Building basic models of forest supply

CHALLENGE

China's forestry sector is in the process of transformation. A pattern of forest depletion has been reversed in China and replaced by the world's largest afforestation process. Centralized command and control of the sector is yielding to various forms of private, localized and frequently highly autonomous management arrangements. China is increasingly integrated into the world wood economy, becoming in a period of less than 10 years one of the world's largest importers of wood and wood products and an increasingly important exporter (and re-exporter) of wood products including pulp, paper and furniture.

Managing forest policy for this increasingly complex, sophisticated and market-driven sector is placing new challenges on Government authorities, which are increasingly hard pressed to ensure that reforms continue and succeed in environmental, economic and social terms. In particular, capacity to conduct modern economic analysis of possible policy reforms and initiatives with China, and within the State Forestry Administration (SFA) is seriously limited. The sector has been judged to be seriously lagging behind other sectors in such critical economic reform areas as taxation, regulation, land tenure and enterprise reform. As a result, there is a risk that future reforms will not be based on well-reasoned analysis. The Forest Economics Development Research Center (FEDRC) recognizes that it is stretched beyond its ability to provide the SFA and others quality economic analysis and has identified supply analysis as an area of particular capacity building need.

APPROACH

Building on the skills and interests of FEDRC, PROFOR helped provide well-justified advice and perspective on the impacts of alternative policy reforms and initiatives on the supply of forest goods and services, and helped institutionalize a stronger, collaborative and modern policy analysis capacity within the sector and the SFA.

This knowledge activity explored timber and forest supply from major components of the Chinese forestry sector (e.g. geographic regions and management arrangements, such as small farmer, communes and state forest farms) in relation to alternative policy and institutional options. Particularly important policy questions included timber and enterprise taxation, land tenure and regulatory and transport policies. A series of reports, studies and workshops for national and international audiences resulted, with recommendations for Chinese forest policy reforms related to topics such as timber taxation, licensing and regulation and land tenure.