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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

Indonesia: Development, Degraded Rainforests & Decreasing Global Biological

Diversity

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Forest Networking a Project of Ecological Enterprises

http://forests.org/

1/20/97

OVERVIEW, SOURCE & COMMENTARY by EE

The following _AntePodium_ electronic journal article takes a detailed

look at the rainforest and biodiversity decline occurring in Indonesia.

The importance of biodiversity and implications of its decline are

presented. This article is networked upon the request of the author, Herb

Thompson.

g.b.

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RELAYED TEXT STARTS HERE:

AntePodium

An Antipodean electronic journal of world affairs published by the

Department of Politics at Victoria University of Wellington

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Indonesia: Development, Degraded Rainforests and Decreasing Global

Biological Diversity

Herb Thompson

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Research for this paper was made possible by a grant from the Asia Research

Centre, Murdoch University. Special thanks to Sara Kindon for pertinent and

helpful criticisms of an earlier version of this article.

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INTRODUCTION

Tropical deforestation is a significant factor in the loss of global

biological diversity. Solow, et.al. [1993: 60] define biodiversity as:

"the totality of genes, species and ecosystems in a region. Genetic

diversity refers to the variation of genes within species. Species

diversity refers to the variety of species within a region. Ecosystem

diversity refers to the variety of systems of living things in relationship

with their environment, within a region".

In these terms, Indonesia is one of the most biologically diverse nations

on earth; and therefore, the negative global economic and ethical

consequences of continued logging of tropical hardwoods in Indonesia must

be examined. This article explores the specific relationship between

tropical deforestation in Indonesia and the decline in biodiversity. The

Government of Indonesia has put the national prerogative of economic growth

above more global concerns which, in itself, is not surprising. However,

the manner in which the decision has been carried out is of concern. The

primary evidence producing this concern is that the wood products industry

is provided with subsidised incentives which undervalue tropical

rainforests.

The first part of the article describes the rapid rate of tropical

rainforest destruction with particular reference to Southeast Asia and the

Pacific. The context is established showing that complex non-linear

ecological structures of hydrological, climatic, geochemical and biological

importance are being lost, in most cases, forever. This is then followed by

a formulation of the global socio-scientific problem of biodiversity

decline. To conserve all present forms of life is impossible. Natural

processes such as climatic change, shifts in sea level, mountain building,

volcanic activity all influence the distribution and abundance of life

forms. The growth of human populations and their desire for rising living

standards speed up these natural processes, affecting the profusion of

biogeographical life. The problem however, is put forward by Myers [1988:

28] as "the opening stages of an extinction spasm...for which the virtually

exclusive cause is Homo sapiens".

The specific case of Indonesia is then explored. In this particular

country, one would expect that decision-makers are making the difficult

economic and ecological decisions to carry forward the development process.

However, just the opposite appears to be true. Both government agencies and

private enterprise in Indonesia are carrying out inefficient and wasteful

practices of wood production with little regard for the issues raised

above. While some ecological sacrifice is generated by a developmental

process, in Indonesia the sacrifice of biological diversity is being

carried out with little, if any, overall economic return. Therefore, before

any discussion is possible regarding the normative aspects of the

economic-ecological confrontation, simple cost-benefit inefficiencies must

be overcome.

In the conclusion, practical measures are recommended to reduce the waste

of tropical rainforests, and thereby the decrease in biodiversity. When

that occurs, realistic debate may begin as to the spectrum of choices

between national development and global environmental protection.

DEFORESTATION - A NATIONAL BENEFIT OR GLOBAL LOSS?

Resource Control

As control over resources becomes a dominant issue in the struggle for

national and human survival, disagreements and differences in approaches,

priorities and philosophies emerge within and between nations. While

governments pursue national strategies of development, opposition may be

generated within the nation, the region, or on a world scale [Tadem, 1990].

Tropical rainforests have been treated as a renewable resource for the past

three decades in most of the world. There has been little, if any,

recognition until recently that rainforests are much more than the trees of

which they are made. They involve complex non-linear ecological structures

which have hydrological, climatic, geochemical and biological effects

whenever a Diptocarpaceae is felled. Ecologically, there is nothing

sustainable about logging a rainforest. First, no tropical rainforest will

rejuvenate in exactly the same manner in which it presently exists. Second,

any biodiversity loss caused by rainforest degradation is lost forever.

Yet, the pursuit of development is confronted by ecological facts that have

only recently been brought to the bargaining table at a global level.

Each year worldwide some 100,000 square kilometres of pristine rainforest

is burnt to the ground to create farmland. A further 50,000 square

kilometres is logged to extract timber of high commercial value. Secondary

damage is generated by logging activity such as road construction, use of

heavy equipment, fires and the incursion of migratory swidden farmers onto

logged land. In fact, less than one-tenth of one per cent of the world's

rainforest is presently under any form of sustainable management [Brown and

Press, 1992:21; Anderson, 1989].

Destruction of natural forest in tropical countries was a familiar

phenomenon to forestry professionals as long ago as the 1920s and 1930s.

However, in the 1970s (the Second Development Decade) even the

non-professionals became alarmed about the dwindling amount of tropical

forest [World Bank, 1989:19].

Of further concern is the fragmentation of the standing forests. McCloskey

[1993] has found that only 33 per cent of the world's existing tropical

rainforests were found in large wilderness blocks (400,000 hectares or

more). Two-thirds of the world's forests are fragmented and especially

vulnerable. Fragmentation means that roads or other avenues of approaches

such as by motor boats and barges on rivers, allow forces of change to

encircle the remaining stands. Not only do loggers and squatters gain

easier access, but the very fact of being smaller reduces the niches for

species diversity, and breaks up ecological landscapes. The picture in

Southeast Asia and Oceania is the worst of all. Only 12 per cent (22

million hectares) of the remaining tropical rainforests in this area are

found in large wilderness blocks.

Southeast Asia and Oceania

Nearly two-thirds of the world's tropical rainforests are found in

Southeast Asia. The Philippines, Malaysia and Indonesia have utilised a

significant proportion of these rainforests to initiate development,

capture foreign exchange, and create jobs, through the felling and export

of hardwoods [Poffenberger, 1990: 20]. Over the past decade, these three

nations have accounted for two-thirds of worldwide exports of hardwood logs

and products. The Philippine Diptocarpaceae forests have been largely

depleted, and as much as one per cent of the tropical rainforest in

Malaysia and Indonesia are being cut each year [Contreras, 1991; Thompson,

1993a; Thompson, 1993b; and World Bank, 1993a]. See Table 1 below:

TABLE 1

TROPICAL FOREST RESOURCES: STATUS AND CHANGES (000 HA)

Area Deforested % of Area

Land Area Forest Area Annually, deforested

1981-1990 annually

Main ecological

regions

[Lowlands]

Tropical

rainforest 912,000 655,500 4,900 0.75

Moist deciduous

forest 1,464,100 626,400 7,300 1.17

Dry deciduous

forest 720,500 212,900 2,100 0.99

Very dry forest 547,700 39,500 200 0.51

Desert 523,800 2,500 100 4.00

[Uplands]

Hill and

montane forest 650,500 178,100 2,300 1.29

[Total] 4,815,600 1,714,900 16,900 0.99

[Reigons]

Africa 2,243,300 600,100 5,000 0.83

Asia 896,600 274,900 16,900 1.31

Latin America &

Caribbean 1,675,700 839,900 8,300 0.99

[Total] 4,815,600 1,714,900 16,900 0.99

Selected

countries

[Latin America]

Brazil 845,651 347,000 3,200 0.92

Peru 128,000 73,000 300 0.41

Bolivia 109,439 55,500 60 0.11

Venezuela 88,205 42,000 150 0.36

Colombia 103,870 41,400 350 0.85

Guyana 19,685 19,300 3 0.02

Surinam 15,600 15,200 3 0.02

Ecuador 27,684 12,300 60 0.49

[Africa]

Zaire 226,760 103,800 200 0.19

Congo 34,150 21,100 22 0.10

Gabon 25,767 20,300 15 0.07

Cameroon 46,540 17,100 80 0.47

C.A.R. 62,298 3,600 5 0.14

Eq.Guinea 2,805 1,200 3 0.25

[Asia]

Indonesia 181,157 108,600 1,315 1.21

Malaysia 32,855 18,400 255 1.39

Philippines 29,817 6,500 110 1.69

SOURCE: [Burgess, 1993]

In the early 1970s the Food and Agriculture Organisation (FAO) estimated

the rate of deforestation in Indonesia at about 300,000 hectares per year;

in 1981 at 600,000 hectares per year, and most recently one million

hectares per year. The data are relatively weak, but World Bank estimates

confirm FAO calculations [World Bank, 1990: 20]. The private short-term

financial gains that can accrue to the exploitation of the country's forest

resources have given rise to a number of serious issues affecting both the

sector's future and societal choice. In addition to the quantitative

economic benefits such as providing foreign exchange, forests also provide

ecological benefits such as protecting critical watersheds, preventing soil

erosion, stabilising downstream river flows, sequestering carbon and

providing a global arboretum for biological diversity. Often, using

resources for economic purposes reduces their ecological value and use.

One factor more than any other seems to determine the pattern of regrowth

of tropical forests: the amount of sunlight allowed through the forest's

evergreen canopy. While the tiniest hole caused by a falling branch may be

enough to trigger the growth of a climax seedling from the forest floor, if

the seedling receives too much sun, it will rapidly whither and turn into

potential kindling. The threat this kindling provides is given evidence by

the great fire of 1982/83 in East Kalimantan, Indonesia which alone

destroyed 40,000 square kilometres [Brown and Press, 1992: 22]. Sufficient

evidence exists to suggest that the fire would have not been at all as

severe had not logging activity opened up the canopy. Even with "selective

cutting", a seemingly innocuous term, as much as 70 per cent of the trees

may be damaged or destroyed in the process of extracting only 10 per cent.

In June 1978 a "Strategy Conference" was held in Washington by the

Department of State and US Agency for International Development on Tropical

Deforestation. It was concluded that:

"Tropical forests are disappearing at a rapid and alarming rate...human

needs and quality-of-life objectives are critically dependent upon proper

stewardship of tropical ecosystems...exponential population growth coupled

with a lack of alternative economic development opportunities is the

basic cause of loss of tropical forest cover..." [Jacobs, 1988:8-9].

To estimate the loss of tropical forest, differences in reliability

notwithstanding, two studies were solicited [Lanly and Clement, 1979; and

Myers, 1980], both of which justified the concern.

Although public awareness of the need to save rainforests has never been

greater [Pearse, 1992:3], and money has flowed freely from international

organisations during the past decade, little has been accomplished [Lanly,

et.al. 1991]. Following scathing independent reviews of the FAOs Tropical

Forestry Action Plan in 1990, and ensuing criticisms from environmentalists

and its own executive board, the World Bank announced plans in 1991 for a

new proactive policy to preserve tropical forests. Since then the Bank has

begun to place more emphasis on supporting programs that involve

institutional development, forest protection measures, and

income-generating projects not dependent on forest resources, which have as

their primary objective the preservation of tropical moist forests [World

Bank, 1991:20; World Bank, 1995a].

In implementing this strategy, the Bank pays special attention to the 20

countries (accounting for 85 per cent of tropical moist forests) whose

forests are seriously threatened by encroachment and destruction. Serious

pressures have since been exerted against a number of nations such as Papua

New Guinea, Solomon Islands and Indonesia. This has made little difference

to the policy-makers in Indonesia; in fact, quite the reverse as the

Government has reacted strongly against "outside interference".

In June, 1995, the specialist Forestry Officer in the Environment Division

at the office in Jakarta returned to Washington. The World Bank's "Country

Memorandum Report, 1995" in which the Forestry Officer played a major

productive role was also embargoed "most likely permanently". Anecdotal

evidence gathered by the author suggests that Government officials were

most displeased with the strong "green" attitudes of both World Bank

official policy and the Forestry Officer in particular. One of the issues

of most concern to the environmental and forestry officers in the World

Bank in Jakarta involved the negative global externalities of declining

biodiversity.

LOSS OF BIOLOGICAL DIVERSITY - A GLOBAL PROBLEM

The loss of biological diversity is one of the most important

socio-scientific problems requiring understanding and resolution at

present. The importance of biodiversity arises not just from its role in

delivering direct use, and non-use, values but in its role as the means of

assuring the resilience of the ecological systems on which human activity

depends [Barbier, et.al., 1994: 17; Perrings, et.al., 1995: 3-4; Norton,

1986]. The economic problem of biodiversity decline arises due to a

'social' loss based on the fact that the private return to conservation is

less than the return to some other use of land, assuming all inputs and

outputs are valued 'correctly in the market'. Ecologically it is difficult

to resist the intuitive view that a vast part of biodiversity loss is

non-optimal by almost any criterion [Pearce and Perrings, 1995:31].

The case of the spotted owl in the Western United States (Strix

occidentalis) has become symbolic of both the concern as well as the

potential conflict which percolates below the surface. While there is no

way to measure the absolute amount of species loss each year, Wilson

[1992:268] optimistically estimates that the loss is approximately 74

species per day, verifying Myer's concern, stated above, that we are in the

midst of one of the great extinction spasms of geological history!

One of the few agreements made at the United Nations Conference on

Environment and Development in Rio, 1992 concerned the preservation of

biodiversity. The ensuing 'Convention on Biological Diversity' provides an

overall framework for international action to protect species and their

habitats. Countries ratifying the convention are required to identify and

monitor their biological resources and to produce plans for conserving

them, including the establishment of protected areas.

Article 20 of the Convention states that developed country parties should

provide "new and additional financial resources" towards the implementation

of the Convention. Since then, meetings of the Conference signatories (133

countries represented) have taken place in the Bahamas in December, 1994,

and Jakarta in November, 1995. So far, the only unanimous substantive

agreement is that the 29th of December of each year should be declared the

International Day for Biological Diversity [Pearce, 1994: 5; and The

Jakarta Post, 1995: 2].

Delegates from developing countries have demanded that industrialised

countries contribute more towards the funding of conservation efforts and

delegates from developed countries have responded to the effect that "aid

fatigue" has set in and further funds were not to be forthcoming. One of

the difficulties of course, is that the economic benefits of deforestation

are seen to occur at the national level, whereas the negative externalities

of declining biodiversity are global. On the other hand, so-called "aid

fatigue" is likely to increase in developed countries, particularly when it

is difficult to quantify the value of biodiversity loss. Convincing voters

in industrial nations of the value of preserving invertebrates, for

example, is extremely difficult during the present era when down-sizing of

the state through budget-balancing, deficit-slashing and tax reduction has

become a dominant ideological proposition. So far the Global Environmental

Facility (GEF) is the only source from which countries can request funds

for various biodiversity projects. The facility's funds now stand at about

2 billion USD for 1994-97. This is too little, its procedures are too slow

in meeting requests for various projects, and many financial contributions

pledged to the GEF have not been paid.

Following the Amazon Basin, Indonesia, with 144 million hectares of forest

land, has the world's second largest tropical forest area. Aside from being

the source of timber and wood products which have been Indonesia's second

major export, tropical forests are also a source of medicinal plants,

resins, and dyes, and a host of other non-wood products.

In addition, and more difficult to measure economically, the Indonesian

rain forests are biologically rich, with more than 10,000 species of trees,

500 species of mammals of which 200 are endemic, and 1,500 species of birds

of which 430 are endemic, all of which play a vital role in regulating the

ecosystem [Parkinson, 1993: 4]. The nation has the world's longest list of

species threatened with extinction including: 126 birds, 63 mammals and 21

reptiles. Some of the more well known include the Javan and Sumatran

rhinoceros, Asian elephant, Sumatran tiger, clouded leopard, orangutan, and

Sulawesi macaque. Two birds, the Javan Wattled Lapwing and Caerulean

Paradise Flycatcher have become extinct in the past decade [Ministry of

Forestry, 1991: 38-39] and the Bali Starling is seriously endangered. One

study revealed that just 10 hectares of rainforest in Borneo contained some

700 tree species, the total number of species found in all of North America

[Kramer, et.al., 1995: 14]. In sum, Indonesia is classified as being part

of Malaysia, one of, if not the most, biological diverse regions on the

planet, as well as one of the most threatened ecologically [Whitten, 1987:

25, 50-51; World Bank, 1990:21; and Maijer, 1981].

Recent studies brought to our attention by Cleary and Eaton [1992:136] give

some indication of the magnitude of biodiversity on the outer islands, as

well as its potential importance. A study of three villages on the Apo

Kayan plateau of East Kalimantan (which exists right in the heart of some

of the most intensive logging activity in the world) identified 213

different plant species that the local Kenyah people use for medical

purposes [Leaman, et.al., 1990]; and in another small village in Central

Kalimantan, over 100 species were reported to have medicinal value [Riswan

et.al., 1990]. Finally, in a study of Iban longhouses in the Pantu area of

western Borneo a total of 142 different plant species were found to be used

by this community. Of these, 60 species were used for handicrafts, such as

the manufacture of mats, baskets, hats, dyes, and weaving material. A

further 46 species were used for construction, 47 for food, 22 for

medicines, and 10 for fish and dart poisons [Pearce, et.al, 1987].

Few species of vertebrate are lost entirely when a rainforest is logged,

though the local populations of some may collapse. While large herbivores

such as elephants and deer may thrive on the new growth of pioneer

vegetation following logging, the species that fare least well are those

with highly specific food needs such as birds. Primates, including

orangutans on Borneo, are particularly vulnerable. While logging cannot be

singled out as the only cause of reductions in, or threats to animal

populations, commercial logging has been the first activity responsible for

widespread tropical forest conversion in the outer islands such as

Kalimantan. It is logging which opens the way for more extensive shifting

cultivation and for the accelerated resettlement programs [Hafild, 1994:5].

At present, Indonesian forest management policy delineates biological

diversity conservation from forest utilisation. Biological conservation

practice is concentrated only in nature reserves, wildlife sanctuaries and

in some national parks. Restrictions on annual allowable logging are based

on estimated growth and physical limitations such as steep slopes, and

regeneration rates prior to the next harvest. Considerations such as

wildlife food sources, nesting sites, migration routes or mating seasons of

wildlife are not taken into account. The protected areas themselves are not

immune from disturbance. Many nature reserves and national parks are

threatened by illegal or semi-illegal logging, landless farmers, and fire.

For instance, extensive areas of Leuser National Park in northern Sumatra

and Tanjung Puting in Kalimantan are illegally logged even today [Hafild,

1994:59-61].

Because most species are not monitored it is very difficult to detect which

ones are likely to disappear when tropical forest destruction occurs. In

fact, no species inventory within any single tropical ecosystem exists in

Indonesia. This knowledge gap between tropical forest ecosystems and

biological diversity leaves us with only intangibles when attempting to

prescribe a formula to address the problem [Pearl, 1992].

INDONESIA - TURNING ECOLOGICAL REGIMES INTO WOOD

Translating a commitment to sustainable forestry, evident in the

Constitution and Government regulations [Warren and Elston, 1993], into

practical reality is frustrated by the country's acute population pressures

in certain areas, the size and geographical dispersion of its forests, the

need to search for additional agricultural land, the continuing quest for

increased output and non-oil productive options, the desire to raise

income, and the need to reduce poverty [Parkinson, 1993:vi]. Given the

national requirements for foreign exchange, industrial growth, employment

generation and regional development, government agents have chosen to

provide incentives for the development of wood-based industries more

rapidly than international experts and representatives of conservationist

organisations would prefer. The often declared objectives of the Indonesian

Government are generally twofold: to reduce the country's reliance on the

oil sector as a source of foreign exchange and government revenues, and to

stimulate job creation [US Department of State, 1992:3]. For quite some

time, wood manufacturing has been the second-largest source of foreign

exchange earnings after oil and natural gas, and is seen as a significant

generator of employment.

In Indonesia, large scale timber harvesting began in the late 1960s.

Initially, the bulk of concessions were awarded to foreign companies which

have since been replaced by locally owned entities. Most concessions are

owned by (or at least have strong corporate linkages to) wood processing

companies (primarily plywood manufacturers). Although around 580

concessions exist in Indonesia, more than 30 per cent of the resource area

is under effective control of 20 companies and five or six corporate groups

dominate the sector [World Bank, 1993a: 33].

Logging operations in production forest concessions should be managed in a

sustainable manner through implementation of the Indonesian Selective

Cutting System. However, the required pre-logging inventories and

post-logging residual stand inventories are not conducted properly or

reported truthfully; there is over-cutting within annual cutting plans, and

cutting outside approved boundaries is frequent; re-logging at more

frequent intervals than the 35-year required cycle is not uncommon; and

control and supervision by the Ministry of Forestry has been ineffective.

Further, the current royalty level of about 15 USD per cubic metre greatly

undervalues the resource, which could be worth as much as 90 USD per cubic

metre based on the international market price of comparable quality logs.

Low domestic prices for logs, in turn have led to inefficiencies in both

the logging and wood processing industries and a lack of market

diversification. Poor logging practices waste an estimated eight million

cubic metres annually, including damage to the remaining trees, while the

lower technical efficiency of Indonesian plywood mills wastes another three

million cubic metres. Together, this amounts to a third of the total annual

harvest [World Bank, 1994: 53-56].

This rampantly excessive exploitation of the rainforests has been made

possible during the past two decades due to a mixture of market and policy

failures [Thiele, 1994]. Controls on forestry products are by far the most

important category of failure-inducing restrictions. By 1978-80 Indonesia

had become the world's largest exporter of tropical hardwood logs (20

million cubic metres in 1980) [Hasan 1991:11]. This along with oil and gas

exports increased the neo-mercantilist concern on the part of the

Indonesian Government. Exporting raw materials and importing finished

manufactures is never perceived as a road to long-term development. In

1975, the Government had initiated a programme aimed at the gradual

reduction of log exports which culminated in a complete ban in 1985.

Although the aim of the programme according to Robison [1990:105] was to

develop self-sufficiency with mutually reinforcing backwards and forward

linkages, a subsidiary aim was to increase the value-added component of

gross national product. Restrictions on the export of raw logs forced

producers into sawnwood and plywood processing. A sharp drop in the value

of log exports was followed by a slow climb in the value of plywood

exports, which by 1983/84 was worth 579 million USD out of a total value of

1,484 million USD for all manufactured exports.

In 1989, high export taxes (250-1,000 USD per cubic metre) were applied to

sawn timber in an effort to drive raw materials into the secondary

processing sector (woodworking, moldings, furniture) where value added was

expected to be higher. In general however, the main beneficiary of this

policy has been the plywood cartels which have been provided with a supply

of cheap logs. In 1992, the ban on log exports was replaced with export

taxes, in superficial recognition of the pressure from world trade

agreements. The impact on resource allocation from the change-over from

controls to taxes is negligible because the taxes are high enough to

replicate the protection provided by the ban. It remains the case that only

processed products can be exported. Because of the exorbitant taxes,

domestic log prices are considerably below international levels. For

illustrative purposes, prices for Meranti logs exported from Sabah (along

with Sarawak the largest exporter of tropical logs in the world) have

averaged around 160 USD per cubic metre since 1986 with recent prices over

300 USD per cubic metre; domestic prices of equivalent logs in Indonesia

currently average around 90 USD per cubic metre. Even this price may

overestimate what most plywood mill operations pay, since the majority are

affiliated with logging concessions and consequently obtain their logs at

cost - approximately 67 USD per cubic metre inclusive of government

royalties (currently 22 USD per cubic metre) [World Bank, 1993b:67].

An over-expansion of production capacity in wood-based commodities has

occurred because the return on investment is high due to the excessively

low administered price of the log input. As of 1990, there were 2,843

plywood and sawnwood mills which required a total log input of 54.9 million

cubic metres per year. The existing maximum supply capacity of production

forests is only 31 million cubic metres per year. Thus, there is an excess

demand of at least 23.9 million cubic metres as a result of

over-investment. Further, the ownership of forest concessions, log trading,

and wood-processing is highly concentrated in the hands of a few timber

magnates. As such, these business groups behave like quasi-cartels and

practice collusive behavior such as price fixing and intra-firm pricing,

which further depresses the real value of natural logs.

Most timber concessions have a duration of 20 years when the minimum

harvesting cycle is 35, providing no incentive to reforest. Concessions are

allocated arbitrarily by a small circle of forestry officials, to a small

number of concessionaires, for a small concession fee, all of which invites

corruption. Overly generous incentives and subsidies have been given to the

plywood and sawnwood industries by restricting log prices to a level far

below their market scarcity values. Extremely low forest fees have

permitted high economic rents to be captured by the private sector. The

anomaly is that much of the excess rent is absorbed in inefficiencies in

logging and processing [World Bank, 1993a:xii]. Regulations are not

enforced and penalties not levied for over-cutting, high-grading, or

illegal entry to contiguous lands due to the inadequate number of forestry

staff in the field [Hargono 1991:13]. Many concessionaires also do nothing

to protect their holdings from encroachment and fire once they are logged

[Parkinson, 1993:13]. While it is not possible to quantify what proportion

of forest operations have created significant adverse impacts on local

communities, it is apparent, from the very extensive amount of case study

and anecdotal material available, that such impacts are widespread and

serious [World Bank, 1993a:50].

Field work initiated by the author of this paper and others in Kalimantan

[See Poffenberger and McGean, 1994] indicate that the environmental costs

of timber operations have been heavy and unfairly borne by the local,

forest-dependent communities along the Mahakam River. The availability of

rattan, gum, and other important economic non-timber forest products has

declined sharply in logged-over areas. Wild animal populations have

diminished. One of the largest forest fires in Indonesia's history occurred

in 1982-83 as a result of logging and residue and drought which has

reshaped the landscape. Companies have consistently refused to consult with

the local communities before beginning timber operations on communal lands.

Finally, in an attempt to move local communities away from logging areas,

the indigenous Dayak people's time-tested, long-term fallow and rotational

swidden strategies are being prevented by government extension agents,

being replaced by demonstration projects noted for their failure. All of

this micro-level ecological degradation has led to Kalimantan being

identified as one of the major fourteen deforestation zones or 'tropical

hotspots' in the world by the Joint Research Centre of the European

Commission and National Aeronautical and Space Agency of the United States

[Myers 1993: 11].

The World Bank has observed that poor logging practices, combined with

inefficiencies in the wood processing industries, waste timber resources

equivalent to a third of the harvest. Including estimates of illegal

logging, the rate of timber extraction from Indonesia's natural forests

exceeds the assumed rate of regeneration, calling into question the

log-term supply of logs for domestic production [World Bank, 1994: xvi]. In

1995 the World Bank was even bolder: "At current rates of exploitation and

with today's inefficient logging and industry practices, suppliers of

commercially sized logs will come into short supply by the year 2010 or

earlier" [World Bank, 1995b: xiv].

Along with these inefficiencies in output, the liquidation of natural

forest for timber results in irreversible losses. This includes the

destruction of what was formerly a perpetual stream of income from nonwood

forest products for millions of people, typically cultural minorities for

whom tropical forests have been a traditional abode. Cash income is lost,

as well as materials for shelter and food in the form of meat, nuts,

fruits, and fibres. The tangible, immediate costs to, generally, poor

forest dwellers extend well beyond these losses including costs attendant

upon increased erosion, greater difficulties in river transportation,

forest fires and flooding that follows in the wake of deforestation.

Employment gains for poor unskilled labourers in logging and timber

processing are extremely limited. And very substantial economic rents have

been destroyed by commercial undertakings in natural forests; and rents

that were not destroyed, given government policies, accrued to the wealthy

rather than the poor .

On straight-forward efficiency grounds therefore, the forestry sector in

Indonesia leaves much to be desired. On equity grounds forestry policies

have proven to be regressive both in practice and effect. Normally, the

more difficult values identifiable in tropical rainforests are never

included in economic analyses because of their non-quantifiable and in some

cases intangible nature. Biodiversity is one such value.

CONCLUSION

Tropical rainforest is commonly recognised as one of the most ancient and

stable ecosystems on Earth. While even virgin, or primary, rainforest

suffers much natural disturbance by, for example, cyclones, landslides,

volcanic activity and drought, the present rate of disturbance by logging

activity in Indonesia is excessive.

From a policy perspective, three characteristics of biological diversity

are critical: its public good nature, the existence of thresholds in

ecological systems, and uncertainty about those thresholds and the wider

values of biodiversity. Not one of these characteristics can meaningfully

be incorporated into a cost-benefit analysis. If economists are to be

relevant from a policy perspective on this issue, then they must begin to

approach the problem ecologically. In the meantime, economists have

something to offer in a minimal fashion. Simple policy changes can be made,

economically, to stop wasting the timber that is presently standing in

Indonesian rainforests. Before the real debate can begin between those who

wish to preserve global heritage and those who see economic growth as

mandatory, agreement must first take place regarding the abolition of

present inefficiencies and inequities in the Indonesian forestry sector

[Tobey, 1996: 25-28]. Some simple changes at each level to negate the

negative externalities generated by tropical rainforest logging include the

following actions. Until, at the very least, these changes occur, a debate

centred on economic and ecological criteria remains fatuous.

At the local level, more attention must be given to consultation with local

communities, with a specific allocation of forest royalty proceeds provided

directly to them for local developmental needs.

At the national level export bans and taxes on logs must end since they

simply provide an incentive to use what is, in fact, a scarce resource

(tropical timber) as if it were plentiful. Further, the subsidies and

protection are presently limited to a few cartels and some of the

wealthiest cronies of the New Order regime, with little benefit to the

indigenous poor. These increase inequities, both in the industry and in the

country.

At the regional level, incorporating both Japanese and Oceanic consumers,

an "ecolabelling" process could easily be instituted, possibly through

APEC. This process would provide for the inspection of all logging

operations and regenerating areas, permitting importation of only that wood

produced according to what is on paper, the most stringent environmental

protection laws and regulations of Indonesia.

At the international level, the Global Environmental Facility must come to

grips with the fact that most of the world's biological heritage exists in

poor nations. Given the positive benefits of protecting this heritage and

taking the precautionary principle seriously, it is essential for all those

nations who pledged funds to the GEF in Rio in 1992 to pay up. If the loss

of biodiversity is a global problem then it must be solved by global

contributions. This is a responsible ecological position. In the meantime,

representatives of the Indonesian Government and wood products cartels must

begin to take a responsible economic position.

Biological diversity is to the planet what the genome is to the individual

human. Erwin Schr"dinger once described a complex molecule as the container

of the code-script for life [Bowman, 1994: 59]. Analogously, biodiversity

is a code-script for Earth, and more rapidly than is at all necessary, it

is being erased.

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