Searching for win-win forest outcomes: Learning-by-doing, financial viability, and income growth for a community-based forest management cooperative in the Brazilian Amazon. (January 2020)

• Record Type: Journal Article
• Authors: Humphries, Shoana; Holmes, Thomas; Andrade, Dárlison Fernandes Carvalho de; McGrath, David; Dantas, Jeremias Batista
• Is Part Of: World development. Volume 125(2020)
• Publication Date: 2020-01
• Subjects: Community -- Forestry -- Enterprise -- Livelihoods -- Prosperity -- Poverty alleviation -- Economies of scale -- Financial analysis -- Amazon -- Brazil; Economic history -- 1990- -- Periodicals; Economic assistance -- Developing countries -- Periodicals; 330.9
• DOI: 10.1016/j.worlddev.2018.06.005
• Languages: English
• ISSNs: 0305-750X

Abstract

Highlights: The small pilot CFE transformed into a large, highly profitable timber enterprise. The CFE employed local people and generated over USD1.5 million in benefits. Keys to success included partnerships, improved productivity, and market access. Assistance is needed for new CFEs to overcome initial start-up costs. Consistently applied research tools are essential for CFE financial analysis. Abstract: After more than two decades of investment by donors and governments in community forest management (CFM) initiatives for timber production from natural tropical forests, also known as community-based forest enterprises (CFEs), the sustainability of this livelihood alternative aimed at improved prosperity remains uncertain. Although many studies have focused on the environmental and social dimensions of CFEs, very little is known about their financial viability and socio-economic impacts, even though these elements are critical to ensuring the broad potential benefits of CFM. Furthermore, the lack of a consistent methodology for financial analyses severely limits the ability to learn from CFE case studies across initiatives and time. In an effort to measure the financial viability and identify critical factors that contribute to the poverty-alleviation potential of CFE timber production, we applied a simplified tool for financial analysis in collaboration with a CFE in the Brazilian Amazon three times over six years. The CFE operates in a national forest and is organized as a cooperative with more than 200 members from local communities experiencing high rates of poverty. We analyzed changes in labor productivity and the growth in incomes generated for seasonal and full-time workers, the value of goods and services purchased from the local economy, profits generated, and the overall financial viability of the timber operation. During the study period, the cooperative: (1) demonstrated substantial gains in efficiency and financial viability due to increasing returns to labor inputs, consistent with a model of learning-by-doing; (2) quadrupled the value of labor payments to local communities; and (3) generated substantial other economic benefits. We discuss strategies used by the CFE to improve its financial viability over time, maximize income opportunities for local residents, and respond to financial, social, and political challenges. Our findings indicate the importance of initial support from governments and other partners for start-up capital, subsidized access to trainings and technical assistance, and navigating complex bureaucratic systems, and the positive effect that improved productivity over time, scale economies, and access to markets can have in influencing the poverty-alleviation potential of CFE timber production initiatives in the tropics.