestic and foreign contributions to the MBR and the percentage of funding attributable to the community concessions. Total domestic and foreign support for the MBR between 1990 and 2005 is estimated at roughly $131 million (Gomez and Mendez 2005). The analysis assumes (based on Bray et al. 2008) that 30 percent of this amount went toward community concessions, for an average of $4 per hectare per year. The analysis further assumes that domestic and international support will continue into the future following historical data trends from 1990–2005. Additional costs that are assumed not to be included in domestic and foreign investments include community expenditures on FSC certification ($0.29/ha/yr), community monitoring and enforcement ($0.55/ha/yr), and CONAP expenditures on monitoring and enforcement ($0.30/ha/yr). Finally, because the community concessions are known to sell timber and non-timber forest products, production expenses associated with these products are also included based on data from Stoian (2015). These production expenses are estimated at $10.89/ha/yr for timber products and $0.79/ ha/yr for non-timber products (equivalent to 87 percent of total revenue from timber and non-timber products), or $11.68/ha/yr total. Total estimated annual costs are $16.85 per hectare (see Table 7). The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Table 7 | ummary of Economic Costs for S Community Concessions in Guatemala’s Maya Biosphere Reserve ($/ha/yr) COST COMPONENT VALUE Domestic and international support $4.04 FSC Certification $0.29 Community monitoring and enforcement costs $0.55 CONAP monitoring and enforcement costs $0.30 Timber and non-timber production expenses $11.68 Total Annual Cost $16.85 Valuing Benefits of Securing and Maintaining Community Forest Tenure the annual avoided deforestation impact is estimated to remain stable at 1.54 percent, based on Blackman (2015) (see the Appendix for additional information on these studies and analysis assumptions). The annual avoided deforestation impact is then applied to the total area of community forest for each study area to estimate the annual area of avoided deforestation. The area to which the deforestation-rate impacts can be applied shrinks every year for both the policy and nopolicy scenarios9 and, as a result, carbon-storage values decrease slightly over time, but remain positive. Identifying and Monetizing Benefits The benefits that could be monetized for the economic analyses include carbon mitigation and timber and non-timber production. The analyses assume that these benefits apply only to the area of avoided deforestation for each year. The valuation method for benefits follows a three-step process. First, we identify the forest-cover change impact that relates to community forest-tenure establishment and maintenance. Second, we identify site-specific benefits that relate to forest-cover change impacts, based on the benefits categories defined in Section 5. Third, we monetize, or value, ecosystem-service benefits that relate to this forest-cover change. As stated previously, we do not include collective-action, conflict-resolution, and social benefits in the benefit-cost analyses because of data constraints (see Box 2). The estimate of the total carbon stored through avoided deforestation is based on the difference in carbon-stock values (the above- and below-ground biomass content in a given biome) between intact forest and partially deforested or deforested areas (i.e., a carbon-storage gap). To calculate total carbon storage based on avoided deforestation, for example, the annual area of avoided deforestation is multiplied by the per hectare carbon-storage value. For Brazil, the carbon-storage gap is equal to 120.4 tonnes of carbon per hectare (tC/ha); for Guatemala, the carbonstorage gap is equal to 75 tC/ha.10 Estimating the Forest-Cover Change Impact Because we are interested in understanding the broader societal economic gains related to tenure-security of community forests, the economic value of carbon storage resulting from avoided deforestation was estimated by multiplying the annual carbon-stock values by the social cost of carbon (SCC). The SCC reflects the fact that carbon-sequestration benefits stemming from avoided deforestation contribute to global climate mitigation and to reduced global damages from climate change.11 The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It includes (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services that result from climate change. In our analyses, we used the United States government’s latest estimate of the global social cost of carbon (SCC) of $41/tCO2 (US$ 2015) (Interagency Working Group on Social Cost of Carbon 2015). To determine the change in forest cover associated with establishing and maintaining tenure security, we relied on matching analyses for Brazil and Guatemala that estimated the impact of protected or community areas on deforestation. Matching analyses are able to isolate a policy-change impact (e.g., establishment of tenure security or protected area status) by comparing forest areas that are very similar in a variety of factors, but have different tenure or protection status. These studies estimated the difference in deforestation rates between tenuresecure areas (defined as protected areas or sustainable-use areas) and matched plots (i.e., the no-policy scenario). The annual avoided deforestation impact is the difference between these rates. For Brazil, the analysis assumes that avoided deforestation impact begins at 1.28 percent (based on Nepstad et al. 2006) and drops to 0.24 percent after 10 years (based on Nolte et al. 2013). In Guatemala, WORKING PAPER | November 2015 | 21 For Brazil, the annual value of carbon storage (or carbon mitigation) begins at $230/ha/yr and falls to $38/ha/yr over the analysis period, depending on the deforestation impact. For Guatemala, the value of carbon mitigation begins at $173/ha/yr and falls to $107/ha/yr over the analysis period.12 Because of data limitations, extractive-use benefits are estimated for Guatemala only and include timber and non-timber wood products based on data provided by ACOFOP (2015). ACOFOP estimates that, on average, a hectare of forest within the community concessions annually generates $12.51 in timber revenue and $0.91 in non-timber revenue. Comparing Benefits and Costs We calculated benefits and costs over a 20-year period and discounted them to their present value using a 2 percent and 6 percent real discount rate.13 We then compared the discounted benefits and costs using benefit-cost analysis and the metric of net present value (NPV). We selected benefit-cost analysis as the decision-support tool and NPV as the metric because community forest-tenure security is considered a long-term investment (greater than 10 years) by national governments to meet one or more goals. Goals might include poverty reduction, conflict resolution, preservation of forest ecosystems, support for communities and indigenous groups, and carbon mitigation. Benefitcost analysis enables policymakers to compare the benefits and costs of an investment decision to see whether it generates economic gains. NPV is a common metric for comparing benefits and costs because it converts benefits and costs into a single value by discounting so that they can be compared in present value terms. NPV allows policymakers to determine whether an investment generates losses or gains, and to compare investment options (Cubbage et al. 2013). In our analyses, we present NPV results at both per-hectare and aggregated-community-forest scales. We selected a 20-year analysis period for two reasons. First, a 20-year analysis period reflects the uncertainty and risks associated with maintaining tenure security over the long term. For example, community concessions in Guatemala are granted only for a 25-year period and may be canceled at any time. In Brazil, despite constitutional reforms, there are also tenure security risks. A large political faction in Brazil opposes the expansion of Indigenous Territories (Vianna 2015), and Brazil’s Indigenous Peoples’ policy still has extensive legal, institutional, and methodological deficits in how it handles the protec- 22 | tion and management of Indigenous Territories (GIZ 2015). Second, the matching analyses we relied on in our research generally report deforestation benefits on a short time period of 4 to 10 years, which makes it difficult to project benefits in a robust way for more than 20 years. The selection of a discount rate (or rates) is important in a benefit-cost analysis because it may greatly alter the NPV and ultimately, influence decision-making. We selected 2 percent and 6 percent discount rates, based on guidance from Cubbage et al. (2013), who explain: The appropriate discount rate is a controversial subject, but in principle it should represent an individual’s, organization’s, or government’s opportunity cost of capital for an investment . . . Discount rates commonly vary from as little as 2 percent to 10 percent in forestry literature, but are often as much as 6 percent to 15 percent or more in practice. The low discount rates will favor investments such as forestry that occur over a long time, since they will not decrease future values as much as high discount rates. Low discount rates may be considered appropriate for public goods and investments because they place relatively more value on returns for future generations. However, obtaining market loans at such low discount rates is often not possible, and many poor persons and communities may have very high discount rates—they need funds and income much more in the present than in the future. Thus the higher discount rates common in the market reflect the cost of capital for private goods and services. Because tenure-security investments can be viewed as national public investments, we estimated benefits using both 2 percent and 6 percent discount rates. (We also present results for a 10 percent discount rate in the Appendix, as part of a sensitivity analysis.) Beyond NPV, we also consider forests’ effectiveness in mitigating carbon emissions. We measure the cost of carbon mitigation as the investment cost of storing a tonne of carbon dioxide ($/tCO2) in the avoided deforestation area (calculated as the 20-year present value cost divided by the total tonnes of CO2 stored via avoided deforestation). We calculated this metric ($/tCO2) to allow readers to compare community forest-tenure security as a climatemitigation strategy with other climate-mitigation strategies. We do not, however, discuss other climate-mitigation strategies in this paper. The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala SECTION 7: RESULTS AND CONCLUSIONS Both Brazil and Guatemala demonstrate that estimated annual per-hectare costs of securing community forest tenure are low compared to benefits from carbon mitigation and timber and non-timber production. In Brazil, annual costs are estimated at $1.53/ha compared to potential annual carbon-mitigation benefits ranging from $230/ha to $38/ha over the analysis period. In Guatemala, annual costs are estimated at $16.85/ha, while annual benefits from carbon mitigation and timber and non-timber production are estimated at $187/ha to $120/ ha over the analysis period. Figure 4 compares the present value per hectare benefits to costs for both countries over the 20-year period using a 6 percent discount rate. Figure 4 | (In the Annex, we provide evidence from a community forest concession in Durango, Mexico that also points to the low costs and high benefits of secure community forest tenure.) The 20-year NPV results (benefits minus costs) for Brazil range from $1,454 to $1,743 per hectare for a 6 percent and 2 percent discount rate, respectively. Applying these values to the total area of Indigenous Territories in the Brazilian Amazon (111,177,224 hectares), the national level NPV is between $162 billion and $194 billion. Additionally, we estimate the cost of carbon mitigation (per tonne of CO2 emission removed from the atmosphere) through a 20-year investment in forest-tenure security to be between $0.39 (at a 6 percent discount rate) and $0.52/tCO2 (at a 2 percent discount rate). Results are summarized in Table 8. 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 $0 $19 BRAZIL GUATEMALA Costs Benefits Note: Costs are likely underestimated due to data constraints on tenure-security establishment and opportunity costs. Likewise, benefits are also likely underestimated due to data constraints. WORKING PAPER | November 2015 | 23 Table 8 | razil Benefit-Cost Analysis and B Cost/tCO2 Results (US$ 2015) DISCOUNT RATE 6% 2% 161,681,533,000 193,915,358,000 Net present value per hectare ($) 1,454 1,743 Mitigation cost ($/tCO2) 0.39 0.52 Total net present value ($) Community concessions in Guatemala also demonstrate positive economic gains to society. The 20-year NPV estimate per hectare ranges from $1,715 to $2,280 for a 6 percent and 2 percent discount rate, respectively. Applying this to the total area of community concessions (352,908 ha), total NPV ranges from $605 million to $805 million. In terms of the carbon-mitigation cost per tonne of CO2 emissions removed from the atmosphere through a 20-year tenure secure security plan, it is estimated to range from $7.37 to $8.50 at 6 percent and 2 percent discount rates, respectively. Results are summarized in Table 9. Table 9 | uatemala Benefit-Cost Analysis and G Cost/tCO2 Results (US$ 2015) DISCOUNT RATE 6% 2% 605,368,000 804,649,000 Net present value per hectare ($) 1,715 2,280 Mitigation cost ($/tCO2) 7.37 8.50 Total net present value ($) Both countries demonstrate that community forests are generating positive societal economic gains through only a subset of the benefits explored in Section 5. The benefitcost analyses do not consider the variety of ecosystemservice, collective-action, conflict-resolution, and other social benefits, so they likely underestimate the true economic gains to society from secure community forest tenure in the study areas. Additionally, the analyses do not consider all applicable costs because of data collection constraints. While costs are meant to be comprehensive in the Brazilian example, they do not include tenureestablishment costs (e.g., constitutional reforms, governmental decrees). For Guatemala, no detailed inventories 24 | of funding for the MBR (and specifically, the community concessions) have been conducted, especially for years after 2005. Additionally, production expenses for timber and non-timber extraction were available for only three concessions and may overestimate these costs. As a result, there is uncertainty associated with cost estimates. The sensitivity analysis was conducted to address these data uncertainties (see Appendix). Data collection constraints that should be considered are also described more in depth in Box 2. The mitigation cost ($/tCO2) results for both countries demonstrate that securing and maintaining community forest tenure may be a cost-effective way to mitigate climate change. The difference in values between Brazil and Guatemala is best explained by the difference in annual costs: Guatemala’s costs are considerably higher than Brazil’s and include timber and non-timber production costs. Although the values estimated may be used to compare carbon-mitigation strategies, we recommend that they be treated with caution, taking into account the data-collection constraints described in Box 2. Additionally, results should not be interpreted as the price that would need to be paid to avoid a hectare of deforestation in these regions. Given the uncertainty and data-collection constraints, we conducted a sensitivity analysis to test the robustness of our results. For the sensitivity analysis, we used a 10 percent discount rate in addition to the 2 percent and 6 percent discount rates and, where possible, we collected a range of benefit and cost data to create lower-bound and upper-bound estimates. The lower-bound estimate assumes high cost values and low benefit values, and the upper-bound estimate assumes low cost values and high benefit values. Additionally, the lower-bound estimate applies the average historical carbon price from the voluntary carbon market ($6/tCO2) instead of the SCC to value carbon-mitigation benefits. The higher-bound estimate assumes a SCC value of $119/tCO2 to reflect the 95th percentile upper-bound SCC estimate. Results for Brazil show that the NPV can range between $102/ha and $5,522/ha or $11 billion and $614 billion for all Indigenous Territories in the Brazilian Amazon. Results for Guatemala show that the NPV can range between $114/ha and $8,118/ha or $40 million and $2.8 billion for all nine active community concessions in the MBR. The Appendix provides additional details on the sensitivity analysis. The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Even with data limitations and the uncertainty inherent in benefit-costs analysis, our research supports three important findings: 1. Analysis results for Brazil’s Indigenous Territories and community concessions in the Guatemalan MBR suggest that efforts to secure community forest tenure are low-cost, high-benefit investments from an economic perspective. The community concessions in Guatemala demonstrate slightly higher gains despite higher per-hectare costs, largely because the concessions are allowed to manage for sustainable timber and nontimber production, and data on extractive benefits for Brazil are patchy. Our sensitivity analysis also demonstrates positive economic gains in both countries even when we used a much lower value of carbon of $6/tCO2. 2. Community forests can generate a wide variety of economic benefits by providing ecosystem services (e.g., biodiversity and climate regulation) and encouraging behavioral changes (e.g., collective action) that support conflict resolution and social benefits. Our results suggest that a better understanding of the multiple economic benefits of community forests could help demonstrate even higher net benefits and the high value of tenure security in improving forest-resources management and conservation. Economic valuation of community forest benefits could help policymakers to better target policies and investments. 3. From a financial perspective, investing in forest-tenure security can be a relatively cost-effective measure for climate-change mitigation when compared with other mitigation measures. However, while we believe our cost data are representative of tenure establishment and maintenance costs for both study areas, we faced data availability limitations in our analyses. Consequently, while our mitigation cost estimates can be useful for demonstrating the cost-effectiveness of community forests as a carbon-mitigation measure, they should not be interpreted as the price that would need to be paid to avoid a hectare of deforestation in these regions. Addressing some of the data constraints we describe in this paper could improve collective understanding of the potential net economic gains from community forests. Investing in improved monitoring and evaluation of community forests would be an important first step. Improved monitoring and evaluation could support a more thorough understanding of the benefits associated with improve- ments in forest cover and ecosystem health. It could also contribute to a more robust understanding of the benefits and costs associated with conflicts and social investments. More transparent stakeholder budgetary data would also help to fill some of the data gaps that researchers and policymakers face when trying to compare the full range of benefits and costs associated with secure community forest tenure. Beyond improving data availability and transparency, conducting similar analyses of other community forests, and comparing results for forests with secure and insecure tenure rights, would also build understanding of the economic case for secure community forest tenure. WRI is working with local experts to extend this work to other countries in South America, including Bolivia and Colombia.. This will allow us to extrapolate the results to the Amazon basin. Findings, conclusions, and policy recommendations will be captured in a WRI Research Report that will be published in 2016. ANNEX 1: CASE STUDY— COMMUNITY FOREST ENTERPRISE IN SAN BERNARDINO DE MILPILLAS CHICO, MEXICO Mexico has a long history of community lands, known as ejidos and comunidades. Ejidos are communally owned and governed on the basis of rural and indigenous traditions, while comunidades are owned by Indigenous Peoples who hold land titles dating back to the colonial period (Zuniga et al. 2012; Bray et al. 2005). Together, ejidos and comunidades hold roughly 60 percent of Mexico’s forests (see Figure 5). As of 2007, there were 31,514 ejidos and comunidades in Mexico (over 92 percent of them were ejidos), covering 106 million hectares. Roughly 65 percent of that land is designated as a common-pool resource of the community. The ejido and comunidad governance systems provide the structure and support for Community Forestry Enterprise (CFE) management institutions. CFEs are forest industries owned and operated by local and indigenous communities. Today, there are approximately 2,300 CFEs in Mexico (19 percent located within comunidades and 81 percent within ejidos) (Bray et al. 2010). Of these 2,300 CFEs, more than 200 have the capacity for industrial processing, sawnwood production, and the commercialization of products with added value, such as furniture, moldings, and flooring (Bray et al. 2007). Well-run CFEs that practice sustainable WORKING PAPER | November 2015 | 25 Figure 5 | Map of Ejidos and Comunidades (Núcleos Agrarios) in Mexico Location of San Bernardino Milpillas Chico. Source: CCMSS 2015 0 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 deforestation rates, and increasing the provision of valuable ecosystem services, such as biodiversity and water. Overall, the experience of CFEs in Mexico is showing that communities can successfully compete in international markets and generate positive economic gains both for the communities and for society. San Bernardino Milpillas Chico (Milpillas) is a communalproperty located in Pueblo Nuevo, Durango. It presents a case study of a successful CFE operation. Milpillas has just over 5,000 inhabitants; 20 percent belong to the ethnic group, Tepehuanos of the South (Tepehuanos del Sur), and 80 percent to the Mestizo population. The total area of Milpillas is 159,925 hectares, and it has 1,148 co-owners.14 Approximately 18,000 hectares of mixed 26 | pine-oak forest are managed for commercial production under a common property regime; this area could expand to ~47,000 hectares in the future. In 1961, a presidential decree recognized Milpillas as being under a communal-property regime. Over the past 20 years, the community has expanded operations and restructured its financing by moving away from financial support from private forest companies toward self-finance and government subsidies on the order of $65,000 to $80,000 a year. The community has installed four sawmills, drying ovens, a pallet factory, and a furniture factory (CCMSS 2015). In 2004, the community received forest management certification from the Forest Stewardship Council (FSC) with support from the Rainforest Alliance (Hernandez et al. 2010). The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Costs of CFE operations Benefits from CFE operations Several expenses associated with CFE operations are not covered by the subsidies that the community receives. These include: Over the past 40 years, the CFE has grown from simple forest operations to value-added operations such as furniture production. One of the earliest benefits of the switch to community ownership in 1961 was a decrease in conflicts associated with earlier government efforts to promote private timber management in the 1940s. Today, the CFE produces 40,000 cubic meters of certified pinewood under the FSC, an increase of 54 percent since 2005. Annual average company sales of lumber and timber products are roughly $2.2 million per year. ▪▪ ▪▪ ▪▪ FSC initial certification cost of $13,365 Establishing a community management plan at a cost of $346,500 Annual (recurring expenses) between $1.78 million and $1.81 million for: □□ Audit costs for FSC membership of $4,455/year □□ Timber production expenses of $1.14 million/year □□ Permits for transporting timber (required by law) at a cost of $5,940/year □□ CFE technical forest-management team expenses (e.g., salaries and administrative expenses) of $214,830/year □□ Sales and financial costs (timber sale expenses, including commissions and salaries, as well as bank account expenses) of $258,390/year □□ Activities to protect, conserve, and restore forest and soil resources of between $81,000 and $104,000/year. Activities include creating and maintaining firebreaks, controlling diseases and pests, conserving and restoring soils, and reforesting through natural regeneration and tree planting. Community investments made in activities to protect, conserve, and restore forest and soil resources have both increased forest cover on degraded lands and reduced fire incidence. In the 1990s, an average of 1,600 hectares was burned each year due to natural causes and unsustainable land management practices. By 2014, an average of only 20 hectares was burned per year. The Consejo Civil Mexicano para la Silvicultura Sostenible (CCMSS) estimates that reforestation occurs on roughly 31.5 hectares per year. Together, forest restoration and protection activities help to avoid the release of CO2 emissions. The CFE also serves as a regional employment center. Today, the CFE is the largest source of income for the community: it produces 430 direct full-time jobs throughout the supply chain and 120 to 130 temporary jobs. The temporary jobs last between one and six months and provide labor for reforestation, soil conservation and restoration, fire-break installation and maintenance, pest control, and the production of plants in the community’s nursery. A significant portion of profits from CFE operations is reinvested in the community. Each year the CFE pays co-owners for the rights to harvest timber—this represents a total direct economic benefit to the community of between $400,000 and $745,000 annually. Additionally, another $230,000 per year is invested by the CFE via the traditional government in cultural activities, health and education programs, and community infrastructure. WORKING PAPER | November 2015 | 27 APPENDIX: BENEFIT-COST MODEL, ASSUMPTIONS, AND SENSITIVITY ANALYSIS RESULTS BENEFIT-COST ANALYSIS MODEL The Benefit-Cost Analyses for Brazil and Guatemala compare a policy scenario to a no-policy scenario. As a result, the paper calculates the net present value (NPV), that is, the difference between the benefit and cost streams for the analysis period of 20 years by: 20 NPV = ∑ Bi – Ci ∑ Bi – C i i=1 20 NPV = (1 + r)i (1 + r)i Where: i=1 Bi = Benefits in year i 20 Ci= Costs in year i Bi – C i r= discount rateNPV = + r)i + M Ci = TEi +(1CFE i i i=1 Annual costs (Ci) were calculated in US$/ha/yr using the equation: ∑ Ci = TEi + CFEi + Mi Where: B = CMi + TFPi + NTFPi costs in year i TEi = Tenure-securityi establishment + CFEi +costs Mi in year i Ci = TEestablishment i CFEi= Community-forest Mi = Management, operating, and monitoring costs in year i Bi= CMi + TFPi + NTFPi Benefits (Bi) were calculated in US$/ha/yr using the equation: Bi= CMi + TFPi + NTFPi Where: CMi = Carbon-mitigation benefits in year i (US$/ha) TFPi = Revenue from timber forest-products sales for year i (US$/ha) NTFPi = Revenue from non-timber forest-products sales in year i (US$/ha) DATA ASSUMPTIONS Brazil To estimate community forest establishment and community forest management, operating, and monitoring costs, federal and local government budgetary data were collected by researchers from the University of São Paulo, who verified that this estimate provides a general approximation of costs. As FUNAI is the official indigenous agency of Brazil, costs are based on the average annual FUNAI budget for working with/managing indigenous lands from 2005 to 2014. These costs are broken out into three cost categories: ethnic identity/cultural heritage expenses, administrative expenses, and protection/land-management expenses. FUNAI’s annual budget for working with/ managing indigenous lands is available at the government online platform Transparência Pública (CGU/ Transparência Pública 2015). Additionally, local government expenditures for Indigenous Territories were also included in community forest establishment and community- 28 | forest management, operating, and monitoring costs based on the average expenditure from 2005 to 2014 (Finbra 2015). Table A1 provides an overview of national and local government expenses from 2005 to 2014. Local government expenses include support to Indigenous Peoples in order to guarantee their rights. This expense is included in a subgroup called “right of citizenship.” Expenses in this subgroup aim to guarantee the rights of minorities and to assist them inside the municipalities. These expenses are assumed to be indicative of local support for all the initiatives regarding Indigenous Peoples’ rights. Finally, the cost estimation also includes the cost of establishing a management plan. The calculation is based on a grant received by The Nature Conservancy (TNC) of $5.2 million for six Indigenous Territories. The total grant amount was divided by the area of six territories (1,248,948 hectares) in order to estimate a per hectare value. The analysis assumes that only about 60 percent of the grant is applicable because the grant may also cover overhead and other general expenses for TNC. It is further assumed that management plans are established in year one, and are a one-time, upfront, expense. The management-plan cost is estimated at $2.61/ha/yr. 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 underestimate costs because it appears likely that the budget for national programs 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 assumes maximum costs; upper bound assumes minimum costs). 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) for 1997 through 2000, and 2000 through 2010 respectively. Nepstad et al. (2006) found that indigenous lands in the Brazilian Amazon strongly inhibited deforestation, especially near agricultural areas. The study estimated the deforestation of indigenous lands using satellite data and land-cover maps. As a metric of indigenous land performance, the study estimates the ratio of deforestation outside the indigenous land boundary versus inside the indigenous land boundary (using 10 km wide strips), from 1997–2000. Deforestation was detected based on forest replacement by cattle pastures and agricultural land, and by detecting fires that are used in the forest-clearing process and in maintaining cattle pastures. The annual deforestation rate for areas outside the buffer zone from 1997–2000 was roughly 1.45 percent, whereas the annual deforestation rate inside the buffer zone for the same time period was roughly 0.17 percent. Nolte et al. (2013) also estimated the inhibitory effect of indigenous lands on deforestation in the Brazilian Amazon. Control groups were identified by repeatedly sampling forested parcels from within the boundaries of the indigenous lands and matching them to forested parcels that had never been protected up to 2010 but were similar in terms of key covariates associated with the likelihood of protection and deforestation. The study used two satellite datasets (PRODES and GFCL) and estimated a range of deforestation impacts between 2000 and 2010. The study found that indigenous lands were effective in avoiding deforestation, but that this impact decreased over time between the first and second half of the decade due to a decrease in deforestation rates on unprotected forest parcels in the Amazon. 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) ETHNIC IDENTITY/ CULTURAL HERITAGE ADMINISTRATIVE EXPENSES PROTECTION/ MANAGEMENT LANDS TOTAL LOCAL GOVERNMENT EXPENDITURES ($) 2005 0.11 0.20 0.26 0.57 0.03 0.60 2006 0.10 0.17 0.21 0.48 0.03 0.50 2007 0.22 0.38 0.49 1.09 0.03 1.12 2008 0.24 0.42 0.54 1.19 0.02 1.21 2009 0.28 0.49 0.63 1.41 0.03 1.44 2010 0.33 0.57 0.73 1.63 0.12 1.74 2011 0.34 0.59 0.76 1.69 0.02 1.71 2012 0.33 0.58 0.75 1.66 0.01 1.67 2013 0.35 0.62 0.80 1.77 — 1.77 2014 0.32 0.56 0.72 1.59 — 1.59 AVG 0.26 0.46 0.59 1.31 0.03 1.34 Lower Bound 0.35 0.62 0.80 1.77 0.12 1.88 Upper bound 0.10 0.17 0.21 0.48 0.01 0.48 YEAR FUNAI EXPENDITURES ($) TOTAL ($) Source: CGU/Transparencia Publica 2015; FINBRA 2015. Based on these two studies, the Benefit-Cost Analyses for Brazil assumes the following deforestation rates (Table A2): Deforestation Rates for the Benefit-Cost Analyses for Brazil Table A2 | YEARS 1–4A (%) YEARS 5–9B (%) YEARS 10–20C (%) Average annual deforestation rate— no-policy scenario 1.45 0.80 0.26 Average annual deforestation rate— policy scenario 0.17 0.03 0.02 Deforestation impact 1.28 0.77 0.24 by the carbon-storage value, to estimate the difference between carbon storage (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 (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 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). The total benefits and costs are then multiplied by the total area of Indigenous Territories in Brazil, to estimate Amazon-wide benefits. Guatemala Sources: a. Nepstad et al. (2006) estimate from 1997–2000 b. Average estimate from Nolte et al. (2013) using value from 2001–2005 using PRODES dataset and value from 2000–2005 from GFCL dataset c. A verage estimate from Nolte et al. (2013) using value from 2006–2010 using PRODES dataset and value from 2005–2010 using GFCL dataset The deforestation rate for each scenario is multiplied by a starting area of 1 hectare to estimate the area deforested in year one. The difference in deforested area between the policy and no-policy scenario is the area of avoided deforestation. The area of avoided deforestation is then multiplied The costs of tenure security and establishment; community forest establishment; and community forest management, operating, and monitoring are based on domestic and foreign investments in the MBR and community concessions between 1989 and 2005, as shown in Table A4. USAID appears to have contributed the most during this period, but other funders include the Guatemalan government, KfW Bankengruppe (German Development Bank), Inter-American Development Bank, the ICCO Cooperation, Ford Foundation, and Scandinavian countries. Bray et al. (2008) estimate that between 20 percent and 40 percent of USAID funding was used to establish the community concessions. Based on this finding, the analysis assumes that 30 percent of total funding ($131 million) was used for community concession establishment and ongoing maintenance expenses. Using this number, an average annual value per hectare of $4 was calculated, assuming the investments apply to the original 12 concessions, or 400,829 hectares. The analysis assumes that investments continue to be made at this rate into the future. WORKING PAPER | November 2015 | 29 Table A3 | Carbon Storage Values by Forest Type and Biome (Above- and Below-Ground Biomass) FOREST CLASSIFICATION AVERAGE CARBON STORAGE (TC/HA) BRAZIL—AMAZON BASIN, TROPICAL/SUBTROPICAL MOIST BROADLEAF FOREST BIOME GUATEMALA—PETÉN, TROPICAL/SUBTROPICAL MOIST BROADLEAF FOREST BIOME Intact 154.10 148.04 Fragmented / Managed 129.54 130.91 Partially deforested 68.22 87.44 Deforested 33.72 57.99 Note: Carbon storage estimates per forest condition category for each area were calculated at WRI using the following GIS datasets: WWF 2001; Potapov et al. 2011; and Saatchi et al. 2001. Table A4 | Domestic and Foreign Investments in the MBR and Forestry Concessions in Guatemala, 1990–2005 PROJECT ORGANIZATION(S) YEARS COST (US$ 2015) USAID/CONTRAPARTES 1990–2002 54,000,000 Sustainable Development Project IDB 1998–2002 26,400,000 PROSELVA KFW 1998–2000 36,960,000 CENTRO MAYA USAID 1998 162,000 CATIE/CONAP USAID 1998 1,200,000 Scandinavian countries 1999 98,400 USAID 2002–2004 10,680,000 — Ford Foundation 1999–2004 564,000 — ICCO 2000–2005 720,000 130,784,400 Maya Biosphere Project OLAFO (Final phase) BIOFOR TOTAL Source: Gomez and Mendez (2005). The analysis assumes that costs covered by these domestic and foreign investments include: ▪▪ MBR and Community Concession establishment costs ▪▪ FSC assessment costs (Carrera et al. 2006) ▪▪ ACOFOP’s budget (Rosales 2010) The analysis further assumes that costs not covered by these investments include: annual audit, membership, and compliance costs (assumed to be ▪▪ FSC paid for by communities) ▪▪ Community and CONAP monitoring and enforcement costs ▪▪ Timber and non-timber production costs 30 | FSC annual audit, membership, and compliance costs are based on data provided by Carrera et al. (2006) and equal $0.29/ha/yr. Community and CONAP monitoring and enforcement costs are based on data provided by ACOFOP (2015) and equal $0.5/ha/yr and $0.3/ha/yr, respectively. Timber and non-timber production costs are based on data from Stoian (2015) for three concessions (Chosquitan, Carmelita, and Cruce a la Colora). Stoian estimated that production expenses are equal to roughly 87 percent of total revenues from timber and non-timber sales. Carbon-mitigation benefits are calculated using the same process as for Brazil. The deforestation impact is based on matching analysis results from Blackman (2015). Blackman’s matching study of deforestation in the MBR used 2001-2006 forest loss data and controlled for land characteristics in order to isolate the actual effect of different management regimes. The study found that the average predicted probability of deforestation in matched unprotected lands outside of the reserve was 2 percent per year. This value is assumed to be equal to the counterfactual annual deforestation The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Table A5 | Timber and Non-Timber Product Sales from Community Concessions in the MBR in Guatemala COMMUNITY CONCESSION TIMBER PRODUCT SALES ($) NON-TIMBER PRODUCT SALES ($) ASOCIACION AFICC 964,762 11,300 ASOCIACION AFISAP 4,474,703 219,496 SOCIEDAD CIVIL OMYC 3,097,472 1,018,725 SOCIEDAD CIVIL EL ESFUERZO 3,003,672 145,459 SOCIEDAD CIVIL LABORANTES DEL BOSQUE 4,645,580 16,751 SOCIEDAD CIVIL CUSTODIOS DE LA SELVA 3,883,139 432 SOCIEDAD CIVIL IMPULSORES SUCHITECOS 3,834,626 $0 SOCIEDAD CIVIL ARBOL VERDE 4,745,362 3,660 COOPERATIVA CARMELITA 2,940,062 1,163,564 FORESCOM 3,738,779 0 Total 35,328,158 2,597,386 Annual total $4,416,020 322,423 rate. Blackman’s model predicts that the average deforestation rate per year inside community concessions is approximately 0.44 percent per year, so the deforestation impact (the difference between the counterfactual and community concession deforestation rates) is 1.56 percent per year.15 The carbon-storage value is based on the difference in above- and below-ground biomass found in intact forest versus that found in partially deforested and deforested areas (average value). The value is estimated at 75 tC/ha (see Table A3). Timber and non-timber revenues are based on data provided by ACOFOP (2015) for 2007–2015, as shown in Table A5. While ACOFOP (2015) reports that tourism generates revenues of $37,500 per year for two communities within the community concession area, the production expenses associated with tourism, and who incurs these costs, are not clear. As a result, tourism benefits are not included in the BenefitCost Analyses calculation. SENSITIVITY ANALYSIS RESULTS Due to the complexity of the research question and data-collection constraints, a range of benefit and cost data was collected, where possible, to create lower-bound, average, and upper-bound estimates to cover the range of uncertainties associated with the data and valuation methods. (Only average estimates are provided in the main body of the working paper.) Carbon-storage value: the lower-bound estimate, the carbon-market value is based on the ▪▪ For value communities might expect to receive in a voluntary market of $6/ tCO2—based on the average historical carbon-market price from the 2014 State of the Voluntary Carbon Markets Report from Forest Trends (PetersStanley and Gonzalez 2014). For the average estimate, a SCC value of $41/tCO is used that better ▪▪ reflects the global benefits of carbon mitigation. This value is based on the 2 most recent United States Interagency study (Interagency Working Group 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 interagency report shows that SCC values increase from 2015 through 2050, the SCC value is held constant over time to be more conservative. the upper-bound estimate, a higher SCC value of $119/tCO is used, ▪▪ For based on the 95th percentile upper-bound SCC value recommended by 2 the U.S. Interagency study. While the interagency study shows that SCC values increase from 2015 through 2050, the SCC value is held constant over time to be more conservative. Additionally, the discount rate was varied between 2 percent, 6 percent, and 10 percent, based on Cubbage et al. (2013). These rates were used for conducting a sensitivity analysis to test the robustness of the results. Tables A6–A11 summarize data assumptions and results for the sensitivity analysis (by country). 1. A lower-bound estimate that assumes low benefits and high costs; 2. An average estimate that assumes average benefit and cost values; 3. An upper-bound estimate that assumes high benefits and low costs. WORKING PAPER | November 2015 | 31 Brazil Sensitivity Analysis: Assumptions and Results: Table A6 | Brazil Deforestation Rate Assumptions LOWER BOUND YEARS 1–4A (%) YEARS 5–9B (%) YEARS 10–20B (%) Average annual deforestation rate—no-policy scenario 1.45 0.72 0.21 Average annual deforestation rate—policy scenario 0.17 0.02 0.02 YEARS 1–4A (%) YEARS 5–9B (%) YEARS 10–20B (%) Average annual deforestation rate—no-policy scenario 1.45 0.80 0.26 Average annual deforestation rate—policy scenario 0.17 0.03 0.02 YEARS 1–4 (%) YEARS 5–9 (%) YEARS 10–20 (%) Average annual deforestation rate—no-policy scenario 1.45 0.89 0.32 Average annual deforestation rate—policy scenario 0.17 0.04 0.02 AVERAGE UPPER BOUND Source: a. Based on Nepstad et al. (2006) b. Based on Nolte et al. (2013) Table A7 | Data Assumptions for Carbon-Storage Benefits and Costs to Brazil CARBON VALUE ($/TCO2) CARBON STORAGE GAP (TC) Lower 6 Average Upper Table A8 | FEDERAL AND LOCAL GOVERNMENT EXPENDITURES ETHNIC IDENTITY/ CULTURAL HERITAGE ($/HA/YR) ADMINISTRATIVE EXPENSES ($/HA/YR) PROTECTION/ MANAGEMENT LANDS ($/HA/YR) LOCAL GOVERNMENT COSTS ($/HA/YR) MANAGEMENTPLAN COST ($/HA) 85.89 0.35 0.62 0.80 0.12 4.18 41 103.13 0.26 0.46 0.59 0.03 2.09 119 120.38 0.10 0.17 0.21 0.01 1.05 Sensitivity Analysis: Results for Brazil DISCOUNT RATE NPV PER HECTARE ($/HA) TOTAL NPV (MILLION $) CARBON MITIGATION COST ($/TCO2) 2% 6% 10% 2% 6% 10% 2% 6% 10% 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 Lower 32 | The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala Guatemala Sensitivity Analysis: Assumptions and Results Table A9 | Benefit Assumptions for Community Concessions in Guatemala DEFORESTATION IMPACT (%) CARBON VALUE ($/TCO2) CARBON STORAGE GAP (TC) TIMBER REVENUE ($/HA/YR) NON-TIMBER REVENUE ($/HA/YR) Lower 1.54 6 61.0 12.51 0.91 Average 1.54 41 75.5 12.51 0.91 Upper 1.54 119 90.0 12.51 0.91 SCENARIO Table A10 | Cost Assumptions for Community Concessions in Guatemala (US$/ha) INTERNATIONAL AND DOMESTIC TECHNICAL AND FINANCIAL ASSISTANCE FOR ESTABLISHMENT AND MANAGEMENT ($/HA) FSC CERTIFICATION ($/HA) COMMUNITY MONITORING AND ENFORCEMENT COSTS ($/HA) CONAP MONITORING AND ENFORCEMENT COSTS ($/HA) TIMBER PRODUCTION COSTS ($/HA) NON-TIMBER PRODUCTION COSTS ($/HA) Lower bound 6 0.29 0.55 0.30 10.89 0.79 Average 4 0.29 0.55 0.30 10.89 0.79 Upper bound 2 0.29 0.55 0.30 10.89 0.79 Table A11 | Benefit-Cost Analyses Results for Guatemala Including Sensitivity Results NPV ($/HA) TOTAL NPV (MILLION $) CARBON MITIGATION COST ($/TCO2) Discount rate 2% 6% 10% 2% 6% 10% 2% 6% 10% Lower bound 187 142 114 66 50 40 6 4 3 Average 2,280 1,715 1,358 805 605 479 8 7 7 Upper bound 8,118 6,104 4,830 2,865 2,154 1,704 3 2 2 WORKING PAPER | November 2015 | 33 REFERENCES Amazon Fund. 2015. “Fortalecimento da Gestão Territorial e Ambiental de Terras Indígenas na Amazônia.” (Strengthening Territorial and Environmental Management of Indigenous Lands in the Amazon). 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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 establishment and maintenance costs, the data are limited. For example, the Brazil analysis does not include tenure-establishment costs, so the costs presented will be an underestimate. For Guatemala, there are no detailed inventories of funding for the MB (and specifically, the community concessions), especially for years after 2005. Additionally, production expenses for timber and non-timber extraction were available only for three concessions and may overestimate these costs. As a result, the cost estimates are uncertain. The sensitivity analysis described in the paper’s Appendix was designed to address these uncertainties. 10.Carbon-storage estimates per forest condition category for each area were calculated at WRI using the following GIS datasets: WWF 2001. “Ecoregions.” Available at: http://worldwildlife.org/biomes; Potapov, P., L. Laestadius, and S. Minnemeyer. 2011. “Global map of forest condition.” Washington, D.C.: World Resources Institute. Available at www. wri.org/forest-restoration-atlas; and Saatchi, S.S., N.L. Harris, S. Brown, M. Lefsky, E. Mitchard, W. Salas, B. Zutta, W. Buermann, S. Lewis, S. Hagen, S. Petrova, L. White, M. Silman, and A. Morel. 2011. “Benchmark map of forest carbon stocks in tropical regions across three continents.” Proceedings of the National Academy of Sciences (108)24: 9899–9904. 2. Available from <http://downloads.ibge.gov.br/downloads_geociencias. htm>; Download date: 2013 11.In a benefit-cost analysis, SCC can be interpreted as the value of avoided climate damages at the margin or Marginal Damage Cost (MDC)—in other words, a marginal benefit to the society—in association with one tonne CO2 emissions reduction, to be compared with Marginal Abatement Cost (MAC), which is derived from the global MAC curve that aggregates the costs of different technologies to reduce one tonne of emissions (Ding 2011; Pearce 2003). If MDC and MAC curves are precisely defined, then the estimated carbon price (i.e. the interplay between the MDC and MAC curves) shall indicate the social optimum level of emissions reduction control (Perman et al. 2003). 3. Available from <http://www.funai.gov.br/index.php/shape>; Download date: July 2015 4. As of 2015, two concessions have been cancelled, one suspended, and one suspended but later reinstated (Hodgdon et al. 2015, Rodas et al. 2014). Concessions can be revoked if the community does not follow its management plan or lacks operational or financial sustainability (Hodgdon et al. 2013; Gretzinger 1998). All cancelled or suspended community concessions experienced a similar rapid increase in population and turnover, as well as rampant illegal land appropriations affecting between 30 percent and 50 percent of the concession area. Additionally, these concessions lacked a historical tie to the land (Radachowsky et al. 2012). 5. Ecosystem services valued included food, water, raw materials, genetic resources, medicinal resources, improvement of air quality, climate regulation, regulation of water flows, waste treatment/water purification, erosion prevention, and recreation and tourism. 6. Ecosystem services include carbon benefits and 15 other services including water regulation, pollination, and food production. 12.For Brazil, the deforestation impact is assumed to decrease over time based on evidence from Nepstad et al. (2006) and Nolte et al. (2013). For both Brazil and Guatemala, the area to which carbon-storage benefits can be applied shrinks over time as deforested area is assumed to be converted to degraded area. 13.A 6 percent discount rate is the average discount rate based on Cubbage et al.’s (2013) finding that forestry studies tend to use a discount rate between 2 percent and 10 percent. 7. OECD (2013) defines collective action as “action taken by a group to achieve common interests.” 14.A co-owner or comunero is a person with land rights and who is a landowner in common with other comuneros. Comunero status is legally recognized by presidential decision or judgment of the corresponding Agrarian Court (Tribunal Unitario). 8. This value does not represent a net revenue number because the staffing, administrative, and other costs associated with ecotourism are not clear. 15.This assumption was verified by Dr. Allen Blackman in a personal communication 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. WORKING PAPER | November 2015 | 37 ACKNOWLEDGMENTS ABOUT THE AUTHORS The authors would like to acknowledge the following individuals for their valuable guidance, critical reviews, and research support: David Kaimowitz (Ford Foundation); Penny Davies (Ford Foundation); Benjamin Hodgdon (Rainforest Alliance); Kevin Currey (Ford Foundation); David Bray (Florida International University); Kenneth Chomitz (Forest Trends); Paul Isbell (Johns Hopkins University); Allen Blackman (Resources for the Future); Caleb Stevens (United States Agency for International Development); Helen Mountford (WRI); Mark Robinson (WRI); Free de Koning (WRI); Katie Reytar (WRI); Laura Malaguzzi Valeri (WRI); Gaia Larson (WRI); Chris Delgado (WRI); and Julia Hussey (WRI). We would also like to thank the community of San Bernardino Milpillas Chico (Milpillas) in Pueblo Nuevo, Durango, Mexico, for allowing us to develop a case study of their Community Forest Enterprise. Erin Gray is an environmental economist with the World Resources Institute’s Economics Center, USA. We would like to acknowledge those involved with graphic design, editing and layout as well as communications and outreach: Hyacinth Billings (WRI), Michelle DeCesare (WRI), Carni Klirs (WRI), Emily Matthews (WRI), Michael Oko (WRI), Emily Schabacker (WRI), Madaleine Weber (WRI), and Lauren Zelin (WRI). We also receive communications support from Burness, a global communications firm that supports nonprofit organizations. Helen Ding is an environmental economist with the World Resources Institute’s Economics Center, USA. For this working paper, WRI is indebted to the Climate and Land Use Alliance, Good Energies Foundation, Ministry of Foreign Affairs of the Netherlands and Irish Aid for their generous financial support. Contact: prozwalka@gmail.com This working paper represents the views of the authors alone. It does not necessarily represent the views of the World Resources Institute or its funders. Contact: EGray@wri.org Peter G. Veit is Director of the Land and Resource Rights Initiative in the World Resources Institute’s Governance Center, USA. Contact: peterv@wri.org Juan Carlos Altamirano is an economist with the World Resources Institute’s Economics Center, USA. Contact: jcaltamirano@wri.org Contact: helen.ding@wri.org Piotr Rozwalka is a graduate student in economics at the Stockholm School of Economics, Sweden, and a Wallenberg Fellow at Georgetown University, USA. Iván Zúñiga is the Forest Policy Coordinator at the Mexican Civil Council for Community Forestry (Consejo Civil Mexicano para la Silvicultura Sostenible), Mexico. Contact: izuniga@ccmss.org.mx Matthew Witkin is a student in Environmental Studies at Middlebury College, USA. Contact: mattwitkin@gmail.com Fernanda Gabriela Borger is a Senior Researcher in Fundação Instituto de Pesquisas Econômicas of the Department of Economics at the University of São Paulo, Brazil. Contact: fgborger@fipe.org.br Andrea Lucchesi is an Assistant Professor at the University of São Paulo, Brazil. Contact: andrea.lucchesi@usp.br Paula Carvalho Pereda is an Assistant Professor in the Department of Economics at the University of São Paulo, Brazil. Contact: pereda@usp.br Keyi Ando Ussami is a Research Assistant in the Department of Economics at the University of São Paulo, Brazil. Contact: keyi.ussami@usp.br 38 | The Economic Costs and Benefits of Securing Community Forest Tenure: Evidence from Brazil and Guatemala WORKING PAPER | November 2015 | 39 ABOUT WRI World Resources Institute is a global research organization that turns big ideas into action at the nexus of environment, economic opportunity and human well-being. Our Challenge Natural resources are at the foundation of economic opportunity and human well-being. But today, we are depleting Earth’s resources at rates that are not sustainable, endangering economies and people’s lives. People depend on clean water, fertile land, healthy forests, and a stable climate. Livable cities and clean energy are essential for a sustainable planet. We must address these urgent, global challenges this decade. Our Vision We envision an equitable and prosperous planet driven by the wise management of natural resources. We aspire to create a world where the actions of government, business, and communities combine to eliminate poverty and sustain the natural environment for all people. Our Approach COUNT IT We start with data. We conduct independent research and draw on the latest technology to develop new insights and recommendations. Our rigorous analysis identifies risks, unveils opportunities, and informs smart strategies. 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