CHALLENGE

Bosnia and Herzegovina (BiH) is home to some of the most diverse forests in Europe with over one hundred tree species. 80% of these forests are state-owned, with the remainder owned by a number of individual private owners. The country’s rural population, estimated at 2 million, regards the forest sector as an important source of employment, as well as energy (fuelwood for heating, primarily from forest residues), non-timber forest products (NTFPs, e.g., mushrooms, berries and herbs) and recreation. The forest sector has also been used as a social safety net for vulnerable populations including the elderly, unemployed, war veterans and survivors of recent conflicts. However, productive forest lands are currently under-harvested and underutilized, with forest management plans prescribing a very conservative Annual Allowable Cut (AAC). Some 17 percent of the country’s forest areas are classified as low, degraded forests, while 6 percent is classified as underutilized pasture land or bare landscapes, where natural regeneration to a forest structure could take place, given the right conditions. Therefore, there is great potential to improve both the forest stock in the country and the management of its forests with the overall goal of generating employment and income from the sector. Consequently, improved forest management would allow BiH to take advantage of “use” values (from timber and other products) to provide income for the local population while protecting its “non-use” values (associated with watershed protection and global ecosystem values).

APPROACH

The focus of this research centers on the evaluation of each link in the wood processing supply chain for selected product(s) in BiH (in terms of material inputs, labor, costs, etc.) in order to understand the potential for improving efficiencies at each of these steps. An assessment of cost factors will be conducted and offer options to address competitiveness with other important countries in the region supplying the European Union with timber. This analysis will be provided in order to provide a strong basis for wood value chain optimization in the future.

The following planned activities will be undertaken over the course of 12 months:

1. Selection of supply chain(s) of focus (i.e. energy wood, construction, and furniture, among other uses), defining the methodology(ies) to be used and planning of data collection;
2. Modelling supply chain dynamics and relationships between actors along the supply chain;
3. Analysis and preparation of country report and recommendations;
4. Contribution to global knowledge and methodological development;
5. Dissemination of the findings at multiple scales

RESULTS

The final report has been completed. The activity held a workshop to present the report findings to key stakeholders and Government counterparts in 2018. More dissemination and client engagement have been deferred to a later stage to coincide with planned consultations during project preparation. Findings of this activity show that:

• The primarily pristine forest estate annually sequesters some 6.5 million tons of CO2 equivalent, and provides important local ecosystem functions such as flood management.
• BiH forest production is potentially competitive in European markets for raw logs (71.2% of export to EU market).
• The investment requirements for forest roads, harvesting, and subsequent replanting far exceed the current cash flow of the forest companies.
• Priority should be placed on extracting higher value from existing production (e.g., less to fuelwood and more to higher value-added supply chain options
• Non-wood products are especially important in improving rural livelihoods for women and other vulnerable segments of the population
• BiH is well positioned to take advantage of the value-added opportunities for medicinal and aromatic plant resources.
• Reforms to the business model for extractive forestry are needed, focusing on multiple avenues including primarily: (i) increased revenue capture and retention; (ii) improved access to foreign capital; and, (iii) reduced social overheads.