The Rainforests of Cameroon - PROFOR

Objectives and Content of the Reforms 41Box 3.4Does the area fee influence loggers’ behavior?Boscolo and Vincent (2007) have suggested that “area fees [the annual tax basedon the area of the concession] can induce concessionaires to accelerate timberharvests and to harvest more selectively” and add that “in Cameroon, area feesat recent levels create an incentive for concessionaires to harvest forests in halfthe estimated sustained-yield period.”Numerous motivations exist for violating the annual allowable cut, especiallywhen concessions do not occupy vast areas, as they do in other Congo Basincountries such as the Republic of Congo and Gabon. For instance, high-speedlogging is typical of most Asian loggers, whether they operate in Southeast Asiaor Africa, and regardless of the fiscal structure imposed by a given country. Their“business model” relies on quickly harvesting large volumes and on ensuringhigh mobility of the invested capital (conglomerates pursue not only forestrybut various agribusinesses, such as oil palm harvesting and processing, in variouslocations). Perhaps the greatest incentive for quick forest depletion is theprivate discount rate. Central Africa is a region with high institutional and politicalrisks, and businesses usually confess they invest only if they can recoup theirinvestment within a couple of years. In Central Africa the desire to see a rapidreturn on investment tends to increase the speed of the harvest, not the intensity,which is limited by the floristic composition of the forests as well as marketcharacteristics. Thus it would seem that the high private discount rate wouldexplain loggers’ behavior more than the forest tax structure.Boscolo and Vincent have observed that prospects for replicating Cameroon’ssuccess with area fees in other countries “is not clear, as the measures wereconditionalities attached to a series of structural adjustment loans from theWorld Bank and the International Monetary Fund to the country.” Their recommendation,which reflects steps taken in Cameroon, is that “countries that wishto encourage concessionaires to comply with sustained-yield requirementsmust implement measures that counter the depletion-accelerating effects ofarea fees.” Several such measures have been implemented in Cameroon, andothers that could potentially reinforce the current tax framework are detailedin this report.Delivered by The World Bank e-library to:The World BankIP : 192.86.100.34Mon, 09 Nov 2009 17:06:18(c) The International Bank for Reconstruction and Development / The World Bank