Mexico - Resource conservation and forest sector review

Report No. 13114-ME Mexico Resource Conservation and Forest Sector Review March 31, 1995 Natural Resources and Rural Poverty Operations Division Country Department II Latin America and the Caribbean Regional Office Document of the World Bank  CURRENCY EQUIVALENTS (November 1994) Currency Unit Nlexican New Peso (N$) US$1 = N$3. 10 US$322,581 - N$I million FISCAL YEAR January I - December 31 WEIGHTS AND NIEASURES I meter (in) 3.28 feet (ft) I kilometer (km) 0.62 mile (mi) I hectare (ha) 10,000 m' = 2.47 acres I square kilometer (km') = 0.38 square miles (mi2)= 100 ha I metric ton (m ton) = 2205 pounds ABBREVIATIONS AND ACRONYMS ALBAMEX Alimentos Balanceados de Method of Silvicultural Mexico Development Mexican Livestock Feed NAFTA North American Free Trade Company Agreement BANRURAL Banco Nacional de Credito NGOs Nongovernmental Rural Organizations National Rural Bank NTFP Non-Timber Forest CITES Convention on International Products Trade in Endangered Species PROCAMPO Programa Nacional de of Wild Fauna and Flora Modernizacion del Campo FAO Food and Agriculture National Farm Organization of the United Modernization Program Nations PRONASOL Programa Nacional de FICART Fideicomiso para Credito en Solidaridad Areas de Riego y de National Solidarity Program Temporal SARH Secretaria de Agricultura y Trust Fund for Rainfed and Recursos Hidraulicos Irrigated Areas Secretariat of Agriculture FIRA Fondo de Garantia y Fomento and Water Resources para la Agricultura, SEDESOL Secretaria de Desarrollo Ganaderia y Avicultura Social Trust Fund for Agriculture Secretariat for Social GDP Gross Domestic Product Development GEF Global Environment Facility SEDUE Secretaria de Desarrollo GLASOD Global Assessment of Soil Urbano y Ecologia Degradation Ministry of Urban GNP Gross National Product Development and the INE Instituto Nacional de Ecologia Environment National Ecology Institute SFF Subsecretaria Forestal INEGI Instituto Nacional de Forest and Wildlife Estadistica, Geografia, y Subsecretariat Informatica SINAP Protected Areas System National Institute for UAF Unidad de Statistics, Geography and Aprovechamiento Forestal Informatics Forest Development Unit INI Instituto Nacional Indigenista UCODEFO Unidad de Conservacion y Indigenist National Institute Desarrollo Forestal MMOM Mexican Method of Forest Development and Harvesting Conservation Unit Metodo Mexicano de UNDP United Nations Ordenacion de Montes Development Programme MDS Metodo de Desarrollo UNEP United Nations Silvicola Environment Programme  MEMCO RESOURCE CONSERVATION AND FOREST SECTOR REVIEW CONTENTS Prologue ......................................... vii Executive summary ................................... x I. THE VALUE OF MEXICO'S FORESTS AND WILDLANDS ...1... Description of the Physical Resource ..................... I Biodiversity ..................................... I Environmental Values of Forests and Wildiands ............... 5 Social Values of Forests and Wildlands .................... 12 Economic Value .................................. 15 II. THE CONTEXT: PAST POLICIES AFFECTING FORESTS AND WILDLANDS .......... ........................... 20 Land Tenure Policies Affecting the Sector .................. 21 Community Organization ............................. 24 Agricultural and Livestock Policies ...................... 28 Policies in Forest Sector ............................. 31 Parks and Protected Areas ............................ 36 III. CONSEQUENCES OF UNDERVALUATION: DEFORESTATION AND DEGRADATION ................................... 39 Deforestation .................................... 39 Forest and Wildland Degradation ........................ 45 Consequences of Deforestation and Degradation .... .......... 52 Consequences of Undervaluation: Underutilization of the Resource . . . 55 IV. THE TRANSITION: CHANGING THE POLICY FRAMEWORK ... 64 Current Economic Climate ............................ 64 Policy Changes, Population Shifts and Deforestation .... ........ 65 Population Growth and its Effects on Deforestation .... ........ 67 The Rural Income Support Scheme-PROCAMPO .... ......... 68 Land Tenure: Reform of Article 27 ...................... 69 Current Natural Resources and Environmental Policies .... ...... 71 This document, prepared by a World Bank team, is based on collaborative analysis of policies and recommended actions by the Bank and a Mexican government team from SARH, SEDESOL, NAFIN, and SHCP, and on background studies by consultants. The Bank team was A. Molnar (Team Leader), L. Constantino (Resource Economist), W. Beattie (Forester), and M. Ramos (Ecologist). The government team was A. Clares, N. Zaidenweber, 0. Ortega (SARH), C. Munioz, and J. Baez (SEDESOL), R. Benitez, G. Medina (SHCP), and R. Casillas (NAFIN). Principal consultants were S. Nahmad, S. Madrid, M.E. Castro, R. Cervigni, M. Collins, L. Snook, E. Puustjarvi, A. G6mez-Pompa, R. Dirzo, F. Velez, and R. de la Torre. The Department Director is E. Segura, Division Chief is M. Baxter, and Principal Economist is F. Lysy.  iv Mexico Resource Conservation and Forestry Sector Review V. TOWARD SOLUTIONS: ELEMENTS OF A NEW FRAMEWORK . . 75 Defining Principles of Mexico's Forest Policy ................ 75 Role of the Public Sector ............................. 77 Biodiversity and Watershed Protection .................... 79 Capturing Environmental Values ........................ 80 Pursuing Mexico's Comparative Advantage ................. 85 Poverty Alleviation and Support to Ejidos and Communities ... .... 88 Institutional Options-Government Responsibilities .... ......... 89 VI. CONCLUSIONS AND RECOMMENDATIONS ............... 95 Conclusions ..................................... 95 Recommendations ................................. 96 ANNEXES 1. Working Papers Prepared for the Study .................... 101 2. Policy Matrix .................................... 104 3. Criteria for the Selection of Protected Areas ................. 110 4. A Recommendation for Environmental Zoning ............... 118 5. Competitiveness of the Timber Producers in Mexico .... ........ 121 6. Statistical Tables .................................. 131 7. Methodology Used in Background Studies of Economic Evaluation and Policy Impacts ................................ 138 8. Bibliography .................................... 157 TABLES 1. 1 Extent of Forest and Wildland Resources in Mexico .... ....... 2 1.2 Diversity and Endemism of Mexican Vertebrate Groups ... ...... 4 1.3 Cost of Carbon Losses from Forest Conversion .............. 6 1.4 Actual Ecotourism and Its Potential in Six Forest Resources ... .... 8 1.5 Quasi-option Value of Pharmaceuticals from Mexico's Forests ... .. 9 1.6 Evidence of Existence Value in Mexico ................... 10 1.7 Subsistence Values of Non-Timber Forest Products .... ........ 14 1.8 Estimated Values of Mexican Forests ..................... 19 2.1 The Viability of Indigenous and Non-indigenous Forest Management .................................... 27 2.2 Nominal Protection Coefficients for Nine Major Crops ... ....... 30 2.3 Current Forestry Institutional Structure .................... 32 3.1 Estimates of Deforestation Rates in Mexico, Mid-1980s ... ...... 41 3.2 Deforestation and Reforestation Rates by Forest Type, M id- 1980s ..................................... 41 3.3 Regional Deforestation Rates .......................... 42 3.4 Growth in Planted Agriculture Area and Beef Cattle Herds, 1970-90 . ...................................... 43 3.5 Main Sources of Deforestation by Forest Type ............... 44 3.6 Calculation of Elasticities for Planted Agricultural Areas and Beef Cattle .................................. 45  Contents v 3.7 Species Diversity, Endemism and Ecosystem Disturbance in Mexico ...................................... 54 3.8 Average Distance and Transportation Cost for Pine Sawlogs .... .. 57 3.9 Mechanical (Sawn Products) Industry Capacity ..... .......... 58 3.10 Chemical (Pulp and Paper) Industry Capacity ................ 59 3.11 Average Costs and Prices of Domestic and Imported Forest Products ................................... 60 3.12 Internal Rates of Return to Forest Plantations ..... ........... 62 4.1 Elasticities of Consumption with Respect to GNP per Capita .... .. 65 5.1 Optional Allocation of Responsibilities .................... 93 FIGURES 1.1 Map of Mexico's Forests ............................ 3 1.2 Map of Poverty Areas in Mexico and in Northern Forested States, by Municipalities ............................. 11 3.1 Forestry and Manufacturing (including Forest Processing), GDP 1987-90 ................................... 58 5.1 Mexico's Place on the Forest Policy Continuum .... .......... 78 BOX 2.1 Union of Communities and Forest Ejidos of Oaxaca .... ....... 26   PROLOGUE This Resource Consenrtion and Forestry Sector Review is the product of a collaborative effort by the World Bank and the Mexican Govenment. Prpared by World Bank staff and a Mexican Government team, the review is based on a policy matrix (Annex 2) that also was developed jointly by the World Bank and Mexico. The objective of the World Bank in undertaking a comprehensive review of the forestry sector was to provide a basis for future lending strategies. This required analysis of (a) the broader issues in the sector, and the social, economic and environmental values of the forests and wildlands in Mexico; (b) the adequacy of the Government's new policy framework for forestry and environmental protection, including the implications of changes in Article 27 of Mexico's Constitution; (c) the expected impacts of trade liberalization on forestry; and (d) the role of public sector institutions and the appropriateness of their resource allocations for addressing national concerns and complementing the role of local governments, the private sector, and voluntary and productive organizations, including ejidos and indigenous communities. The objective of the Government was to undertake a comprehensive review of the forestry sector under the overall direction of the Forestry Subsecretariat but involving all other relevant ministries. The focus of concern for the Govemment included (a) analysis of the changes needed to implement its new policy framework for forest and wildiand management; (b) identification of potential issues related to trade liberalization and policies in other sectors; (c) definition of a clearer allocation of responsibilities between the Forestry Subsecretariat and other agencies working in the sector; and vil  viii Mceico Resource Conservation and rmstry Sedor Reiew (d) identification of the potential role of private enterprises and the ejidos and communities in forest development, management, and conservation activities, examining constraints to private investment in the sector. The objectives and policy goals of the Bank and the Government of Mexico (GOM) are fully consistent and have facilitated the consultant studies, working papers and drafts of the study. Many important issues have already been resolved in the workshops held to discuss the implementation of the review, and some recommendations have already been carried out. Not the least of these recommendations is the deregulation of productive forestry activities by GOM and a shift in its role from command and control activities to more-normative technical assistance. In view of the transition to a new six-year presidential term (1994-2000), the exercise was also intended to provide important information to help shape the policies and actions of the incoming administration. The review has been carried out in three stages: diagnosis, analysis, and (currently) strategy development. A World Bank team was constituted in January 1993 by the Latin America Region's Department 2, Natural Resources and Rural Poverty Division (LA2NR); an interagency Mexican team was constituted with representatives from SHCP, Secretarfa de Agricultura y Recursos Hidraulicos (SARH), Subsecretaria Forestal y Fauna (SFF), (Secretaria de Desarrollo Social (SEDESOL), including Instituto Nacional de Ecologia (INE) and NAFIN. This working group agreed on a terms of reference (IOR) in May 1993 and, with grants from the governments of Japan and Finland, contracted eight background studies to international and national consultants. The focus of this TOR was a broad review of forests and wildlands, eamining the historical situation, analyzing the new policy framework and the potential impacts of North American Free Trade Agreement (NAFrA) on forests and wildlands, and recommending adjustments for the implementation of Mexico's new resource conservation and forest strategy. These studies focused on biodiversity and protected areas, the competitiveness of forestry currently and projected under NAFrA, silvicultural issues, valuation of environmental goods and services, policies affecting the sector, gender roles, institutional issues, and the social and indigenous issues of community forestry. There were a number of successful consultative exercises included in the diagnostic and analytical stages involving more than forty people and two trips by Mexican officials to %Wshington, D.C During the diagnostic phase, consultations were held with indigenous forest ejidos and other forest producers  Prologue ix in seeal case study areas and biological and park specialists The findings of the protected areas workshop have become the proposed National Protected Areas System (SINAP), presented in Annex 3. A series of workshops were held with members of the worldng group, Mexican government experts in the sector, and consultants to analyze the findings and strategic recommendations. The policy matrix in Annex 2, summarizing the outcome of these workshops, was developed initially by the World Bank and Mexican working group, and then discussed by the consultant teams and other technical experts from the World Bank and Mexico.   MEXICO RESOURCE CONSERVATION AND FOREST SECTOR REVIEW EXECUTIVE SUTNMARY Background 1. Forests and wildlands cover 72% of Mexico, and they have broad importance both nationally and globally: (a) biologically, as ecosystems that are repositories of species, genetic material, and aesthetic beauty; (b) environ- mentally, as stabilizing elements in soil and water regimes and to capture carbon; (c) socially, as the source of a range of subsistence and informally marketed products used by a poor, rural population; and (d) commercially, as the source of timber and non-timber products for domestic consumption or export and as a base for tourism and recreational enterprises. But despite their critical importance, these forests and wildlands are under intense pressure from deforestation and degradation, and the resources that remain are underutilized. 2. Over the past five decades, wildlands have declined considerably and forests have declined more than 50% in area, with deforestation concentrated in the humid tropics. There is clear evidence that the continued deforestation- estimated conservatively at 230,000 hectares (ha) per year-is resulting in conversion of forest lands to less productive uses with negative environmental externalities. 3. In addition, the resource base is degraded and underutilized. Degradation stems from (a) the conversion of fragile forests and wildlands to unsustainable agriculture or livestock uses, with loss of soil and moisture regimes; (b) the overharvesting of accessible timber and non-timber resources so that the productivity of the forest and wildland declines; and (c) the loss of distinct (including endemic) ecoregions and their respective species and genetic material. Underutilization stems from (a) the inefficiency of timber and non- timber product industries and small-scale enterprises; (b) the failure to capitalize on latent environmental goods and services or to adequately develop sustainable tourism industries that capitalize on forest and wildland existence values; and (c) the haphazard harvesting by the mrual population of a variety of domestic goods, including fuelwood, wild foods and game, thereby losing potential production. 4. This situation has arisen because historically Mexican policies and development strategies have almost exclusively valued forests and wildlands for x  Excutive Summary xi their commercial timber only or, in its absence, their conversion to agricultural or pasture lands. Agricultural and trade policies and incentives, inadequate authority and resources for state agencies to manage and protect forests and wildlands, and insecure and ill-defined land tenure have all discouraged wider resource use and conservation. Environmental and social values and the commercial potential of nontraditional products have been largely ignored, even though these combined values greatly exceed timber and alternative use values alone. 5. Past agriculture and trade policies favored the use of forests for timber or the conversion of forest lands into pasture, agricultural land, and other enterprises with short-term returns. Subsidies for agricultural and livestock products and water resources, coupled with import barriers both inside and outside the forest sector discouraged more-rational resource use. In addition, timber industries were given fairly easy access to extensive timber extraction areas to generate jobs and revenues and were not encouraged to develop sustainable extraction systems. 6. Although forest laws were passed in 1926 and 1986 to regulate forest and wildland use, their effectiveness have been undermined by the more powerful impacts of policies outside the sector. Direct protective measures have also failed. Less than 5 % of the national territory is included in SINAP, and many of the national and state reserves are protected only on paper. State agencies have consistently been too underfunded to assume major responsibility for the resources and too weak to counter powerful timber or livestock interests. Effectiveness is further diminished by inappropriate institutional organization: the environmental agency and the forest agency, which are in separate ministries, share regulatory and enforcement responsibilities. This is both inefficient and confusing to forest producers. 7. The land tenure system historically has also provided an incentive to forest and wildland degradation, due to five main factors. First, the system favors the allocation of cleared parcels over forested ones. Second, the boundaries between public land and land belonging to communal land reform blocks (ejidos) and indigenous communities are ill-defined. Tenure is therefore insecure and this discourages investment by ejidos and communities in forest conservation or protection. Third, although 70% of the forests and wildlands are owned by communities and ejidos,1 most of these lands historicaUly have not been put under management, apart from traditional indigenous forests. With the 1. Another 15-20% are in private parcels averaging 15-20 ha up to a maximum of 1,000 ha or in the protected forests, parks and reserves (5-10%).  xii Merico Resource Conservation and Forestry Sector Review undervaluing of forestry activities, management has not usually been a community priority. This has led to progressive degradation of the resource from uncontrolled timber harvesting, even in areas with commercial management. Fourth, even those ejidos and communities interested in better management lack the technical support needed for implementing sustainable systems. Fifth, the mutual distrust between the forest industries, ejidos and communities discourages the joint ventures that could maximize access to capital and technology. Recent Institutional and Policy Changes 8. While new laws, policies and institutional arrangements have been introduced for forests, water, land and environmental management, they are not adequate for the desired level of forest and wildland management. Legislation for regulation and control of forests and conservation areas continues to be overambitious, covering too big an area and too many aspects of management and conservation and requiring too many personnel to administer. Federal and state agencies have not been able to fulfill their previous duties, so it seems unlikely they will be able to cope with yet more. Responsibilities are overcentralized and duplicated across federal agencies, and financial and human resources are not efficiently allocated. There is no technical or financial support for producers organizations, NGOs or the private sector to enable them to improve resource management and use. 9. In 1988, a law for ecological balance and environmental protection was passed. In 1992 a new Forest Law focused the forest subsecretariat's role on regulation, monitoring, and promotion of forest management activities by the private sector, including communal entities. It maintained responsibility for environmental norms and regulations in the environmental agency, but made their application and interpretation the responsibility of the forestry agency. 10. Article 27 of the Constitution was changed in 1992 to permit greater property rights in communal lands and titling of agricultural parcels, giving smalUholders, ejidos, and communities greater legal rights to their forests. For a number of reasons, however, these changes do little to clarify ownership of and therefore responsibility for forest lands. First, actual titling applies only to private forest or agricultural land; this could encourage deforestation as individuals seek to clear common lands and claim them as private holdings. Second, common land has not been demarcated or adjudicated to ensure new property rights in practice; hence, neighboring communities and ejidos are still able to encroach on or illegally extract from forests. This also means that ejidos and communities have limited incentives to develop this resource intensively and invest over the long term. Third, communal ownership of forests might have been strengthened in the law, but mechanisms for managing forests within most  Execuaive Summary ]di non-indigenous communities do not exist. Fourth, the law permits the selling of communal non-forest land holdings should the community or ejido choose to disband, but does not provide for compensation for forest holdings that have to revert to government. This actually encourages deforestation. Fifth, the constitutional recognition of the rights of indigenous communities to maintain traditional management systems and autonomous government is not upheld in the Forest Law. This allows government foresters to refuse to approve the indigenous management plan if it is deemed unsustainable. Potential Effects of Economic Liberalization and NAFEA 11. Economic liberalization, including the implementation of NAFTA and related agreements, will impact forests and wildlands in several ways. While it has already removed incentives favoring agricultural development, suitable incentives for forestry and conservation activities have not yet been established. As farmers and livestock owners begin to react to the removal of those incentives, the area of land under basic grains will decrease, and agricultural and livestock production will be concentrated on higher-quality lands. This will reduce pressure on the forests and wildlands. However, in the short term the urban and manufacturing sectors may not absorb rural labor entering the market, and the threat of deforestation for agriculture or pasture from subsistence farmers could remain. 12. NAFTA will lower the cost of imported wood relative to the national resource. With current costs of transporting raw material and processing wood, the sector cannot compete in the bulk of wood products. Demand for timber products is expected to rise in Mexico, but unless the industries and ejidos increase efficiency, many forests will become uncompetitive, as Mexican wood is 10-30% more expensive than equivalent U.S. or Canadian wood. Substantial investment is required to modernize equipment and provide training in marketing, business management and modern technologies, even at the cottage industry level. On the one hand, if investment is not forthcoming, there could be less logging, which would be good for the environment. On the other, a reduction in forestry could bring about an increase in the conversion of lands for agriculture and livestock. Recommendations 13. An improved institutional and policy framework is needed to better establish priorities for regulation and promotional activities. Realizing this goal will require considerable political will as well as sustained effort and allocation of funds within and outside the public sector. However costly, this adjustment will not exceed the costs of inaction. While deforestation appears to have slowed, at  xiv Mexico Resource Conserwtion and Fore*ry Sector Recrw least 230,000 ha of forest disappear every year, irreversibly. Further degradation of existing forests and wildlands will result in an enormous loss of economic potential, further impoverishment of the rural poor and marginal ejidos whose livelihood depends on access to forests and wildiands, a threat to the cohesion of indigenous cultural and social structures, and the irretrievable loss of unique ecoregions and their related species and genetic stock. 14. This review recommends a number of strategic and institutional changes and specific actions. (a) Strategic Changes. * Forest and wildland strategy should address a comprehensive set of goals, include all relevant sectors, and allocate resources commensurate with the combined environmental, social and economic values. D Dialogue on forests and wildlands should become a responsibility of senior government policymakers, perhaps within the context of the Environmental Action Plan discussions, so that crosscutting issues that extend beyond the responsibilities of individual agencies can receive the needed attention. 3 A new conceptual zoning exercise that includes ejido, community and small-holder lands is required to consolidate SINAP and better prioritize which forest and wildland resources require dirct government intervention, which require govenmment regulation coupled with incentives, and which should be removed from govemment control. * The importance of forestry should be recognized as a potential source of income and therefore of poverty alleviation for marginalized ejidos and communities. Their ability to generate income should be maximized, at the same time drawing upon their efforts to protect the resource. This will reduce the governmental costs of protecting the resource from land clearing or illegal logging. * Any lack of capacity to clarify forest property rights or lack of long-term investment capital for forest owners to adopt sustainable methods should not undermine the efforts in other aspects of the strategy.  Ecuawve Swnma,y xv (b) Institutional Changes. No single institutional model is proposed, but options recommended have common elements. * The relative responsibilities of government agencies for conservation and forestry activities should be clarified. * Agency budgets for parks, forests and wildlands management should allow for more funding to be channeled to local offices. * Significant responsibilities should be transferred to state and municipal governments in a phased manner. * A clear strategy for involving the regional consultative bodies for forest implementation should be designed, perhaps combining their activities where appropriate with those of biodiversity councils. * -The emerging networks of ejidos should be supported so that they can provide technical assistance and guidance to fellow members. * Lack of capacity to clarify forest property rights or the lack of long-term investment capital for forest owners to adopt sustainable methods should not undennine the efforts in other aspects of the strategy. (c) Specific Actions. * Protected Areas Management. Expand SINAP to include priority biodiversity and areas with watershed conservation value; consolidate research efforts and available databases; explore self-fnancing mechanisms and options for international contributions; and involve local communities and NGOs, as appropriate, in management. * Support to Ejidos and Communities. Consolidate forest property rights in communal holdings; decentralize technical support and training to forest ejidos and communities so that they can more efficiently and profitably manage their resources, drawing on private and voluntary sector resources and building on the self-development initiatives of successful forest ejidos.  xvi Mexico Resource Conservation and Forestry Sector Review * Seek Mexico's Comparative Advantage. Remove constraints to the development of environmentally friendly timber and non-timber enterprises in the forested areas that could competitively supply local, regional or international markets; make training and technical assistance available; develop key road infrastructure; disseminate information on credit, new technologies and raw material markets, including ecolabelling; remove policy constraints and other impediments to the development by the private sector of better industrial capacity that is also environmentally sustainable. * Applied Research on Tropical Forests and Non-timber Product Development. Develop an institution to promote and fund public, academic, and private research on more- sustainable tropical forest management systems, extraction or propagation, and non-timber forest products that could have important and more-extensive commercial markets. 15. This report is organized as follows: Chapter I describes the multiple values of forests and wildlands; Chapter II analyses the history of policies shaping the sector; Chapter IH examines the extent as well as the proximate and underlying causes of resource degradation and deforestation; Chapter IV analyzes recent policy changes and their impact on the resource base; and Chapters V and VI lay out the elements of a more optimal resource conservation and forest strategy, including the institutional alternatives.   I. THE VALUE OF MEXICO'S FORESTS AND WILDLANDS 1.1 Mexico's forests and wildlands are of tremendous environmental, social and economic value both for the nation and the global community. This chapter describes the forests and wildlands and the rich biodiversity they contain. It then discusses each type of value, pointing out the importance of protection and sustainable management. Description of the Physical Resource 1.2 Mexico is the third largest country in Latin America after Brazl and Argentina. It covers 197.3 million ha, including 10,000 kilometers (km) of coastline, 1.2 million ha of lakes and 1.6 million ha of estuaries. Forests and wildlands comprise 137.5 million ha, or 72% of the total land area. They are made up of 50 million ha (35%) of tropical and temperate forest; 55.5 million ha of bush, grassland, and scrub (37%); 0.5 million ha of mangrove (0.3%), 2.2 million ha of desert (1.5%), 7.7 million ha of thorny scrub (5%), and 21.6 mfllion ha of degraded forest land (15%). One percent of the forests and wildlands is wetlands (Synnott, 1993, Working Paper 14, and Annex 5). Figure 1.1 maps Mexico's temperate and tropical forest lands (SARH Gran Visi6n, 1992, cited in Synnott, 1993, Working Paper 14), and lable 1.1 provides a summary of all forest and wildlands resources. 1.3 Nearly half (24.1 million ha) of the forests are mixed, broad-leafed tropical moist forest found in the southern half of the country. The states of Campeche, Chiapas, Oaxaca, Quintana Roo and Veracruz contain over 80% of the tall and medium tropical forest timbers. Another 25.5 million ha are mixed temperate forests, dispersed along the spine of the Sierra Madre on the Pacific side of Mexico, with three-fourths of the conifer timbers concentrated in the states of Chihuahua, Durango, Guerrero, Michoacan, and Oaxaca. There are also small areas of temperate cloud forest (MichoacAn) and mangrove stands (scattered along the Gulf of Mexico and the Pacific coasts). Deserts and thomy scrub areas are concentrated in the northern states, and dryland and scrub are scattered throughout the northern and central states. Based on slope, quality of resource, and legal zoning status, 34 million ha of forest have potential for sustainable productive use for commercial timber. Biodiversity 1.4 With 10% of the world's biodiversity, Mexico is considered one of the megadiversity countries, ranking fourth after Brazil, Columbia, and China. Its 1  2 Mcrico Resource Conservation and Forestry Scdor Review Bible 1.1: Extent of Forest and Wildland Resources in Mexico (million hectares) Vegetation type Inventory 1961-85 Gran Visi6n or land use (average 1973) FAO 1990 1991-92 Temperate forest 27.5 25.5 Conifer 17.0 Broad-leaved 8.4 Mesophyl 0.1 ______ _____ Tall 1.7 High and medium 11.4 8.7 7.0 tropical forest l Low tropical forest 17.9 15.4 Deciduous 13.7 evergreen Evergreen 1.8 FORESr SUBTUrAL 56.8 51.7 49.6 Bushland and other 69.0 70.3 Dry 55.5 Tanl 2.8 Chaparral 7.7 Mangrove 0.5 Desert 2.2 _____ _____ Other 1.6 Degraded forest land 17.8 21.6 18.1 Severely disturbed 3.5 Non-Forest use 52.2 54.3 51.5 Water 2.3 .______________ Urban 0.5 TCTAL 195.8 195.8 195.8 forests and wildlands hold an extraordinary richness of flora and fauna in diverse ecosystems over a wide range of altitudes and rainfall patterns. 1.5 There are an estimated 30,000 species of flowering plants in Mexico, covering 220 families and 2,410 genera. Fourteen percent of these genera and 40-50% of the species are endemic. Tropical humid and temperate forests contribute to its biological richness. The pine-oak forests are the richest on the planet, consisting of 55 species of pine (85% of which are endemic) and 138 species of oaks (70% endemic). The temperate cloud forests cover only 1% of the territory but house 10% of the plant species of the country; the temperate pine- oak forests have the highest species diversity of any such forests on the planet. Mexico is ranked fifth in the wvrld in the extent of its mangroves  3 Figure 1.1 Map of Mexico's Forests IBRD 26040 UNITED STATES OF AMERICA MEXICO TEMPERATE FORESTS ft A _._t \~~~~k,\ Au NoG O " k .ltA 5t GuIlf of Mexico C.Uc,/~~~~~~~~~~~-LC" P A C I F I C O C E A N s,< TEMPERATE FORESTS - - - - STATE BOUNDARIES - -- INTERNATIONAL BOUNDARIES r.rp- HGUANEMAURAS NICARAGUA UNITED STATES OF AMERICA MEXICO -S.t . TROPICAL FORESTS O S~~ONOAA \ Vh -< S O N o 1 ^ AG { s%\ '~~~ l~\'rof '' ErlurGulf f M) iJ PACIFIC'OCE NACAr t r P A C I F I C O C E A N Ai 4 -^Irs, < --?L__CH1AC.C UZ a TROPICAL FORESTS -~ - - - STATE BOUNDARIES _ O; I ~-.- INTERNATIONAL BOUNDARIES A P I The boundaries, colors, denominaions ord aon oa r information LIATEMALA shouq on this n?p do not ipl a t prt e or Bn Grou p, DUkAS any judgment on the legal sbaus of any territory, or any endrsem ent or occeptance of such boundaries. o 100 200 300 MILES MICA JUNE 199A  4 Mvdco Rasource Conservation and Fomstry &ctor PbWew (Cloud and Tbledo 1988) and desert scrub forests. Mexico's deserts have the highest number of cacti of countries uvrldwide. 1.6 Mexico has the highest reptile diversity in the world; the greatest mammalian diversity in the Neotropics (and second only to Indonesia, globally); nearly 30% more bird species than the United States and Canada together; and the second highest (after Brazil) number of terrestrial vertebrates. It has 8.7% of the wvrld's amphibian species; over 11 % of all reptile, bird and mammal species; and over 14% of aU fish species (see summary in lIhble 1.2). Table 1.2 Diversity and Endemism of Mexican Vertebrate Groups Group #Mexican sp. % World sp. % Endemic sp. Fish (sea) 3,600 14.4 0 Fish (river) 461 6.6 48.8 Amphibians 282 8.7 62.0 Reptiles 707 11.4 56.0 Birds 980 11.2 11.8 Mammals 439 11.4 33.0 Soure: CSERGE, 1993, Wbrdkng Paper 15. 1.7 Mexico is also the most important wintering area for many of the U.S. and Canadian migratory bird species, hosting 51% of all migratory bird species from the twv countries every year. These birds spend six to nine months in Mexico (Rappole et al., 1983, cited in Gomez-Pompa and Dirzo, 1993, Working Paper 10). Butterflies, fish, whales, bats, and turtles pass through the country seasonally. The Monarch butterfly (Danaus plexippus) is the most notable insect that migrates north-south annually; populations reach an estimated 200 million in approximately 30 colonies in small fir-forested areas in the Transvolcanic belt (Bower and Lanting, 1988, cited in Gomez-Pompa and Dirzo, 1993, Working Paper 10). Insectivorous bats and the whales that breed at Ojo de Liebre and Laguna de San Ignacio in the Baja California peninsula are additional examples of internationally shared resources. 1.8 Mexico's diversity varies geographically and ecologically. Highest species diversity is found in the warm humid regions of the south and southeast, particularly in the states of Chiapas and Oaxaca and extending eastward and northward to Veracruz in the east and Sinaloa and Durango to the north-  Chapter 1 The Valuc of Mexco's Forests and Wildiands S northwest. In the Yucatan Peninsula, also, the highest species richness is in the south and decreases northward. Biological richness varies according to the type of ecosystem: humid and dry tropical regions generally have higher numbers of species than temperate and desert ecosystems. 1.9 The regional distribution of endemism is the opposite of that for biodiversity. While tropical, warm and humid regions have the highest species diversity, the deserts (desert scrub and grasslands) have the highest endemism at the family and generic levels (Rzedowski, 1962 cited in Gomez-Pompa and Dirzo, Working Paper 10). At the species level, however, the pine-oak forests have the highest endemic numbers, followed by the desert scrub and grasslands and the dry tropical forests. In contrast to species diversity, the humid tropical region species of Mexico are only 5% endemic. As noted, for example, Mexican deserts have the highest number of cacti on the planet, many of which are endemic-and severely threatened. Twenty-five percent of the species in Baja California Peninsula are endemic, compared with 28% in the Chihuahua Desert, 26% in the Islas Revillagigedo, and 25% on Guadalupe. The importance of Mexico's endemism has been highlighted with the recent discovery of a primitive, perennial form of Zea diploperennis, which is resistant to seven of eight critical diseases found in maize. Environmental Values of Forests and Wildlands 1.10 Forests and wildlands are important for carbon sequestration, watershed protection (quality and flow of water, soil conservation, etc.), tourism and recreation, pharmaceuticals and genetic products (potential drugs, gene banks, etc.) and have significant existence and bequest values (defined in para 1.19). Measuring these values has improved remarkably in recent years, but much work still needs to be done. While these values vary considerably, they are generally very high and can exceed those of the standing timber, although often not in terms of commercial use or cash income. Most of these values accrue to the international community. 1.11 Carbon Sequestration. The capacity of forest biomass and organic matter to sequester carbon is of tremendous international importance to counteracting global warming. Establishing who will pay for this environmental value either within or outside the country, however, is a difficult task. Mexico can follow the example of other countries and tap international and national capital to help fund the preservation of its forests (Schneider, Brown and Pearce, cited in CSERGE, 1993, Working Paper 15). It is already a signatory to the Climate Change Convention that fosters international investment for carbon sequestration. Governments are prepared to offset their own emissions through investment in forest projects and other initiatives in other countries. Private  6 Mexco Resoure Conservation and Fomy Sector Review domestic emission regulations or perceive a public relations benefit from taling the initiative. Another source of funding for forest maintenance is revenue from taxes on carbon emissions. Nevertheless, even if Mexico does gain some international capital to fund this environmental value, it will still have to invest its own resources. 1.12 The cost to the global community and, in part, to Mexico of not protecting the forests-for example, if they were converted into pasture and carbon were released into the atmosphere-could range from US$3436 per ha for temperate coniferous to US$693 per ha for temperate deciduous. These values exceed their agricultural value as marginal agricultural lands (see Tlble 1.3). Table 1.3. Cost of Carbon Losses from Forest Conversion Converted Land Use Formet Type Permanent Pasture Agricultur (S/ha) (S/ha) Tempento Conifrrous 3,436 3,410 Tehmpeoe Deciduous 693 643 Tropical Everreen 3,633 3,337 Tropical Deciduous 1,887 1,863 Source: CSERGE, 1993, Abridng Paper 15. 1.13 Watershed Protection. Forests and wildlands are very important for climate and environmental stability, particularly for protecting water catchments. In the Sierra Madre mountains there are temperate forests at elevations between 1,000 and 3,500 meters (m) that play an important role in watershed protection and reducing off- and on-site costs of erosion. Throughout Mexico there are 320 hydraulic basins, but water resources are very unevenly distributed for both agricultural and urban areas. Most sources of water for urban use are less than 500 m above sea level, whereas most urban centers are located above that level, making pumping costs extremely high. It is therefore important that groundwater sources be well protected in these high-altitude sites. 1.14 Wter-related externalities of deforestation include increased soil erosion, which entails on- and off-site sedimentation costs, accelerated water run-off leading to localized flooding, and reduced hydrological cycling and recharge of groundwater and watercourses. Off-site costs (not easily internalized by the landowner) of forest loss or degradation in watersheds include (a) damage to water storage and conveyance, reservoirs and irrigation systems; (b) siltation of dams and hydroelectric installations; (c) reduced water quality and availability; (d) altered hydrological balance, groundwater recharge and increased flood  chapter I The Value of Mer.co 's Forsu and WRldand 7 (d) altered hydrological balance, groundwater recharge and increased flood hazard; and (e) wetland and lagoon siltation with loss of biodiversity (see details in Chapter III). 1.15 Tourism and Recreation. Forests and wildlands are becoming increasingly popular locations for tourism and recreation. Tourism to nature resorts can be divided into two market segments: (a) multipurpose tourism, which comprises, as part of a larger trip, visits to national parks or other protected areas, lasting one or two days; and (b) specialized ecotourism, usually organized in tours of longer length. Official statistics seem to underestimate the importance of ecoturism. In contrast, estimates made for this study indicate that ecotourism expenditures could be about US$14 million per year, or 0.4% of total expenditure of foreign visitors. The total benefits to Mexico from ecotourism could be in the range of US$30-$34 million (see Table 1.4). There is considerable potential to expand ecotourism even further. 1.16 Pharmaceutical and Genetic Values. The value of Mexico's forests for pharmaceutical use can be roughly estimated based on the concept of quasi-option value: the value placed on the possibility that a future discovery will make useful a species currently thought to be useless. This value could range from a minimum of US$26 million per year to US$4.6 billion, depending on assumptions regarding the probability that a species will yield a useful product, the royalties on such products payable to Mexico, a coefficient of rent capture, the likelihood of an internationally traded product, and the area of the forest. Values per hectare per year could range from US$1 to US$90, and these would be lost if the forest disappeared through deforestation (Table 1.5). 1.17 Some 25 plant species are used as sources of drugs in western bio- medicine, and approximately 120 pharmaceuticals are derived from plant materials. Over 25% of all drugs prescribed in the US are plant based, and, together with over the counter purchased plant-based drugs, had an annual value in 1985 of US$18 billion. Zea diploperenis, a wild relative of maize, which is resistant to seven diseases, has a use value of about US$7 billion annually for its use in the creation of perennial hybrid only. The world society is willing to invest money to preserve the last few remaining wild individuals of this species because of its potential value, by demarcating its habitat as a protected area in Jalisco (CSERGE, 1993, Working Paper 15). 1.18 Unfortunately, there are many gaps in the scientific knowledge for all Mexican biota, particularly in regard to their ecology and population biology; little is known beyond the distribution of known species. It is clear from the number of new species now being recorded, especially through studies of flowers  Table 1.4 Actual Ecotourism and Its Potential in Six Forest Resources I I I Average Number Price Paid or Visitors/Year Estimated Revenues/ Tourist Name of Resort Area (years of Willingness to Revenues/ Year/Hectare Market (State) Type (hectares) reference) Pay (US$) Year (US$) (US$) Source El Triunfo Biosphere 119,177 150 i) 17.15' i) 2,572.5 i) 0.02 Touval (1992) Ecotourists (Chiapas) Reserve (1989-1991) ii) 752 ii) 11,250 ii) 0.09 Sian Ka'an Biosphere 528,1473 500 1154 57,500 0.11 Amigos de Sian (Quintana Roo) Reserve (1989-1993) Ka'an a.c. Izta-Popo National 55 12,406 I5 12,406 225 Boo (1990) (Mexico, Park Morelos, Multipurpose Puebla) l Tourists Arrareko Lake Complejo 20,000 7,500 i) 3.336 i) 24,975 i) 1.24 Comision de (Chihuahua) Ecoturistic (1992-1993) ii) 4.427 ii) 33,150 ii) 1.65 Defensa de los o Ejidal Derechos Humanos A.C., _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ C reel Mariposa Special 16,110 47,500 i) 5s i) 237,500 i) 14.7 SEDESOL Monarca Biosphere (1986-1992) ii) 309 ii) 1,425,000 ii) 88.4 (Michohacan) Reserve __ Barranca del Declared 450,000 55,000 i) 3.27 i) 179,850 i) 0.40 SECTUR, Cobre as (1992) ii) 8.20 ii) 451,000 ii) 1.01 Acuerdo Mexico- (Chihuahua) National Alemania, Park Author's Survey 1. Average estimate of individual visitor's expenses for services in a nature tour (transportation, meals, guide services). 2. Suggestion of a possible individual donation based on an average consumer surplus of $470, in tum calculated with a travel-cost analysis (Touval 1992). 3. This number refers only to visitors to the Reserve taking a one-day tour boat. The number of total visitors is likely to be much higher, but many of them enter Sian Ka'an through the many uncontroUed entrance points and therefore remain unreported (Bezauri 1993). 4. Price of a one-day boat tour in the reserve. 5. The higher figures refer to ovemnight visitors only, who pay an entrance fee of under US$1. 6. Individual entrance fee. 7. Entrance fee plus weighted average of other services purchased by visitors (hire of boats, mountain bikes, horses, camping space). S. Admission ticket to the sanctuay (adults). 9. Average price of a standard tour fromn Mexico City (transport, pick-up drive and admission ticket). Source: CSERGE, 1993, Working Paper 15.  Chapter 1 7he Value of Mexico's Forests and Wildlands 9 Table 1.5 Quasi-Option Value of Phannaceuticals from Mexico's Forests Level of Quasi-Option Value Quasi-Option Value Quasi-Option Value Biodiversity Moist Tropical Forests Moist Tropical All Forests US$1ha/yr Forests US$million/year l____________________ US$million/yr Low 1 5 26 ] Medium 6 66 332 High 90 875 4,646 Note: It is assumed that since 5,000 species is the lower estimate of the number of species in moist tropical forests (MTF) in Mexico, this number represents the lowest estimate for all forests. (See Annex 7 on methodology of this table.) Forest areas: 9.7 million ha MTF; 51.5 million ha all forests. Probability of identifying a species of value is 0.0005, royalty rate 0.05. Low estimate: appropriation rate = 0.1, drug value = US$0.39 m/yr Medium estimate: appropriation rate = 0.5, drug value = US$I bn/yr High estimate: appropriation rate = 1, drug value = US$7 bn/yr Source: CSERGE, 1993, Working Paper 15. (such as from Uxpanapa and Los Chimalapas in Veracruz and Oaxaca) and invertebrates, that there is much yet to be discovered. The information available is not sufficient to permit well-informed management decisions except on a very broad scale, which creates tremendous risks and possibilities of error. The great diversity of species found in Mexico demands management systems more finely tuned to the various ecosystems. Mexico cannot afford to lose this diversity while waiting for more data on its scope and potential economic value. Either the resource should be protected for future investigation or extensive research should be initiated immediately before it is lost. Most likely a mix of the two is needed. 1.19 Existence and Bequest Values. Existence value derives from the knowledge of a resource's continued existence independent of any use, while bequest value derives from the knowledge that the resource will be left for future generations' benefit. Estimates of existence value for other countries range from US$1.2 to US$64 per person per year for wild species, while estimates of willingness to pay for scenic and wilderness areas range between US$9 and US$107 per person per year. Table 1.6 presents elements of revealed value for a sample of transactions related to area conservation in Mexico. Total existence value for the entire current system of protected areas in Mexico is estimated at about US$60 million.  10 Mexico Resource Conservaion and Forestry Sector Review Table 1.6 Evidence of Existence Value In Mexico Willingness to Pay Amount of (WTP)/ Type of Organization Area Trmnction hectare Evidence Involved Involved Size (ha) (USS) (USS) Comments Debt for Conservation Selva 385,000 4,000,000 10.38 nature swap International Lacandona; Montes Azules (Chiapas) Donations Amigos de Sian Ka'an 528,147 34,000 0.06 Sian Ka'an report for Nature Sian Ka'an biosphere 0.05 that only 10% of Conserva- (Cancun, reserve donors have tion Or- Quintana Roo) (Quintana actually visited ganizations Roo) the reserve. Promatura Dispersed n.a. 809,622 n.a. The figure refers (Mexico City) sites to total 1992 rec-eipts of Pronatura, including donations and other sources of income. On-site Barranca del 450,000 100,000 4.4 A survey carried evidence, Cobre out in Barranca visitor's (Chihuahua) del Cobre survey suggests a WTP/person/ year related to existence value of US$1.82. Multi- plying this by the number of visitors per annum (55,000 in 199) gives a total of US$100,100; and at a 5% discount rate, a present value of US$4.4. US contri- World Several area 190,869 5,528,809 0.029 Areas involved in butions to Resources the calculation are biodiversity Institute, those contained in conserva- Washington, a WRI tion pro- D.C. biodiversity jectsin projects datae. Mexico n.a Data not available. Souwce: CSERGE, 1993, Working Paper 15.  11 Figure 1 .2 IBRD 26041 UNITED STATES OF AMERICA MEXICO :. POVERTY AREAS IN MEXICO AND IN NORTHERN FORESTED STATES SONORA I - . - . * .- -/f- . OAHUIlAJ> <SX '