Economics and finance, Environment & energy | Asia, Southeast Asia

15 September 2017

Cambodia’s Economic Land Concessions will cost the Government money in the long term, Abu SMG Kibria and Alison Behie write.

Cambodia stands to lose US$130 million per year in economic benefit unless deforestation in the Veun Sai-Siem Pang National Park (VSSPNP) is halted.

This was the major finding in ANU-led research recently published in Ecosystem Services. In collaboration with Conservation International, researchers found that this forest provides three major economic benefits — air purification (US$56 million a year), water storage (US$32 million), and soil erosion reduction (US$22 million).

Despite these benefits, policy decisions are traditionally based only on the value of the land if converted to agriculture, which we found to only account for 1.36 per cent of the forest value. This suggests that government does not take into account over 98 per cent of the value of a forest when making decisions regarding the conversion of forested land to commercial land.

This is a figure worth more consideration given Cambodia’s globally high deforestation rate. According to Forest Trends, Cambodian forest cover dropped from 73 per cent in 1993 to between 55 and 60 per cent in 2015.

Much of this forest loss may be a result of legal concessions — the Cambodian Government has policies in place that allow for the granting of Economic Land Concessions (ELCs) to local and international companies.

In 2012 alone, more than 270,000 hectares of protected forest were granted as ELCs in Cambodia. This policy is used as a way to boost economic activity through job creation and revenue generation.

Many of the forest products removed as a result of ELCs end up on the international market. Rosewood, a tree no longer found in VSSPNP, often ends up in China, where it is processed for international timber markets.

ELCs also impact on human livelihoods by adversely affecting the natural production of the forest, reducing access to the forest, restricting access to important communal land that may fall within the ELC area and overall environmental degradation.

There are also other indirect economic costs to consider. For example, shortages of water following deforestation would require the Government to spend money to improve water security. This is traditionally considered as a development cost, not a consequence of forest destruction, highlighting the need to better understand and connect the costs associated with environmental degradation.

In April 2016, it seemed as though the tide of forest policy may have shifted in Cambodia, with the establishment of five new protected forests covering more than one million hectares. This included VSSPNP, an area of fundamental importance to both biodiversity and economic sustainability.

It turns out that this was too good to be true, with the Government deciding to deal with ELCs within protected areas not by prohibiting concessions, but by downsizing and redrawing the boundaries of protected areas.

A report published in The Cambodia Daily in May 2016 reported that Chinese company Union Development Group (UDG) had cleared much of the forest within its 36,000 hectare ELC in Botum Sakor National Park, situated in Kong Kong province and the largest national park in Cambodia. UDG’s construction of US$3.8 billion worth of ecotourism complexes has also displaced thousands of local residents and commenced land disputes.

The Cambodian Government argues that excluding these nearly 40,000 hectares from Botum Sakor will allow them to better protect the rest of the park.

And according the Ministry of Environment, this practice will continue in other  protected areas.

Given that nearly the entire value of the potential goods and services of forest ecosystems have gone ignored by the government in policy decisions, Cambodia has unwittingly already accrued a massive financial loss. This loss will continue if ELC practices carry on, as the Government is eventually going to spend more money as a result of the clearing of these forests. The Government will ultimately have to pour more and more of the national budget into services, such as water treatment plants, and health care to deal with air pollution.

Only by understanding the full scope of ecosystem services provided by these forests can we understand the full costs of deforestation.

This research was conducted with the financial support by The Rufford Foundation, UK and The Australian National University.

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