cost benefit analysis- executive summary

8/6/2019 Cost Benefit Analysis- Executive Summary

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ExecutiveSummarythe WTO agreement,ndian paper ndustry now graduallyopensup to globalThePaPer ndustry everywhere n the world to a largeextent dependsupply of fibres, a considerableamount of which is forest-based. hus it isany doubt, that Indian paper industry cannotbe globally competitive f itprocure ts requirementof fibresat a competitive ate.Till the eighties, heof such raw materialswas mostly corning rom the forestsmanagedby theThe supply has been restricted considerably with India signing the

on Biodiversity n1992.Frombeingconsidered sourceof only tangiblendian forestsemergedbeing consideredas a vast gene pool. Such achange n attitude ed to a completeshift in focus rom'production-centred'to 'conservation-centred'nranagement of the State forests.the forest managersof the country failed to strike the necessaryetweensupply of tangibleand intangible esources y the National foresteadingto scarcity n the availability of tangible resources. uchscarcitiesturn led to considerable egradationof our forests aisingdoubtsabout theof our existing institutional structure in guaranteeing the proper

f the orestsaswell.epresentstudy was nitiated to look into thepossibilityof striking sucha balancethe two objectives hrough a Public-PrivatePartnership. ndian paperor quite a long time, hasbeenarguingfor a shareof the existingdegradedon lease,which they may use for producing their requirementof pulpat a price hat will add to their globalcompetitiveness.ucha measure,t feels,reduce he present tateof uncertaintiesn supplyof fibresas well. TheWorkingconstitutedby the Planning Commission in June 1997on the 'Prospectsof

out Degraded Forest Land to the Private Entrepreneurs / Forestarguedagainstaccedingo the demandsby the paper ndustry.An inscrutiny of the argumentsof the group in the light of surveysundertaken nestates f orissaand Andhra Pradesh,evcalsa differentsituation.


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Re-Greening India - Cost

Thestudy ooked nto the mplicationsof leasingout degraded orest and to privatesectorentrepreneursn generaland the paper ndustry in particulr, for productionof pulp-woodat four levels:o Thecommunities. The forestdepartment. Thepaper industry and. Thecountryasa whole.To considerhe communities,t is observedhat they -. ale mostly ying belowpovertv line;' do not get enoughalternativeemploymentopportunities n their localities;o do not dependmuchon the degraded orest and for their livelihood n view ofa highly reducedsupplyof resourcesrom such and;o cannotoptimally utilize the agricultural land owned by them due to lack ofaccesso necessary omplementary nputs like credit, good quality seeds,onthe onehand and to remunerativemarketingoptions or their products,on theother;andt do not have access o other productive assets ike skills, technologicalknowledgeetc.Under suchcircumstancest is imperative hat they are provided with opportunitiesto higher income,higher scope or employmentalong with accesso proper healthcare and educational acilities,so that they may improve their physicalas well ashumancapitals.Leasingout of degraded orest land to private enhepreneurswould considerablyincreasehe scopeof employmentgeneration it is estimated hat one hectareofplantation of pulp wood speciescreatesan employmentpotential of around 450mandaysover ts entire rotationperiod. n addition, the villagersstand o get around1.2MT of fuelwoodeveryyear per hectare,reeof cost.Let's now look from theperspective f theForestDepartment. n theeffort to strikeabalance between the objectives of production and conservation, a portion of theexisting degraded forestland may lre leased out to the private enterprises having real


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n putting them to productive use. T'he rest of the forestland may be put toe exclusively for conservation of biodiversity and generation of complementary

benefits. Towards translating the plan, we may conceptualise a newof JFM that incorporates a three-way cooperation among communities

in secured livelihood, the Forest department, keen on conservation tothe National interest and the private enterprises interested in increased andsupply of forestry resources as their raw materials. The Panclnyatsmay also

into such a collaborative mechanism. Such plantations on degradedwill also act as green boundaries crround he standing well-stocked forests

d help facilitate their protection from timber m#ias.r the Paper Industry, it is projected that the gap between demand for and

of forest-based ibres will be around 18-20million tones, L0 years from now.that the ongoing research activities will help achieve a higher yieldout around 1. to 1..2million hectares of degraded forest land to the

may help them tide over the crisis. Given the costhat the Indian units already enjoy in terms of their labour costs, easing

land will ensureadded advantage in terms of cost of fibre over their globalSuch an advantage may well be converted into a large share in themarket. If such opportunities trckon, the paper indushy may require

1 million hectares of degraded forestland to produce the necessary surplusfor exports. Under such a mechanism we may jointly produce some tangible

though increased productivity and some intangible benefits like carbonwater conservation and soil conservation services. The prospect of

Kyoto Mechanisnrsand entering the carbon trading marketlooks very bright. Activities on such leased land will be in

to their present efforts vis-d-vis promoting and providing extensionn farm forestry to the communities.

their credibility, it is imperative that the Industry requires'code of conduct' which will ensure that they will not compromise with thethe Nation has put on them by leasing out a good amount of land, still

remaining under the ownership and management of theese could be facilitated and coordinated by national level industry

CII towards ensuring that they continuously keep the Nationgains that are accruing to the communities, the inter-linked

department and the country as a whole in view of the land being


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leased out to them. An 'in-house certification system' by IPMA along with thedevelopment of a mechanism of 'social audit' of the units in the industry by CII willhelp achievesuch an objective.Some changes in the legal framr:work are also necessary to be introduced by theGovernment. We have proposed some changes n the Forest Conservation Act 1980,which may be helpful in ensuring a smboth transition from the present regime of'conservation only' to one that strikes a balance between 'production andconservation' and ensuresparticipation of the communities in the real senseof theterm.Thus to conclude we argue that

a portion of the degraded orest and may be eased ut to the paper ndustry totake care of the apparent contradictionsarising out of India simultaneouslysigning the Convention on Biodiversity and the World Trade OrganizationProtocols.The captainsof the paper industry have to play a proactiverole in changingtheir perceivedrole from that of 'opportunism' to one that makesthemselvesaccountableowardsensuring he well-beingof the nation.The State has to shed its inhibitions of looking at forests only from theperspective of conservation and consider the importance of increasing theproductivity of land under forestsaswell.

We may summarise he benefits that may accrue oaround 1.2million hectares f degraded and are easedo Areaof Plantation:

Areaof plantation n oneyear(12/\:o Averagemandaysoverone rotation:

Therefore, annualmandays equ red (450x1,.7\Totalarurualwage (@Rs50 / rnanday):r If one personworks for 330 days year

Total annualemploymentgeneration(774 330):r Total uel wood,@1.2MT / Tla, 1,.72x1.2'1:

Value@Rs500 MT:

the different stakeholdersfout to the paper ndustry.

1.2Million Hectares1.72 akhhectares450 mandays774lakll.mandaysRs.387crores

2.35lacs2.1 akh MT / Yr10.5 rores Yr


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If MAI of natural orest s 0.7 o 1..0 u.mt.Woodon 7 yrs:Flarvesting ressureeductionon natural errest:Pulpwood yield (1.71ac Ha X 80 MT / HaJ:If 4 MT wood = L MT of paperTotal paperproduction(137 \:Foreignexchangeavedby reducing mports34lakhMT paper@USD600 MT:

Kyotocarbonsink @30USD/hectare/year :$D 36million or

Soil and water conservation

7 M T30,000MT to 2lacHa/Yr137lakhMT Yr34lakh MT

USD 2040million or> USD 2 billion / Yr orD Rs979200Iakh Yr or) Rs10000 rores Yr

D Rs.173croresYrDifficult to measure.

the total benefit works out to be well above Rs. 10500 crores per year. Thisin addition to the prospective gains in the form of water and soil

protection to the existing forests and the consequent protection of ourpool therein.

production by the paper indusfy will have its spillover effectson theenjoying backward and forward linkages with it. All will be bubbling with

of increased production antl consequent value addition to thecountry. The employrnent potential of the economy will

manifold.a 'trinity' - strong bondage of partnership across Community, State and

- will go a long way in opening up the space for a fruitful private-country and motivate such collaborations in

of the economy to bring about the required change in the country andthe dream of becoming a'developed' countty by 2020an absolute reality.

cost benefit analysis- executive summary

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