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Forest constitute over 80% of the total land area in Bhutan (Photo: http://crossingbhutan.com)
Forest constitute over 80% of the total land area in Bhutan (Photo: http://crossingbhutan.com)

Forestry can be the bigger growth driver than hydropower

We have in the country a timber reserve or growing stock of 1001 million m³ according to the National Forest Inventory 2016. The reserve was 529 million m³ in 1981. The national forest added net 472 million m³ of wood over the 35-year period. The wood volume grew at an average annual increment of 13.50 million m³ or 2.55 percent of the total growing stock. In financial term, the net annual increment can be described as the annual interest rate on the principal sum, the growing stock.

As a simple rule, the annual felling must not exceed the net annual increment for the long-term sustainability of forest. In 2016, we removed only 0.39 million m³ of wood from forest which is 2.89 percent of net annual increment or 0.04 percent of the total growing stock, reflecting our phobia to forest harvesting. This still yielded revenue of Nu 4 billion (USD59 million) or 2.68 percent of the GDP.

The national goal is to be economically self-reliant by 2020. The target year is just two and half years away, and by all indications it looks we are a decade away from achieving the goal. We are still an aid-dependent country with donor grants and loans financing over 40 percent of the annual government budget. Further, we face large current account deficits, high public debt, underdeveloped private sector, rural-urban migration, high youth unemployment rate, stagnant government pay and human capital flight.

We exported wood products worth Nu 0.35 billion in 2015 but imported over six times more wood worth Nu 2.60 billion. This for a country sitting atop a huge timber reserve is an indefensible act, almost bordering on criminal when viewed against the background of the many economic woes we face as a country and people.

Environmental conservation strategy centred around the simple forest protection narrative and lack of information on the current availability and the potential for future availability of timber resource have stopped and are stopping us from optimizing the sustainable use of forest in the country. For instance, a perfectly sustainable annual increase of wood harvest from 0.39 million m³ to 1 million m³ can generate revenue of Nu 10 billion (USD149 million). 

Likewise, 

Two million m³ = Nu 20 billion (USD298 million)

Three million m³ = Nu 30 billion (USD447 million)

Four million m³ = Nu 40 billion (USD596 million)

Five million m³ = Nu 50 billion (USD745 million)

Five million m³ of wood extraction amounts to 0.5 percent of the total growing stock or 37 percent of net allowable increment, way below the sustainable harvest level. 

The hydropower revenue was Nu 20 billion (USD296 million) in 2016 which was 13.48 percent of GDP.

Technically speaking, forestry has tremendous potential to be the bigger growth driver than hydropower.

Last but not the least, sustainable use of forest is good for our natural environment. An increase in growing stock is an indication of a maturing forest and/or more areas coming under forest cover. An expanding and overstocked forest is a serious threat to biodiversity conservation and wildlife habitats, a cause for mega-fires, and is known to dramatically change hydrology (e.g. decrease groundwater recharge and stream flow). Further, economic impact of revenue from forestry is often felt most at the local level and is a great employment generator, thus inherently inclusive and green economy.

Contributed by Dr. Phuntsho Namgyel

Forest Analyst,  Thimphu

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