Mpact of Community Forestry on Income-poor-rich-gap

8/13/2019 Mpact of Community Forestry on Income-poor-rich-gap

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IMPACT OF COMMUNITY FORESTRY ON INCOME

DISTRIBUTION IN NEPAL: PARTICULARLY ON POOR-

RICH GAP

Dr. Anuja Raj Sharma, Community Forestry Division, Department of Forests, Nepal.

Abstract

Community forestry is one of the major programme that is being implemented in Nepal for last three

decades. The programme with twin goals: nature conservation and poverty reduction is believed to be

faring well with the first goal. The paper exclusively focuses on the impact of community forestry on

income distribution and reviews relevant studies with the conclusion that community forestry has

contributed in poverty reduction and intensive management expedites the whole process.

Keywords: Community forestry, income distribution, Gini coefficient, poverty,

household, forest management.


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Analysis of situation

Development philosophy has changed over time and the changed policies are reflected

even in the Forest sector of Nepal. The newer perspectives require that the development

should be achieved on the basis of increased rural income and output. The importance is

also being placed on achievements of equity, and emphasising the distribution aspects

underlying growth and development while people's participation in the development

process is mandatory. Community forestry in Nepal is an outcome of changes in

development philosophy. The Programme in Nepal is a global innovation in participatory

environmental governance that encompasses well-defined policies, institutions, and

practices with dual mandates: the conservation of forest resources and poverty reduction

(Baral, Vacik and Sekot, 2009; Ojha, Persha and Chhatre, 2009). As more than 70

percent of Nepals population depends on agriculture for their livelihood, community

management of forests has been a critically important intervention.

The programme is hailed as a success in replenishing greenery in once a barren Hills of

Nepal (Sharma, 2010c). The latest statistics (as of January, 2011) shows 15256 Forest

User groups managing 1.35 million hectares of community forests (23.2% of the total

forest area) with 1.65 million beneficiary-households (42% of the total).

Thus, it is widely accepted that community forestry (CF) is successful in conserving

forest resources; however, its poverty reduction approach is still a subject of discourse

(Baral, Vacik and Sekot, 2009 ).


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Although widely appreciated as a successful programme in terms of rehabilitating forest

condition, the state of institutional and social inclusion and livelihoods opportunity is

discouraging and has not been recognized at national level in line with the other

achievements made so far (Chapagain, Kafle and BK, 2009).

To what extent the re-growth of biomass in the community forests has contributed to

uplift the livelihood of Nepalese people still remains largely unknown. The contribution

of community forestry on household income has not been properly valued and quantified

at national level1. Hence, there are conflicting findings regarding the role of community

forestry in poverty alleviation or reduction and an effort is being made in this paper to

take a stock on this aspect.

Community forestry is expected to reduce poverty, particularly in remote areas of Nepal,

where the population below standard poverty line is extremely high and the forest

condition degraded (Chapagain, Kafle and BK, 2009).

The immediate livelihood benefits derived by rural households bolster strong collective

action wherein local communities actively and sustainably manage forest resources.

Community forests also became the source of diversified investment capital and raw

material for new market-oriented livelihoods. Community forestry shows traits of

political, financial, and ecological sustainability, including emergence of a strong legal

and regulatory framework, and robust civil society institutions and networks (Ojha,

Persha and Chhatre, 2009).

1A comprehensive study covering all five development regions of Nepal is being commissioned by theMinistry of Forests and Soil Conservation, Nepal with development partners: Livelihoods Forestry Project(LFP), Swiss Agency for Development and Cooperation (SDC) etc and the report is expected in nearfuture.


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There are scant studies on community forestry's socio-economic consequences, income

distribution in particular (Bampton and Cammaert, 2007; Baral, Vacik and Sekot, 2009;

Chapagain, Kafle and BK, 2009; Dhakal, Bigsby and Cullen, 2006; Kafle, 2008; LFP,

n.d.; Ojha, Persha and Chhatre, 2009; Sharma and Kanel, 2002; Sharma, 2010 etc) Most

of the studies conducted so far circumvent prevailing poverty and inequality. The

findings are conflicting, some argue that community forestry has either aggravated

poverty or it has almost no substantial effect on poverty reduction (Adhikari, 2003;

Bampton and Cammaert, 2007; Dhakal, Bigsby and Cullen, 2006; Pokharel, 2007 etc.)

While there are other studies that argue in significant reduction of poverty through

community forestry programme in Nepal (Baral, Vacik and Sekot, 2009; Chapagain,

Kafle and BK, 2009; Kafle, 2008; LFP, n.d.; Sharma and Kanel, 2002; Sharma, 2010)

It is still not clear how much financial resources is required to carry out poverty

alleviation activities in community forestry (that encompass 1/3rd

of the total Nepalese

households). These all information gaps make the success of community forestry largely

rhetorical.

Discussion

In this section, the focus will be on the objectives, methodologies of different studies

carried out in the topic and constraints, opportunities pertaining to the reduced gap

between rich and poor households through community forestry.

The main objectives of this paper are to assess the impact of community forestry on

income distribution in regard to the existing income inequality in Nepal, and to quantify


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the contribution of community forestry on farm-household income. Besides identifying

the constraints, opportunities and challenges in regard to poverty alleviation through

participatory forest management in general and community forestry in particular.

Bampton and Cammaert (2007) discuss the history of community forestry in the Terai,

differential access to the forests between the inhabitants of northern and southern areas of

Terai and focus on serious inequalities between FUGs, between FUGs members and non

members.

To evaluate the community forestry programme for its economic contribution to the poor

user, Baral, Vacik and Sekot (2009) carried out study in two community forest users

groups (FUG) of Dolakha District, by stratifying households into different economic

groups through well-being ranking2. They also used Lorenz curves and Gini-coefficients

to characterise the distribution of the household income.

Sharmas (2010) carried out his research at two levels: macro and micro respectively. The

first one involved mainly deskwork and it extensively used the data and information of

the National FUG database containing information of 13,791 FUGs, covering 1.14

million hectares of community forests and 1.58 million households in Nepal. While at

micro level, one case-study (Kumariban community forest) was carried out not only to

test the empirical validity but also to get insights on the linkages of macro and micro

level data. Various tools such as Gini coefficient, income variance method, Spearmans

rank correlation, Bartletts test etc. were used in the research.

Major findings

2Previously called wealth ranking.


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After carrying out research in the Terai region of Nepal, Bampton and Cammaerts

(2007) main finding was that community forestry does not contribute to poverty

alleviation through targeted use of timber rents alone. Nevertheless, they conclude that

through judicious and systematic reform, the contribution of CF to poverty reduction can

be significantly increased.

Sharma (2010) estimated that each FUG member household gets an annual income of

NRs 3955 (US $ 57) due to community forestry (in 2004 prices). The estimated income

of the community forests in Nepal for the year 2010 is about NRs 10.9 billion3 (US $

0.16 billion) including subsistence use.

Sharma (2010) opined that income from animal husbandry, and salary has a disequalising

effect while wage income, self employment and income from community forest products

have equalising effects on income distribution based on the findings of his research.

Gini coefficient of household income calculated by Sharma (2010)4including community

forestry income was 0.242 while excluding that was 0.265, indicating that community

forestry reduces the coefficient by 0.023, hence, contributes to reduce poverty by about

3The income is corrected for annual inflation (9%) and the figure is obtained by multiplying with 1.65million households which are the beneficiaries through out the country.

4 Sharma (2010) used wealth ranking for delineating the households by wealth and also used incomeranking. Development partners in Nepal are increasingly using wealth ranking instead of household surveyfor stratifying household (for the purpose of development intervention). As the former is parsimonious andless time consuming than the latter. Spearman's rank correlation coefficient (0.712) suggests wealth rankingand income ranking closely resemble.


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eight percent. He also reiterated that, through intensive management5, the coefficient

lowers by 0.038 meaning that there can be a reduction of poverty by 22 percentage point.

Passive forest management hinders community forestry's contribution to poverty

alleviation (Sharma and Kanel, 2002). They suggest amendment in the forest rules (basic

needs oriented) as the rule was inconsistent with the government's policy directives set

out in the National Plan. However, any attempt towards intensive forest management

needs to be accompanied with equity and taxation issues in Community Forestry. As

already mentioned, Community Forestry is often subjected to the criticism due to the

dominance of elite and high caste people in the user groups, threatening it's potential as a

viable development strategy for securing the basic needs (Graner, 1997 cited in Sharma

and Kanel, 2002) because of the following reasons:

Dominance of economically advantaged groups in CFUG membership;

Exclusion (often) of disadvantaged groups from membership; and

Disadvantaged group may lose access to VITAL resources.

Community Forestry income has more equalizing effect in the household income of poor

class households. The absolute income of CF to rich class households is the largest

though it seems greater to the poor in percentage income terms (kafle, 2008).

Baral, Vacik and Sekot (2009) calculated with and without the contribution of

community forestry to the households' income and underpin the significance of income

based on forest resources especially for the poor. Their results show that in both FUGs

community forest contributed to reduce the income inequalities among different

5Sharma (2010) defined intensive management as a situation where the forest products and employmentgeneration increases by the fivefold to the normal level.


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economic classes, with the conclusion that community forestry is not only successful in

forest conservation but can also help in abating poverty (Baral, Vacik and Sekot, 2009).

Chapagain, Kafle and BK (2009) explored the existing situation of relative poverty and

ways to feed the community forestrys achievements into the national poverty reduction

goal. Their paper based on LFP study, carried out on the 2700 households of the sampled

26 CFUGs, demonstrates the importance of a standard absolute relative line to quantify

the socioeconomic changes (Chapagain, Kafle and BK, 2009).

The result shows very encouraging status in regards to change in livelihoods condition of

poor whereas more than 45% poor users have crossed the relative poverty line due to the

membership of community forest (Chapagain, Kafle and BK, 2009).

Sharma (2010) used a poverty line of NRs 78,300 (US $ 1118) per household/year and

employed poverty gap analysis, to estimate financial resources required to carryout

poverty alleviation activities in community forests to a magnitude of NRs 37.72 billion in

2004 price (US$ 503 million).

LFP comprehensive study, carried out in seven eastern districts of Nepal,report that the

annual incomes of respondents (after adjusting for inflation) had increased by 61%

between 2003 and 2008. This annual growth rate of 12% was five times the national

growth rate. The study attributed 25% of this increase to community forestry and LFP

support, 54% to remittance incomes, 12% to general economic growth and 9% to other

development efforts.


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LFP study, report that the number of households living below the poverty line dropped

from 65% in 2003 to 28% in 2008. The proportion of very poor households came down

from 42% to 10%. These figures imply that 72,000 households (about 433,000 people)

had moved out of poverty. Improved living standards were recorded in terms of asset

ownership, sanitation and access to drinking water and electricity.

Firewood, grass and leaf-litter are the important subsistence products obtained from the

community forest. There is neither a significant difference between rich and poor

households nor between lower and higher caste, regarding use of low and high value

forest products from the community forest (Sharma, 2010). Thus, community forests play

laudable roles in supplying the local demand of forest products, supplying almost 70% of

the firewood required with an average of 334 kg of firewood, 16 cu ft of timber, 887 kg

of grass and 863 kg of leaf litter annually per household (ibid).

A study to find out who benefits from pro-poor programs of Nepals community forestry

was done by Pokharel (2007). The study reported that the generated income through

community forestry (or in other words FUG fund) was invested in different development

works. The pro-poor programs received one-third of the annual investment of the

community forestry user groups which indicated a significant increment in the

investment. Although the investment in pro-poor programs had increased significantly

poor households were not benefiting from the investment as anticipated. Non-poor

households were benefiting more from flow of loan, one major activity of pro-poor

programs, and the study suggested that pro-poor programs in community forestry are not

really pro-poor (Pokharel, 2007).


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However, in contrary to the Pokharels finding, LFP study report that Community

forestry was found to have contributed to the increased incomes in a number of ways.

Access to low-interest loans from user group revolving funds was a major factor, with a

fourteen-fold increase in the number of loans taken between 2003 and 2008. The positive

impact of LFPs enterprise and development support was shown by the larger increase in

incomes amongst households that had received income generating support (a 67%

increase) compared to those that had not (a 45% increase). The availability of forest

products had also increased, leading to time and cost savings.

In lieu with the contradicting claims regarding contribution of community forestry in

poverty reduction, Adhikari (2003) reports Poorer households in forest dependent

communities obtain much less value from community forests than middle income and

rich households. The average poor household obtains NRs 7,756 from community

forests annually while the more rich households obtain in average NRs 24,466 per year.

Thus, in terms of absolute contribution to the total household income, community forests

contribute more to the less poor households compared to poor. (Adhikari, 2003).

There are studies that report timber as the main source of income of the forest user groups

(Kanel and Niraula, 2004; Shrestha and Khadka, 2004 etc), however according to

Bampton and Cammaert (2007) timber rent alone cannot contribute to poverty alleviation

in Nepal. They further argue in that some FUGs have developed more equitable timber

rent distribution systems including:


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Variable timber quotas based on poverty ranking. Member households are dividedinto rich, medium and poor households whereby the highest quotas are provided

to the poorest families.

Variable and affordable pricing based on poverty ranking. Prices for timber areadapted to the wealth of member households. This allows affordable pricing for

all members and to some extent prevents inequitable hidden subsidies. Prices

applied to the richest member households are closer to the real market price, while

prices paid by the poorest households are very low and therefore affordable for

them.

The above distribution system is sometimes combined with timber grading, with

differential pricing affordable to all households. If supply exceeds demand, timber

grading is sometimes applied to optimize rents by selling the best grade timber

outside the FUG to the highest bidder. Some FUGs will distribute for free a

predetermined annual quota to their poorest members or victims of natural disasters.

Timber distribution based on demand and poverty ranking where a special sub-committee examines individual annual demands made by members, verifies them

and allocates timber using variable pricing based on poverty ranking. If demand

exceeds supply, some FUGs apply a prioritized allocation system where the

demands of the poorest householdsare met first

In many cases, more equitable systems of forest product distribution have been

developed, whereby the poorer or needier families receive additional concessions, such as

free fuelwood (e.g. Janajagaran, Kalika, Sahara and Gautam Budda FUGs of Kapilbastu


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district) or free timber for welfare support (e.g. Dhuseri FUG in Nawalparasi reported by

NORMS, 2003 cited by Bampton and Cammaert, 2007).

Besides, above proposition, a further initiative becoming more widely adopted recently is

the allocation of small areas of community forests to poor families for NTFPs and timber

production for their exclusive use. Such provisions are extremely important to poor

households (Bampton and Cammaert, 2007).

The average size of a community forest is 82.7 hectare and that accommodates 116

households. Almost 63% of the households have community forests smaller than 100

hectares, constituting less than 30% of the total area of the community forest in the

country. While 37% of the households have community forests larger than 100 hectares

and such forests constitute more than 70% of the total area of the community forest. The

Gini coefficient of community forest distribution by size of the community forest is 0.445

suggesting high inequality in the hand over process. In 2007 this measure of inequality in

community forestry distribution had further increased to 0.458 indicating further

deterioration in the distribution of community forests in the country. However, Gini

coefficient of community forestry distribution in the country slightly reduced to 0.451 in

2009 and the governments mandatory requirement of Initial Environmental Examination

or Environmental Impact Assessment for handing over community forests of certain size

attributed the reduction in the coefficient (Sharma, 2010b).

Sharma (2010) carried out Bartletts test but failed to justify the use of Income Variance

Method in his research. However, he further argue that the result still showed community

forestry reduces total inequality in Nepal, with a concluding remark that community


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forestry contributed to poverty reduction because the poor and low caste households have

easy access on forest products that had equalising effect on income distribution.

Dhakal, Bigsby and Cullen (2006) used a mixed-integer linear programming model to

determine the impacts of conservation-oriented community forest policies in Nepal on

three household income groups.

Kanel and Niraula (2004) appraised income and expenditure of FUGs in 12 districts from

Hills and the Terai and extrapolated the estimate for Nepal. The total annual income was

about Rs 747 million using the market value of forest products, and estimated the annual

income of the FUGs to be NRs 913 million while the total expenditure was NRs 457

million. The highest expenditure was on silvicultural operations (18.4 percent) followed

by other infrastructure (16.6 percent). The total annual budget of the Department of

Forest was about Rs 680 million, and the annual income of the Department was about Rs

550 million in 20026.

Bampton and Cammaert (2007) suggest ways to understand how Forest User Group

(FUG) community expenditures benefit the poor, by first knowing who the poor were,

and what community development activities were undertaken. Situations were extremely

variable in reality. Allison et al. (2004) demonstrate how FUGs were able to address the

livelihoods of their members through supporting a wide variety of activities of interest to

users outside forestry per se. That reinforced interest in, and commitment to, good

community forestry management. There was clear evidence that FUGs were ranking

6 Kanel and Niraula's (2004) estimation is based on the Terai and Mid-Hill districts where large scaleharvesting of forest products took place during the period.


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wealth7 to identify their poorer members, and that FUG funds were being used for

income generating activities (mainly agriculture or livestock related, although bee-

keeping, shop-keeping, and trade skills development were also quite common). Other

activities that had positive impacts on the poor were emergency funds for health or

natural disasters, or for birth control. Finally, expenditures for improving FUG

governance also had positive impacts on the poor by increasing transparency in, and

awareness of, FUG activities and the poors participation in FUG decision making.

However, the difficulties in sustainably reducing poverty were not solely financial, and

FUG funds were inadequate on their own (Bampton and Cammaert, 2007).

There are not only fairy tales regarding community forestrys role in poverty reduction.

In fact there are counter arguments based on solid research. According to Dhakal, Bigsby

and Cullen (2006) there are chances that community forestry may have aggravated

poverty let alone to alleviate it. Their research studies showed the effects on income and

employment when externally imposed policies constrained use of common forest

resources. The results showed that current community forest policies, which direct forest

use towards environment conservation and timber production, caused large reductions in

employment and income of the poorest households and that largely explained the recent

increase in rural poverty (Dhakal, Bigsby and Cullen, 2006).

Conclusions and Recommendations

7Sharma (2010) also reports about the pragmatic approach of wealth ranking for delineating the rich andthe poor households and justifies the use of the method after statistical tests.


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In general, the community forestry in Nepal is to be considered successful when it

provides equitable benefit to all users and decreases income inequality in the community

(Baral, Vacik and Sekot, 2009).

It is hoped that an endeavor like this (changed) will facilitate policy maker to initiate to

shape the poverty reduction strategy achievements into the national poverty reduction

goal and rethink on the relative and absolute poverty benchmark (Chapagain, Kafle and

BK, 2009).

The main conclusions and recommendation of this paper are as follows:

In general, community forestry contributes in reducing income inequality inNepal however there are particular studies that deny the conclusion.

Lower income households rely mainly on off-farm (wage income and self-employment) sources and community forestry contributes in diversifying sources

of income.

Income from animal husbandry, and salary and benefits has a disequalizing effectwhile wage income, self employment and income from community forest

products have equalizing effects on income distribution.

Further studies investigating indirect benefits and multiplier effects of community

forestry as well as respective impacts on rural livelihoods and poverty alleviation are

suggested.


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The future research should focus on the sources of income that has equalising effect on

income distribution. As self-employment constitutes a major part of income for the poor

and middle income group, future research should attempt to highlight this aspect and

stimulate government to invest on human development (skill promotion, education,

health etc). Intensive management of community forest may require huge investment but

it directly contributes in reducing poverty in the country.

Challenge

However, a continuing challenge is to ensure equitable distribution of benefits to women

and marginalized groups. Lessons for replication emphasize experiential learning,

establishment of a strong civil society network, flexible regulation to encourage diverse

institutional modalities, and responsiveness of government and policymakers to a

multistakeholder collaborative learning process (Ojha, Persha and Chhatre, 2009).

Likewise, feeding the contribution made in the livelihoods opportunity into the national

poverty goal has been a great challenge. Consequently, the donors are implementing

different projects, they feels a challenge to aggregate the achievements due to the

different methodology used in order to achieve the same objective (Chapagain, Kafle and

BK, 2009).

The number of FUGs are gradually increasing which has out stretched the capacity of

forest department to cater their technical and emerging needs (such as adaptation to

climate change). As Forestry sector is not a priority in resource allocation, there is

challenge of providing services through non-government service providers.


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Monitoring is regarded as one of the weakest part in community forestry, hence self-

monitoring is an inevitable reality. There are indications of this happening in community

forests having substantial funds accruing through the commercial logging. One such

indication is frequent reshuffling of the management committees as reported by Iversen et

al. (2006).

References

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and distributional implications of common property resource management. Working

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Nepal, September 15-18, 2009.

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Mpact of Community Forestry on Income-poor-rich-gap

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