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DRAFT April 29, 1996

I. Basic Features of the Sector
A. The Forest Lands
B. Forest Administration and Management
C. Historic Patterns of Forest Resources Utilisation
D. The Forestry Sector Today

A. Past
B. Description of Current Policies

III. Description of the Principal Issues and Constraints Facing the Sector
A. Issues
B. Constraints

IV. Sectoral Objectives

V. Alternative Policies for Achieving Stated Objectives
A. Technical Discussion of Alternative Policies

VI. Policy Recommendations and Their Technical Justifications
A. Economic Policies
B. Institutional Policies
C. Other Policies

VII. Recommended Legislative Changes

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I. Basic Features of the Sector

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A. The Forest Lands

1. Area Information

The total land area of Guyana is some 83,000 square miles (215,000 km2); of which 65,000 square miles (169,000 km2) or more than 75%, is forested. Table 30-1 below gives the basic land area classification of the country.

Table 30-1

Land Area Classification
Land classification Area
Square km Square miles
Tropical high forest

Coastal mangrove forest

Savannah and scrub

Cultivation, settlement, areas deforested by mining












Source: GNRA/GFC

Note 1: km2=100ha

1 ha= 2.47 acres

The country's total estimated forest area is 65,000 square miles or 16.8 million ha. Of this total, about 8.9 million hectares lie within the gazetted State Forest boundaries. There have been excisions from this block of land, however, for Amerindian communities, the Iwokrama Rain Forest Reserve, and mining leases. State Forests are where practically all commercial timber exploitation occurs.

As for ownership and administrative responsibility, Table 30-2 shows how the total forested area is apportioned.

Table 30-2

Total Forest Area by Ownership and Jurisdiction
Ownership Jurisdiction AREA

% of total forest area

Square miles km2
Publicly owned

State forests owned by the Government of Guyana

Forests on state lands

owned by the Government

Communally owned

Forests on Amerindian lands

Privately owned

Forests on Private Lands


Guyana Forestry Commission

Dept. of Lands & Survey (Min. of Ag.)

Village Councils

Individuals or corporate entities















Source: Guyana Forestry Commission

Table 30-3 shows how those public lands gazetted as State Forests and placed originally under the jurisdiction and the stewardship of the Guyana Forestry Commission (GFC) are currently allocated. The allocations may not be completely accurate or up to date since there have been frequent allocations of these lands by Government departments other than the GFC. Additionally, under present policies, the allocations by GFC or other cabinet level departments to private concessionaires are not always easily ascertainable.

Table 30-3

Area of State Forests Allocated
Categories of tenure

No. of


Approximate area

(MM acre) (MM ha)

% of state forests

Forest concessions

State forest permission





Wood cutting lease





Timber sales agreement





Communal lands

Amerindian lands

30 villages




Protected areas

Iwokrama Rain Forest Reserve














Source - Guyana Forestry Commission for Forest Concessions Data

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B. Forest Administration and Management

1. Types of Present Forest Concessions

Under prevailing regulations, an entrepreneur may obtain three types of forest concessions: a State Forest Permission (SFP), a Wood Cutting Lease (WCL), or a Timber Sales Agreement (TSA).

(a) State Forest Permissions (SFPs) are issued for areas less than 20,000 acres (8,100 hectares) and are issued for one calendar year only, with an option of renewal. SFPs do not necessarily grant exclusive rights to an area.

(b) Wood Cutting Leases (WCLs) are issued for areas between 20,000 and 60,000 acres (8,100 ha. to 24,200 ha.) for periods ranging from 3 to 10 years with an option of renewal.

Holders of Wood Cutting Leases are expected to undertake management level and operational level forest inventories and to submit management plans. Holders of Wood Cutting Leases also pay annual acreage fees.

(c) Timber Sales Agreements (TSAs) are issued for areas greater than 60,000 acres (24,200 ha.) for periods of 10 to 25 years with a right of renewal. TSA holders are required to undertake management and operational level inventories, and submit management plans. Annual acreage fees are also charged.

2. Other Timber Producing Lands

There is some timber production from Amerindian lands and the very few private properties. However, no royalties or other fees are payable on timber from such lands.

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C. Historic Patterns of Forest Resources Utilisation

Commercial forest exploitation must have started soon after European settlement, because by 1624 there was already established a barter trade between the colonists and the Amerindians for letterwood (Piratinera guianensis). The cutting and export of this wood completely dominated the timber trade until the latter part of the 18th century.

The beginning of the 19th century saw the establishment of an export trade in hewn greenheart squares. The first sawmill was established about this time and sawn greenheart baulks were exported. By then a lucrative export trade in balata was well established. Balata is the coagulated latex obtained from tapping the bulletwood tree (Manilkara bidentata).

In 1925, when the National Forest Service known as the British Guiana Forest Department was established, the pattern of timber exploitation and utilisation was well-entrenched. Greenheart hewn squares, piles and large sawn baulks were exported in response to orders for specific sizes and lengths. Thus, the forest operations were highly selective. Greenheart was used locally in house-building but mostly as framing, since lumber for flooring and cladding was unseasoned and poorly machined. Imported North American pine was used for all the better houses. There was little utilisation of other species.

The fledgling Forest Department saw as its main tasks in timber utilisation and marketing: improving the quality of lumber sold on the domestic market; consolidating and regulating the export greenheart market; introducing a wider range of species, the so-called lesser known or lesser used species, into that market and the local market.

The fact that today, seventy years later, these are still some of the more important issues in the sector, shows the intractability of the problems.

1. Impact of Historic Logging Practices on the Forest Ecosystems

The patterns of exploitation established over the past 150 years, and their effect on the forest resource may be characterised as follows:

(a) Selective logging of a few species to fill specific orders.

This is particularly the case with greenheart and purpleheart where felling is often done in response to specific export orders. Since this "cutting to order" approach is highly selective, it makes little apparent impact on the forest canopy. However, this systematic concentration on certain species and very light cuts gradually skews the ecosystem balance and tends to favor the regeneration of certain species, particularly shade-loving species, and not others.

Additionally, the "cutting to order approach" also means that repeated entries to a particular site may be made within a relatively short time span. The consequent logging damage to regeneration will, given enough time, lead to significant changes in the species composition of the forest and a gradual erosion of its economic value as it loses its more commercially valuable species.

(b) The exploitation on a sustainable basis of a non-timber forest product, balata.

The export of balata rubber was a significant source of foreign exchange until it was substituted in the marketplace. Detailed regulations were applied to ensure that only mature trees were tapped using procedures that allowed a sustained yield over time.

(c) The intensive exploitation of wallaba forests on white sand soils.

Wallaba forests are unusual for tropical forests, in that they are characterised by the dominance of two species: soft and ituri-wallaba. Typically, these species that are similar in many wood characteristics, comprise 60% or more of the volume of trees 12 inches (30 cm.) in diameter and above. Exploitation may be very intensive, and if conducted without care it could easily approximate a clear-cut operation.

The trees with the best forms are converted to transmission poles for the local and export market. Other wallaba trees are used to make fence posts and staves (and in former years, vat staves) and roofing shingles. Finally, firewood-cutting and charcoal-making utilise the remaining suitable timber. When frequent and heavy harvests are followed by the repeated setting of wild fires, these forests degrade to a worthless scrub. In fact, areas closer to the coast that have been exploited over the past 150 years, carry a mosaic of vegetation ranging from closed high forest to open scrub land, depending upon the intensity of exploitation and the frequency of wild fires. If wildfires can be completely eliminated, the exploited areas will slowly regenerate.

The forests that lie outside the State Forests (about 40% of the total forest area of the country) are pristine, except for wallaba forests next to the coastal plain that have been subjected to intensive exploitation over the past 100 years. By and large they do not carry commercial stands of greenheart. This, and the fact that they are mainly situated a considerable distance from the coast, or that they occur in difficult terrain, has kept them inviolate until now. This situation is likely to change shortly with the great interest being evinced in our forest resources by large well-financed foreign entrepreneurs. Since only 17% of the gazetted State Forests remain unallocated, new investment will focus on the forested areas presently designated as State Lands.

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D. The Forestry Sector Today

1. Employment and Foreign Exchange Generation

Based on older estimates by the National Forestry Action Plan working papers, total employment has been estimated at 20,000. The formal operations (those whose roundwood consumption or production is reported to, or tracked by, the GFC) comprise less than half this number.

The total employment in the forestry and wood products sector should also include seasonal or sporadic employment in the production of charcoal, shingles, joinery, wood and nibbi furniture, wooden crafts, latex collection, medicinal plants, etc. The total equivalent in full time jobs has been estimated at about 20,000. When these smaller, rural and informal firms are added, the actual contribution by the forestry sector is estimated at 4-5% of GDP.

The total roundwood consumption for 1994, based on official production records of GFC, is estimated at about 420,000 cubic meters. Based on the large proportion of smaller informal enterprises and rural intermittent operations that are impossible to track, it is likely that the actual consumption is more than 500,000 m3 per year. Figure 30-1 shows how the estimated total roundwood is allocated among different formal users.

Export revenues by the forestry sector almost tripled between 1987 and 1994 to about US$25 million and were expected to increase significantly during 1995 as the export plywood operations of Barama Company Limited (BCL), reach planned production. A preliminary and unofficial estimate of forest and wood products exports for 1995 is in the order of US$32-35 million.

Figure 30-2 shows how the different products contributed to the total export of wood products, estimated for 1994 at US$ 25 million, based on preliminary GFC statistics.

The formal logging and wood products operations generate direct employment roughly estimated at 7,000 full time jobs. Table 30-4 shows the rates of employment and total revenue (FOB mill basis) generated per each cubic meter of timber harvested.

Figure 30-1
Figure 30-2

Table 30-4

Rates of Employment and Revenue Generation

by Selected Wood Products in Guyana, 1995









Revenue US$/m3 roundwood






Jobs per 1000m3 of roundwood







US$/m3 product

FOB plant






Source: V. Molinos, 1995

Note: *Mid range quality log

**Lumber mix includes greenheart and mixed hardwoods

2. Industry Structure and Trends

Based on surveys done about 5 years ago, the forestry sector comprised mainly logging and sawmilling operations. There were 85 active sawmills of which 70 are old, inefficient and require heavy recapitalisation. Their product recovery rate is low (about 45%) and the quality of lumber produced is often poor and relatively expensive.

Although lumber production from formal sawmills has been falling steadily since the late seventies (Figure 30-3), much of the absolute drop in the domestic consumption of formal lumber has been offset by the rapid increase in the production of chainsawn lumber (Table 30-6).

Since there are no seasoning or preservation facilities at most of the mills, there has been a definite trend towards substitution of lumber by imported steel and cement in new construction. The implications of this trend are significant since they reduce the productivity of the housing sector and increase the requirements for foreign exchange.

These formal enterprises may be divided into two groups:

(a) the low capital, labor-intensive activity of small entrepreneurs who sell logs to sawmillers.

(b) medium to large scale capital-intensive logging operations of integrated firms, with their own sawmills, planer mills, etc. Modern, heavy duty logging and road building equipment are used.

During the past five years these developments in the sector stand out:

(a) Increased large scale foreign investments

The launching of the foreign-owned Barama Company plywood operations in the early 1990s may be a decisive break with the exploitation patterns of the past. It is not a greenheart operation, since the company's concession area lies outside the commercial range of greenheart.

The species of interest is Baromalli, a low density timber used for the manufacture of plywood. Plywood manufacture utilizing Baromalli is not new. A small plywood plant with an installed capacity of 5,000 m3/annum owned by a local firm, Plywood Industries Ltd., has been in operation since the 1980s, but the scale, integrated nature of the operations, and export value of the product, make the Barama Company's operations very significant to the sector. At full production the Barama mill will have an output of nearly 240,000 m3/annum. Table 30-5 illustrates the phenomenal increase in the consumption of Baromalli, and Figure 30-2, the export revenues from plywood manufacture, which are due to Barama's production.

Another foreign financed firm that plans to begin field operations in 1996 - Case Timbers Ltd. (UNAMCO) - will be involved initially in sawmilling, utilising state-of-the-art equipment, to produce lumber for the export and domestic market.

Table 30-5

Roundwood production ('000 ft3)

for selected years







Total all

















Source - Guyana Forestry Commission

Memo: Note: 27.8 cu. ft. Hoppus= 1 m3

(b) Rapid growth in chainsawn lumber production

A recent trend has been the extensive use of chainsaws for timber conversion at the stump. While chainsaw lumber operations cause less environmental damage than conventional logging, the large number of individuals involved makes monitoring difficult. This would severely limit the ability of the GFC to institute proper forest management. There are also reports of large scale wastage (except that the waste remains in the forest where it is recycled in the ecosystem), and poor quality lumber which incurs additional waste and added costs during remanufacturing.

This activity has shown dramatic growth over the past five years, as shown on Table 30-6.

Table 30-6

Rapid increase in chainsaw lumber production

(Million board feet)
1990 1993 1994
Sawmill 15.0 18.7 20.0
Chainsaw 2.1 5.9 12.6

Source - Guyana Forestry Commission

(c) Important growth in furniture and millwork

Available surveys from five years ago showed about ninety (90) joinery establishments in Guyana. Based on cursory observations of the many smaller and informal woodworking operations in the rural areas that are now being supplied by the mushrooming chainsaw lumber trade, it is clear that the next nationwide survey of forest products establishments will reveal that micro enterprises that produce lumber, millwork, furniture, nibbi articles, crafts, charcoal, and shingles are a most significant source of income and employment.

Recently there has been fast growing interest in the export of furniture and millwork to the Caribbean, Europe and the USA. Important investments have been made recently in equipment, technology and training to assure accurate and proper finishing of furniture and furniture components. Furniture and millwork exports represent one of the most exciting possibilities for investment in the forestry sector.

(d) Traditional sawmill industry losing share in domestic market

The domestic market for lumber has been historically very important to the forest industry. Figure 30-3 shows that for the past two decades, domestic consumption has consistently absorbed well over 80% of total production. The traditional sawmilling industry is losing market share to chainsaw lumber and wood in general to imported cement.

The same Figure 30-3 shows that both total lumber production and domestic consumption of lumber from formal sawmills have shown a steady decline since the mid 1970s. A UNIDO study estimated that lumber production in 1993 was only about 30% of the installed capacity of the formal sawmills.

In Guyana's domestic market quality requirements are not strict, with no building or other codes to specify species, sizes or quality of lumber to be used in construction. Thus sawmillers have been able to sell anything they produce, regardless of quality, if they can match chainsaw lumber prices. This situation may change with the new dynamism being exhibited by the National Bureau of Standards.

Figure 30-3

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Policies of the Sector

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A. Past

Evolution of Policies

1. Historic Concentration in Extraction and Timber Exploitation Under State Control

From the colonial days, the main thrust of Government policies towards forestry has reflected the early coastlanders' views of the hinterlands as unknown and inhospitable areas covered with extensive jungles waiting to be conquered.

Although many outsiders would look at Guyana as having a predominant "resource mining posture," it is worth noting that a few visionary Guyanese policy makers recognised long ago the trade-offs between the different options for using its forests and natural resources and the economic benefits associated with conserving certain natural areas. Evidence of this broader perspective of using forests for more than just timber, mining or agriculture is the creation of the Kaieteur National Park that was officially gazetted in 1929. Also, regulations made under the Crown Ordinance of 1903 specified latex extraction procedures for conserving the productivity of the balata trees and established minimum diameters' limits to protect young timber trees from being logged before they are ready.

2. The Role of the Private Sector

Over the years policy makers have avoided the concept of ownership or even giving exclusive control of leased State forest lands to private firms and individuals. In the forestry sector this lack of security and a historically low cost stumpage have not encouraged the development of an integrated, well capitalised and forward looking private industry.

Leases on forest lands are short. The longest is now 25 years with many permits lasting just one year - with very limited tenure rights. Short leases, together with very low stumpage royalties and acreage fees, have relegated forests until recently to a public asset with a low value, to be mined under "control" of the State. Under these policies, the private sector never evolved much beyond a primary timber processing industry with short-term goals and making only the essential capital investments to keep operating.

Sometimes the Government, with the support of international agencies, has tried to fill the void left by private capital and has directly or indirectly invested in downstream and value-added manufacturing facilities. These investments have not had the economic or financial returns expected and have been shut down or sold to private investors.

3. Government's Participation in Marketing of Timber Products

Legal control of trading in Guyanese timbers passed to the State through the Guyana Timber Export Act of 1973. Before this, trading was conducted by individual producers, and more importantly by a consortium of the largest producers of greenheart. Since not all the large producers joined the consortium, there was serious and unnecessary price undercutting for a unique world-class timber like greenheart that was in much demand.

Seeking the national interest, Government stepped in and created the Timber Export Board, to be the sole entity empowered to export timber and timber products. Thus the Board received orders, entered into contracts with overseas buyers, allocated orders and charged fees.

The Board was dissolved by means of the Guyana Timber Export Board (Transfer of Functions) Act of 1981 and its functions transferred to a Marketing Unit created within the GFC. Owing no doubt to producers' pressure and to the Commission's own acknowledgment that freedom of marketing is in the best interest of the industry and the country, the Government of Guyana in 1983 adopted the policy of allowing producers to do their own marketing. There was the proviso that the GFC should do careful monitoring and control of the trade.

Consistent with the overall policy of the Economic Recovery Programme, the process of liberalisation was speeded up rapidly, thus by 1989 Government had virtually withdrawn from all types of marketing control of timber exports. The GFC continued to provide the services of grading and issuing of export certificates. It collected commissions and allocated orders to producers whenever such were received. However, the formal step of repealing the Export Board Act(s) was never taken.

4. Training in Forestry and Forest Products

At least five different entities are engaged in delivering training in the silvicultural and utilisation aspects of the forest sector through technical level programmes covering a broad range of subjects. Although the GFC and the University of Guyana actively participate in the delivery of the more silviculturally-oriented programmes, there is no national strategy or leading entity providing coordination.

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B. Description of Current Policies

1. Economic Valuation of Land Use Options, Including the Non-timber and Non-market Values and Services of Forest Lands

Despite early awareness shown by lawmakers in getting royalties from minerals and from a variety of renewable products extracted from the forests, little progress has been made towards establishing a system for evaluating the economic and social costs and benefits associated with different land use options. As a result the Government is foregoing substantial amounts of revenue.

The present legal frameworks in forestry, protected areas, tourism, and mining do not adequately reflect the relevant experiences of other countries about maximising the returns from natural or cultural assets while reducing the social costs or conflicts, environmental costs and biodiversity losses. Examples of specific areas that need attention are:

- the potential conflicts and valuable synergies between forestry, protected areas and nature tourism;

- the conflicts between mining and sustainable management of renewable resources and cost sharing for access, infrastructure and social services;

- achieving a better balance between the economic development of the hinterland and the need for preserving and utilising Amerindian knowledge and cultural assets;

- use of protected areas, national parks as core areas for conserving Guyana's biodiversity to offset risks of losses in areas where higher-impact development is being planned.

2. Tenure of Production Forests

Historically there has been a strong tendency to keep land in general and forest lands specifically as property of the State. About half the forests or 8.9 million ha. have been designated as State Forests and have been almost totally allocated under different forms of concessions or timber extraction permits of different sizes and duration. While there is no formal policy regarding concession assignment and monitoring, the historic emphasis of laws and regulations has been on the extraction and utilisation aspects rather than on enhancing the productivity or value of the forest that is left after harvesting.

3. Marketing of Forest Products

The situation exists where the sole legal exporter, the GFC, does not in fact export, but can approve or deny permits for the export of forest products on a case-by-case basis. This has created a great deal of uncertainty and a climate of controversy and frictions with the industry that perceives GFC as arbitrary, petty or unjust. Still, such is the lack of common purpose in the trade that one producer still feels the need for a strong government presence in the marketing of greenheart, to prevent Guyanese exporters from undercutting each other's prices.

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III. Description of the Principal Issues and Constraints Facing the Sector

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A. Issues

1. Outmoded Harvest Practices

Outmoded harvest practices that recover insufficient number of timber species in frequent entries to each forest site, affect the economic and environmental sustainability of the forest sector.

As the more marketable timbers, such as greenheart and a few other well-known species, become less accessible, larger integrated forestry operations will not survive using historic timber harvesting practices. Modern practices that involve better planning and larger economies of scale, must be gradually introduced so that the volumes extracted per acre will better balance the regeneration needs of each forest type while reducing logging costs. Frequently, this will involve a market-driven process which harvests more species and higher volumes from each entry, does more careful felling and extraction, and uses much longer rest periods (estimated at 25 to 40 years), before harvesting again in a given compartment.

2. Low Level of Efficiency

Low level of efficiency in the utilisation of equipment, facilities, personnel and timber harvested is common. Royalties and logging costs that remained low while timber was accessible, have allowed many firms to thrive with very low levels of efficiency and relatively low production. The Government's policy interventions in marketing have discouraged market development by the private sector. Laws that emphasised short term and unpredictable regulatory practices, have maintained an unstable business climate that has discouraged private investors from upgrading equipment and expanding facilities. Historically, the average sawmiller could sell almost anything he produced, because there are no formal building codes nor local standards for timber. Thus there has been no strong push to induce and maintain a commitment to quality production. Today, with increased logging costs, depreciated equipment and untrained personnel, the formal traditional producers are being displaced from the local lumber market by a proliferation of informal, roving, chainsaw millers. These informal producers have even lower timber recoveries, no fixed capital costs, pay little or no forest fees and taxes, and often poach their timber from formal operations. As a result, the competitive position of the traditional forest products industry, both in the local and export markets has steadily eroded over the years (Table 30-6 and Figure 30-3).

3. Lack of Skills at all Levels

It is generally agreed that there is a critical shortage of skilled human resources in the Guyana Forestry Commission (GFC). It is also quite evident, but perhaps not so readily conceded, that the need for training is equally critical in the timber industry itself. As the National Forestry Action Plan stated: "All development in the (forestry) sector is contingent on the availability of trained people. Even at the present low level of activity in the sector, all operations are constrained, productive assets are misapplied, and human effort and economic resources are being wasted, due to non-availability of trained personnel and training."

The types of training required both by the GFC and the industry include vocational, professional and executive. The training needs of the GFC relate mainly to its major functions as guardian and manager of the forest estate. The training needs of the forest products industry are in business management, forest harvesting, manufacturing and marketing.

4. Unavailability of Suitable Capital Sources

Capital in the amounts required for investments in forest harvesting, manufacturing and marketing, and under the longer terms and conditions suitable to the forest industry, is not available locally. The undeveloped nature of local equity markets coupled with short, non-exclusive and non-tradable leases makes it difficult for local firms to use their cutting rights to attract joint venture capital. Loans for working capital and export financing are difficult to obtain from local banks, and this affects the negotiating ability of exporters. Real interest rates are high for an industry that often requires capital on a medium to long term basis.

5. Insufficient Capture of Economic Benefits from Non-timber Products and Services

It is important to stress the multiple-use function of our forests. They yield not only timber, but also recreational values and non-timber products. The Amerindians have traditionally used the forests to satisfy a variety of needs such as medicinal products, fibers and fruits. This knowledge could give them important opportunities for development, in ways that are socially and culturally attractive to them.

Two examples of non-timber products, where successful product development and marketing have led to the creation of important export industries, are the heart-of-palm canning operations, and the expanding nibbi-furniture exports.

6. Need for Land Use Planning

In the absence of rules and mechanisms for land use allocations, conflicts arise which can lead to great waste of resources. On the coast where the bulk of the population lives, these rules and mechanisms have evolved slowly over time. With the prospect of large-scale economic activities taking place in the hinterland, it is necessary to put in place the rules and structures to allocate land for different uses and clearly define permanent production forestry areas, Amerindian areas, protected areas and mining areas.

Among the many related needs, the following stand out:

(a) To demarcate expeditiously Amerindian lands and define buffer zones where required (see Chapter 22 of this Strategy).

(b) To define legally and demarcate protected areas, agricultural settlement areas and mining areas.

(c) To improve the mapping and service capacity of the Lands and Surveys Department.

7. Clearer Government Investment Policies and Procedures

A long tradition of top-down decision making continues to be reflected today in the laws affecting Guyana's forestry sector. While excessively detailed in many ways, forestry laws have been very flexible and rather vague in key aspects such as the reporting relationships within the executive branch and the lack of inter-agency coordination. This situation has been further confused over the years by a series of partial legal amendments with wide-ranging consequences.

The net result is that too frequently, political considerations have influenced or even superseded vital technical decisions. This in turn has produced inappropriate short-term measures involving permits and concessions. For example, under present laws, medium sized sawmills that employ more than thirty people have to renew their harvest permits for assigned harvesting areas annually, with no assurance that these areas will be reassigned to them the following year. Under such conditions, no expenditures in roads and facilities are being made beyond those that are essential for survival. This has discouraged new and longer-term investments by the local private sector in forestry and forest products.

8. No Clear Policy and Strategy Regarding Permits

The traditional approach was cutting to order. This emphasised selective extraction of a few marketable species in an ad-hoc manner, often involving repeated harvesting entries to a given forest site. Industry has clung to this tradition of "forest mining" which for the most part worked well while the preferred species were plentiful and accessible. To move from large forest exploitation permits to concessions for sustainable forest management means to incur large up-front costs for better roads, increased log handling and forest inventory. Developing markets for a variety of lesser known species will also be costly.

Both the GFC and most of present timber leaseholders lack the capacity to implement sustainable management in the field fully. A policy that will induce forest management should include a much longer term concession period than the present 25 years, and much clearer measures for supporting and enforcing investors' rights and obligations. Annual permits induce only a mentality of mining the resource and need to be abolished completely. Given the present state of the industry, policies must provide the economic incentives and the research and market development support that will entice and enable integrated producers to invest in sustainable forestry.

9. Need to Strengthen Regulatory Framework and Monitoring Capacity

Chainsaw lumber has helped in no small measure to stabilise the price of lumber on the domestic market, because it can undersell lumber produced by established sawmills. In the short run, therefore, it has been beneficial to some consumers. However, unless harnessed, the fast growing number of informal chainsaw milling operations could become a major threat to the development and success of sustainable forest management concessions by the larger lease holders. Recent efforts to consolidate areas held under smaller and shorter permits into units of more viable size and easier to monitor may have to be continued.

10. Inability of the Guyana Forestry Commission to Fulfill its Mandate

GFC does not have the funding and experienced staff to fulfill its broad legal mandate that covers protected areas, forest products manufacturing and marketing, product development, research and training.

Present legal statutes for GFC are very flexible and even vague, and provide for a public-private Board. These give it the ability to regulate itself and generate its own revenues. However, they subject all GFC decisions to a Minister who is not clearly specified. Lack of clarity and stability in this area has resulted in the GFC's position in the administrative structure of the Government, being substantially changed by each incoming administration. At times this meant that financing for GFC came through a Minister's office and budget. At times like now, the GFC was required to generate its own revenues.

According to present practices the fifteen members of the GFC Board are appointed by the President and serve for one year. This does not provide for the continuity in policy and operations that are desirable for forestry. It does not adequately support the independence of GFC from political or other pressures. The picture is further confused by the overlaps of authority between the GFC, the Guyana Natural Resources Agency (GNRA), and the Office of the President. As a result, important policy and resource allocation decisions are being made with insufficient technical information. In other cases, fairly clear decisions such as increasing the forest fees to levels that would allow GFC to improve its monitoring capabilities, are significantly delayed.

11. Need for GFC and Private Producers to Re-examine Their Roles

Historically, GFC has not played a major development and service role. It has mostly concentrated its meager resources on capturing a variety of forest fees and taxes that now are its only source of funding. Diligent efforts by the present GFC Commissioner to enforce rigidly an outmoded legal framework and capture revenues, have become a continuous source of friction and political attention. Weak private sector organisations, lacking a broad representation, have been in the past unable to fulfill the leadership roles required of them.

A substantial increase in forest fees, initially doubling or tripling them and achieving a goal of a five-fold real increase by the year 2000, is overdue and could be absorbed gradually by the productive forestry sector. However, this should be done within a context that develops a new working relationship that can meet the challenges facing the forestry sector with the right mix of partnership and cooperation between GFC and the producers, stiff penalties for offenders and streamlined regulations.

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B. Constraints

1. Policy on Hinterland Development

Guyana's history, small population, and the bountiful harvests of sugar and rice produced by the fertile soils of the coastal plain, combined with other factors such as difficult access, have maintained the hinterland virtually unknown to most Guyanese.

Development of the forestry sector should be seen as part of the larger whole, namely a policy for the development of the hinterland. In this way questions such as Amerindian lands, protected areas, the provision of transport and social services infrastructure to interior communities, can be placed in a logical context.

2. Lack of Clear Policy and Streamlined Decision Making

All important decisions about allocations of publicly-owned forest resources in Guyana have been centralised in the highest political authorities, in spite of the different administrative structures created over the years.

Centralised decision making at the highest level of the Government has been perpetuated by a combination of factors, which includes extremely flexible legislation regarding the use and delegation of authority and responsibility, short-term Board appointments, and provisions that allow a complete turnover of the Boards of Government agencies by incoming administrations.

3. Insufficient Resources, Direction and Sustained Political Support

Over the years, the only constant regarding GFC has been its lack of administrative continuity, its perceived susceptibility to political interference and its ad-hoc decision making under external pressures. This situation has prevented the GFC from playing an effective development and service role. Cyclical switching of its funding sources has forced GFC to become self-financing. This becomes very difficult when its decisions are subject to political interference, and when lack of continued support and direction have not allowed GFC to build a healthy working relationship with the trade.

4. A Weak GFC and Weak Producers' Associations

Complete lack of acceptance of each other's roles has been compounded by the lack of continuity, lack of autonomy and unstable and meager funding of GFC, as well as the many changes in its role and emphasis over time, as described earlier.

5. Government Interventions in Marketing

Government interventions between greenheart exporters and buyers were initially welcomed by some of the main greenheart producers as a way to maintain pricing and regulate the market. Even as the industry has grown and diversified beyond greenheart, the legal role of GFC in marketing has been maintained. Its interference by approving shipments on a case-by-case basis is contentious and nonessential to GFC's central mission. Today, GFC's role in export marketing has become a major obstacle to Guyana's forest-based development.

6. Historic Mind-set on "Forest Mining" Rather than Forest Management

The depletion of the more accessible stands of valuable timber renders historic practices uneconomic. On the other hand, since there is no tradition of forest stewardship or management, the large investments required to change practices will not be made unless producers become convinced that a more systematic management of their forestry operations will pay. As noted above, the excessively short duration of cutting permits encourages only a mining mentality.

7. Transport, Power and Social Services Infrastructure in the Hinterland

The lack of minimum access, communications, and health services including malaria control, is a major practical obstacle hindering sustainable development options in the interior. It is often prohibitively costly for private firms to move their manufacturing facilities closer to the forests when they have to invest in providing access, transportation, communications, energy, basic social services (schools, health facilities, law enforcement) to serve company settlements and their surrounding areas.

8. Shortfall of Private Investments in Plant, Equipment and Infrastructure

Government interventions in marketing, together with short-term permits that open the way for often unpredictable decisions by the GFC, have created over the years a climate of instability surrounding the forestry sector. The growing insecurity within the forestry sector follows a period when macroeconomic and foreign exchange policies restricted private sector growth. As a result, the local private sector, with very few exceptions, has not made investments in roads and equipment replacement beyond those essential to keep existing facilities and equipment operational.

At the practical level, the short-term and non-tradable leases on forest lands, the lack of land titles for mill facilities and the very traditional ownership structures of family operated businesses, have made it very difficult to raise the required equity or loan capital. There is thus a large accumulated shortfall of investments in equipment and personnel. The loss of market share in the traditional export and local markets has accelerated the downward spiral. Overcoming the present situation will require decisive changes in Government policies, as well as changes in business strategies and operational practices by the industry. Policies should encourage improved internal cash flow generation by the industry, and facilitate its access to long-term commercial loans.

9. Insufficient Efforts and Expenditures in Training

The perception exists within some businesses that skills can be generated "from within," and that hiring experienced professional managers and developing local men and women of high potential, is unnecessary. Many local businesses have spent important amounts in ad-hoc training efforts, without getting the results that would have been obtained with an integrated and coherent national programme of training. These practices have reinforced the image of the forest industry, held by young people locally, that it does not offer attractive career opportunities.

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IV. Sectoral Objectives

Three broad objectives have been identified:

1. Increase the economic benefits that Guyana derives from its forests and associated natural resources.

2. Improve the sustainability of Guyana's forest-based sector.

3. Spread the benefits of forest-based development to Guyana's rural areas in a participatory way.

To establish common ground in the participatory process and to facilitate the appropriate follow-up actions, the following detailed objectives have been defined:

1. Increase income, employment and foreign exchange generated by the existing wood products manufacturing operations, by improving production management, quality control and value added manufacturing.

2. Establish a policy framework for concessions that makes them long enough to be consistent with sustainable harvesting, collects royalties that are consistent with the true value of the resource, dimensions their sizes more appropriately, and protects the rights of and enforces the obligations of investors in a transparent and predictable manner.

3. Develop an integrated and coherent national programme of training, involving institutions at various levels, and link training with all ongoing research programmes.

4. Develop programs to capture more economic value from forests through non-timber forest products, nature tourism and bio-prospecting.

5. Develop the marketing capabilities to use a wider range of species, particularly the dense, heavy hardwoods that predominate in Guyana's forests.

6. Establish the facilities and mechanisms that will allow the local forest products industry access to equity capital and commercial loans with longer terms (10-30 years) and internationally competitive interest rates for private investments in infrastructure, harvesting and manufacturing needed to implement sustainable forest management programs.

7. Develop the capacity of GFC and organised producers to work cooperatively towards expanding the sector in ways that are environmentally sustainable and economically self-sustaining, involving NGOs where appropriate.

8. Through modern land use planning techniques, define and legally demarcate Amerindian lands and their buffer zones, protected areas, agricultural settlement areas and mining areas.

9. Improve access to, and social infrastructure in, strategically selected hinterland areas.

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V. Alternative Policies for Achieving Stated Objectives

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A. Technical Discussion of Alternative Policies

Taking into account the present lack of policies in many areas of the forest-based sector, and the interdependence between several constraints, the following is an attempt to analyze briefly the alternative policy directions to be considered for achieving the three broad sectoral objectives.

a. Increase forest fees gradually, and simplify their structure, to provide the industry with the economic incentives to improve efficiency, and utilise some of the increase in fees for sharing investment costs with the industry.

The weaknesses of the GFC and the producers' associations have delayed resolution of this issue for years. This, despite several studies independently recommending (and some producers recognising the need for) doubling or tripling present fees, most of which have decreased substantially in inflation-adjusted terms over the last decade and a half. On average, royalties and acreage fees have fallen by about 80 percent in real terms since 1979, indicating the need for a five-fold increase to return to those earlier levels. As they stand today, Guyana's forest fees are internationally among the lowest even after allowance is made for the relatively lower quality and productivity in commercial timber species.

Higher fees are needed to provide the people of Guyana with a fair royalty from the exploitation of this important national resource. As discussed in this Strategy's chapter on Amerindian policies, the new policy on forest fees includes designating a portion of the royalties deriving from forest exploitation on Amerindian lands for the Amerindian Development Fund. Higher fees also are needed so that the national budget can finance a more efficient national forest management authority, in the form of a greatly strengthened GFC. Finally, both higher fees and a different structure of fees are needed to encourage more efficient and sustainable timber operations.

The present structure of fees is unduly complicated, with 32 different rates, each for a different product or concession size, expressed in a variety of units such as ft3 hoppus, board feet, pieces, linear feet, pounds, cords, and acres. It is very difficult to ensure uniformity of equivalent charges when they are applied in such a diverse fashion. Internationally, the standard unit for forest fees is the m3; more importantly, normally that concept refers to a cubic meter of standing timber. The logic behind charging for standing timber, rather than harvested timber, is that if the logger has to pay for the entire tree, he will tend to utilise it more fully, rather than discarding in the forest the portions of lesser diameter. This will encourage the cutting of fewer trees to obtain the same volume of wood. Estimates of the volume of standing timber of harvestable species, per acre, can be made readily, on the basis of the species composition of the forest and inspections of sample tracts. Thus a royalty, or stumpage fee, on standing timber can be converted for practical purposes into an acreage fee if that is preferred.

Another advantage of fees based on estimates of standing timber in concession areas is that they discourage attempts to acquire over-sized concessions. If loggers know fees will be paid on the concessions' total harvestable timber (whose volume also accords with plans for sustainable management of each area), then bids for concessions will conform to realistic capabilities of harvesting. At present, some concessions are several times greater than the capability of harvesting even over a period of twenty-five years.

At the same time, it is important to bear in mind that some components of the domestic timber industry are in a state of decline and adequate incentives are needed for the industry to make needed investments in rehabilitation of plant and equipment. Therefore it is important to give due consideration to a drawback, or rebate, scheme under which a percentage of investments in wood processing industries undertaken by the timber concessionaire could be applied against timber royalty accruals, up to, say, 30 percent of the total royalty obligation per concession.

b. Develop a policy framework for concessions of forest products to be managed sustainably by successful private bidders.

The pertinent concepts here are size, location, and length of concessions, and the manner in which they are allocated. By choosing the location and size of different areas to be leased as forest management concessions, the Government can deliberately channel the development of infrastructure or certain land uses to specified areas and avoid others. The size of the management concessions should relate to forest characteristics (e.g., tradeable volume and species composition), and scale of the manufacturing envisaged. Excessively large concessions tend to reduce Government's revenues. They also increase the risk of poaching, since the concessionaire would find it too expensive to police the concession's boundaries.

To implement this policy effectively, the GFC must carry out forest inventories of designated blocks of forest. These pre-investment level inventories will give the GFC the information it now lacks for discussions with potential investors. Using this level of information would also allow the GFC to prequalify the proposals of interested firms and consider the option of auctioning blocks of forest to investors under phased bidding procedures.

An absolute precondition for such a policy to succeed is the zoning of the hinterland to define the permanent forest estates, mining areas, Amerindian lands, protected areas and agricultural settlement areas.

The policy on the length of timber concessions merits thorough review and revision. The guiding principle is that concessions should be long enough so that the concessionaire has an institutional interest in the forest's regeneration, i.e., so that the concessionaire can benefit from the regeneration. This implies concessions that are longer than the natural regeneration cycle of the commercially usable species (regeneration to the point where they may be commercially harvested again). In the case of Guyana's forests, this would mean concessions of 80 to 100 years.

In contrast, the present practice of authorizing one-year wood cutting permits creates a mentality of mining the forest resource, with no interest at all in its regeneration. Even the twenty-five year concessions are not long enough to encourage interest in successful regeneration of the forest. Taken together, the foregoing considerations would imply a new policy that creates smaller but longer concessions, with more sustainable exploitation and greater revenue to the Government as a result.

Another major policy consideration is the manner in which the concessions are allocated. It is to the nation's benefit to establish a procedure that is transparent and as competitive as possible, thereby yielding as much revenue as possible per concession. Typically this means allocating designated concession areas via auctions. The GFC would have to publish maps of areas presently allocated and to be auctioned, along with inventories of resources. A minimum stumpage fee would be established before the beginning of each auction, on the basis of the inventories. As present permits and concessions expire, those lands would be put up for lease through the auction procedure, in longer-term leases. To avoid discriminating against domestic firms with smaller financial capacities than international firms, some of the concessions would be designed to cover relatively small areas.

Other aspects of concession policy that would bear refinement include the clarification of rights and obligations of the concessionaires, with emphasis on respecting GFC's forest management plans and the requirement that GFC remove concessionaires that refuse to honor those plans even after being given a warning and a second chance.

The grounds under which concessions may be transferred need legal underpinning. If a concessionaire finds that it can no longer manage its lease, then it should have the right to seek a "purchaser" of the lease, for the remainder of its duration, who could compensate the original concessionaire for some of the sunk investment costs. The need for this provision becomes more pronounced as the concessions are lengthened. The new concessionaire would have to meet the same qualifying standards, established by GFC, as the original one did and would have to assume the responsibility for annual royalty or stumpage payments. Transfer of the concession in the last half of its duration should be prohibited, for the same reasons that the lifetime of the concessions is being lengthened.

Finally, there has been increasing concern over the potentially overlapping nature of mining claims and forest concessions. One approach to resolving potential conflicts is to map out in advance all mining areas and all forest areas (in concert with a clear identification of Amerindian lands.). This avenue should be pursued to the degree possible but it should be recognised that in practice it is impossible to foresee all such overlaps. New mineral discoveries, or new possibilities of economically exploiting deposits, inevitably will emerge. Therefore it is important also to allow for the possibility of transfer of forest concessions, or portions of them, to investors in minerals. In this case, a fixed transfer fee should have to be paid to the State, and the new concession holder would undertake to respect the covenants attaching to mineral concessions, including those concerning protection of the natural environment.

c. Complete the removal of GFC from sales and marketing of forest products.

The sector faces a tough technical and marketing challenge due to the heterogeneity of Guyana's forests, and the fact that most of the timber species are dense, heavy hardwoods, rather than the low and medium density timbers that dominate the tropical timber trade.

This situation calls for marketing to specialised niches, under cooperative, often experimental programs that require close contact and trust between users and exporters over many years. Therefore, to interpose any government bureaucracy, between producers and the market, compounds the problem.

One reason that GFC has had for insisting in monitoring the prices paid by exporters and for approving every shipment is to ensure that the different taxes have been paid, and that invoices reflect the true value of the merchandise being shipped. This aim can be achieved more cost effectively without the GFC having to approve shipments on a case-by-case basis. Reference prices, set deliberately low for auditing purposes and audited through a combination of private and GFC inspectors, would be a good option.

The process for the withdrawal of GFC from the marketing of timber and timber products should be completed by making the necessary legal changes. This action had already been recommended and elaborated on in the 1989 National Forestry Action Plan document. It was further recommended that the GFC, having removed itself from commercial trading, should develop the capacity to provide the industry with timely market intelligence, statistical information, shipping information, dependable grading services to support the expansion in forest products exports.

While private firms could eventually supply many of these services, others, such as the official statistical reporting and quality or sanitary inspections, would benefit from being under the final legal authority of the GFC Board.

d. Establish a log export policy as an instrument of forest management and industry development.

The objective of this policy is to improve the sector's marketing capabilities so that a wider range of species may be utilised, particularly the dense heavy hardwoods. The export of logs has been a feature of Guyana's timber industry for a long time. The volume and species exported varies considerably from year to year.

In many tropical timber exporting countries, conventional wisdom, aided by the strong lobby of local wood processing establishments, argues that it is better to produce and export a processed product rather than logs. Many studies in various countries have shown conclusively that this is not necessarily so. It depends very much on several factors among which are the export price of logs, the efficiency of the local processing industry, the extent to which it depends on imported inputs such as oil or machinery and the price of the product (lumber, plywood, etc.) on the local and export markets.

The net effect of well-meaning Government bans or quotas on log exports, has been to depress the price of logs on the local market and subsidise inefficient local primary producers of lumber, plywood and other wood-based panels, at the expense of local consumers and the forest owners or managers. Eventually these primary producers will lobby for tariff protection against lower cost and higher quality imports.

In Latin America, there are many examples of the tragic results of these misguided protectionist policies. First, the low quality and high cost products are displaced from the local housing markets by non-wood substitutes (already happening in Guyana) and second, exporters of furniture, furniture parts and millwork cannot acquire the quality lumber and wood panels that they need as inputs so their end products can compete internationally in quality and cost.

In other words, these policies end up hurting not only local consumers but also the exporters of value added products who were the supposed beneficiaries.

In Guyana, the low conversion efficiency of the sawmilling industry (only about 45% of the volume of a log currently ends up as usable lumber), due to poor and poorly maintained equipment, and low operator skills, seems to indicate that this lucrative trade in logs should be allowed to continue, being driven by market demand, with the condition that the logs come from forest concessions operated under approved management plans.

As a complementary measure, the policy will provide for a temporary increase in the export tax on logs from the present 2% of FOB value to 15% of FOB value. This surcharge will be phased out automatically and completely over a period of ten years. It will be earmarked to cover the monitoring and inspection services by qualified individuals. The remainder will feed a training and applied forest management research fund administered under the GFC Board.

e. Develop policies for smaller logging and chain sawmill operators based on better understanding of their potential role.

Medium and smaller sized firms are an essential component of any forest sector and particularly in Guyana's diverse, low volume natural forest where economies of scale are elusive. Smaller firms can economically harvest isolated species or add value to the forest by processing mill offcuts, salvaging logging waste or simply manufacturing millwork and furniture with lumber, plywood and even non-timber forest products.

Despite their serious impact over the rest of the industry, chain sawmill operators are very difficult to control and impossible to legislate out of existence (since chainsaws are essential for modern logging operations). In Guyana, with its vast river network, the opportunities for evasion and corruption are even greater than elsewhere. So, in addition to very stiff penalties on timber poachers, peer pressures and positive incentives may be a good option to try. A firm policy is required in marking harvested logs with a code that identifies the logger, supplemented by random inspections of roads and waterways. The cooperation of NGOs in the inspections will be vital to their success.

In the short run, furniture and millwork exporters will continue to thrive based on chainsawn lumber purchased through intermediaries and truckers with little connection or responsibility for the source of the timber they use and whether the forest fees have been paid or not. In the medium term this strategy will backfire. Increasing costs and growing scarcity of the chosen species will limit their growth precisely when they have broken into the export markets.

Relevant experiences from other tropical countries show that furniture and millwork exporters, which have used chainsawn lumber from trucking intermediaries as their sole supply source, have grown rapidly to a point where they must resort to imported lumber or plantation timber to survive.

The Forest Products Association has recognised the opportunities for vertical integration and cooperative programs between larger producers and suppliers and purchasers. FPA could have a very positive impact and could use international cooperation to structure and execute joint programs with GFC and NGOs.

For example, smaller producers organised into producers' associations could receive and pay for technical assistance, training, repair services and market information. After an initial period of trial and consolidation they could also apply for larger and longer leases with secure tenure. This might be conceived as a type of industrial park concept where members would come to own and eventually trade shares of the jointly-held lease. In Guyana there is a precedent to this approach, though on a smaller scale, through the longstanding, church-sponsored efforts.

f. Develop concessions for the use of forests by non-timber products, nature tourism.

For lands whose conversion to agriculture is not a desirable option, leases for sustainable forestry, nature tourism or extraction of non-timber forest products can be considered. Experiences of other tropical countries have shown that economic and social returns from sustainable development tend to be highest when combinations of complementary activities are chosen within a given region.

Having several income-generation options helps to satisfy the income and employment needs of rural populations during the whole year by accommodating the social and cultural preferences of different groups and fits in well with the seasonality of subsistence crops, non-timber crops, off-farm employment, cultural traditions, and availability of family labour, among others.

In countries with heavy pressures over the forest from "slash and burn agriculture," these types of diversified income strategies have proven very useful in creating buffer areas around national parks and even forest management concessions to protect them from encroachment by squatters and timber and wildlife poaching. It will be useful to consider this concept and create buffer zones and tourism or extractive reserves around some Amerindian areas to maintain and use productively their traditional knowledge about the forest.

As with timber production leases, these options too must encourage longer-term thinking and enable local entrepreneurs and communities to raise the capital needed to expand and adapt their operations to a changing environment and evolving markets.

g. Develop a harmonised policy framework for land use planning and the mechanisms for resolving disputes and trade-offs among competing land uses at various levels.

In many other countries large percentages of the land were transferred to private ownership or control in exchange for the creation of railroad infrastructure, sources of income and employment or securing border areas among others. The resulting creation of private capital based on the extraction and processing of natural resources was the key for further growth and diversification, sometimes at the cost of excessive concentration of wealth and power in few industries, groups or individuals.

In Guyana, for several reasons, the process of transferring the control of public lands and renewable natural resources from government to private developers has been deliberately slow. When this transfer of control of publicly-owned natural resources is ambiguous, for short periods and without exclusive rights, as in Guyana today, it gives way to what economists call the "tragedy of the commons." This is a short-term and very self-oriented behavior that characterises the use of public assets by private individuals when they do not perceive they have a stake in the medium or long-term outcome of their actions.

Because of the low overall population, especially in the rural areas, widespread forest resource depletion is not expected to become a major environmental issue in Guyana's hinterland for some years. The most immediate threat to the forests will come from the combined effects of unplanned growth, agricultural settlement patterns close to rivers and highways and repeated timber and fuelwood cutting around presently populated areas and major settlements. The timing is right for Guyana to evaluate the technical, economic, social and environmental costs and benefits associated with different uses for its public lands and natural resources. This exercise would allow to plan better and locate higher impact forestry operations closer to population centers, main roads, mining areas or where active immigration and squatting pressures are projected (such as the highway from Lethem to Linden) and away from areas with fragile environment, high biodiversity value, or exceptional tourism potential. The better managed concessions, when working towards sustainable forest management, could be used as protective buffers around these areas where lower impact development is desired.

h. Coordinate responsibilities between agencies dealing with natural resources.

Guyana must find ways to manage separately, intensively, and technically the operational aspects of sustainable forestry on one hand, and the nascent system of protected areas on the other. Yet, it is essential that both programs be conducted under a common vision, policy and strategy. Only then will they mutually reinforce each other rather than compete. Most potential conflicts regarding land use zoning should be resolved using the systems proposed above so they do not become a source of permanent friction and inaction at the Cabinet level. Basic elements of a solution to these conflicts include a demarcation of protected areas, clear vesting of responsibilities for their oversight in an appropriate agency, establishment of buffer zones, and implementation of cooperative programmes with rural populations, including Amerindian communities, for the management of both the protected areas and the buffer zones. Foreign funding can be sought for such programmes.

Experiences of many other developing countries show that any option that relegates the pay scales of the technical personnel to the typically low civil service salaries of a Ministry will not do. Low pay and cumbersome bureaucratic ways will not attract or retain the caliber of personnel required to lead and oversee the types of cooperative programmes and approaches required to meet the challenges facing Guyana's forestry and natural resources.

i. Enhancing GFC's role as steward of production forests and strengthening the oversight capacity of GFC's Board.

Clearly, GFC must have an important voice in the planning of the broader natural resources of the Nation. Yet, it is also urgent that GFC refocuses its mission to more effectively oversee the deployment and use of public forest assets.

In many countries like Guyana, where forest lands are publicly owned and where the Government does not have the human, technical and financial capabilities to develop them, effective policies for achieving forest-based economic growth must start addressing the question of roles for the private and public sector. For GFC to lead and perform effectively on the policy, planning and forest stewardship aspects, it must find ways of gradually transferring many of its operational and routine functions to the private sector and NGOs, while strengthening the functions that it retains. In Guyana, achieving an effective, more technical and less political GFC Board is an essential first step of this long process.

It is important to develop the capacity of GFC, organised producers, and training and research entities to work cooperatively to expand the sector in ways that are environmentally sustainable, socially appropriate. As a first and essential step, GFC's Board members must be appointed for longer terms.

In addition to strengthening the GFC Board, the quality of GFC's staff and its administrative capability need to be improved urgently. Budgetary allocations need to be increased for this purpose. A degree of administrative autonomy may be sought, but care must be taken in regard to its sources of financing. It is important not to compromise the institution's integrity as steward of the nation's forests, for reasons of financial expediency, by succumbing to the temptation to fund it through collection of forest fees. Such a policy would create a conflict of interest by making the guardian of the forests dependent on their very exploitation.

However, complementary funding sources may be sought in other directions. GFC could be legally empowered to be the recipient of domestic currency funding that results from debt-for-nature swaps initiated by international institutions interested in promoting sustainable forest management. (Some of that funding could be destined as well to the proposed new entity that would have the mission of working with local communities in programmes of managing protected areas and buffer zones.) By contributing to GFC in this way, the international donors, most likely NGOs, would be directly reinforcing the country's capabilities to manage in a sustainable way its vast forest resources.

Another institutional question concerns the need for greater capacity in the area of promoting sound forest development. GFC itself can provide technical field services in statistical collection and publications, forest inventory and silviculture. However, activities oriented toward development of the industry per se need to be located under other institutional auspices, again to avoid questions of potential conflict of interest. GFC above all is a regulatory agency, and as such cannot be involved in promotion of the industry. Consideration should be given to formation of a joint, public-private institute of forest products development. Its Board would be private in the majority, but it could include representation from the Ministry of Industry, Trade and Tourism, the Ministry of Education and the University of Guyana, among other entities. Its responsibilities could include education, research and development, programmes for on-the-job training, market and business development, and technical services in logging. International projects such as those of CIDA and ODA could provide support to this institute as well as to GFC.

j. Spread the benefits of forest-based development to the rural areas in a participatory way.

A key prerequisite for this policy is to develop a long range vision and policy for the development of the hinterland and have preliminary criteria established for the land use zoning of the interior.

The objective is to analyze how private investment projects can be steered so Government's priorities for extending the physical or social service infrastructure to certain areas and avoiding others, can be accomplished with minimum economic, social, and environmental costs.

Some developing countries have used the forestry sector's need for access to extend the road and social infrastructure deliberately to certain depressed or strategic areas. Often the political driving force has been the perceived need to expand the agricultural frontier, even into lands unsuitable for agriculture. In Guyana, establishing well-planned road networks will be the key to making the sustainable forestry, agriculture and tourism options economically viable. The alternative is slower but disorganised and, quite likely, more destructive growth.

Because logging (and large scale mining) activities require roads, there is currently a considerable mileage of driveable trails. A strategy will be worked out in conjunction with the mining and forestry sectors to upgrade and maintain some of these routes as part of a projected national road network. (See chapter on Transport Development in this Strategy.)

The creation of a few strategically located industrial poles revolving around forestry and wood products, or service and recreation poles around tourism and crafts, will enhance the overall competitiveness of Guyana's forestry sector and provide the manufacturing and marketing base for making sustainable forest management economically viable. These poles will also relieve the social pressure on the crowded coastal areas.

The industrial poles will involve the formation of clusters of complementary industries that can fully use a wide range of diverse species, raw materials and process residues (for example, sawdust, bark and chips for energy or edgings for smaller millwork or craft items) as has been planned in parts of South East Asia and as it has developed historically in the West Coast of the USA or Canada. In this regard, the planned establishment of an Export Processing Zone will be very timely. Undoubtedly many of its industries will be forest-related.

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VI. Policy Recommendations and Their Technical Justifications

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A. Economic Policies

1. Increase Forest Fees

A substantial increase in forest fees (initially doubling or tripling them) is overdue and could be absorbed gradually by the productive forestry sector, while giving the industry the economic incentives to improve efficiency in the utilisation of facilities, personnel, timber harvested and areas under lease. The goal is to increase real revenues per acre of forest concession by five-fold by the year 2000, while at the same time making provision for an investment credit that can be offset against as much as 30 percent of the forest fees, for investments in wood processing industries.

At the same time, the following additional provisions will be made:

i) Twenty percent of forest fees collected for logging on Amerindian lands will be deposited in the Amerindian Development Fund, to be constituted as outlined in this National Development Strategy.

ii) Forest royalties will be simplified to a single rate per cubic meter of wood extracted, plus an acreage fee, and then in stages over time the royalties will be applied to all the commercially-usable standing timber in a concession. When one hundred percent coverage of the concession is reached, then the royalty will be merged with the acreage fee.

2. Develop a Policy Framework for Concessions

The GFC Board must develop a policy framework for concessions of production forests to be managed sustainably by private bidders. The objective here is to improve the process for granting concessions by making it more transparent and more contributory to national development goals.

The Government, through the GFC will establish a policy framework for concessions that will protect the rights of the investors and will enable the enforcement of their obligations. This policy will address the location and size of new forest management concessions, the length of tenure, and questions of transferability. As matters now stand, the investor decides where and what size concession to apply for. This relationship will be reversed.

Recommended principles in this regard include:

(a) Prior definition of blocks of forest eligible for natural forest management concessions.

(b) Some form of phased competitive bidding for the rights of these blocks. The entire process, including terms and award conditions, must be completely transparent and straightforward.

(c) Establishment of blocks of different sizes, to provide opportunities for investors of different scales.

(d) Making all the new concessions minimum of 80 years in length, and a maximum of 100 years. Eliminating all shorter permits and concessions, in order to put an end to the "mining mentality" with respect to forest resources.

(e) Clear specification of property rights such as exclusivity, transferability and enforceability.

(f) Clear establishment of obligations, and performance bonds for concessions.

(g) Development of regulations that allow for transfer of forest concessions to mineral concessions with provision for payment of a fixed transfer fee to the State, and allowing for the forest concessionaire to negotiate a transfer price, to recover investment costs, with the mineral concessionaire.

(h) Development of a standard agreement so that all potential and actual concessionaires will face the same conditions in regard to fiscal provisions and forest management requirements.

3. Establish a Log Export Policy

As instrument of forest management and industry development, this policy will improve the marketing capabilities of Guyana's forest sector so that a wider range of species, particularly the dense heavy hardwoods, may be harvested. This is essential for achieving a more balanced forest regeneration while expanding the scale of forestry operations to more economical levels.

The export of logs has been a feature of Guyana's timber industry for a long time. The volume and type of species exported varies considerably from year to year. The uncertainty and controversies surrounding the approvals by GFC on a case-by-case basis have not helped Guyana's image as an exporter and have not allowed the sector to reap the full benefits of a well-established activity.

The new policy established under this Strategy includes a ten-year period during which the proposed temporary "forest management development" surcharges on log exports will be gradually and totally phased out. By targeting funds and management attention to a few field initiatives, it will help train selected local producers in practical systematic harvesting, regeneration aids, directional felling techniques.

By having experienced and hands-on international technical and applied research support, practical and cost-effective practices, well adapted to Guyana's forest types and conditions will have been field tested.

4. Develop Funding Options for Private Investors

It is recommended that a capital lending programme, which might be conceived as a Fund for Sustainable Forestry Development, be established in GNCB to make loans to the sector at non-subsidised rates, under the longer terms that the sector needs. With the specific aim of advancing forest management to a higher level of sustainability this program will include a line of loans for periods longer than 10 years.

It is also proposed that the smaller operations of this fund should be administered through a development desk or window at one or more commercial banks. This development financing should be available to all local timber firms who are operating their concessions under approved working plans, and not only to those who are currently in the export business.

5. Target Fiscal Incentives

In recent years Guyana has moved into a new stage in its forest industries, where foreign investment is now arriving on a considerable scale and the policy emphasis should shift to creating the greatest amount of employment per cubic meter of wood extracted from the forest, rather than simply attracting the greatest volume of foreign investment. This means encouraging the more labour-intensive wood processing industries, including millwork and moulding and flooring materials. Therefore the existing fiscal incentives for foreign investments should be applied only to integrated developments that include labour-intensive wood processing operations. The criterion for eligibility for the fiscal incentives should be a verifiable production plan that will generate at least 25 person-years of employment per thousand m3 of wood extracted annually.

The same criterion will be applied to determine the eligibility of wood processing firms, domestic or foreign, wishing to establish operations in the new Export Processing Zone.

6. Increase Fines for Non-compliance

The fines for non-compliance with the management plans for forestry concessions are so low as to be meaningless. They need to be increased very substantially and automatic mechanisms are needed to update them annually to take account of inflation.

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B. Institutional Policies

1. Complete the Removal of GFC from Sales and Marketing of Forest Products

Remove GFC from participation in the commercial marketing of forest products, as discussed above, by making the needed legal changes.

2. Focus GFC's Role as Steward of Production Forests and Strengthen its Oversight Capacity

Much needed legal and policy changes will be made to focus GFC's attention on what should be its primary mandate, namely, managing sustainably the production forests leased to private concessionaires. GFC's Board members will be appointed for longer terms, GFC will be given administrative autonomy, and GFC will be empowered to receive revenues that result from debt for nature swaps.

Existing ambiguities and overlap of functions between GFC, GNRA, and the Office of the President will be clarified.

The Guyana Forestry Commission Act #2 of 1979 gives the Commission a general mandate over Wildlife and Protected Areas, except the Kaieteur National Park. In fact, the GFC has no administrative or other control over wildlife handled by the Wildlife Unit of the Ministry of Agriculture, and it should not have a mandate in these areas. When a National Protected Areas System, including the Kaieteur National Park, is established, a specific agency will be created to manage the system, and GFC Act No. 2 will be amended accordingly.

3. Strengthen Mechanisms of Cooperation with Organised Producers

An institute of forest products development, as a joint undertaking of the public and private sectors, will be formed, reserving a majority representation on the board for the private sector. The board will undertake programmes in the areas of education, research and development, training, market and business development, and technical services to industries.

4. Harmonise Policy for Land Use Planning and Improve Coordination Between Agencies

It is advisable that the highest levels of government take steps to speed up the coordination of two projects in the early stages of implementation that will address the issue of zoning of the forested lands of the interior for alternative uses. One is the Natural Resources Management Project, which the German Technical Assistance Agency (GTZ) is funding and the other, development of a National Protected Areas System, is being financed jointly by the World Bank and the IDB. Linked to both projects is the question of the demarcation of Amerindian lands.

Since the limited capacity of the national institutions involved with these projects will almost certainly be a constraining factor in implementation, consideration will be given to creating mechanisms at the regional level to avoid and resolve obvious land use conflicts, and prevent unnecessary waste of resources.

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C. Other Policies

1. Develop a Training Strategy

A large percentage of the more immediate training efforts will be arranged to be "on-the-job," to provide the technical and vocational skills required by the industry and GFC in areas relevant to the sustainable management and use of the forests. Examples of priority areas include tree identification, forest engineering, forest inventory, heavy equipment operation, saw doctoring, millwrighting, and timber use. The assistance of international governments and organisations will be sought for developing an initial set of study tours and workshops, which will help to structure a training strategy and systematic longer-term training programme. The new institute for forest products development will take the lead in formulating a training strategy.

Developing centers of training excellence for all aspects related to forestry is also necessary, at vocational, technical and professional levels. Each center will have an advisory board to ensure that the different types of training respond to the needs and get the support of their constituents. For example, UG will be gradually developed as a centre of excellence for tertiary level training and research and an advisory board to the Forestry Unit of UG would be set up to steer their academic programs and activities.

There should be an immediate shift toward increasing emphasis on bringing teachers to the students in Guyana rather than sending Guyanese students to the teachers in other countries. To that end, education and training will be component parts of all projects operating in Guyana with overseas partners. The curricula of primary and secondary schools will be developed to motivate more students toward careers in the forestry sector, and to provide the necessary basic academic and practical training.

2. Strategy for Road Construction in Hinterlands

The objective is to develop a long range policy on the development of the hinterland and to analyse how private investment projects can be steered in ways that will reduce the total cost for accomplishing Government's priorities for extending the physical or social service infrastructure to certain areas.

3. Supervision of Small Loggers Operations

The GFC must study and develop options for establishing policies and programmes that monitor, tax and channel the activities of small loggers and chainsaw lumber producers.

The sheer number of small loggers' permits (486) makes control difficult but not impossible. Given the Commission's limited resources, NGOs with international support must be encouraged to help develop and implement programmes for monitoring volumes of timber extracted. It is recommended that GFC insist that the chainsaw operators organise themselves into cooperatives, as a condition of being able to bid for small-sized concessions once the annual loggers' permits are phased out.

4. Develop a Concession Framework for the Sustainable Use of Forests for Non-timber Products, Nature Tourism

The present legislation and regulations governing the lease or grant of tenure over tracts of state forests or state lands (more than 90% of the area of Guyana), do not conceive of a commercial non-timber, non-agricultural use of such lands. Thus there is no formal mechanism to issue to entrepreneurs leases or grants for recreational or other non-timber, non-agricultural purposes.

The concept of forest management will be broadened to include the non-timber products. A necessary step in this direction would be the designation of certain buffer zones (for example, around valuable protected areas or around existing Amerindian areas) where the criteria for multiple-use forest management is pursued, would be defined in detail and implemented.

This matter should be addressed promptly by the relevant government agencies --the GFC and the Department of Lands and Surveys-- to work out the legal and regulatory framework under which such leases or grants may be made.

5. Monitoring Bio-prospecting

A policy and legislative framework will be developed to monitor bio-prospecting and to regulate and monitor the activities of foreign scientific personnel working in hinterland areas.

Mechanisms will be established to strengthen links between the Iwokrama Rain Forest Programme and the GFC, UG, and other relevant agencies. The objective here is to clarify the legal and property rights laws of Guyana to its biodiversity and set the conditions under which potential foreign investors such as pharmaceutical companies or their research teams might be able to operate in Guyana's best interest. The legitimate rights of Amerindian communities will be taken into account, and those communities consulted, in the development of this legal and policy framework.

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VII. Recommended Legislative Changes

One of the most urgent tasks to update Guyana's forestry legislation is to assemble a team qualified to draft the legal changes that would include an international legal expert on forestry issues, experienced officials from Parliament, the executive branch, and the private sector. They could use the feedback from related sectors such as banking, manufacturing, tourism, Amerindians and training.

This group of specialists should review and revise the following legislation:

a) GFC Act No: 2; 1979

b) Forest Act Chap. 67:01; 1953 and all amendments thereafter.

c) Guyana Timber Export Board Act Chap. 67:03; 1973.

d) Timber Marketing Act Chap. 67:04; 1975

e) GNRA Order of 1986 and related Acts.

The principal purposes of the revisions would be the following:

a) Simplify and increase the structure of royalty rates for timber extraction, at the same time allowing for partial drawbacks for producers who invest in downstream processing facilities.

b) Establish a basis for moving the rate structure over time to one that is based on the standing timber volume in commercial species.

c) Make legal provision for contribution of a portion of the royalties obtaining from timber exploitations on Amerindian lands to the Amerindian Development Fund.

d) Establish the legal foundations for auctions of concession blocks, under 80- to 100- year concessions, and the mechanisms for defining the blocks, ensuring always that some of them are relatively small in size. As soon as the auction procedure is in place, eliminate upon their expiry all annual permits and concessions of less than eighty years in length.

e) Clearly specify the property rights and obligations associated with concessions and provide for the transfer of concessions as described in this chapter.

f) Remove GFC from sales and marketing of forest products.

g) Establish legally the new log export policy, with a gradually declining export tax.

h) Establish the mechanisms for an improved system of timber marking and of spot inspections of timber extracted from the forests, incorporating the participation of NGOs.

i) Develop the legal framework for concessions for forest use for non-timber products and services.

j) Provide GFC with greater administrative autonomy and empower it to receive financial support from debt-for-nature swaps.

k) Extend the terms of the GFC's Directors.

l) Lay the foundations for a joint public-private institute for forest products development.

m) Clarify the overlapping responsibilities in forest management of GFC, GNRA and the Office of the President.

n) Assign oversight responsibility for protected areas and wildlife to the appropriate agencies, and not GFC.

o) Develop a legal framework for bio-prospecting, giving due recognition to the rights and roles of Amerindian communities in that regard.

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