Ecological Corridors and the Green Economy Prof Dr Mohd Shahwahid Haji Othman Prof Dr Mohd Shahwahid Haji Othman Dep. Dean,Faculty of Economics & Management & Research Associate, Institute of Tropical Forestry and Forest Products Universiti Putra Malaysia
Sabah Heart of Borneo (HoB) Green Economy Development: Engaging Business for Environment Magellan Sutera Harbour, Kota Kinabalu 15-16 November 2011
Abstract
• Ecological corridors such as Sabah’s Heart of Borneo, provide opportunities as well as incur implicit cost to the economy. In a green economy perspective, ecological corridors provide ecological services which when valued are valuable, provided innovative mechanisms along the lines of market-based instruments could be created to capture these services. Illustrations of the economic values of ecological corridors are provided such as that of the Central Forest Spines of Peninsular Malaysia and the interesting instruments formulated such as the Malua Biobank in Sabah and Malaysia Airlines Voluntary Carbon Off-set Scheme. Nevertheless, these ecological corridors have to be weighed against the trade-off that State Governments face when large areas of rainforests are not harvested or converted for economic development.
A green economy
i. sustainable development and
• is one that results in
– improved human well-being and social equity,
– reduced environmental risks and ecological scarcities
United Nations Environment Programme (UNEP) (2010).
ECONOMICS
SOCIAL
ENVIRONMENT
•Efficiency
•Growth
•Stability
*Poverty
Consultation/
*Empowerment
Definition
• A capacity of ecosystems to maintain their essential functions and processes, and retain their biodiversity in full measure over the long-term.
How to achieve? • Change resource use as if they are infinite to a habit where the society
lives within the ability of the earth to support it and one that maintains the diversity of living things.
• Main greenhouse gas emissions have to be radically reduced, and new and improved economic ways developed based on clean, green technology including be more energy efficient.
could lead to a Sustainable Economy Some Characteristics: • Use renewable resources in such a way that the harvest/use rate is not
greater than the natural regeneration rate • Keep waste flows to the environment at or below the assimilative capacity
of the environment • As exhaustible resources are depleted, their reduced stock is compensated
for by increases in renewable resources Actions needed • Substitutability between resources • Efficiency of resource use • Technological progress including green technology • Inter-generational equity • Internalisation of externalities • Natural Resource Accounting
WHAT ARE THE CHARACTERISTICS OF MANY CURRENT DEVELOPMENT ACTIVITIES ?
• Economic activities such as agriculture, residential and industrial construction and infra-structural development are motivated by financial returns
• In some cases these projects involve the conversion of natural areas, rising environmental pollution and negative social impacts.
• These project developments are at the expense of a: • Loss or alteration of resource stocks and ecosystem and
their goods & services.
• Inconveniences to society.
•Despite These Impacts Upon Society And The Environment, Why Are These
Economic Activities Viewed Favorably In Decision Making Process ?
Occurrences of Market Failure !
(MDG)
• Integrating the principles of sustainable development into
– government policies and programs
– private sector activities: reducing adverse ecological impacts (GO GREEN) and
– reverse the loss of environmental resources
Economic valuation in environmental and ecological assessment - Increasing importance of estimating indirect use and non-use values using innovative economic valuation methods
Economic valuation as Key sustainability development
indicators
changes
Partnership in environmental management:
private sector in partnership with government bodies, NGOs and local communities.
global partnership
socially acceptable
environmental ethics
Provision of alternative livelihood
industry
Challenge 3 Raising public appreciation of the environment. Integrate multi- stakeholder involvement and
participation.
Legislative
changes
projects.
Functions &
Services
Figure 2: Mechanism To Capture The Value Of The Environment
Economy Going Green requires!
• Enhancing the economy with green technology
• Sustaining of green business
Ecological Corridor
Heart of Borneo (Sabah & Sarawak) and Central Forest Spines (P. Msia)
• Protecting and Conserving Forested Watershed in strategic locations to sustain source of clean water & ecosystem functions
• Enhances conservation and connectivity of forest areas that protects wildlife roaming areas for
– Large mammals such as elephants, orang utans, tigers etc
Green Economy involves among others
• In search of Green Tipping Point – business versus sustainability
• Green growth regulations
• Low-carbon emission
• Sustainable energy solution
Experiences in Malaysia on the Link of Ecological Forest Corridors and Green Economy
quite limited but with growing interests
Sustainable consumption and production (SCP) – greening the Supply Chain
• FSC, MTCS Certification
• Tendering Forest Licenses:
• Low impact logging
– Low impact logging (Logfisher technique eg. in Kelantan, Helicopter logging)
• Community-based Ecotourism
• Wood product Buyers Could
FSC, MTCS on
• incremental costs of compliance to additional forest management activities.
– International Tropical Timber Organization-Forest Research Institute Malaysia research project conducted in the MTCC forest certified compartment found that overall log production cost inclusive of pre- felling, felling and post-felling activities increased 50% to RM167/m3 (Mohd Shahwahid et al. 2002).
– Shares of the incremental costs are: • 11.9% by the Forestry Department,
• 23.5% by the concessionaire and
• 64.7% by the harvesting contractor.
• 1970s & 80s: Logging
revenue
Means to Raise Rent Capture
• Forest stand valuation:
tender process
Means to Raise Rent Capture
Community-based tourism and sustainable economic development
• A strategic partnership of local community cooperation with other stakeholders in protected areas
• eg. MESCOT & KOPEL at Batu Puteh
• Fulfilled best practice
CBT
Experiences in Malaysia on the Link of Ecological Forest Corridors and Green Economy quite
limited but growing interests
– Malaysian Palm Oil Council – wildlife conservation trust
– New England Power - Innoprise
MAS VCOS • Malaysia Airline System (MAS) was keen on setting
up a scheme that enables its customers on a voluntary basis to account for their carbon emissions arising from flying.
• MAS approached NRE to explore a collaboration whereby funds collected from such a scheme could be channelled into a trust fund and be applied towards activities that either sequester or reduce carbon emissions in a measurable, reportable and verifiable manner
HOW THE SCHEME WORKS?
• The scheme allows for customers to go online and calculate their carbon miles and its associated monetary value.
• They can then make their contribution which will be used towards offsetting their carbon emission.
• MAS, MASWings and Firefly have upgraded their websites to enable customers to contribute towards this scheme.
• The funds collected will be channelled towards a trust fund
MALAYSIAN AIRLINES SYSTEM (MAS)
VOLUNTARY CARBON OFFSET SCHEME
MAS Voluntary Collection and Carbon calculator
MAS Voluntary Collection and Carbon calculator : YOUR PAYMENT FOR YOUR CARBON FOOTPRINT
Proposed Project Site
“New Forests Project”
• Investment management services
Malaysia
•Global problem of forest conversion—soy, palm oil, beef, timber
•Biodiversity, carbon stocks, watershed management are being lost
•International move towards pricing nature—could become a major
global business—analogous to investment in infrastructure
Sabah State Cabinet Decision March 2006 • to phase out logging by 31 December
2007 and remove threat of conversion to palm oil
• affecting 295,286 ha logged over forest
• located within Ulu Segama, Malua and Ulu Kalumpang (USM)
Forest Reserves
rehabilitation and restoration enhances conservation.
an abandoned degraded forest invites predatory behaviour
– encroachment.
Who will pay?
Who Will Pay?
• JV between US investors and the
Sabah government
restoration & protection
• Sponsors receive biodiversity
• Sponsorship creates permanent
endowment Malua Trust
Sell love in the form of a Bio-D Conservation Certificate
(BCCs) at the rate of USD10/BCC/100m²;
Malua can produce USD 34 million gross income to the State Government;
20% of the net profit goes to the HSBC Trustee, the remaining 80% is divided equally between the State Government & New Forests Asia Sdn Bhd .
The State Government will manage the operation while New Forests Asia
markets the BCCs.
Forest Ecological Corridors Benefits Society
• Enhances forest catchment & ecosystem functions
• Wildlife Habitat Function is an important functions that avoids Various ECONOMIC COSTS to SOCIETY
Large scale conversion of forests to other land uses & forest fragmentations are causing Habitat Loss
resulting in human-elephant conflicts.
HUMAN ELEPHANT CONFLICTS
• HEC existed since 1950’s when Malaysia adopted the 5-years Malaysia Plan to boost the economy by encouraging the agricultural sector, as an engine of growth.
• Wildlife such as elephants are deprived of – space and thus compressed them into areas that are too small to be
viable, – deprived them of their ancestral & seasonal migratory routes and
separated them from their families and friends. – Elephant herds in the wild follow well defined seasonal migration
routes, between wet and dry seasons. – When human settlements and farms are found in these old routes,
confrontations occur which often lead to damages to crops and properties as well as injuries and deaths to both species.
Valuing Wildlife Habitat Function
What would be the losses if the Forest Habitat functions are jeopardized? • Present values of reduced productivities from those stunted growth of
crops not destroyed. • Present values of foregone revenues from those crops destroyed that
require replacement • Replacement cost of those destroyed crops • Present values of foregone revenues from crops destroyed that do not
require replacement • Foregone earnings during human wildlife conflicts • Property losses • Health related and mortality • Loss from tranquality and trauma
PV loss of RM22,850 /affected household (Poh Lye Yong, Mohd Shahwahid et al 2007).
Plantation property loss
Economic values of damages as a result of HECs (RM/household)
Value of losses District (RM)
Maran Rompin Total (%)
Properties damaged* 19,937.25 1,340.50 21,277.75 2.80
Cost of night sentry* 170.89 31.00 201.89 0.02
Forgone revenue* 3,500.00 70.00 3,570.00 0.47
Loss of tranquillity (WTP) 4,728.57 14,821.43 19,550.00 2.58
Average Total Lost** 49,992.86 21,012.36 760,044.99 100.00
* = average for affected individuals
** = average for the total number of respondents Source : Computed from survey data
Value of HEC at Grik, Perak
Sources of economic losses Value
(RM/household))
Loss from damaged property 377 12.7
Loss from expenditures on night sentry 0 0
Foregone revenue from trauma 8 0.3
WTP to avoid future HEC* 14 0.5
Loss from injury 0 0
Loss from death 0 0
Total loss 2,977 100
Economic Cost from Human Elephant Conflict at Bertam, Gua Musang
Types of Losses RM/
Opportunity cost for not tapping due to fear of elephants
365.00 5.45
Value of trauma and worry 42.50 0.63
Loss from damages to rubber smallholding 0.00 0.00
Cost of replanting rubber and fruit trees 0.00 0.00
Total 6693.47 100.00
APPLICATIONS OF VALUATION OF HEC INTO LAND USE PLANNING & ADMINISTRATION
• Malaysia’s Town & Country Planning – responsible in preparing the ‘National Infrastructural
Plan (NIF)’
Wildlife crossings) • Fragmented forests that used to be ancestral &
seasonal migratory routes are to be rehabilitated as Wildlife Corridors
CONCLUSIONS
valued are valuable eg. Conservation of our Wildlife heritages, Ecotourism incomes, Avoid Losses from Human Wildlife Conflicts and generates Watershed functions
• Sustainable forest management, green forest industries, ecotourism
• Innovative financial mechanisms could be created to capture these services.
• Nevertheless, these ecological corridors have to be weighed against the trade-off that State Governments face when large areas of rainforests are not harvested or converted for economic development.
Acknowledgements
• Department of Forestry Sabah for this cordial invitation to participate in the interesting conference