Externalities and Distributional Implications of Community Forest Management: A Case of Arun River Valley

Abstract

The equity issues of community-based forest resource management have become major areas of disputed discussions in recent years. This study entitled Externalities and Distributional Implications of Community Forest Management:A Case of Arun River Valley tries to examine the contribution of community forestry to household-level benefits (income) and costs with emphasis on different caste and income groups focusing equity in benefit/cost distribution. This study aims to contribute towards the understanding of rural poverty-natural resource relation vis-à-vis the victim hypothesis,equity issues and externalities of community forest management.The primary objectives of this research study are: 1) to review the theories of development and povertyenvironmental/natural resource nexus 2) to analyze institutional mechanisms, property rights and distributional rules of community forest management 3) to verify empirically the victim hypothesis that whether those rural poor and lower caste or non-poor and high caste households depend more on natural community forest resources 4) to examine the equity and externality issues of management of common property forest resources byemploying benefit-cost analysis and 5) to provide suggestions for policy issues. The study was under taken in three Village Development Committees (VDCs) from Bhojpur district and one VDC from Dhankuta district of lower Arun River valley including a total of sixteen Community Forest User Groups (CFUGs). Compiling acensus of all households under the sixteen community forest user groups,a ParticipatoryRural Appraisal (PRA) technique was applied with focus group discussion meetings held at each CFUG to distinguish all the households into four caste/ethnic and three income groups for realistic assessment of poor and non-poor households based on multidimensional local criteria and to reach consensus regarding user’s price and bartergame prices of different forest products, working hour in a day and average daily wage etc.Based on identified households by the PRA group discussions, a stratified sample of400 household out of total 1224 household was chosen for household survey from October 2002 to March 2003. The household sample represented about average of 32 percent of total households from each CFUG vis-à-vis of each caste/ethnic and incomegroups of households in a proportional basis of the study area as a whole. The standard methods/formulas were designed to calculate the household level gross and net benefits from and gross costs including labour cost, transaction costs and cash expenditure of use and management of community forests. A multiple regression model was used with seventeen explanatory variables and household level income from CF as dependentvariable to understand the relationship between forest dependency (household level in come from CF or value of outputs) and socio-economic determinants. In addition to vi primary data, the other necessary secondary information has been used as and whennecessary. Based on PRA technique, the study had found out that Janajati group had more poor households(48.7 percent)followed byDalit(41.9 percent),Newar(33.3 percent) and the Brahmin/Chhetri(23.4 percent) respectively. Two major types of forest products,consumption based and production based forest products were observed in the studyarea.The existing local institutional base and distributional rules of community forestry was found to be unable to distribute the common property forest resources and provide a significant contribution to the livelihood of poor and marginalized people. In terms of absolute dependency or contribution of Community Forest (CF), the Newar households obtained much more gross and net income from CF/year (NRs 6,393 andNRs 2,229) than theBrahmin/Chhetri(NRs 5,837 and NRs 1541),Janajati (NRs 5,370NRs 1,714) and the Dalit (NRs 5,108 and NRs 1,413) respectively. Per year gross household income from CF was far less for the poor income groups NRs.3, 236 (18.6percent) than the rich NRs. 7, 786 (44.7 percent) and the medium income groups NRs.6,397 (36.7 percent) respectively. The study findings suggested that in absolute term,NewarandBrahmin/Chhetri households were more dependent on community forests than the Janajati and the Dalit and non-poor households were more dependent on community forests than the poor households. In terms of relative dependence, gross and net income from CF as a percentage of total non-CF cash income was lower for Brahmin/Chhetri households (14.0 percent and 3.7 percent) than the Newar(21.8 percentand7.6 percent),Dalit (16.6 percent and4.6 percent) and theJanajati (14.1 percent and 4.5 percent).Similarly, gross income from CF as a percentage of total non-CF cash income was lower for non-poor households(13.1 percent) and middle-income (15.6percent) than the poorer households (18.2 percent). On the contrary, the poorer households had lower net CF income (3.2 percent) as percentage of total non-CF cashincome than the non-poor households (4.7 percent).This means, in relative term,Newar and the Dalit households were more dependent on community forests than the Janajatiand the Brahmin/Chhetri households and poor income households were more dependenton community forests than the non-poor households, findings that some contradict and some support the results from the other similar studies. Average gross value of forest used and cost of management for each of the Brahmin/Chhetri, Newar, Janajati and the Dalit caste/ethnic groups were NRs 5,837 and NRs 4,297,NRs 6,393 and NRs 4,164, NRs 5,370 and NRs 3,656 and NRs. 5,108 and NRs 3,694 respectively. The difference between average household gross value and cost or the average per household net benefits for Brahmin/Chhetri household was NRs vii 1,540,Newar NRs 2,229, Janajati Rs 1,714 and the Dalit Rs 1,414. This means the average percentage differences of household level benefit and cost i.e.net benefits of CF was positive for Newar (28.2-26.3 =1.9) and Janajati (23.6–23.1=0.5) and it was negative for the Brahmin/Chhetri(25.7–27.2 =-1.5) and the Dalit (22.5–23.4 =-0.9).Hence, the benefit–cost ratio (B/C) for theNewarand theJanajati household was morethan one (1.07 and 1.02) and it was less than one for the Brahmin/Chhetriand the Dalithouseholds(0.94 and0.96). Similarly, the average percentage differences of household level benefit and cost i.e.net benefits of CF was positive for the rich(45.0–41.0 = 4.0),zero for the middle-income(37.0–37.0 = 0) and negative for the poor income groupofhouseholds (22.0–18.0 =-4.0) respectively. Consequently, the benefit–cost ratio (B/C)for the rich households was more than one (1.09), middle-income households(1.0) and the poor income household (-0.81). Thus, as per the results of benefit-cost and externality analysis the Brahmin/Chhetri and the Dalit households had failed to internalize the benefit from CF as per the total grosscost incurred by them.TheNewarand theJanajati households were able to internalize the benefit from CF by externalized the total gross coston the Brahmin/Chhetriand the Dalithouseholds. On the other hand,the poor income households failed to internalize the benefit from CF as per the total gross cost incurred by them. The middle incomes households were able to internalize by equalize both of gross benefit and the gross cost.Therich income householdswere able to externalize the gross cost on the poor income households to gain disproportionate net benefits from CF.Thus, it is concluded that in case of benefit accrued (positive externality) and gross cost incurred (negative externality) of CF use and management by different caste/ethnic and income groups of forest users’ households, the externalities of CF had not created equity efficiencies with in and between the caste/ethnic and income groups of households in the study area. Although, the environmental value by vegetation cover (bio-physical condition)of forest resources were found remarkably enhanced since the forest resource management regimeshifted from state to local community participatory management, however, due to the lack of relationship about different linkages between rural poverty andenvironmental/natural resources, equitable distribution of forests resources within the rural community especially across the disadvantaged and marginalized groups of people has not been clearly demonstrated. Thus, this study raises the concern of whether conservation-oriented measures that promote regulated systems of forest management in Nepal undermined social goals such as equitable distribution of benefits and costs amongthe forest dependent households. It is reasonable to require that policies aimed at allocating forest resources should not eschew equity concerns altogether. The study had made a number of recommendations to improve community forest management and viii equity in benefit-cost distribution in Nepal which include,class and income dichotomyconcept of poverty should shift towards across the socio-demographic and economic indicators to define rural poverty, representation on the Forest User Executive Committee (FUEC) should at least be proportional based on inclusion of caste/ethnic and gender,provision of membership possession should be in only one CFUG, CFUG fund should divert to income/employment generation, the existing monitoring systems andpractices of CF should considered equity in forest products sharing, the taxation on commons (forestry sector) should impose on the basis of per household net benefit and the benefit–cost ratio, provision of leasehold community forestry and private property options should introduced in CF,and the government should encourage of co-investment between multi sector stakeholders for more production of forest products within the CF. Since this study could not compare pre and post impact ofCFs on household income and cost. Further comparative study on organizational development processes of CFUGs,participatory action research for various ecological belt and socio-economic circumstances and explore market and forest product development potential at commercial (beyond subsistence) levels based on time series information would contribute to a richer analysis on the complexity involved in poverty, inequality and distributive consequences of regulated forms of CPR regime and all these may help comprehensive understanding about dependency and externalities issues of community forestry.