Logged to death

By Dev Nadkarni

As it enters its 30th year of independence this month, the Solomon Islands finds itself on the brink of a twin disaster. In those three decades, its economy has overwhelmingly depended on just one rapidly disappearing natural resource - timber - which successive governments have failed to manage well, jeopardising the country's environmental health and economic wealth.

Estimates of how much tree cover is left vary, but the general agreement from most international environment groups is that the archipelago will be rendered almost completely treeless in the next five to six years. Moses Rohana, project manager for Environmental Concerns Action Network of Solomon Islands, fears commercial forestry will end as early as 2010.

The International Monetary Fund warned that at current felling rates, the natural forests will be depleted much sooner than envisaged.

Rick Houenipwela, governor of the Central Bank of the Solomon Islands, is clearly worried. "The extraction rate is faster than before. We will get to the other end of the forest much before our earlier estimates," he says.

Despite these loud alarm bells, the country's logging industry is growing at a rate of as much as 12 per cent, according to some estimates. Against a computed sustainable rate of a quarter-million tons a year, more than four times that volume - more than a million tons - was felled last year.

Perversely, that growth rate makes the Solomon Islands the fastest-growing economy in the Pacific Islands region at an impressive 6 per cent. But it is fated to be shortlived, as the main resource propelling it disappears in the next few years.

Over the years, sustainable forestation initiatives have consistently failed to catch up with this indiscriminate rate of felling, and most replanting projects, except for a handful in the country's western province, have been all but abandoned.

Even worse is the failure of successive governments to maximise the value of this fast dwindling resource for the benefit of the economy. In the past two to three years, log prices in the international markets have increased considerably, according to the Central Bank's annual report. But the benefits of that hike have not trickled down to the economy.

Finance Minister Gordon Darcy Lilo attributes that to the country's failure to invest adequately in downstream processing facilities, thereby missing the opportunity of exporting value-added products that fetch higher prices in the developed world.

Most of the country's raw round logs head for low-yield markets like China and India, where the demand for timber is growing exponentially, fuelled by the near double-digit growth in their economies over the past decade.

Houenipwela believes other forces are at play. "There are many companies operating but I have a gut feeling they are all owned by a few individuals," he says. "I think they are all selling and dealing among themselves."

Lilo denies any cartelisation within the industry but over the years, there have been widespread accusations that local and national politicians have been in bed with the loggers, giving them a free run over the runaway rate of felling and pricing.

"Instead of ten dollars, the locals get a dollar. For the government, instead of 100 dollars what accrues is just 5 dollars," says Houenipwela.

Lilo agrees the "determined prices" - government parlance for the price of logs on which export duties are calculated - have been low for years, and blames previous regimes. The IMF asked his Government to raise the determined price immediately.

In 2005, the country exported S$510 million worth of forestry product. Last year's figure is projected to be higher and that's not necessarily because of increased logging activities, says Darcy. "We have increased the value of logs for calculation of duties and cut back on the generous tax breaks given by previous administrations," he adds.

All these measures are too little too late as the present Government seems to realise. It is looking at alternatives to logging more seriously than any government before and has decided to concentrate on its next biggest sectors, farming and tuna fisheries.

Unlike other Pacific Island countries, it has never concentrated on tourism and receives the lowest per capita tourist numbers in the region. Fewer than 4000 people arrived in 2005, mostly from Australia. But regional aviation links, tourism infrastructure and inter-island transportation facilities being what they are, the Government is realistic in favouring other sectors over tourism as a fallback against logging's impending demise.

This same myopia of not investing in downstream processing facilities has plagued its tuna fisheries as well.

Situated in probably the most tuna-rich zone of the Pacific, the Solomons has no processing facility to speak of and depends almost exclusively on access fees it receives from distant countries fishing in its waters.

Unfortunately, those access fees too have been poorly negotiated. And poor policing has considerably increased illegal trawling. "We got S$48 million last year, which is one of the best collections for any year since independence. But even $48 million is peanuts," says Lilo.

The Government has an uphill task putting in place alternatives to prevent its primarily timber-based economy from grinding to a halt in the next few years. And it has no clue as to how it will meet the immense ecological cost as it gets ever closer to felling its last tree.

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