Global Prospects for Commercial

Plantations and Agroforestry

John Spears

COMMERCIALLY ORIENTED COMMERCIALLY ORIENTED PLANTATION FORESTSPLANTATION FORESTS

Brazil Brazil Chile;Argentina,Chile;Argentina,

UruguayUruguay15 million ha15 million ha

Ghana, Ghana, Nigeria ,Nigeria ,

CoteCote’’ ivoireivoire1 million ha 1 million ha

ChinaChina

30 million ha. 30 million ha.

East andEast and Ssouthern Ssouthern Africa Africa

2 million ha2 million ha

Russia17 million ha.

IndiaIndia..

3 million ha.3 million ha.

IndonesiaIndonesiaAustralia Australia

New ZealandNew Zealand15 Million ha. 15 Million ha.

USASouthern States17 million ha.

Western Europe7 million ha.

What influences demand for What influences demand for primary wood products?primary wood products?

• Expanding global forest product markets

• Population increase • Technological change• Environmental issues.

Growing Demand for Paper and Growing Demand for Paper and PaperboardPaperboard

Courtesy Jaakko Poyry Consulting

Growing Demands for solid Growing Demands for solid wood products wood products

0

100

200

300

400

500

600

700

800

1993 1998 2003 2008 2013 2018

Million m3 (actual)

Softwood lumber

Hardwood lumber

MDF

OSB

Particleboard

Plywood

Other fiberboardForecast

Courtesy Jaakko Poyry Consulting

x3

THE PULP AND PAPER INDUSTRYAccounts for 50% of global industrial roundwood

consumption

Technological ChangeTechnological ChangeMedium densityMedium density fibreboardfibreboard

Technological ChangeTechnological ChangeOriental strand boardOriental strand board

OB

SMALL-MEDIUM SCALE FOREST ENTERPRISES

Comprise 80-90% of all forestry enterprises in many developing countries . They employ 20 million people ,add US 130 billion in gross added value to the world economy and are a major source

of off farm employment

AGROFORESTRY AND ON FARM WOOD LOTS• Nitrogen fixing trees contribute to to soil fertlity• Shelter belts increase crop yields• Reduce wind erosion of top soil• Essential fuelwood and building pole needs • A significant source of small holder income •POTENTIAL TO BENEFIT ABOUT A BILLION PEOPLE

Agroforestry a major source of livestock fodder

BIOENERGY AND BIOFUELS

e.g.Jatropha

Environmental ChallengesEnvironmental ChallengesProtection of watersheds

Biodiversity

Contribution of Deforestation to carbon emissions and global

warming

Population expansion : ( 9 billion people by 2050)

Pressure for conversion of forest lands to agriculture and biofuels

Major Sources of Global Major Sources of Global Carbon EmissionsCarbon Emissions.. Indonesia a significant emitter due to

forestry and land use change

Source: PT P.E.A.C.E., 2007 compiled from IEA’s 2005 annual statistics, US EPA 2006, and Houghton 2003. If EU included, Indonesia stands 4th. Estimate subject to uncertainty.

Energy emissions lower, but growing fast

RAINFORESTS

•Are the Earth's oldest living ecosystem.

•Cover only 6 %of the Earth's surface

•Contain more than half of the world's plant and animal species

RAINFORESTSForest Foods,

Medicines,Wildlife

Home for 300 million indigenous peoplePlay a key role in global carbon sequestarion

Rain Forest Conversion

MAIN CAUSES OF DEFORESTATION

Currently 13 million hectares a year• Shifting agriculture 42%• Forest conversion by agribusiness and cattle ranching companies 33%

• Extensive and illegal logging 14% • Fuelwood and charcoal 11%Total 100%

Kyoto Protocol

Annex I

Non-Annex I

Not ratified

Only afforestation and reforestation are allowed under the CDM. Reduction of emissions from deforestation and degradation is not.

20 ongoing Biocarbon reforestation projects

( All under Voluntary funding arrangements)

CDM has procedural limitations

Potential to involve small holders not yet realised

Industrialized countries (“Annex I” Countries) are committed to limiting and reducing their collective emissions at 5 percent below 1990 levels by 2008 – 2012.

Emissions TradingJoint ImplementationClean Development Mechanism (CDM) the only mechanism that can involve developing countries

Potential of plantations to sequester carbon and to slow

tropical deforestation

REPORT BY SIR NICHOLAS STERNContainment of Deforestation a cost

effective option for reducing global carbon emissions

(COP13 : BALI INDONESIA : DECEMBER 2007)

ENDORSEMENT OF THE NEED TO INCLUDE REDD , SFM AND SEQUESTRATION OF CARBON STOCKS IN A FUTURE CLIMATE REGIME

LEADING DONORS WILLING TO SUPPORT NEW FUNDING MECHANISMS :

● An REDD targeted Forest Carbon Partnership Facility already established ● A UNFCC supported proposal for creation of more broadly based Forest

Investment programme and ● A Global Forest Partnership under active discussion

POSITIVE IMPLICATIONS FOR MOBILISING UP FRONT FUNDING FOR ESTABLISHMENT OF PLANTED FORESTS

INDONESIA STRATEGY FOR INDONESIA STRATEGY FOR REDUCING DEFORESTATIONREDUCING DEFORESTATION

• ACTIONS BY PRIVATE SECTOR INDUSTRY AND FINANCIAL INSTITUTIONS

• 1. Commit to a rapid switch away from harvesting and conversion of rain forest • 2. Consider cessation of pulp wood chips exports to China . Accelerate harvesting

of already established plantations and if necessary temporarily import wood chips • 3. Rapid escalation of company /community partnerships to assist small holders to

establish oil palm and pulp wood plantations on non forest lands• 4. Within Production Forests commit to acceptance of independent certification of

all harvesting and management operations • 5. Within Production Forests initiate company driven adoption and implementation

strategies for containment of timber theft • 6 Adoption by private banks of the Equator Principles

• ACTIONS BY GOVERNMENT • 1. Engagement of local communities in management of Protected areas • 2. Protection of indigenous peoples rights .• 3. Land tenure reforms in support of community and small holder ownership • 4. Implementation of FLEG initiatives for containment of illegal logging • 5 Support for rural development activities to create alternative livelihoods for low

income communities •

Climate Change Related Investment Opportunities in the Forest Product Sector

Transportation

About 9% of emissions in FPI Limited opportunities

Plantations

Huge opportunities.Key is previous land-use.

Biofuel & Cogeneration:

Energy > ½ all emissions. Large opportunities.

Conversions

Limited emissions Limited opportunities

Waste Management

i) Post-consumer recycling. ii) Utilization of waste wood.

Large opportunities.

SFM Natural Forests

Huge opportunities.Carbon in wood harvested & avoided deforestation.

IFC Farm Forestry Related Investmentsin India (1)

Job Creation in Farm Forestry for IFC Clients in India (# farmers on left axis)

020,000

40,00060,00080,000

100,000

120,000140,000160,000

180,000200,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

WCPM

APPM

JK Paper

BILT

Carbon Sequestration Impact

2 million tons of CO2 in 2007 increasing to 3.5 million tons by 2010

(1) Covering 40% of the total farm forestry by the Indian P&P industry. These projects are generating 25%-50% additional income for 170,000 smallholder families

Plantation (Reforestation) in MozambiqueProject Concept Note

Target Over 10 years: 500,000 ha Carbon Sequestration10 million ton CO2 per year This offsets emissions from:

1.5 million cars per year

Job Creation & MDG#1 100,000 jobs

Assuming 1 job per 5 HA Most jobs fit with MDG#1

Project Cost$500 mn (all equity)

Assuming $1000 perha

Potential to sustain a major pulp export

industry Return

IRR = 13%

Role of the Climate Forest Investment Fund

Financial incentive for initiating smallholders engagement .Foster company /community partnerships

IFC RoleVery strong due to:i) Long time horizon

& ii) High CountryRisk

IDA Role Creation of rural infrastructure . Alternative

agroforestry based livelihoods for low income

families

PROVEN TECHNOLOGIES FOR INCREASING PRODUCTIVITY

• Major possibilities to apply already well researched technologies for tree breeding and clonal propagation

0

5

10

15

20

25

30

35

40M

ean

Annu

al In

crem

ent (

m3/

ha/y

r)

1965 1972 1981 1985 1990 1995 2000'

Proof That Research Pays: Eucalypt Productivity

RSABRAZIL

TRENDS IN GLOBAL PLANTATION OWNERSHIP

1990

2005

19902005

1990

2005

0102030405060708090

Public Corporate Smallholder

South African Tree Farmer Mama Schlenga

Income from her tree farm is financing schoolfees for four children and construction of a

new house

Proportion of World Industrial Wood Supply from Intensively Managed Plantations and Farm Forestry

10%25%

40%

50%

75%

01020304050607080

1985 1995 2010 2030 2050

Percentage of World

IRW Supply

Challenges to creating mutually beneficial company/community

partnerships

Technical assistance for strengthening the bargaining power of low income

communities and small scale outgrowers( SEE IIED et al)

Larger scale pulp,paper and wood based panel Industries

Farm Forest Wood Lots

Wood &NTFP Based Small-Medium Enterprises

(SMEs)

Plantation Based Construction Grade Timber Fibre and

biofuel Supply

Investment Opportunities

Payment for Environmental

Services

Carbon

Bio diversity

Watersheds

CONCLUSION A bright future for Plantations

and Agroforestry

TROPICAL DEFORESTATION UNDERLYING CAUSES (1) (2)

RURAL POVERTY AND AGRICULTURAL ENCROACHMENT SLASH AND BURN FARMING , FOREST FIRES

EXPANSION OF SUBSIDISED CATTLE RANCHING , SOYBEAN, OIL PALM, COCOA RUBBER, COFFEE AND BIOFUEL PLANTATIONS IN TROPICAL RAIN FORESTS.

FAILURE TO INVOLVE LOCAL COMMUNITIES AND SMALL HOLDERS

ILLEGAL LOGGING . NON TRANSPARENT TIMBER CONCESSION ALLOCATION POLICIES.

INADEQUATE INVESTMENT IN PLANTATION AND AGROFORESTY BASED REFORESTATION

FAILURE TO VALUE FOREST ENVIRONMENTAL

SERVICES, ESPECIALLY FOREST CARBON

(1) Intergovernmental Panel on Forests(2) World Commission on Forests and Sustainable

Development

Global Closed ForestArea

2000 : 3 billion ha2050: 3 billion ha

Emerging mechanisms to pay for carbon biodiversity & watershed protection

Improvements in Law Enforcement and governance (FLEG)

Rising per capitaincomes. Rural/Urban migration

Adoption of safeguard and due diligence policies by financial institutions and

commercial banks

Independent certification

Improved planningof road access.

PROSPECTS FOR GLOBAL FOREST RECOVERYSOME POSITIVE TRENDS.

Economic inaccessibility

Elimination of some agribusiness subsidies

Civil society initiated campaigns

Increased community and small holder ownership

Potential for a significant increase in area of plantations and spontaneous agroforestry

Increasing privatesector investment

PROJECTED GLOBAL FOREST SITUATION 2050 Global closed forest area 3.0 billion hectares

Global industrial round wood demand 2.5 billion cubic m 3

Glbal carbon sequestration 800 gigatons of carbon

Community forests for meeting local needs

1.2 billion ha (40%)Timber production 300 million m3

Carbon sequestration potential 200 GtC

Intensively managed plantation forests 200 million ha (6%)Timber production 2 billion m3

Carbon sequestration potential

120GtC.

Planted natural forests

400 million ha (14%)Timber production 1.2 billion m3

Carbon sequestraion potential 160 GtC

Protected Areas IUCN (Categories I - VI)

1.2 billion ha (40%)

Carbon sequestation potential 320 Gtc