**5.1.4 Market failure**

38 Sustainable Forest Management – Case Studies

traditional land-use pattern in southern Cameroon, or carbon credits as compensation for the conservation of primary forest, …found that a break-even price of \$2.85/t of carbon dioxide equivalent would level shifting cultivation with "Compensated Reduction" (Bellassena & Gitz, 2008)." The conclusion is that it is more profitable for the poor shifting cultivator farmer in Cameroon to preserve the forest under the REDD mechanism rather than to slash-and-burn it to grow crops. Unfortunately, in spite decades of educating this forest dwelling communities about the negative effects of practicing slash-and-burn agriculture, the practice still persists. This persistence can be linked to the poverty factor, a condition which the REDD mechanism must not undermined if it is to succeed in a post-

Another obstacle is the growing global demand for energy, materials, and industrial processes – notably mining and petroleum production. In Cameroon, a policy decision to exploit oil and natural gas in an ecologically sensitive coastal forest area in the Southwest Region in the early 1980s set precedence for deforestation and degradation of forests areas that harbor oil and mineral resources. Following this policy the government, in the late 1990s, made a decision to allow the landlocked nation of Chad to export its oil via the port of Kribi which led to significant forest loss. The project, which involved the laying of oil pipe lines from the oil field in Doba in Southern Chad to the port of Kribi in the South of Cameroon (over 1,070 km), is responsible for the loss of over 15 km² of rainforest (Center for Environment and Development [CED], 2004). Another potential loss of forest under Cameroon's oil exploitation policy could come from the oil rich Bakassi peninsula which is home to rare species of plants and animals. Although oil resources have produced high rents and made substantial contribution to the national economy of Cameroon in the past 30 years11, the continued falling output trends in the past 10 years has pushed the government to further open up forest areas for mining activities. For example, the discovery of a massive iron-ore deposit in the dense forest area near Mbalmayo in the East Region of the country has attracted the Australian mining company, Sundance Resources Ltd (Nyuylime, 2006). The company is forging ahead with mining operations in the area which has the potential of triggering extensive deforestation and degradation, mainly from infrastructure development such as roads and railways. Another mining prospect is the iron deposit located within the sensitive forest area at the western coast at Kribi. Though not currently under exploration, increasing demand for mineral resources from China has attracted Chinese companies in "obtaining exploration and exploitation rights to several bauxite reserves in the far northern portion of the country, at Minim-Martap and Ngouanda" (Reed & Miranda, 2007), and may also attract these Chinese companies to the Kribi iron reserve which lies within the forest zone in the South Region. Although the revision of Cameroon's mining law in 2001 led to an overhaul of the mining code, it still enables dozens of small mining operations to take place within forests areas, which leads to deforestation and forests degradation. The DRC's mineral and oil exploration policies (World Bank, 2008) are similar to those of Cameroon. However, Reed and Miranda (2007) noted that "mining in DRC has been limited largely to the fringes of the [Congo] river and

11 Oil accounts for more than half of Cameroon's export earnings, around 24% of government revenue,

and about 6% of GDP (Extractive Industries Transparency Initiative [EITI], 2006).

2012 emissions reduction mechanism.

**5.1.3 Increasing global resource consumption** 

A significant issue peculiar to most tropical timber exporting nations is market failure. Many services provided by tropical forests (table 2) are not traded in markets and, as a result have not established markets based on prices and therefore do not enter into the decisions of private and public sector actors (Pearce & Warford, 1993). For example, in both Cameroon and DRC the government is the country's land owner who has the responsibility of maintaining lands under forest cover, but because the government does not get the full value of social benefits provided by forests, there is little or no incentive to protect the forests and the underlying lands. The market has failed to stimulate these governments and the private sector in the direction of socially based objectives. This causes these governments to misplace their priorities, hence, ushering in inefficiencies that lead to deforestation and forests degradation and, consequently, forest loss. Lack of information regarding the value of non-market benefits of forest is the reason for market failure (Pearce, 2001; Wertz-Kanounnikoff, 2006). In Cameroon for example, Fomété (2001) notes that non-market goods such as biodiversity, watershed protection, recreation, and carbon sequestration appear to be of low importance to the government and to the local population hence, no incentives to actively engage in seeking information on the market value of forests and other environmental services. The failure of markets to capture the value of non-priced services of the forest is an indirect but meaningful cause of forest loss that shapes the non conservation attitude of forest exploiters in these countries. Therefore, assigning a price to the services provided by forests and charging the price to the beneficiaries of these services is a good strategy for the REDD mechanism for two reasons: (1) it reduces over exploitation of the forests (for timber, firewood, agriculture etc.) hence reducing emissions and (2) it generates income for the protector of these services. The concept of payment for environmental services is not new to the Congo Basin region. However, integrating it into the REDD mechanism would be challenging as a majority of the people in the region are very poor and depend on nature's free services for their livelihoods. Even with the significant funding by international organizations and financial institutions (for example, the United Nations Environment Program, the United Nations Development Program, the Food and Agricultural Organization, the African Development Bank and the World Bank) toward the implementation of the concept in the region, very little has been accomplished (Lescuyer et al., 2009). The land tenure crisis in the region will compound the problem for the REDD mechanism. This is already the case where a proposed project by Conservation International and the World Wildlife Fund to pay for biodiversity services in the Ngoyla-Mintom forest and the Bonobo forest in Cameroon and DRC respectively has been delayed due to land ownership contentions (Lescuyer et al., 2009).

Obstacles to a Conceptual Framework for Sustainable Forest

Management Under REDD in Central Africa: A Two-Country Analysis 41

has made the policy vulnerable to fraud, evasion, and misappropriation. For instance, rents from the royalties are rarely distributed as stated in the loggers' condition of contract (Fomété, 2001). Logging companies have taken advantage of the weak modalities to benefit from the system by making only partial payments to the communities and direct contributions in kind to the villagers. In some cases, powerful elites have made deals with loggers that benefit only them and not the community. In such cases, the local populations do not get the social benefits (roads, schools, hospital etc) as stipulated in the conditions of contract. This depravity fosters illicit activities as forest dwellers become engaged in clandestine logging in an effort to meet their needs (Cerutti & Tacconi, 2006). Another revenue related issue is the boundary problem. Neighboring forest villages often have quarrels related to boundary issues. This is because the larger the forest estate, the more benefit the local populations gets from it. Boundary problems are particularly challenging to authorities as lack of consensus between all stakeholders due to the absence or improper consultations with the local populations has led to vague provisions that lack legislative clarity. In DRC the situation is much the same. Klaver (2009) has noted that even though the 2002 forestry law clearly stipulates that local authorities are entitled to 15% of all forest related taxes and 25% for provincial governments "no funds have been transferred to provincial or local governments

because they still lack the necessary legal authority and rights" (Klaver, 2009).

been paid directly to the national Treasury" (Klaver, 2009).

**5.1.6 Lack of secure land tenure** 

Another problem with the forest taxation system of these countries is lack of transparency. There is little or no flow of information between the different stakeholders. Most forest inhabitants in both countries are illiterate. The few who can barely read and write find it difficult to interpret policy documents. This is a huge limitation which, coupled with the lack of adequate information to estimate their expected revenue, causes inhabitants to fall prey to the greedy loggers and government official imposters. An even more serious problem with the forestry taxation system of these countries is that though it claims to be a decentralized system, both governments still place strong emphasis on centralized decisionmaking, ownership and control of forest resources. In Cameroon for example, the creation of community forests under the 1995 forestry law was aimed at giving complete autonomy for managing the forests to the communities themselves. However, communities are still unable to fully control the management process as local, national and regional government representatives sit in management committees and impose government directives on community leaders (Assembe, 2006; Mbatu, 2010). This has caused the local population not to cooperate with the government in managing the forests. These centralized decision-making policies have been partly responsible for failures to protect forests and for its extensive loss and degradation in Cameroon. The decentralization of forest management in Cameroon was meant to act as a model for the Central African region but in many ways has fallen short of the desired prototype. Though not a prototype of an ideal decentralized management system, the model has been adopted by some countries in the region including DRC which adopted a new forestry law in 2002 and passed a new constitution in 2006 (Government of DRC, 2006) in a move aimed at empowering communities to take control over the management of local forests. Although the 2006 constitution "stipulates that taxes are to be collected by decentralized autonomous local governments (Government of DRC, 2006), all forests-related taxes are [still]

The local populations in many communities in Cameroon and DRC have little or no incentive to protect the forest resource because they feel they have no stake in it as the


Source: Lescuyer et al., 2009

Table 2. Categories of Environmental Services Provided by Forests

Not only are services provided by the forests in the Congo Basin not traded in markets but charges paid by timber concessionaires in the region are relatively low compared to the market value of the resource (Fomété, 2001). These low charges are encouraging foreign timber companies especially from countries with rapidly growing economies like China to aggressively seek concessions here. In fact, the Chinese company Vicwood-Thanry which began exploring Cameroon's forest in 1997 now owns 12% of foreign-owned concessions in Cameroon (Topa et al., 2009). There is also the lack of incentive for long term management due to logging competition among the many concessionaires. High profits due to low charges are also potential drivers of corruption that has handicapped strict enforcement of concession terms (Sieböck, 2002).
