El Salvador Country Forest Note A Green Deal for El Salvador: Forest-Based Green Infrastructure for Income and Services August 10, 2020 © 2020 Interna onal Bank for Reconstruc on and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contribu ons. The findings, interpreta ons, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Execu ve Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denomina ons, and other informa on shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemina on of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full a ribu on to this work is given. A ribu on: Please cite the work as follows: “World Bank. 2020. A Green Deal for El Salvador Forest- Based Green Infrastructure for Income and Services. © World Bank .” Acknowledgments: This report was produced under the overall guidance of Rodrigo Mar nez Fernández. The Bank’s team was made up of lead consultant Lawrence Szo , and German Obando, Gustavo Solano and Rene Rivera. It had the collabora on and contribu ons of Giuseppe Topa, Muhammad Najeeb Khan, Ben de Jong, Shaadee Ahmadnia, Anabella Palacios, Gerardo Segura, Philippe Dardel and Julia Navarro. Special thanks to the team at the Ministry of Environment and Natural Resources. The team is also grateful for the generous contribu on of the Forest Carbon Coopera ve Fund (FCPF) and the Wrold Bank Forest Program (PROFOR). Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publica ons, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522- 2625; e-mail: pubrights@worldbank.org. Cover photo: Mesoamérica Sin Hambre FAO- AMEXCID El Salvador Country Forest Note A Green Deal for El Salvador: Forest-Based Green Infrastructure for Income and Services Photo: Maren Barbee iv | El Salvador: Country Forest Note CONTENTS ACRONYMS 3 PREFACE 5 KEY MESSAGES 6 EL SALVADOR COUNTRY CONTEXT 9 REGULATORY, POLICY AND INSTITUTIONAL FRAMEWORK 12 Regulatory Framework 12 Ins tu onal Framework 13 Incen ve Programs 14 Interna onal Commitments and Agreements 16 FORESTS AND THE NATIONAL ECONOMY 18 State of El Salvador´s Forest-Based Green Infrastructure 18 Economic Contribu ons of the Forest Sector 21 FOREST LOSS – CAUSES AND MANAGEMENT CHALLENGES 24 Forest Loss 24 Deforesta on 24 Degrada on 26 Drivers of Forest Loss 26 Underlying Barriers and Challenges 28 Legal Challenges 28 Land Tenure 28 Inter-ins tu onal Coordina on and Policy Harmoniza on 30 Ins tu onal Capaci es and Resources 31 Economic/Produc ve Challenges 32 OPPORTUNITIES FOR FOREST-BASED GREEN INFRASTRUCTURE 34 POTENTIAL INTERVENTIONS 36 KEY ACTIONS 40 ENGAGEMENT OF THE WORLD BANK AND OTHER DEVELOPMENT PARTNERS IN EL SALVADOR´S FOREST SECTOR 44 World Bank 44 Other Donors and Projects 46 El Salvador: Country Forest Note | 1 ANNEX 1. LEGAL, POLICY, AND INSTITUTIONAL FRAMEWORKS 47 ANNEX 2. INTERNATIONAL COMMITMENTS 54 ANNEX 3. INVENTORY OF COMMERCIAL TREE SPECIES 55 ANNEX 4. FOREST VALUE CHAINS AND ACTORS 56 ANNEX 5. DEFORESTATION AND FOREST DEGRADATION 62 ANNEX 6. AGRICULTURE IN EL SALVADOR 72 ANNEX 7. LAND TENURE 76 ANNEX 8. ECONOMIC CHARACTERISTICS OF INTERVENTIONS 78 ANNEX 9. GENERATING GREATER INCOME FROM FORESTS BY IMPROVED TIMBER PRODUCTION AND WATER USER FEES 80 ANNEX 10. WORLD BANK PROJECTS IN EL SALVADOR 84 ANNEX 11. ON-GOING OR PLANNED PROJECTS IN EL SALVADOR 87 2 | El Salvador: Country Forest Note ACRONYMS ANDA Na onal Administra on of Water and Sewerage AOP Annual Opera ng Plan BAU Business-As-Usual BCIE Central American Bank for Economic Integra on C Carbon CEDEFOR Forestry Development Center CENTA Na onal Center of Agricultural and Forestry Technology CFN Country Forest Note CIAT Interna onal Center for Tropical Agriculture CIMMYT Interna onal Maize and Wheat Improvement Center CITES Conven on on Interna onal Trade in Endangered Species CO2 Carbon dioxide COMURES Corpora on of Municipali es of the Republic of El Salvador CONAMYPE Na onal Commission for Micro and Small Businesses CPF Country Partnership Framework DGEB General Directorate of Ecosystems and Biodiversity DGFCR General Directorate of Forestry, Watersheds, and Irriga on ENA Na onal Environmental Strategy ENCC Na onal Climate Change Strategy FANTEL Special Fund of Resources from the Priva za on of ANTEL FAO Food and Agricultural Organiza on of the United Na ons FCPF Forest Carbon Partnership Facility FIAES Environmental Investment Fund of El Salvador FMCR Forest Management, Conserva on, and Restora on FMP Forestry Management Plan FONAES Environmental Fund of El Salvador GDP Gross Domes c Product GEF Global Environmental Facility GHG Greenhouse Gases GOES Government of El Salvador ha Hectare IFAD Interna onal Fund for Agricultural Development JICA Japan Interna onal Coopera on Agency KOICA Korea Interna onal Coopera on Agency M Million El Salvador: Country Forest Note | 3 m2 Square meter m3 Cubic meter MAG Ministry of Agriculture and Livestock MARN Ministry of the Environment and Natural Resources MbA Mi ga on based on Adapta on MDL Ministry of Local Development MIGOB Ministry of Governance MINEC Ministry of the Economy MIVIVIENDA Ministry of Housing MOP Ministry of Public Works MRV Measuring, Repor ng, and Verifica on MW Megawa NDC Na onally Determined Contribu ons NGO Non-governmental organiza on NPV Net Present Value NTFP Non- mber Forest Products PAF Family Agriculture Program PAN Food and Nutri on Program PAP Produc ve Agriculture Program PAR Restora on Ac on Plan PEIC Industry and Trade Program PES Payments for Ecosystem Services PLDS Local Sustainable Development Plans PNA Protected Natural Areas PREP Na onal Program for the Restora on of Ecosystems and Landscapes RAMSAR Conven on on Interna onally Important Wetlands REDD+ Reduc on of Emissions from Deforesta on and Forest Degrada on SFM Sustainable Forest Management SINAMA Na onal Environmental Management System t Ton UICN Interna onal Union for Nature Conserva on UNDP United Na ons Development Program UNEP United Na ons Environment Program UNFCCC United Na ons Framework Conven on on Climate Change USAID US Agency for Interna onal Development WBG World Bank Group WRI World Resources Ins tute WRS Worldwide Reference System yr Year 4 | El Salvador: Country Forest Note PREFACE Various policies, plans, and programs established in El Salvador during the past two decades have iden fied the consolida on of forest management, conserva on, and restora on (FMCR) as a key priority for reducing the country’s vulnerability to climate change and extreme climate events. This focus coincides with the Fostering Sustainability and Resilience pillar of the World Bank´s current Country Partnership Framework (CPF). This El Salvador Country Forest Note (CFN) presents a forward-looking business case for the World Bank to invest in FMCR in El Salvador. The document is intended to orient considera on of forests in the new CPF under development and to serve as a basis for discussions with key partners and the government as to how these objec ves can be achieved. It also aspires to be er inform the country’s Na onal Ecosystems and Landscapes Restora on Program and Ac on Plan, which incorporates the Na onal REDD+ Strategy developed with the World Bank’s assistance. While the forest sector is not presently a priority sector for the World Bank’s engagement, managing forests and other land uses in a sustainable manner is essen al for the sustainability of other sectors and for social well-being in the context of climate change. The CFN demonstrates why forest resources (trees, soil, water) are important for economic development, poverty reduc on, and sustainability in El Salvador, especially their importance as suppliers of public goods, such as environmental protec on and ecosystem services. It explains what the factors driving forest loss in El Salvador are and the barriers that prevent forests from a aining their full poten al. It outlines how forest management, conserva on, and restora on interven ons can take advantage of opportuni es and contribute to nature-based income and services, key ac ons needed for achieving these goals, and how these ac ons might be incorporated into the World Bank’s assistance programs. The document is structured in the following manner. The first part of the document lays out the context of El Salvador’s forests including the legal and ins tu onal framework, incen ve programs, and the country´s interna onal commitments regarding forests. The next sec on discusses the contribu ons of forests to the na onal economy and exis ng threats, challenges, and opportuni es for maintaining or increasing forest-based green infrastructure, ecosystem services, and the produc on of mber and non- mber forest products (NTFPs). The document ends with sec ons dedicated to a schema c descrip on of how interven ons might be packaged, a summary of key ac ons, and the rela onship of these ac ons with the World Bank’s engagement and exis ng projects. The analyses and syntheses presented are based on exis ng documenta on, interviews, and a recent analysis of satellite images; the la er is of high quality and provides the most precise es mate of forest and land use changes since 2001. This CFN also draws upon secondary data and previous analy cal work undertaken by interna onal programs (e.g. FAO), various development partners (e.g. IUCN), government documents, and interviews with government representa ves. Apart from the recent satellite images, data and informa on available for the forest sector in El Salvador are fragmented and inconsistent. Therefore, the informa on provided in this document should be carefully interpreted in the context of these limita ons. The la er are due, in part, to the lack of consistent monitoring and widespread informality within the sector. While significant efforts were made to analyze the available data, informa on gaps exist and are duly iden fied in the document. El Salvador: Country Forest Note | 5 KEY MESSAGES El Salvador’s forests cover 817,000 ha, about 38% of the country’s land area. While most of the forests are young and fragmented due to past deforesta on and degrada on, they con nue to provide goods and income for a large number of small subsistence farmers and ecosystem services for the na on including: a) 1.5% of GDP and about 12,000 direct jobs, b) fuelwood for about 23% of the rural popula on and 3.5% of the urban popula on, and c) environmental protec on and ecosystem services, especially water and soil protec on, which are crucial for a country among the most vulnerable in the world to climate change and extreme climate events. The majority of El Salvador’s forest-based green infrastructure is comprised of a forest-agriculture mosaic landscape that includes approximately 676,000 ha of forests associated with about 900,000 ha of crops, while another 141,000 ha of forests are associated with protected natural areas (PNAs), biosphere reserves, and Ramsar sites. These forests sequester CO2; maintain regional biodiversity and biological connec vity; moderate soil loss, stream flows, and local microclimates; and provide socially and economically important goods for sale or consump on by rural households. Forests are being lost at an es mated average annual rate of 2.6%, equivalent to about 21,700 ha annually. This loss is due to agriculture and urbaniza on, and also to fuelwood and charcoal produc on, logging, and fires associated with forest degrada on. Forest loss, underlain by rural poverty, rural land fragmenta on, demographic growth, and the low opportunity cost of forests, has become a major concern since cri cal environmental thresholds have been reached and the vulnerability of agricultural prac ces and food security are at historical limits. Failure to address forest infrastructure losses would exacerbate the costs of nega ve clima c impacts averaging $215 million annually already affec ng many regions of the country. The main challenge in El Salvador is reconciling the needs and opportuni es for forest produc on and protec on with the constraints, capaci es, and needs of the large number of subsistence farmers who own the forests. Proposed solu ons should sa sfy farmers’ needs for sustainable sources of income and goods from forests in ways that are compa ble with their resources and capaci es and maintain or increase environmental 6 | El Salvador: Country Forest Note protec on and ecosystem services needed by greater society in the face of climate change and a dense and growing popula on. There are means for increasing the opportunity costs of forests through incremental changes in forest management so that they can be er compete with other forms of land use:  The poli cal will for forest restora on and management is favorable and is backed by the country´s legal and policy framework and interna onal commitments.  The exis ng ins tu onal framework of the General Directorate of Forestry, Watersheds, and Irriga on (DGFCR) and the Ministry of Environment and Natural Resources (MARN), especially the Ecosystem and Landscape Restora on Program (PREP), can provide a base for new ac vi es related to forest produc on, management, conserva on, and restora on.  There are a number of civil society or non-governmental organiza ons that could poten ally promote and par cipate in these changes.  El Salvador’s forest capital is currently in a phase of accumula on. Large areas of young bush fallows or secondary forests, if properly managed by farmers, could provide forest products, such as wood, fuelwood, other forest products, and crops while protec ng and improving soil and regula ng water cycles, especially on marginal lands where opportunity costs are low and poten al pay-offs in environmental protec on and services are high.  There are favorable condi ons for producing profitable high- and low-value mber for interna onal and na onal markets.  Forest value chains based on wood or other NTFPs have a high poten al for social impact via employment and income genera on among coopera ves and mul ple small producers and processors.  Pilot experiences for financing forestry incen ves through user fees or compensa on exist, as do pla orms that could be adapted to organize payments for forest conserva on or restora on, as well as technical assistance. To realize the poten al of these opportuni es to reduce pressure on forests and manage them more sustainably, various challenges must be overcome:  Climate smart and sustainable agriculture policies and ac ons need to be promoted, including support services, such as technical assistance, access to germplasm and credit, or other types of incen ves for the adop on of sustainable prac ces.  Contradic ons must be resolved between the forest and water legal frameworks that limit mber harvests and thus act as disincen ves for tree plan ng.  Be er planning and control of land use around secondary ci es based on strengthened municipal planning, technical personnel, and land use monitoring, are needed to channel urbaniza on to more appropriate areas.  Greater crea on of employment in both urban and rural areas is needed to provide subsistence farmers with alterna ves to agriculture. Photo: Rodrigo Flores El Salvador: Country Forest Note | 7 These measures imply a mul -sectoral approach, with a premium placed on greater inter-sectoral coordina on and policy harmoniza on, par cularly for the harmoniza on of forest policies with those of agriculture, urbaniza on and zoning, and infrastructure. Par cipa on of the private sector and municipali es in this coordina on scheme is important. Mee ng these goals will require greater ins tu onal capacity of the DGFCR and the MARN and/or greater par cipa on of non-governmental actors. The DGFCR’s ins tu onal agenda, resources, and capaci es would need to be modified to respond effec vely to the challenges of managing green infrastructure for income or ecosystem services. The MARN also has limita ons, mainly related to ins tu onal coordina on and accessing adequate financing, to effec vely promote the Ecosystem and Landscape Restora on Program (PREP). Be er informa on and coordina on of forest monitoring is also needed to fill gaps related to the distribu on of forests among owners and farms, flows and value of non-regulated mber and NTFPs, market intelligence, and the impact of forest restora on/conserva on on climate change vulnerability. Fragmented landholdings nega vely affect forest produc on, conserva on, and restora on ac vi es that need large blocks of land, such as large-scale mber or fruit planta ons. Similarly, the large number of farmers who farm part- me or rent the land they farm has nega ve implica ons for long-term investments in sustainability. These farmers, along with landless rural inhabitants, are a latent threat to forests since they may ramp up agricultural ac vi es when condi ons are favorable. Therefore, more sustainable agricultural or other employment opportuni es are needed. Forest product value chains face various challenges. El Salvador has significant quan es of high-value mber in secondary forests and coffee planta ons, as well as pine forests, but greater organiza onal and technical assistance, informa on, access to credit and improved technologies, investments, and legality are needed to take advantage of exis ng or future market opportuni es. Value chains are also limited by the availability of legal mber, trained personnel, capital, and informa on; inefficient or obsolete technologies; the demand for low-cost products; external compe on in local markets; and the scale and quality standards of interna onal markets. The NFTP value chains face addi onal challenges related to the size of demand, supply capacity, and market consolida on. Widespread adop on of some forest conserva on or restora on techniques is made difficult due to their rela vely large investment needs vis-à-vis the financial, technological capaci es, and livelihood needs and constraints of small subsistence farmers. As a result, incen ves are needed for promo ng legal wood and forest conserva on and restora on, but financing has fallen short of what is needed. $400 million is needed to comply with the restora on goal of 400,000 ha. User fees for ecosystem services or environmental compensa ons could aid in filling this financial gap. At the same me, greater emphasis needs to be placed on lower cost conserva on and restora on measures. An opportunity exists for the World Bank to assist El Salvador in overcoming these challenges. Support to the forestry sector should not be viewed only as a poten al area of lending for economic, policy, or ins tu onal development but also an environmental safeguard mechanism for the Bank´s future por olio. Important gaps in El Salvador’s FMCR implementa on that the Bank could help fill include: natural resource governance and coordina on, ins tu onal strengthening, incen ves and financial mechanisms, especially compensa ons or payments for environmental services, and coordina on of donor assistance. The Bank could also contribute technical services and assist in closing major knowledge gaps. 8 | El Salvador: Country Forest Note EL SALVADOR: COUNTRY CONTEXT El Salvador is the smallest country in Central America (21,041 km2) but is densely populated (an es mated popula on of 6.486 million in 20201). It ranks 26th among the countries with the highest popula on densi es (318 inhabitants/km2) in the world, despite the fact that 20% of the popula on resides outside the country.2 FIGURE 1. GEOGRAPHIC LOCATION OF EL SALVADOR Source: FISDL - Social Investment Fund for Local Development, 2019. Resilient Local Economic Development Project. Environmental and Social Management Framework (ESMF) Presently, about 27% of El Salvador’s popula on is rural, but this has been decreasing in recent decades as the rural poor seek opportuni es in urban areas or other countries. Almost half the rural popula on is below the poverty line and depends on agricultural produc on, agricultural and non-agricultural labor, and remi ances for their livelihoods.3 Although rural wages and median income of rural households ($180/month in 2012) have been increasing, they are s ll significantly below those for urban households ($250). About 80% of El Salvador’s land area is covered by farms in a diverse anthropogenic agriculture-forest landscape composed of old and young secondary forests, fallows, coffee 1 https://databank.worldbank.org /views/reports/reportwidget.aspx?Report_ Name=CountryProfile&Id=b450fd57&tbar=y&dd=y&inf=n&zm=n&country=SLV 2 Indexmundi El Salvador Demographics Profile. 2019. h ps://www.indexmundi.com/el_salvador/demographics_ profile.html 3 Calvo-Gonzalez, Oscar, and J. Humberto Lopez. 2015. El Salvador: Building on Strengths for a New Genera on. Systema c Country Diagnos c. Washington, DC: The World Bank. El Salvador: Country Forest Note | 9 forests, dooryard gardens, pastures, annual and industrial crops, and protected natural areas (PNAs). Agriculture occupies about 43% of the country´s surface area, mainly for corn and beans; coffee and sugar cane; and livestock produc on. Forests occupy about 38% of the country’s area. Most agriculture is subsistence oriented and is practiced on small (<3 ha) farms, which contain forests that represent a small but important source of wealth and services. Although the forests are largely fragmented, degraded, rela vely young, and largely unregulated, they are s ll biodiverse and contain significant quan es of commercially important mber species. The value of mber, non- mber forest products (NTFP), and protected areas contribute about 30% of the total wealth represented by these sources plus agriculture.4 Moreover, forests and protected areas generate ecosystem services that contribute to climate change resilience and overall well-being at the local, na onal, and global levels. Forest-based services are important since the country is one of the most vulnerable in the world to clima c events, due to its dense popula on, mountainous topography (covering half the country), land degrada on, erodible soil, and loss of forest cover. According to the MARN, around 10% of the country is exposed to floods, 20% is prone to landslides, and 50% can be affected by droughts; the country also has the lowest per capita availability of freshwater in Central America. Moreover, this vulnerability is expected to increase in the future due to projected increases in temperatures, more seasonal and variable rainfall, and more frequent extreme clima c events. Climate scenarios for El Salvador project that by 2030 the temperature will increase by 2°C, and precipita on will decrease by 47 mm and will become spa ally and temporally more variable, with a higher frequency of high rainfall events.5 Destruc on caused by extreme rainfall events and droughts since 2009 is implicated in El Salvador´s slow economic growth.6 Average losses in infrastructure, crop produc on, and water supply because of clima c events are es mated at $215 million annually or almost 1% of the country’s annual GDP (Table 1), without accoun ng for impacts on hydroelectric energy. Another 2.5% of the GDP is lost due to the health impact of environmental degrada on. Many of these impacts are ed to the loss of forest cover. Sixty-four percent of the main water recharge areas, 42% of the landslide prone areas, and 67% of the margins of the main rivers do not have any kind of forest cover.7 Moreover, almost 25% of the na onal territory suffers from soil erosion due to land clearings,8 since the majority of subsistence producers clear and farm slopes greater than 20 degrees9 without the use of soil conserva on or erosion control prac ces. In recent years, cri cal environmental thresholds in many areas have been reached and the vulnerability of agricultural prac ces and food security is at historical limits. Failure to address forest loss would con nue to exacerbate the nega ve economic impacts already affec ng many regions of the country. 4 G.M. Lange, Q. Wodon, and K. Carey. eds. 2018. The Changing Wealth of Na ons 2018: Building a Sustainable Future. Washington, DC: The World Bank. doi: 10.1596/978-1-4648-1046-6 5 M. Salazar, T. S. Thomas, S. Dunston, and V. Nazareth. 2019. Climate Change Impacts in El Salvador’s Economy: The Agriculture Sector. IFPRI Discussion Paper 01826, April. Also see World Bank database: climateknowledgeportal. worldbank.org/country/el-salvador/climate-data-projec ons 6 According to the World Bank´s Systema c Country Diagnos c, 2015, El Salvador’s persistent low growth is ed to a vicious cycle involving the low educa on levels of the popula on, lack of employment opportuni es, high rates of crime and violence, high migra on and remi ances, low levels of savings, low investments, high energy and logis c costs, and low produc vity. See Calvo-Gonzalez et al., 2015. 7 MARN, 2013. 8 The World Bank. 1998. El Salvador. Rural Development Study. Washington, DC: The World Bank. 9 MINEC, 2008. 10 | El Salvador: Country Forest Note Table 1. Average annual losses associated with clima c events Type of loss Average annual Es mate loss (million $) Infrastructure damage due to 125.2 Period: 2009-2018. Analysis of Public Expenditure and extreme climate events Ins tu onaliza on for Climate Change. UNEP/UNDP/WRS (2018). Agricultural losses due to 12.7 17% reduc on in crop yields on farms with moderate or steep erosion slopes. World Bank (1998). Agriculture loss due to storms 35.4 Period: 2009-2018. UNEP/UNDP/WRS (2018); MAG annual and droughts sta s cs. Water 40 - 80 Forgone income due to unsa sfied demand or subs tu on value of water for sa sfying unmet demand in the San Salvador metropolitan area. Total 213.3 – 253.3 Within this context, improved management of forest-based green infrastructure that integrates produc on, conserva on, and restora on has the poten al to help ensure future climate resilient na onal development based on: strengthened local economies provided by forest goods, climate resilience through green infrastructure and the protec on of fragile areas, and the provision of ecosystem services. However, to fully leverage this infrastructure and reduce pressure on forests, changes in compe ng land uses (e.g. agriculture and urbaniza on) outside the forestry sector are also needed. ee aren Barb Photo: M El Salvador: Country Forest Note | 11 REGULATORY, POLICY AND INSTITUTIONAL FRAMEWORK Regulatory framework The legal basis for forest management, protec on, and restora on is provided in Ar cle 117 of the na onal cons tu on: “It is the duty of the State to protect natural resources, as well as the diversity and integrity of the environment, in order to guarantee sustainable development.” It is further developed via the regulatory framework of the forestry and environmental sectors (see below) as well as laws regarding water (Law on Irriga on and Drainage, 1973; Law on Integrated Management of Water Resources, 1981) and natural disasters (the Na onal Plan for Civil Protec on, Disaster Preven on and Mi ga on, based on the 2005 Civil Protec on Law, which establishes the ac ons to be taken to preserve or recover forests to prevent natural disasters in highly vulnerable priority areas) (Annex 1). The regulatory framework for the forestry sector is based on the current Forestry Law No. 852, and the Ministry of Agriculture and Livestock (MAG) is the sector’s governing body. Enacted in 2002, the Forestry Law has a strong focus on forest produc on, emphasizing the management and sustainable use of forest resources, reforesta on, and the development of the mber industry. It enables the use of forestry incen ves and the promo on of the use of industrial systems and equipment for adding value to forest products. The law allows forest clearing, forest conversion to planta ons, and the harvest of forest products authorized by the DGFCR, the MARN, or municipal governments. Illegal ac vi es include conversion of land classified for forestry use to other non-forest ac vi es or use, the unauthorized extrac on of products, use of fires that affect forests, and forest ac vi es that affect water sources. It should be noted that the maintenance, thinning, and harvest of planted forests, including coffee agroforests and tree planta ons, do not need authoriza on or management plans (Annex 5, Polí ca Forestal Nacional, 2019). The Na onal Forestry Policy of 2016 and the Na onal Forest Strategy of 2018 place a greater emphasis on climate change and forest services than the original Forestry Law. They include enabling forestry incen ves and voluntary compensa on mechanisms for forest ecosystem services, protec on, reduc on of forest vulnerability, and the valua on of forest products and ecosystem services that complement similar changes in environmental legisla on and policies. The 2012 Environmental Law and its complementary norms and regula ons provide the framework for the protec on, conserva on, and restora on of the environment, the sustainable use of natural resources, and climate change under the leadership of the MARN. The Na onal Environmental Policy focuses on reversing environmental degrada on and reducing vulnerability to climate change through restora on and conserva on of natural resources. The main instrument for implemen ng this policy is the Na onal Environment Strategy, composed of four inter-related na onal strategies: Climate Change, Biodiversity, Water, and Environmental Sanita on. Environmental and forestry sectors, among others, coordinate on the following strategies or programs related to forestry and climate change: The Environmental Strategy for Adapta on and Mi ga on to Climate Change in the Agriculture, Forestry 12 | El Salvador: Country Forest Note and Aquaculture Sector; the Na onal BOX 1. COMPLEMENTARY LAWS REDD+ Strategy; and the Ecosystem and Landscape Restora on Program (PREP) Other laws or norms that complement the Environmental and the corresponding Restora on Ac on and Forestry Laws are: the Law of Protected Natural Areas Plan (PAR) to halt deforesta on and restore (2005), whose objec ve is regula ng the administra on, essen al ecosystem services. management, and increase of natural protected areas to conserve the biological diversity and assure essen al Since 2012, PREP has provided the ecological processes; the Wildlife Conserva on Law (1994) framework used by the MARN to counter for the protec on, restora on, management, use, and land degrada on and has served as the conserva on of wildlife, as well as the use and exploita on of basis for the Na onal REDD+ Strategy, with this resource; and the Special Regula on for Environmental an emphasis on an innova ve approach Compensa on (2004), which recognizes environmental called Mi ga on based on Adapta on compensa on and payments for environmental services. (MbA). This approach seeks to lay the groundwork for climate change adapta on Significant recent progress in the environmental framework while simultaneously contribu ng to includes: approval of the Territorial Planning and mi ga on and food security. Its main Development Law; the Water Law (under discussion); a components are sustainable agriculture new approach to the Na onal Environmental Management at the landscape level; restora on and System (SINAMA); amendments to the Environment Law conserva on of cri cal ecosystems; incorpora ng a specific chapter on Climate Change; and the synergis c development of grey and establishment of specialized environmental tribunals. green infrastructure; and strengthening of governance and local management. Despite the innova ve and strategic nature of PREP and expecta ons for accessing new financial resources through a future REDD+ regime, the scope and impacts of the program have been limited by available financing10 and investments, land, and livelihood needs of farmers. Ins tu onal framework The General Directorate of Forestry, Watersheds, and Irriga on (DGFCR) of the MAG is responsible for forest produc on, management, and use, as well as soil and water resources for agricultural produc on (Table 2). Within the DGFCR, the Forestry Resources Division is in charge of forests and concentrates mainly on the supervision, regula on, and sustainable management of forests, including forest management plans and permits, transporta on documents, as well as control of mber, the la er mainly through highway checkpoints in collabora on with police (Annex 1). Within the MARN, the General Directorate of Ecosystems and Biodiversity (DGEB) aims to ensure the sustained provision of cri cal ecosystem services and the protec on of habitats and related species. It focuses on restora on and conserva on. The Directorate leads inter-ins tu onal coordina on of the PREP and Restora on Ac on Plan and administers the Environmental Fund of El Salvador (FONAES) (see below). In addi on to the na onal ministries of agricultural and environment, according to the Municipal Code of 1986, municipali es also regulate and develop plans and programs focused on the preserva on, restora on, ra onal use, and improvement of forests and natural resources. They are responsible for trees in urban or restricted municipal areas, vigilance of saltwater forests, and par cipa ng in forest planning (e.g. compensa on program). Although municipali es have Environmental Units that should ar culate na onal agriculture, forest, and environmental programs, they are not opera ng effec vely to control or discourage deforesta on or to restore degraded land. 10 IUCN, The Bonn Barometer, El Salvador. h ps://infoflr.org/bonn-challenge-barometer/el-salvador/2018/ financial El Salvador: Country Forest Note | 13 Municipali es in 9 regions of the country also par cipate in Local Sustainable Development Plans (PLDS) organized under the MARN. They have also been recently supported by the Resilient Local Economic Development Project of the World Bank, which aims at suppor ng the development and financing of resilient municipal infrastructure and capaci es. Table 2. Ins tu onal responsibili es for forest management Areas of Responsibility MAG MARN Municipali es Private natural forests Natural protected areas Trees in urban areas Private forest planta ons Interna onally important wetlands, Trees in areas of restricted use Ramsar sites covered by municipal regula ons Areas of restricted use (if not covered by Biosphere reserves municipal regula ons) Na onal forests Saltwater forests Trees within coffee, agricultural, or Protected or endangered tree livestock systems species Source: MAG and MARN, 2019. Na onal Forest Plan. There are also a number of civil society organiza ons or NGOs related to forestry, agroforestry, and agriculture (Table 3). These are most common in the coffee sector, which has 81 coopera ves and a number of federa ons.11 Incen ve programs Although the Forestry Law allows the crea on or use of incen ves, there are currently no tax or other types of incen ves for forestry ac vi es. In the past, El Salvador had implemented two incen ve programs for reforesta on, which were moderately successful, but were curtailed due to indebtedness. Currently, two environmental compensa on funds, FONAES and FIAES, are ac ve (Table 4). FIAES is an environmental fund administered by a civil society organiza on that has partnered with the MARN for the restora on and adapta on of ecosystems and landscapes and the conserva on and management of natural resources. FIAES has been more effec ve than FONAES and has managed to generate funds from environmental compensa on from businesses, the USAID trust, and other collaborators that have invested in ecosystem and landscape conserva on. Between 2015-2019, FIAES raised $7.760 million. It invested $4.2 million of these funds in 54 projects, priori zed and approved by the DGEB of the MARN related to a variety of themes in conserva on areas. At present, FIAES has priori zed local sustainable development plans in 7 of the 15 conserva on areas iden fied by the MARN´s Restora on Program. The El Salvador Environmental Fund (FONAES) is a public ins tu on under the MARN that captures compensa on payments based on the environmental impact of infrastructure projects or businesses, as es mated from Environmental Impact Studies. These funds are used for financing ac vi es to reduce environmental degrada on and vulnerability to climate change, primarily watershed and water management projects and the protec on of natural areas. Between 2015 and March 2020, FONAES signed compensa on agreements with a dura on of 1-20 years with 83 businesses or projects 11 ICO/Salvadorean Coffee Council. 2016. Country Coffee Profile, El Salvador. Interna onal Coffee Organiza on, ICC-117-8. 14 | El Salvador: Country Forest Note Table 3. Agriculture, forestry and water organiza ons in El Salvador Area Organiza on Orienta on Reforesta on Salvadoran Forestry Associa on (AFOSALVA) Mainly forest planta on owners Coffee Salvadoran Coffee Council (autonomous Focuses on coffee commercializa on; has a na onal public-private authority) school for coffee tasters Salvadoran Coffee Associa on More tradi onal producers; involved in sector promo on CUSCACHAPA Coopera ve Large progressive coffee coop; has technical assistance (TA) capacity La Majada Coopera ve Large progressive coffee coop; has TA capacity Coffee Processors Associa on (ABECAFE) Coffee processors; provides TA to members Agriculture Agriculture and Livestock Chamber Mainly composed of large agricultural and (CAMAGRO) forestry producers or agribusinesses Na onal Commi ee of Family Agriculture Wide umbrella organiza on mainly focused (CNAF) on policies Agricultural coopera ves Federa on of Agricultural Coopera ves of El Umbrella organiza on for agricultural Salvador (FEDECOOPADES) coopera ves. Has some technical assistance programs Confedera on of the Agrarian Reform Umbrella organiza on for agricultural Coopera ves of El Salvador coopera ves formed by agrarian reform. Has TA and research capaci es Water Rural Water Juntas and watershed Juntas exist at the municipal or village organiza ons (e.g. ACUGOLFO and levels; mainly involved in the establishment ASUSCUBAJI) or maintenance of water infrastructure Implementa on or service Catholic Relief Services Various civil society organiza ons or providers SalvaNATURA NGOs, focusing on sustainable or organic PRISMA Founda on agriculture, vegetables, agroforestry, FUNDESYRAM cocoa, coffee, processing, water, FUNDESA commercializa on, soil conserva on, CORDES environmental conserva on, protected CLUSA areas, and special studies totaling $5.755 million; to date, concrete contribu ons total $2.52 million. These funds have been used for financing $1.38 million spread over 28 compe ve projects and have been complemented by $303,361 in contribu ons by counterparts. Both instruments disburse funds in their areas of interest based on public calls for proposals. FIAES’s priori es are aligned with PREP and local Sustainable Development Plans, whereas FONAES is more focused on conserva on of PNAs and water. Eligible groups include: associa ons for community development, NGOs, municipal commonwealths, producer associa ons, and universi es. Funds are awarded based on compe ve proposals that address the program’s strategic objec ves. The size of these funds has been rela vely small compared to the magnitude of the need. El Salvador: Country Forest Note | 15 Table 4. Forestry incen ve and compensa on programs Type of Incen ve Fund or Project Quan ty of funds Source of funds Incen ves for planta ons Environmental Credit Fund $16.46 million Created by the Central and forest management (FOCAM) (1986-2003) Reserve Bank with a dona on from USAID Forestry Bonus Fund $4.7 million, plus $1.9 million FANTEL (2003-2009) for coffee and mber species Environmental FONAES (El Salvador $2.52 million Payments from companies compensa on for the Environment Fund) (2018- for environmental impacts of infrastructure 2019) compensa on, projects, projects and counterpart funds FIAES (Fund for Americas $4.2 million Payments from businesses Ini a ve-El Salvador) for environmental (2016-2019) compensa on Interna onal commitments and agreements El Salvador has signed and ra fied various interna onal conven ons and agreements related to natural resources and the environment, with legally binding principles and obliga ons. El Salvador has also entered into a number of regional commitments with its Central American neighbors (Annex 2). El Salvador’s priori za on of forest restora on is evidenced by concrete commitments expressed in its Na onally Determined Contribu on (NDC), Forest Policy 2016- 2036, Program for Ecosystem and Landscape Restora on (PREP), Restora on Ac on Plan 2018-2022 (PAR), Na onal REDD+ Strategy, and 20 x 20 Ini a ve, which supports the goals launched under the Bonn Challenge and the New York Declara on on Forests. With World Bank support, El Salvador has assumed a leadership role at the interna onal level in forest restora on and has also been a leader in coordina ng the REDD+ agenda and other ini a ves at the regional level in Central America. The 20 x 20 Ini a ve states that by 2030, El Salvador will establish and manage one million hectares of “Sustainable and Climate Change Resilient Landscapes.” This is almost half the country’s territory. In this context, the PREP’s goal is the restora on of 400,000 ha by 2020 via the conserva on of exis ng mangroves, agroforestry systems, and forest planta ons; restora on (reforesta on of gallery and mangrove forests and subs tu on of annual cropping systems by agroforestry in cri cal areas, such as gallery forests, water recharge areas, and areas prone to landslides); and the transforma on of agricultural areas via low-carbon prac ces to reduce degrada on, through trees for example. Between 2014 and 2018, the MARN’s leadership in coordina ng this agenda with the MAG and many local governments has been commendable and largely successful. The PREP has been able to restore 170,000 ha of natural protected areas, mangroves, wetlands, and agroecosystems.12 El Salvador has also formulated and implemented a na onal restora on monitoring system, has formalized agreements with municipal authori es, and is implemen ng local sustainable development plans (PLDS) in 9 territories. These plans incorporate ac ons aimed at restoring ecosystems and landscapes with an emphasis on conserva on areas and biosphere reserves. 12 MARN communica on. 16 | El Salvador: Country Forest Note Restora on is also an important component of the country´s Na onal REDD+ Strategy, which focuses on mi ga on based on adapta on, primarily through the restora on of ecosystems and landscapes. Since 2009, El Salvador has received support from the World Bank under the Forest Carbon Partnership Facility (FCPF) Readiness Program to assess the causes of deforesta on and forest degrada on and develop a Na onal REDD+ Strategy and implementa on framework. The Readiness Package was endorsed in October 2018. The country has also formalized the role of the Roundtable on Restora on of Ecosystems and Landscapes (Mesa de Restauración de Ecosistemas y Paisajes), formulated the REDD+ Strategy based on AbM, and is finalizing a Measuring, Repor ng, and Verifica on (MRV) System and Reference Level for Forests and Carbon Emissions.13 Fulfillment of El Salvador´s interna onal commitments has been limited by a lack of na onal and interna onal funding. According to the Bonn Barometer14 used for monitoring progress of the Bonn Challenge/20 x 20 Ini a ve, the na onal government has invested almost $86 million in restora on, but funding from interna onal donors ($53 million), the private sector ($35 million), and philanthropic sources ($16 million) is insufficient. It is expected that the mul -ins tu onal na onal Restora on Ac on Plan 2018-2022 will provide added impetus to public financing of restora on ac vi es,15 but its impact is uncertain. Moreover, the receipt of possible REDD+ payments depends on El Salvador comple ng the prepara on process and this is s ll a number of years away. Pho to: Meso am éric a Si nH am bre FAO - AM EXC ID 13 The World Bank. 2015. El Salvador. Country Partnership Framework 2016-2019. Washington, DC: The World Bank. 14 h ps://infoflr.org/bonn-challenge-barometer/el-salvador/2018/financial 15 MARN. 2017. Plan de Acción de restauración de ecosistemas y paisajes de El Salvador con enfoque de mi gación basada en adaptación. Proyecto 2018-2022. El Salvador: Country Forest Note | 17 FORESTS AND THE NATIONAL ECONOMY State of El Salvador’s forest-based green infrastructure Green infrastructure is a network of natural, semi-natural, and engineered areas, such as forests, agroforestry, windbreaks, constructed wetlands, biological corridors, parks, and green roofs designed and managed for delivering ecosystem goods and services, such as erosion and flood control, coastal resilience, carbon sequestra on, water and air quality, space for recrea on, and climate mi ga on and adapta on. In the context of El Salvadore, forest-based green infrastructure refers to forests and their ability to support economic growth through the provision of goods, services, and environmental protec on. Forest-based green infrastructure is distributed among the system of protected natural areas (PNAs) and reserves and forest-agriculture mosaic landscapes of on-farm forests. The PNA system includes about 141,000 ha of forests, including 179 PNAs with about 21,000 ha and 3 large biosphere reserves containing about 121,000 ha, including saltwater/ mangrove forests; the la er are also associated with 3 of the 7 Ramsar areas that cover about 204,000 ha (Table 6, Figure 3). These PNAs are valued at approximately $2.5 billion, and annually provide benefits es mated at $71.4/ha/yr for habitat and species’ protec on, recrea on, and water services.16 Biosphere reserves permit economic ac vi es, but mber produc on in these areas is assumed to be small, although some mber may be extracted illegally from PNAs or other protected areas. The forest-agriculture mosaic landscape based on farm forests, includes approximately 676,000 of forests associated with about 900,000 ha of crops.17 These forests sequester CO2; maintain regional biodiversity and biological connec vity; moderate soil loss, stream flows, and local microclimates; and provide socially and economically important goods for sale or consump on by rural households, such as wood, fuelwood and charcoal, fruits, ar san materials, forage, and medicines. However, the under-valua on of these forest goods or services by markets favors the conversion of forests to other uses. In 2018, 38% of El Salvador´s na onal territory, an area of 817,000 ha, was covered by forests18 (Table 5, Figure 2). The departments with the greatest forest cover include: Usulután, La Union, Cabañas, San Vicente, Chalatenango, Cuscatlán (all with 32%-37% forest cover), and Morazán (44% cover).19 16 J. Siikamäki, F. J. San ago-Ávila, and P. Vail. 2015. Global Assessment of Nonwood Forest Ecosystem Services. PROFOR INFO Working Paper. Resources for the Future, The World Bank WAVES, Program on Forests. 17 The 139,000 ha of forests and coffee agroforests included in PNAs and biosphere reserves are excluded. 18 Forests are defined as land area measuring at least 0.5 ha with a tree canopy cover equal to or greater than 30% with trees having a poten al to reach a minimum height of 4 meters at maturity in situ. It does not include land that is primarily under agricultural or urban use. 19 Na onal Forest Inventory, 2018. 18 | El Salvador: Country Forest Note Table 5. Forest cover 2001-201820 Forest Type 2001 2018 % na onal land area, 2018 Broadleaf forests 646,332 595,892 28.3 Coffee agroforests 147,294 138,021 6.6 Saltwater and mangrove forests 44,461 42,941 2.0 Pine forests 32,544 32,492 1.5 Forest planta ons 6,620 8,307 0.4 Total 877,251 817,655 38.9 Table 6. Exis ng areas for forest protec on and ecosystem services Type Number Area (ha) Forest Area (ha) Annual value of forest services (million) Protected Natural Areas 179 44,930 < 21,000 Biosphere Reserves 3 268,684 120,000 Ramsar sites 7 204,479 ?? Sub-total 189 518,093 141,00 $10.07 Forest-farm mosaic 395,000* 1,229,000 676,000 $41.39 Total 1,747,000 817,000 $51.46 Note:* An unknown number of farms are contained in the Biosphere Reserves. Broadleaved forests make up about three-quarters of El Salvador’s forests, almost 600,000 ha, and are sca ered throughout the country (Figure 2). Some of these forests are old, found mostly in unconnected or inaccessible areas,21 and have a high conserva on value but most are secondary forests in various stages of succession. These forests are rela vely rich in commercial species (24 m3/ha) of which 10 m3/ha are associated with high value mber species22 (Annex 3). Coffee agroforests contribute 6.6% of the forest cover or about 138,000 ha. These forests are composed of coffee bushes, shade trees (about 60 trees/ha),23 and other vegeta on, such as fruit trees. They contain about 12 m3/ha of high value commercial mber/ha, such as Spanish cedar (Cedrela spp.), mahogany (Swietenia spp.), and cocolobo (Dalbergia spp)24 (Annex 3). These forests are found mainly in the western part of the country and along the volcanic chain near the coast (Figure 2). Departments with the largest area of coffee include: Usulután, Sonsonante, Ahuachapan, La Libertad, and Santa Ana, with between 18,000-35,000 ha each.25 Saltwater forests, including mangroves, cover about 42,000 ha. Despite their rela vely small area, they produce diverse economic and ecological benefits based on fisheries, 20 In the framework of the na onal REDD+ program, land use of 21,000 sampling points of high resolu on satellite imagery were iden fied for 2001, 2011, and 2018. 21 The World Bank; CIAT; CATIE. 2014. Supplemental material to Climate-Smart Agriculture in El Salvador. CSA Country Profiles for La n America Series. Washington, DC. 22 Na onal Forest Inventory, 2018. 23 PROCAFE, 2009. 24 Na onal Forest Inventory, 2018. 25 Ibid. El Salvador: Country Forest Note | 19 wood, fuelwood, and ecosystem services that approach $18,500/yr26 and thus have high conserva on value. They are found mainly on the coastal plains of the southeastern Pacific coast (Figure 2). Natural pine forests are rela vely small, covering about 32,000 ha and are found along El Salvador´s northern fron er (Figure 2). They have a high volume (64 m3/ha) of commercial mber, composed mostly of low value species (47 m3/ha), such as pines (Annex 3). Finally, forest planta ons (8,307 ha) are of rela vely minor importance. Planta ons are concentrated mainly in the western half of the country; conifers are most frequent in Sta. Ana and Sonsonate, whereas planta ons of broadleaf species, especially teak, are more dispersed. FIGURE 2. LAND USE IN EL SALVADOR IN 2016: FORESTS LEFT AND CROPS AND OTHER USES RIGHT FIGURE 3. EL SALVADOR’S RAMSAR SITES OUTLINED IN YELLOW , BIOSPHERE RESERVES OUTLINED IN BROWN , AND PNAS SHADED AREAS 26 MARN. 2018. El Informe Nacional del Estado del Medio Ambiente 2017. 20 | El Salvador: Country Forest Note There are also some land use types, such as vegeta ve fallows (340,000 ha) and other areas of woody vegeta on, such as fruit tree planta ons (about 20,000 ha) that cover significant areas and provide ecosystem services and soil protec on, although they are not classified as forests. Fallows have the poten al to become forests if they are allowed to grow. Currently, forest cover is only about half of what it should be (65% of the na onal territory, according to El Salvador’s Land Classifica on Scheme). Forests are usually found in areas that are marginal for agriculture or interspersed with cropped areas. When they exist, they are rela vely sparse, likely due to degrada on. Forest cover density is usually only 30%-50% and is highest in coffee growing areas and along the country´s northern border (Figure 4).27 FIGURE 4. FOREST COVER DENSITY % LAND COVER, SEE SCALE ON THE RIGHT IN EL SALVADOR28 Economic contribu ons of the forest sector Direct contribu ons of forests to the na onal economy are about $350 million annually, equivalent to 1.5% of GDP (Table 7). Of the total, wood and wood products contribute about 57%, NTFPs about 28%, and ecosystem services about 14%. This es mate of forest value is significantly greater than previous es mates due to the inclusion of non- regulated mber, which comprises about 70%-80% of total mber, as well as NTFPs and environmental services. The value of mber and value-added processing is also about 70% greater than that es mated by El Salvador’s Central Reserve Bank and is likely due to the inclusion of non-regulated mber and ecosystem services in the current calcula on. The commercial wood sub-sector employs about 12,000 persons directly,29 about 0.5% of the na onal labor force and 2% of agricultural employment; employment created by NTFPs is unknown. 27 This is also corroborated for the period 1990-2000. See S. Hecht and S. Saatchi. 2007. Globaliza on and Forest Resurgence: Changes in Forest Cover in El Salvador. BioScience 57(8): 663-672. 28 Salazar et al., 2019, op cit. 29 O. Santamaria and J.A. Aquino. 2016. Análisis de los flujos en volumen y valor de los principales productos maderables en El Salvador. El Salvador: Country Forest Note | 21 Table 7. Es mated annual volume and value of El Salvador’s forests Product Year Volume (m3) Value (million $) Source Timber Logs 2015 283,100 $88.3 Santamaria and Aquino 2016 & this study30 Added-value processing 2015 100,000 m3 domes c products $127.5 (imports Santamaria and Aquino (not included in total) not included) 2016 & this study Non- mber Fuelwood 2017 1,241,00031 $60.8 UNDATA32 Charcoal 2017 22,858 tons, equiv. to 457,160 $8.9 FAOSTAT34 m3 of woody material33 Other: medicinal plants, 2010 Unknown $15-30 WRI, the World Bank,35 honey, forage, fruits, FAO36 animals/insects Services Recrea on, water, 2015 $51.5* WRI, World Bank34 habitat/biodiversity Total 1,981,260 $352 - $367 * Recrea on value of 138,000 of coffee agroforests is assumed to be $0. Timber Produc on and Value Chains Although El Salvador’s forests are fragmented and rela vely young, they produce significant value, about $173-$188 million annually from mber, fuelwood, and charcoal (Table 7). About 70%-80% (215,000 m3)37 of the total volume of mber (approximately 283,000 m3) is non-regulated, as are fuelwood and charcoal. Unregulated boundaries for non-registered wood products among El Salvador, Honduras, and Nicaragua make es ma on of product flows difficult. Timber originates mainly from natural broadleaf and conifer forests and from shade trees in coffee agroforests; planta ons contributed only about 45,000 m3 of legal wood in 201538 (Annex 4). Teak, balsam, ipé, Spanish cedar, and cypress are high value mbers. Teak is mainly produced in planta ons and is exported due to low domes c capacity to process hard wood. Pines, monkey pods, laurel, and other species originate from planta ons and natural forests, are of lesser value, and may be used in construc on or local furniture making. 30 This study is based in part on data from Santamaria and Aquino 2016 and also CCAD, 2008 cited in MAG, 2016. Polí ca forestal de El Salvador, 2016-2036. Reports of annual mber produc on vary greatly: 682,200 m3 (FAOSTAT) versus 68,000 m3 of legal wood with permits versus an addi onal 127,000 m3 (approximately 195,000 m3 in total) needed to balance imports, exports, and domes c use based on the former es mates. 31 $49/m3, equivalent to a price of $25/month for household consump on. h ps://www.paho.org/hq/ dmdocuments/2016/HAP-Perfil-ElSalvador-eng.pdf 32 h p://data.un.org/Data.aspx?q=fuelwood+El+Salvador&d=EDATA&f=cmID%3aFW%3bcrID%3a222 33 $388/ton. The density of charcoal is 0.208 t/m3. . To convert raw biomass into charcoal, volume to weight conversions can vary widely between 10-27 m3/ton depending on species, ini al moisture content, type of kiln used, etc. (fao.org/3/q1085e/q1085e0c.htm). We used a conversion ra o of 20 m3/ton, which is typical of hardwood species under rus c charcoal making condi ons. 34 h p://www.fao.org/faostat/en/#data/FO 35 According to Siikamäki et al. (2015), op cit, the value of NTFP is $99.88 million based on the 2018 es mate of forest area (excluding coffee agroforests). h ps://www.wavespartnership.org/sites/waves/files/kc/Global%20 Assessment%20of%20Non-Wood%20Forest%202-25-16%20%281%29.pdf 36 FAO. 2010. Evaluación de los recursos forestales mundiales 2010, El Salvador. 37 This study and DGFCR, 2013. Diagnós co del sector forestal en el municipio de Ciudad Delgado, San Salvador. 38 Santamaria and Aquino, 2016, op cit 22 | El Salvador: Country Forest Note The commercial volume of mber present in broadleaf, conifer, and shaded coffee forests is about 13.3 million m3 39 (Annex 4). A sustainable annual harvest of 5% would result in 665,000 m3, about 2.5 mes the currently es mated mber harvest level. Wood value chains processed about 100,000 m3 of wood products and added significant value, about $127.5 million. Furniture, doors, and other products accounted for a li le over half the volume (54,000 m3), but almost 90% of the value was added ($112 million) by the processing sub-sector. Micro and small actors are predominant in all steps of the wood value chain from logging to commercializa on but are responsible for less than 50% of the mber logged, processed, or sold (Annex 4). Logging and processing opera ons are characterized by the use of small-scale or obsolete technologies but account for a majority of the 12,000 direct jobs created in the wood sector. These two opera ons have rela vely high average ra os (about 14) of direct employment/business compared to other links along the value chain (about 3-5 jobs/business). Actors are concentrated in the San Salvador area (region II), but a number of towns throughout the country specialize in certain types of wood products. Exports and imports represent about 20%-25% of the domes c value of wood produc on. El Salvador imports 148,000 m3 of wood products with a value of $55 million, mainly sawn wood from Guatemala and Honduras, and exports about 37,000 m3 of added- value products worth $38 million, mainly furniture, doors, and other secondary products and 21,000 m3 of logs. These values, however, are likely to be greatly underes mated due to the flows of non-regulated products. Non- mber forest products In 2017, the country produced about 1.24 million m3 of fuelwood40 valued at $60.8 million and 22,858 tons of charcoal, equivalent to 445,716 m3, with a value of $8.9 million.41 Most (76%) of the fuelwood as well as wood for charcoal is gathered by individuals or small groups from secondary forests and prunings of shade trees in coffee planta ons; the remaining 24% of the fuelwood is supplied by different commercial channels involving individuals and about 65 businesses, crea ng almost 200 jobs.42 Fuelwood (948,000 m3) is consumed by about 11% of households in El Salvador and 29% of rural households;43 these households spend $15-$25/month (September 2015) on fuelwood for cooking.44 Another 293,000 m3 of fuelwood is transformed or used by industry or other uses. Charcoal is used in the restaurant, agriculture, and gardening sectors, and small quan es are also exported.12 El Salvador’s forests also produce forage, honey, medicinal plants, animals/insects, ar san goods, and recrea on, but their value is uncertain, around $44/ha forest/yr.45 This value does not include the value of supplemental fodder during the dry season or fruits. Coffee agroforests, in par cular, provide fruits for household consump on. Services Among ecosystem services, water and recrea on have the highest es mated value, but their combined annual contribu on of about $20 million accounts for less than half that of the NTFPs. 39 Na onal Forest Inventory, 2018, op cit. Also see Annex 1. 40 h p://data.un.org/Data.aspx?d=EDATA&f=cmID%3aFW. Data for fuelwood produc on are variable and inconsistent (see FAOSTAT and UNDATA h p://data.un.org/Data.aspx?d=EDATA&f=cmID%3aFW). Total produc on reported by FAOSTAT appears to be over-es mated compared to UNDATA but UNDATA and the 2016 Household Survey es mates of household consump on, which accounts for about 76% of firewood use are consistent. 41 FAOSTAT. h p://www.fao.org/faostat/en/#data/FO 42 MARN, 2005, cited in FAO, 2006. Estrategia Forestal de El Salvador. 43 Conversion based on the following: household fuelwood consump on of 948,000 m3, a wood density of 0.65 ton/m3, and a user popula on of 13% (3.5% in urban areas and 29% in rural areas, equivalent to approximately 711,000 people) according to the 2016 Household Survey (h ps://www.ilo.org/surveydata/index.php/ catalog/1635/datafile/F6/?offset=300&limit=100). 44 Paho, 2015, h ps://www.paho.org/hq/dmdocuments/2016/HAP-Perfil-ElSalvador-eng.pdf); Santamaria and Aquino, 2016. 45 Siikamäki et al., 2015, op cit. El Salvador: Country Forest Note | 23 FOREST LOSS – CAUSES AND MANAGEMENT CHALLENGES Forest loss Forests are under severe threats from deforesta on and forest degrada on. Losses total about 21,735 ha equivalent/yr, an annual rate of forest loss of 2.6% (Table 8 footnote 45, Figure 5). Table 8 suggests that the impacts of deforesta on and degrada on are similar in magnitude. Table 8. Average annual forest loss, 2001-2018 Deforesta on Agent of Forest Loss Volume (m3) Deforesta on Between 2001 and 2018, gross equivalence deforesta on was 11,804 ha/yr and (ha/yr)46 totaled 200,000 ha. Deforesta on occurred Forest Degrada on throughout the country but tended to be more concentrated in central and eastern Fuelwood 1,241,000 3,597 areas (Figure 5) and departments with Charcoal 457,160 1,325 greater forest cover: Morazan, La Union, San Vicente, and Cabañas, as well as the coastal Logging 283,100 820 area of La Libertad and parts of Cuscatlán. Fires 4,190 Given that most (90%) of the forests are privately owned and are found on farms,47 Degrada on sub-total 9,932 most deforesta on occurs on private Gross Deforesta on (avg. 2001-2018) property. About 25% of the deforesta on (a bit more than 50,000 ha) occurs on slopes Agriculture 9,828 > 25%. Urbaniza on 1,852 On the other hand, there was also Other 124 significant forest regenera on between 2001 and 2018 (141,000 ha) (Table 9), Deforesta on sub-total 11,804 mainly in the departments of Chalatenango, Total Loss 21,735 (2.6%) Cabañas, Morazán, la Unión, and Sta. Ana, and the coastal areas of La Libertad and Sonsonate (Figure 5). As a result of forest gains and losses, net deforesta on between 2001 and 2018 totaled almost 60,000 ha, at an average rate of 3,505 ha/yr. Between 2001 and 2011, there was a net decrease in forests of 65,248 ha (6,524 ha/yr), but between 2011 and 2018, forests increased at an average of 807 ha/yr for a total of 5,651 ha (Annex 5). Although it is 46 To convert degrada on to hectare equivalent to deforesta on, the volume of logs and firewood was transformed to biomass using a density of 0.60 t/m3. This quo ent was then divided by the weighted average biomass/ha of El Salvador´s forests, 103.5 t/ha, to obtain hectare equivalent to deforesta on. Since it was impossible to ascertain whether firewood, charcoal, or logs originated from standing forests (degrada on) or cleared plots (deforesta on), we assumed that half came from each. 47 However, saltwater forests are mainly owned by the State (89.8%), while the State owns only 0.1% of coniferous forests. 24 | El Salvador: Country Forest Note FIGURE 5. DEFORESTATION LEFT AND FOREST REGENERATION RIGHT , 2001 2011 AND 2011 2018 common to report net deforesta on, from an economic and ecosystem services perspec ve, gross deforesta on may be a more important considera on since the rate of loss of commercial mber, carbon stocks, and biodiversity associated with deforesta on are usually much greater than the rate of regenera on. Table 9. Es mated forest loss and regenera on (ha) by forest type, 2001-2018 Forest Type Forests Forest loss Forest Net change Forests 2001 2001-2018 addi on 2001-2018 (avg. 2018 2001-2018 annual rate) Broadleaf forests 646,332 182,235 132,468 -49,749 595,892 (-0.45%) Coffee agroforests 147,294 12,100 2,030 -10,070 138,021 (-0.40%) Saltwater and mangrove forests 44,461 2,748 1,272 -1,476 42,941 (-.20%) Natural conifer forests 32,544 2,656 2,903 247 32,492 (0.04%) Forest planta ons 6,620 495 2,413 1,451 8,307 (1.29%) Total 877,251 200,701 141,104 -59,597 817,654 (-0.43%) Non-forest land use Non-forest Addns. from Losses Net change Net change Total net Non-forest uses, 2001 deforestn. to forest in forests from non- change from uses, 2018 (a) (b) regenera on (d)=(b)+(c) forest uses forest and (a)+(f) (c) (e) non-forest uses (f)=(d)+(e) Ha Crops 225,396 95,223 18,170 77,053 46,140 123,193 348,589 Grassland 351,253 31,515 26,382 5,133 (92,312) (87,179) 264,074 Sugar cane 76,000 3,881 411 3,470 25,617 29,086 105,086 Fruit planta ons 13,377 2,417 191 2,225 4,144 6,369 19,746 Bush fallows 250,362 34,048 89,987 (55,939) (30,390) (86,329) 164,033 Agriculture sub-total 916,388 167,084 135,141 31,943 (46,801) (14,860) 901,528 Semi-urban/ urban, 201,854 31,495 4,659 26,836 46,875 73,711 275,564 sub-total Other uses sub-total 59,182 2,122 1,304 818 (72) 746 59,927 Total 2,104,100 200,701 141,104 59,597 0 59,597 2,104,100 El Salvador: Country Forest Note | 25 Degrada on Forest degrada on is caused by small-scale subsistence and commercial ac vi es, such as fuelwood extrac on, charcoal produc on, and selec ve logging (Table 8) that are associated with poverty. Although fuelwood produc on has decreased by about 38% since 200148 as a result of a reduc on in rural popula on and rural poverty, its impact is s ll large. Charcoal produc on has been rela vely constant and is about one-third that of fuelwood. Both charcoal and fuelwood produc on are mainly associated with broadleaf secondary forests and coffee agroforests. Fire is another important cause of forest degrada on. During 2012-2017, on average 135 fires annually affected 4,190 ha/yr49 or 0.5% of the forest area, but were responsible for 42% of the es mated degrada on and almost 20% of forest losses (Table 8). Fi y-six percent of the fires were caused by agricultural ac vi es; 22% were caused by wildlife extrac on; and 22% were associated with changes in land use. Drivers of forest loss In El Salvador, direct drivers of deforesta on are agriculture and the encroachment of urbaniza on, while those of forest degrada on are logging, fuelwood and charcoal produc on, and fires. Between 2001 and 2018, most of the almost 59,600 ha of net deforesta on was caused by agriculture (31,943 ha) and urbaniza on (26,836 ha), especially around secondary ci es (Table 9, Annex 5). The intensity and direc on of these drives were influenced by demography, poverty, urban employment, social conflicts and insecurity, and slow economic growth, as well external causes, such as interna onal commodity prices and trade policies, global economic cycles, and clima c events and climate change (Figure 6). The impact of these internal and external factors was shaped by the ins tu onal and legal frameworks and economic or produc ve condi ons. Ins tu onal factors exert their influence mainly through agricultural and forestry policies, incen ves, and ins tu onal enabling condi ons that affect forest control and use. At the ins tu onal level, limita ons of resources, capaci es, coordina on, and poli cal backing of the forestry sector give rise to non-integrated and o en contradictory forestry, agricultural, and climate change policies; weak monitoring and control of forests; li le public awareness; and few incen ves for forest management. Various economic condi ons affect the value, produc vity, and compe veness of forests vis-à-vis other land use alterna ves (Figure 6). Timber illegality, scarce capital, inefficient and low-quality processing, interna onal compe on or subs tutes for wood products, and lack of recogni on of the importance of forest ecosystem services contribute to the low value of forests and the reduced compe veness of forest products in domes c or interna onal markets. Moreover, policies favoring agriculture while simultaneously ignoring its environmental effects tend to favor agricultural land use. In combina on with a high demand for fuelwood, these factors result in deforesta on and forest degrada on. Agriculture Since the 1980s, agricultural land cover and forest cover have fluctuated inversely depending on the security of rural areas; agricultural prices and trade policies; global shocks; droughts; urban employment; remi ance levels; agricultural incen ves, such as the Family Agriculture Plan (PAF); and agricultural credit policies (Figure 6, Annex 5). The net increase in forests observed in 2011-2018 is a ributed to lower agricultural prices and three years of drought. Given the mul tude of factors that affect agriculture, it is hard to predict future trends. Although recent data suggest that clima c or topographic 48 data.un.org/Data.aspx?d=EDATA&f=cmlD%3.FW 49 Comision Nacional de Incendios Forestales – CNIF 26 | El Salvador: Country Forest Note FIGURE 6. CAUSES OF DEFORESTATION AND FOREST DEGRADATION Impacts DeforestaƟon DegradaƟon Fires Direct ReducƟon of off- Unregulated Inadequate Fuel wood Logging Causes farm employment urban growth farming pracƟces & charcoal Underlying InsƟtuƟonal Economic/ProducƟve Causes - Low opportunity cost/low value of forests Weak Limited - Low yields due to obsolete technology ReducƟon of IneffecƟve monitoring awareness and and control of environmental - Limited access and use of credit off-farm incenƟves employment natural educaƟon of civil - Limited investment resources society - Commercial compeƟƟon and wood subsƟtutes - Under valuaƟon of forest ecosystem services and environmental externaliƟes of forests - Illegality and shortage of Ɵmber Insufficient Limited Lack of Deficient - High demand for fuel wood insƟtuƟonal and resources poliƟcal regulatory policy and - Over-exploitaƟon and agriculture coordinaƟon capaciƟes support framework - Perverse incenƟves (agricultural subsidies) External Land tenure Demographic pressure Poverty RemiƩances Social conflicts/insecurity Causes Intl. agricultural prices Intl. trade policies Global economic cycles Climate events constraints limit significant further increases in agricultural area, despite a large increase in the number of producers,50 the widespread use of shi ing cul va on prac ces implies that gross deforesta on will con nue, resul ng in a shi towards younger and less diverse forests, or that land degrada on will become more common. Among agricultural causes, annual crops were responsible for most forest loss, followed by livestock and sugar cane (Table 9, Annex 5). Basic grains and tradi onal livestock produc on is characterized by unsustainable prac ces, whereby subsistence level slash- and-burn farmers limited by lack of capital, access to credit, and technologies, use forests instead of inputs for maintaining agricultural produc vity (Annex 6). The result is low agricultural or livestock produc vity, reduced compe veness, and land degrada on. On the other hand, agro-industrial crops, such as sugar cane are well-capitalized and use large amounts of inputs but in an unsustainable manner that causes significant nega ve environmental externali es. Agricultural expansion at the expense of forests is promoted by agricultural policies and subsidies that promote basic grains, livestock, fruits and vegetables, and sugar cane with li le emphasis on the sustainability of produc ve systems (Annex 6). This tendency may be accentuated during the current COVID-19 pandemic should expatriate migrants or domes c workers return to rural areas due to job losses or if the government decides to increase assistance to assure food security. Between 2004 and 2018, agricultural subsidies fluctuated between $40-$60/farm family/yr (average of $48/family), at a total cost of $273 million ($18-$26 million/yr).51 Subsidies consisted of seeds and fer lizers for basic grain produc on; seeds for forages; ar ficial insemina on for ca le; favorable credit terms for agriculture and livestock raising; market support for grains, dairy products, and other crops; tariffs that maintained high domes c prices for sugar; and plan ng material and irriga on systems for fruits and 50 N. Cuellar, O. Díaz, S. Kandel, I. Gómez, F. Luna, and W. Morán. 2017. Dinámicas de Exclusión y Degradación Ambiental en El Salvador. Programa Regional de Inves gación sobre Desarrollo y Medio Ambiente (PRISMA), San Salvador. 51 J. A lio Alvarado and V.B. Lopez Posada. 2019. Evaluación de la polí ca agrícola de subsidios en El Salvador, periodo 2004-2018. University thesis, Escuela de Economía, Universidad de El Salvador, San Salvador. El Salvador: Country Forest Note | 27 vegetables (Annex 6). Although these policies were rela vely successful at improving produc on and livelihoods, they increased the dispari es between opportunity costs for agriculture and forests, and indirectly promoted the conversion of forests to agriculture. Urbaniza on Urbaniza on, caused by demographic growth and rural migra on to ci es, is associated with 26,838 ha (45%) of net deforesta on between 2001 and 2018, but more agricultural land than forests was converted to urban areas (Table 9). Since 1971, rural poverty and lack of economic opportuni es in rural areas have driven rural-to-urban migra on. This, combined with demographic growth and high land prices in peri-urban areas, fueled an explosive growth in urbaniza on at the expense of good agricultural land and forests,52 especially in the southwest, the San Salvador Regional Metropolitan Area, and around secondary ci es.53 An analysis of land use change suggests that a significant degree of urban expansion in these areas appears to have been preceded by road infrastructure combined with weak land use zoning and development control mechanisms. In the future, urban growth is expected to level out since declining rates of popula on growth are approaching zero. The effects of agriculture and urbaniza on differed among forest types. Broadleaf forests were most affected by the expansion of basic grains and urbaniza on. Coffee agroforests have suffered a long decline due to interna onal compe on, fluctua ng world coffee prices, and more recently, coffee rust disease, climate change, and urbaniza on. Saltwater/mangrove forests have been reduced by the expansion of sugar cane and its externali es, such as sedimenta on, agrochemicals, and fires. The slow growth of the area of under forest planta on has been affected by the fragmenta on of landholdings, legal limits on holding size (245 ha), legal uncertainty regarding harvest rights, high ini al capital requirements, and long return periods. Pine forests have remained rela vely constant despite mber harvests. Underlying barriers and challenges Forests serve mul ple purposes, providing protec on, ecosystem services, and mber and other forest products. At the same me, they are under pressure due to a wide range of factors. Due to this mul -faceted nature, the challenges for forest conserva on and restora on are varied, mainly cross-cu ng or mul -sectoral and structural in nature. Legal challenges Contradic ons between the Forest and Water Laws may prohibit mber harvests and thus act as disincen ves for plan ng trees. Legal gaps include the lack of prohibi on of forest clearings for tree planta ons. Land tenure Farm area and forest holdings are small and highly fragmented. It is es mated that about 325,000 of El Salvador´s 400,000 farms are at the subsistence level, have an average size of < 3 ha, and account for about 39% of agricultural or forest land; about 57% of the agricultural and forest land is associated with less than 24,000 commercial family farms, coopera ves, and corporate farms larger than 5 ha in size54 (Table 10, Annex 7). 52 The World Bank, 2012. El Salvador Country Land Assessment, Report Number 82312-SV. 53 Cuellar et al., 2017, op cit. 54 The 2007 Na onal Census does not provide data on total farm size, total area of each agricultural holding size class, or area of forests within farms. The average size of agricultural holdings within each holding size class and the area of tree cover in addi on to agricultural area was es mated from the World Bank El Salvador Rural Development Study, 1998. A mul plier of 0.75 based on the ra o of the forest/agriculture area was used for calcula ng the forest area associated with each agricultural holding size class. This is likely to result in an overes mate of the forest area associated with small agricultural holdings and an underes mate of the forest area associated with large holdings. 28 | El Salvador: Country Forest Note Table 10. Characteris cs of agricultural and forest landholdings and farm types, based on the 2007 census Size Number of Average size Es mated % of Farm type Es mated agricultural of holding total area agricultural forest* area holdings (ha) (ha) land area (ha) 0-3 ha 354,692 1.0 354,692 38.1 Subsistence 266,019 3-5 ha 12,258 3.9 47,806 5.1 Commercial family farms 35,854 5-20 ha 16,405 9.4 154,207 16.6 Commercial family farms 115,655 20-50 ha 4,954 30.4 150,601 16.2 Commercial family farms, 112,950 coopera ves, corpora ons > 50 ha 2,176 102.4 222,822 24.0 Commercial family farms, 167,116 coopera ves, corpora ons Total 390,485 930,128 100.0 682,765 Note: * Excludes coffee agroforests. The tendency towards fragmenta on of agricultural land since the 1970s suggests that rural households are less able to subsist solely on agricultural produc on than in the past, since farms are now too small to generate sufficient incomes to rise above the poverty level.55 As a result, there are a large number of poor subsistence farmers with agricultural incomes of about $135/month who are forced to incorporate income from other sources, such as forest products, remi ances, and off-farm employment.56 Apart from farmers, there is also a significant popula on of landless rural dwellers (see a comparison of the agricultural popula on in Tables 11 and 12). These land tenure related condi ons present challenges for forest conserva on and restora on. The fragmenta on of agricultural and forest property nega vely affects forest produc on, conserva on, and restora on ac vi es that need large blocks of land, such as large-scale mber or fruit planta ons. Similarly, mixed livelihood strategies, combined with a large popula on of producers who rent land or farm part- me and landless rural dwellers, contribute to a latent agricultural labor force that becomes ac ve when condi ons for agriculture are favorable, usually resul ng in deforesta on (Table 12). These farmers are also less likely to invest in long-term prac ces that increase sustainability. Moreover, the marginaliza on of women and indigenous groups with regard to land rights and tenure makes their inclusion in efforts to increase forest or agricultural sustainability more difficult. The situa on of indigenous peoples in El Salvador remains controversial and is par cularly sensi ve in the context of REDD+. Table 11. Land tenure (ha) of primary and part- me farmers, 201457 Land tenure Par cipa on Full- me Part- me Total Owned 61,549 38,974 100,523 Rented 71,748 115,148 186,896 Shared 7,519 9,069 16,588 Loaned without charge 37,831 74,790 112,621 Total 178,647 237,981 416,628 55 The World Bank. 2012. El Salvador Country Land Assessment. 56 Calvo-Gonzales et al. 2015, op cit. 57 E. Baumeister. 2017. El Salvador: Evolución de la agricultura y las estrategias de los pequeños agricultores. Fundación Prisma, San Salvador. El Salvador: Country Forest Note | 29 Table 12. Changes in rural and economically ac ve agriculture popula ons and net changes in forests, 1990-2018 Variable Year 1990 2000 2011 2018 Urban popula on (million) 2.597 3.469 4.119 4.624 Rural popula on (million)1 2.665 2.410 2.085 1.793 Na onal labor force (million)2 1.92 2.29 2.56 2.85 Agricultural employment (% of total labor force)2 28.1 21.61 21.59 18.53 Popula on employed in agriculture (1000s)3 539 495 552 528 Net change in forest area (ha) from previous period 480,000 -65,248 5,651 Note: 1fao.org/forestal/en/#country/60; 2h ps://www.theglobaleconomy.com/El-Salvador/labor_force/; 3Calculated. Inter-ins tu onal coordina on and policy harmoniza on Compe ng land uses for agriculture and urbaniza on that detrimentally affect forests underscore the need for be er inter-ins tu onal coordina on of policies and ac ons. However, as a result of the limited par cipa on of the forestry sector in the na onal poli cal agenda, the roles of forests and their contribu on to the na onal economy, climate resilience, and sustainable development are not clearly ar culated with other sectors, such as agriculture, environment, energy, health, and tourism, or with municipal governments. Limited spaces for dialogue and sectoral agreements inhibit coordina on with other sectors or municipal and private sector actors. This is compounded by the rela vely limited size and poli cal par cipa on of actors in the forestry sector, many of whom form part of informal value chains. The MAG and the MARN are implemen ng some important cross-sectoral ac vi es, such as PREP, but greater inter-sectoral coordina on and policy harmoniza on are needed. This is par cularly the case in harmonizing policies related to forests with those related to agriculture, urbaniza on and zoning, and infrastructure. Clear examples are the MAG´s subsidies for seeds and fer lizers for basic grains and livestock produc on or the Ministry of Public Works and Transport’s policies for road construc on, both of which affect forests. In this context, municipal Environmental Units, PLDS, and municipal Territorial Development Plans could play a poten ally important role in promo ng and coordina ng forest-based green infrastructure at the local level, but weak capaci es, perceived corrup on, and lack of confidence in many municipal governments limit their par cipa on and effec veness. Strong coordina on among central ins tu ons involved in rural development and natural resource management, and with local municipali es, is cri cal. Key governmental stakeholders include: The MARN, the MAG, the Ministry of Public Works and Transport, the Ministry of Economy, the Ministry of Housing, and municipal governments and communi es. In the past, coordina on was provided by special high-level en es, but these have been discon nued. Similar en es could be created, or coordina on could occur under the SINAMA framework (see Key Ac ons). Greater coordina on and par cipa on of the private sector can help reduce public expenditures, support ins tu onal agendas for change, facilitate implementa on, and provide investments and market signals that could reinforce these processes. Evidence of this par cipa on exists (e.g. FONAES, FIAES, and the Bonn Barometer), but the level of par cipa on needs to be scaled up. There are a number of organiza ons or pla orms of private sector or civil society groups (e.g. coffee growers, agroforestry associa ons, wood 30 | El Salvador: Country Forest Note BOX 2. EXAMPLE OF CENTA/MAG The government’s technical assistance organiza on, CENTA/MAG, has an ins tu onal mandate for agricultural and forestry extension. However, during the last two decades the MAG has faced human and financial resource limita ons in the delivery of efficient and comprehensive public services in agriculture. External funding originally intended for strengthening government services has been directly executed by donors or assigned to NGOs and private ins tu ons. As a result, the extension capacity of the CENTA, including its coffee program, has decreased. In its current, limited capacity, the CENTA’s technical assistance program concentrates mostly on improving subsistence produc on of basic grains and livestock/pastures and not sustainability or forestry. Inclusion of rela vely simple sustainable agricultural prac ces, such as cover crops, green manure, mulching, controlled grazing, improved forage, and the incorpora on of trees in farming systems (e.g. living fences, windbreaks, and improved fallows) is limited and adop on is not widespread. This situa on raises ques ons regarding the CENTA´s ability to provide technical assistance for addressing agricultural sustainability, as well as tree- or forest-based systems. processors, and NGOs – see Table 3) that could be used to promote more sustainable forestry and agriculture. Strategies for working through these groups need to be developed. Be er informa on and coordina on of forest monitoring is also needed. Although the MARN is monitoring restora on, informa on gaps exist in the Ministry and the DCGFCR with regard to the distribu on of forests among owners and farms types, the flows and value of non-regulated mber, the extrac on and poten al of NTFPs, market intelligence, and the impact of forest restora on and conserva on on climate change vulnerability. These informa on gaps affect ins tu onal planning and decision-making, forest management, as well as produc ve and commercial ac vi es of the private sector. Ins tu onal capaci es and resources Although recogni on of forests´ importance for climate change resilience is increasing at the na onal level, the forestry and agricultural sectors are s ll rela vely weak compared to other sectors in the na onal context. The forestry sector is relegated to a secondary role in the MAG, where a majority of the resources are channeled to agriculture. However, the agricultural sector has also declined in importance, which makes it difficult to take on new agricultural ini a ves related to climate change and sustainability. There is limited interest, especially among economic leaders (e.g. industrial, agro-industrial, and financial sectors)58 in the importance of forests for environmental stability, resilience, and na onal economic development. Lack of poli cal support for the forestry and agricultural sectors is manifested in inadequate ins tu onal budgets, human resources, and capaci es needed to comply with the ins tu onal agenda, monitoring forest resources, and expanding ac vi es to new areas, such as forest restora on and climate change (Box 2). As such, ins tu onal, physical, personnel, and financial capaci es need to be improved. Within the DGFCR, exis ng ins tu onal resources of the Forestry Division are very limited and are directed towards administering diverse mber plans and permits, not mul ple forest uses. Forests are seen mainly from a mber extrac on perspec ve, with limited importance assigned to NFTPs, agroforestry systems, forest ecosystem services, and the role of forests in climate change. 58 Cuéllar et al., 2017, op cit. El Salvador: Country Forest Note | 31 Current mber monitoring and control ac vi es are inadequate, foment illegality, and need to be redirected or re-engineered. The me and monetary costs of compliance with regula ons are prohibi vely expensive for many farmers (Annex 1) and incen vize deforesta on and non-authorized mber harvests. Moreover, forest control appears to be largely ineffec ve, since about 80% of the mber is non-registered. Thus, the DGFCR´s ins tu onal agenda, resources, and capaci es need to be modified to respond effec vely to the challenges of managing forests for farm-level income or ecosystem services. The MARN also has limita ons to effec vely promote the PREP and RAP. These are mainly related to the need for the harmoniza on of policies, ins tu onal coordina on, and accessing adequate financing. Current government spending priori zing agricultural subsidies aimed at food security and poverty allevia on in urban areas means that few resources are available for new investments in agricultural sustainability or forestry. The ability to make these changes is affected by the government’s high fiscal deficit, which leaves li le room for increasing social investments, and by poli cal conflict and lack of consensus.59 Some of these responsibili es could be shi ed to municipali es, but their capacity is uncertain. According to the Bonn Barometer,60 between 2012 and 2018 El Salvador invested $190 million from various funding sources for the restora on of approximately 170,000 ha of forests. This suggests that addi onal financing of $400 million is needed to comply with the goal of 400,000 ha. According to the Bonn Barometer, funding received has been insufficient or is not available. Given the current public deficit, incen ves financed from outside the public sector may be the most cost-effec ve mechanism for increasing adop on of conserva on and restora on measures since they may leverage addi onal investments from producers or other private sector actors. El Salvador has experience with environmental compensa on schemes and water user fees on a small scale. These need to be more fully evaluated for poten al scaling-up. Economic/produc ve challenges Value chains. Timber and NFTP value chains are characterized by mul ple small actors limited by the availability of legal raw material, trained personnel, capital, and informa on; inefficient or obsolete technologies; demand for low-cost products; and external compe on in local markets and the scale and quality standards of interna onal markets (Annex 4). Forest produc on and processing is mainly “hormiga” or ant-like in nature (i.e. mainly small-scale, unorganized, widely disseminated, non-regulated, and with limited capital and technology). Na onal market demand, mainly for low-cost products, is unsa sfied; it is limited by wood supply, legality, prices, and product variety and suffers from foreign compe on. In general, informa on and knowledge gaps regarding technical informa on, markets, and prices exist along the value chain. Among the wood value chain actors, processors are the most vulnerable since they suffer supply and market limita ons as well as constraints within their own sub-sector. The NFTP value chains face addi onal challenges related to the size of demand, supply capacity, and market consolida on. Sustainable produc on. Widespread adop on of some sustainable agricultural produc on or forest conserva on or restora on prac ces is made difficult due to their investment needs vis-à-vis their financial and technological capaci es and livelihood needs of small subsistence farmers. While the incorpora on of trees in agricultural niches (living fences, improved fallows, sca ered trees in pastures, and agricultural fields) may be feasible under subsistence condi ons, the subs tu on of basic grains by 59 Calvo-Gonzalez and Lopez. 2015, op cit. 60 h ps://infoflr.org/bonn-challenge-barometer/el-salvador/2018/financial 32 | El Salvador: Country Forest Note alterna ve cropping systems that are more sustainable and profitable (e.g. fruits and other agroforestry or silvopastoral systems) entails large changes. These alterna ves are o en more complex, require greater planning and investment (in the ballpark of $250-$800/ ha for forest restora on of areas under agriculture and $1,000-$1,500/ha for agroforestry systems61), may reduce crop produc on as well as immediate cash flows, and have longer return mes in comparison to annual crops62 (Annex 8). Coffee is a special challenge since these economically and ecologically important systems have been in decline for two decades and have been recently hard hit by coffee rust, droughts, and increased temperatures due to climate change. Well-designed interven ons that enable coffee growers to invest in coffee restora on, conversion to other sustainable crops, such as cocoa, and the exploita on of more favorable niche markets are needed. The high indebtedness of many coffee farmers further complicates this situa on. NTFPs. Informa on on the importance and poten al of NTFPs in on-farm economies is lacking. Such informa on is needed for assessing the feasibility of investments for further development of this sub-sector. XCID FAO- AME mérica Sin Hambre Photo: Mesoa 61 L. Raes, T. Nello, M. Nájera, O. Chacón, K. Meza Prado, and A. Sanchún. 2017. Análisis económico de acciones para la restauración de paisajes produc vos en El Salvador. Gland, Suiza: UICN. 2017, 72 p. 62 D. Pezo, N. Ríos, M. Ibrahim, and M. Gómez, 2018. Silvopastoral Systems for Intensifying Ca le Produc on and Enhancing Forest Cover: The Case of Costa Rica. Leveraging Agricultural Value Chains to Enhance Tropical Tree Cover and Slow Deforesta on (LEAVES): Background Paper, PROFOR, the World Bank. El Salvador: Country Forest Note | 33 OPPORTUNITIES FOR FOREST-BASED GREEN INFRASTRUCTURE There is a confluence of economic, ecological, and policy factors that could provide an impetus for conserving and increasing forests in a cost-effec ve manner, and in so doing, maintain or increase land protec on, ecosystem services, and incomes of small farmers. El Salvador´s growing recogni on of essen al services provided by forests is manifested in recent government policies and ini a ves, as well as its interna onal commitments, whereby forest conserva on and restora on has been emphasized. This poli cal will is backed by the country’s legal and policy framework, interna onal commitments, as well as the World Bank´s Country Forest Partnership and its support of REDD+ and Resilient Local Economic Development. The IUCN has highlighted El Salvador’s response to the Bonn Challenge/NY Declara on on Forests related to forest landscape restora on.63 More specifically, the policies and plans of the flagship PREP and REDD+ programs and the RAP for achieving forest conserva on and restora on on 400,000 ha for the period 2018-2022 are being implemented. Between 2014 and 2018, about 170,000 ha were restored, the system of PNA has expanded in recent years, and there is growing interest on the part of municipali es and other local actors to acquire or manage headwaters of watersheds for forest and soil conserva on. Moreover, four projects are being developed to further support these efforts: 1) the design of the Restora on Incen ve Program; 2) a community-based restora on monitoring system; 3) mechanisms for improving the integra on of the private sector into restora on ac vi es; and 4) the establishment of the Forest Seed Center for the conserva on and use of na ve forest germplasm in restora on.64 The exis ng ins tu onal framework can poten ally be modified to organize and facilitate future ac ons related to forest-based green infrastructure. The DGFCR’s ins tu onal focus on the administra on of mber produc on could be adapted and broadened to include NTFPs, such as fuelwood or other forest products from young secondary forests or fallows, as well as greater a en on to wood value chains. The exis ng collabora on between the MAG and the MARN could increase the emphasis on natural regenera on and conserva on of recently established forests. The CENTA’s extension system could be expanded to place greater emphasis on sustainable and climate friendly techniques as well as forestry components and management. Alterna vely, there are a variety of civil society or producer organiza ons with significant membership and/or proven effec veness that could poten ally provide services to producers under public-private partnerships while also crea ng employment (Table 3). El Salvador’s forests are currently in a phase of accumula on, which provides a step forward towards their conserva on and restora on. There are large areas of young bush fallows or secondary forests which, if managed properly, could provide products, such as wood, fuelwood, and other products while protec ng and improving soil and regula ng water cycles. These areas could be managed simultaneously with crops; as produc ve, 63 R. Dave, C. Saint-Laurent, M. Moraes, S. Simonit, L. Raes, and C. Karangwa, 2018. El Barómetro de Progreso del Desa o de Bonn: Informe monográfico 2017. Gland, Suiza: UICN 64 Dave et al. 2018, op cit. 34 | El Salvador: Country Forest Note FIGURE 7. FOREST CONSERVATION AND RESTORATION PRIORITIES medium-term forest fallows between cropping cycles; as longer-term produc ve forests or woodlots; and areas for conserva on. This flexibility would enable farmers to adapt these systems according to their needs and would increase adop on. Given the recent expansion of El Salvador’s forests, on-farm forest conserva on or restora on via the management of natural regenera on is an a rac ve alterna ve for both income genera on and ecosystem services due to its rela vely low cost and poten al to provide mul ple benefits. These op ons could be targeted at farmers of marginal lands with steep (> 40%) slopes or aquifer recharge where opportunity costs are low and poten al pay-offs in environmental protec on and services are high (Figure 7). Opportuni es for restora on of cleared areas on steep slopes include 60,000 ha, while another 148,000 ha of exis ng forests on steep slopes can be conserved. Pilot domes c and regional experiences with water user fees, on-going development of El Salvador’s REDD+ program, and a 2005 World Bank/GEF Environmental Services Project (P064910) provide inputs, experiences, and guidelines for developing incen ves or payments for ecosystem services that could increase farmer incomes and discourage clearing of forests for agriculture. Moreover, the MAG’s pla orm for administering agricultural subsidies to small farmers and the FIAES and FONAES funding pla orms could be adapted to organize payments for conserva on/restora on as well as technical assistance. There are favorable condi ons for producing mber and NTFPs profitably. These include significant quan es of high value exportable mber in older secondary forests (3.62 million m3) and coffee agroforests (2.12 million m3). There are also rela vely large quan es (7.55 million m3) and high domes c demand for low quality mber and fuelwood, growing domes c interest in renewable energy sources that could poten ally include tree biomass, and geographically close and well-known interna onal (Central America and US) markets for wood products that could poten ally serve as outlets for high value commercial mber if quan ty and quality improve. Forest value chains based on mber or NTFPs have the poten al to involve coopera ves and small producers as suppliers, as well as mul ple small processors. As a result, there is poten al for high social impact via employment and income genera on. They could help absorb some of the significant latent agricultural labor force that exists. Moreover, natural forest restora on/conserva on and sustainable agroforestry on 200,000 ha are es mated to create the equivalent of about 50,000 new jobs in the first year and about 12,500 in subsequent years. El Salvador: Country Forest Note | 35 POTENTIAL INTERVENTIONS There are opportuni es for increasing the opportunity costs of forests so that they can be er compete with other forms of land use. Changes in forest management can contribute to incremental increases in farmer incomes through forest produc on and payments or compensa ons for ecosystem services generated by forest-based green infrastructure. They can also create a greater demand for labor (Annex 8). Given the El Salvadoran context and farmers’ constraints and capaci es described above, poten al land use interven ons will be small-scale, but taken together their impact on income and ecosystem services may be large. Poten al interven ons include: SFM of secondary forests and coffee agroforests for valuable (“gourmet”) commercial mber; woodlots for fuelwood or other NTFPs alone or in associa on with crops; establishment of agroforestry systems based on coffee or cocoa with valuable commercial mber as shade; perennial fruit planta ons established under taungya; and passive on-farm forest conserva on or restora on ac vi es based on natural regenera on (Figure 8, Annex 8). Many of these interven ons could be combined with tradi onal crops and other high value investments (small ruminants, vegetables) to assure food security and income (in this context, it should also be noted that a number of possible agroforestry components, such as living fences and windbreaks, were not considered as stand-alone interven ons since they do not meet the criteria for forests but could be included in various land use systems). The mber and NTFP interven ons also need to be combined with value chain improvements. Finally, the forestry interven ons need to be accompanied by interven ons in other sectors, such as changes in agricultural policies to realize their full poten al. FIGURE 8. OVERVIEW OF FORESTRY INTERVENTION OPTIONS AND MECHANISMS Forestry sector Agroforestry - Intersectoral - within the forest Outside the forest Outside the forest ProtecƟon/ SFM natural Agroforestry, fruit Others Ecosystem Serv. forests plantaƟons Second forests for Harvest of gourmet wood ConservaƟon of on from exisƟng coffee Sustainable, climate wood/fuel wood friendly agriculture farm forests agroforests Woodlots for fuel Estab. of coffee or cocoa Land use zoning and Natural forest wood/ biomass shaded by gourmet regeneraƟon control wood species AcƟve conservaƟon Fruit plantaƟons (NPAs) or restoraƟon (mangrove gallery forests) Improvements of wood and NTFP value chains 36 | El Salvador: Country Forest Note Other alterna ves, such as mber planta ons, in mate associa ons of trees with annual crops, and silvopastoral systems face greater barriers or are more complicated due to legal contradic ons, land tenure, and their investment characteris cs, as noted above (see also Annex 8). Small planta ons or woodlots, for example, can be established on farms as men oned above, but the establishment of industrial planta ons on large blocks of land is more difficult due to legal limits on the size of landholdings and landholding fragmenta on. Tourism has not been included as an interven on even though the sta s cs of the Ministry of Tourism suggest that the country received almost 2 million tourists in 2015. There is reason to believe that these data over-es mate the poten al impact of nature- based tourism since they reflect all arrivals to the country including many business-based travelers, as well as the fact that San Salvador was a regional hub for Avianca airlines, which is now in bankruptcy proceedings. Moreover, the security situa on in El Salvador, where the homicide rate approaches that of countries at war, is a strong disincen ve for tourism. Large-scale and successful adop on of these systems will require changes in farmer behavior. These changes can be induced by incen ves or subsidies, greater access to technical assistance and credit, and the crea on of greater public awareness. Legal and ins tu onal modifica ons may also be necessary enabling condi ons. An illustra ve example of how incen ves for forest conserva on might be financed from outside the public budget is shown in Box 3 and Annex 9. Another source of financing poten al incen ves for forest conserva on or restora on is the na onal REDD+ program for reducing carbon emissions. El Salvador´s Forest Restora on Program aims to restore 50% of exis ng degraded land and achieved restora on of 170,000 ha between 2014 and 2018. Once El Salvador completes its prepara ons for REDD+, the country will become eligible for genera ng several millions of dollars annually that could be used for compensa ng small farmers for forest restora on. BOX 3. CONSERVATION FINANCE VIA USER FEES FOR WATER Experience from the Nature Conservancy in Central America shows that on-farm conserva on can be financed by user payments for water, crea ng a win-win situa on whereby farmers receive income from the conserva on of forests and ecosystem services (i.e. increased infiltra on and reduced erosion of their land), in return for improved water supply for downstream users. This measure is based on an incen ve ed to forest conserva on or restora on on farms on steep slopes or the headwaters of watersheds. The incen ve would be equivalent to the opportunity costs of agricultural labor of subsistence farmers (approximately $190/ha/yr) and would be generated by a small fee paid by approximately 1.78 million downstream water users. Preliminary es mates suggest that a monthly water fee of $1.70 per family would raise sufficient funds to promote conserva on or natural regenera on on 50,000 ha of steeply sloping agricultural land, which would improve infiltra on and water quality in the headwaters that supply water to the San Salvador Municipal Area. Alterna vely, benefits could be pegged to the value of ecosystem services, approximately $71/ha/yr but farmer adop on would have to be monitored to determine if this level of payment is adequate for inducing behavioral change. El Salvador has the necessary experience to implement a water fund financed by user fees. Both the FONAES and FIAES environmental compensa on funds have the technical and administra ve capacity to implement a compensa on system for subsistence farmers located in cri cal areas for water infiltra on and the mechanisms for monitoring farmers par cipa ng in the MAG’s agriculture subsidy program could be adapted to forest conserva on. El Salvador: Country Forest Note | 37 BOX 4. A COLLABORATIVE VIRTUAL PLATFORM FOR THE MARKETING OF FOREST GOODS AND SERVICES In El Salvador, mber and NTFPs are largely exploited in the informal economy without paying taxes and without complying with regula ons. At the same me, civil society enjoys environmental services (e.g. regula on of the hydrological cycle) provided by third par es who protect the forest without receiving any compensa on. Achieving sustainable forest management in El Salvador requires overcoming the problems of free-riders and linking forest goods and services to the formal economy. Farm incomes from forest resources can be improved by providing forest producers with technical and marke ng assistance and providing access to economies of scale. However, highly fragmented property holdings, lack of organiza on, limited access to informa on, and high levels of poverty are barriers to achieving economies of scale, be er prices, and cost-effec ve technical assistance. Experience from Mexico, Costa Rica, and Chile suggests that it may be possible to overcome these barriers by organizing groups of forest producers through a public-private collabora ve pla orm aimed at accessing new and be er markets for forest goods- fine woods and services- water and carbon- while reducing transac on costs associated with legality and informa on asymmetries. The pla orm would group mber owners, loggers, and wood processors and would be supported by a small technical team to provide technical assistance related to logging, processing, marke ng, and keeping the system organized and running (Figure 9). In this partnership, the State would finance forest management plans but extrac on would be under a quota system based on annual limits whereby loggers or producers would register and pay fees for the mber logged. This would reduce bureaucra c procedures associated with mber plan formula on and approval (see Annex 5), lower the costs of legality, and provide be er informa on on mber flows. The mber would be placed in virtual or real deposits (centros de acopio) where all users would have access to price informa on. Sales would occur either through specific purchase orders or by auc ons. This increased transparency would reduce informa on asymmetries and result in fair and likely higher prices. At the same me, the pla orm could help organize mber supply and provide technical support to individuals or groups of producers and processors to assure sustainable and profitable produc on. Through be er organiza on of logging, transport, and processing, transac on costs could be reduced and a more stable mber supply assured. Assistance by the pla orm could also aid at iden fying and accessing more lucra ve markets for high value or sustainable mber. It is es mated that annualized incomes from rota onal logging of 10 ha alone would increase from $1,686/yr to $2,113/ yr, while that from logging and primary processing would increase from $3,181/yr to $4,078/yr (Annex 9). In the event that forests managed under this system become eligible for REDD+ payments, the pla orm would allow the par cipa on of small landholders in this system and could also assist in benefit sharing (Figure 9). FIGURE 9. A COLLABORATIVE PLATFORM FOR MARKETING FOREST GOODS AND SERVICES Wood energy <5 ha woodlots Forest $ Timber and fuelwood Better Owners Procducer markets $ Market registry intelligence Valuable Coffee commercial Merchandising agroforestry timber, fuelwood and carbon CO2 fil ar nd at s in al s a tr ea n er tic r io at cri ne $ $ r w in ow fo FS est A or F Result based payments of REDD+ Water Fund $ Water fee FIAES / FONAES Environmental $ compensation 38 | El Salvador: Country Forest Note The FIAES and FONAES are other vehicles for capturing and managing funds from environmental compensa on by businesses that could be used for conserva on or restora on incen ves. These funds could also be complemented by assistance from interna onal donors. In the mber and NTFP sub-sector, a more autonomous public-private mechanism might increase the profitability of mber and NTFP value chains. An illustra ve approach for organizing and improving produc on of the mber value chain for reducing costs, accessing higher prices, and providing technical assistance is shown in Box 4, Figure 9, and Annex 9. This approach could improve mber legality, reduce transac on costs, stabilize mber supply, improve capaci es and product quality, and provide greater transparency, fairer prices, and greater access to more a rac ve markets. A er an ini al start-up investment, it would be largely self-sustainable. Photo: Mesoamérica Sin Hambre FAO- AMEXCID El Salvador: Country Forest Note | 39 KEY ACTIONS To increase forest-based green infrastructure, the needs and opportuni es for forest conserva on, restora on, and produc on need to be reconciled with the constraints and needs of farmers who affect the forests. Proposed solu ons should sa sfy farmers’ needs for sources of income and goods from forests in ways that are compa ble with their resources and capaci es and maintain or increase environmental protec on and ecosystem services needed by greater society in the face of climate change and growing popula on pressure. The mul ple and cross-sectoral causes of deforesta on and forest degrada on demand integrated and cross-sectoral solu ons. This implies close coopera on and coordina on between the MARN, the MAG, the DGFCR, other ministries, and municipal governments to reduce pressure on forests by agriculture, urbaniza on, and gray infrastructure, while poten a ng forest management as a source of income and environmental services. This includes: modifying current agricultural policies, incen ves, and extension programs for basic grains and livestock so that they emphasize more sustainable and climate friendly agricultural prac ces; condi oning the recep on of current subsidies to the use of sustainable techniques; and incorpora ng forestry technical assistance into current programs. To reduce the need for forest clearing, alterna ve income opportuni es also need to be created. A number of agroforestry interven ons, such as coffee renova on and conversion of low al tude coffee to cocoa are costly and require rela vely large amounts of labor, especially in the first year. Woodlot management or management of natural regenera on requires moderate amounts of addi onal labor but is much less costly than crop renova on or conversion (Annex 8). Involving civil society and NGOs as service providers could also increase employment crea on through low cost alterna ves. These measures, if implemented on 200,000 ha, would increase employment by about 50,000 in the first year and about 12,500 in subsequent years. A coordina ng en ty focused on the integra on of forestry, agriculture, water, and climate change policies is needed. This en ty could be composed of representa ves of select ministries, local municipali es, and the private sector and would determine policies to be implemented at the territorial level by municipal Environmental Units, Local Sustainable Development Plans, and private sector or civil society organiza ons shown in Table 3 (Figure 10). The en ty would also serve as a pla orm for dialogue and policy formula on, whose implementa on at the territorial level would be carried out by local organiza ons, including producer groups, water boards, and municipal en es. To implement these changes, ins tu onal capaci es at the na onal and municipal levels need to be improved. These include: physical, personnel, and financial capaci es, as well as informa on and monitoring. At the municipal level, Local Sustainable Development Plans or Environmental Units can provide a vehicle for be er integra on of sustainable forestry, agriculture, and urbaniza on, but these need to be strengthened. To reduce the con nued urban expansion into forests, coffee agroforests, and agricultural land, municipal planning capacity needs to be strengthened via training and deployment of technical staff, as well as investments in land use and land market monitoring systems. 40 | El Salvador: Country Forest Note FIGURE 10. SCHEMATIC DESIGN FOR INTEGRATION, COORDINATION, AND IMPLEMENTATION OF INTERVENTIONS EĂƚů͘'Žǀƚ͘ (DZE͕D'͕D/E͕ D/'K͕D/s/s/E͕ WK>//^ DKW͕EͿ Agriculture, forestry, ǁĂƚĞƌ͕ĐůŝŵĂƚĞĐŚĂŶŐĞ ǀƵůŶĞƌĂďŝůŝƚLJ Private sector DƵŶŝĐŝƉĂůŝƟĞƐ (Coops, producers, ;KDhZ^Ϳ ĐŽīĞĞĂƐƐŶƐ͕͘ďƵƐŝŶĞƐƐ ĐŚĂŵďĞƌƐͿ WƵďůŝĐďƵĚŐĞƚƐ͕ĚŽŶĂƟŽŶƐ͕ĐŽŵƉĞŶƐĂƟŽŶƐ͕ƵƐĞƌĨĞĞƐ AdmiŶ͕͘MŽŶitoriŶŐ DƵŶŝĐŝƉĂůŝƟĞƐŽĨDƵŶŝĐŝƉĂů WƌŽĚƵĐĞƌKƌŐĂŶŝnjĂƟŽŶƐ Water ŝƐĂƐƚĞƌ ŽŵŵŽŶǁĞĂůƚŚƐ :ƵŶƚĂƐ ŽŵŵŝƩĞĞƐ ;ĐŽŽƉĞƌĂƟǀĞƐ͕ďƵƐŝŶĞƐƐ N'Ks ;ŶǀŝƌŽŶŵĞŶƚĂůhŶŝƚƐ͕W>^Ϳ ĐŚĂŵďĞƌƐ͕ƉƌŽĚƵĐĞƌĂƐƐŶƐ͘Ϳ dZZ/dKZ/> /DW>DEdd/KE Changing behaviors at the farm level require be er technical assistance, informa on, access to credit, and incen ves or compensa on for forest conserva on or restora on. Pla orms for technical assistance and credit exist within the MAG and could be expanded to include forest-related ac vi es. However, given the limita ons of governmental ins tu ons, the involvement of the private sector and civil society actors, should be considered, alone or in public-private partnerships. For example, a number of ins tu ons listed in Table 3 have technical assistance and/or applied research capaci es, which could be directed towards this purpose. Incen ves could be based on environmental compensa on, user fees, or payments for services, such as reduc ons of greenhouse gas emissions. Key aspects of incen ve programs that would need to be developed include the defini ons of: program ambi on, geographic or socioeconomic targets, par cipants, internal ground rules, the form and level of incen ves, benefit sharing, and program organiza on. Technical op ons based on lower-cost conserva on of exis ng secondary forests and restora on via natural forest regenera on should receive greater emphasis within the forest conserva on and restora on framework. At the same me, more ac ve and costly forest restora on through changes in land use systems and agroforestry needs to be be er aligned with farmer constraints, capaci es, and needs, perhaps through the use of incen ves or subsidies to reduce the costs of these changes. In general, all op ons for increasing forest-based green infrastructure need to examine strategies and mechanisms for crea ng greater community and private sector involvement, financing, and monitoring to reduce reliance on public investments and ins tu ons whose future capacity is uncertain. Other cross-cu ng needs include effec ve control and response mechanisms to threats to forests and the linking of forest- based infrastructure with other green infrastructure components, such as water collec on and catchment areas. Although El Salvador is not likely to become a major forestry producer, the wood sector creates significant value and employment. With regards to the produc on of commercial mber or NTFPs, the over-riding need is how to improve, organize, and increase the profitability of informal, fragmented, non-regulated, and inefficient produc ve ac vi es. The DGFCR needs to carry out this assessment. El Salvador: Country Forest Note | 41 Barbee Maren Photo: Barriers for legal produc on of wood or other forest products need to be lowered. Since state actors have a low capacity for monitoring and enforcement, ins tu onal efforts should be redirected to taking advantage of informa on and communica ons technologies to: eliminate or simplify permi ng procedures; facilitate mber registra on; reduce or assume costs for the prepara on of forest management plans; provide posi ve incen ves for legality; and improve monitoring and enforcement. Modifica ons to the legal framework to permit harves ng of planted trees are also needed. These ac vi es should be included as part of the new Forestry Plan under discussion. More sustainable management of secondary forests can be incen vized by improving profitability along the wood and forest products’ value chains. This requires be er organiza on of actors, greater access to informa on, more efficient technologies, improved links to markets, and reduc on of transac on costs. The sustainable management and use of the rela vely large quan ty of high value commercial mber species, as well as pines found in secondary forests and coffee agroforests also needs to be promoted. Given the limita ons of the DGFCR and the Forestry Division, this could occur under a public-private partnership via a virtual pla orm. These changes will require a redirec on of the MAG’s and the DGFCR’s efforts related to forestry. The CENTA will need to devote more a en on to sustainable agriculture and forestry technical assistance, and the DGFCR will need to redesign procedures for authorizing, monitoring, and controlling forest use; assessing the use of effec ve incen ves for promo ng legal mber; and paying more a en on to promo ng forest restora on and NTFPs. The MAG/DGFCR should evaluate how credit can be extended to loggers and processors to upgrade equipment. In this respect, the use of the Resilient Local Development Project (P169125), funded by the World Bank to address credit and resilient infrastructure needs at the municipal level, should be explored. Likewise, the requirements for private sector engagement and for a rac ng investments into the commercial forest sector should be analyzed. Since fuelwood and charcoal produc on are by far the most important NFTPs and are implicated in forest degrada on, further assessment by the DGFCR is needed of the op ons for the sustainable management or improvement of vegetated fallows and young secondary forests for fuelwood and charcoal produc on, alone or in associa on with annual crops, and the poten al opportuni es for the supply and use of fuelwood 42 | El Salvador: Country Forest Note and charcoal as industrial sources of renewable energy. These studies should aim at be er understanding the supply and processing of these materials, the poten al for involving producer organiza ons, the characteriza on and needs of users, and linkages with local rural and urban markets. Increased fuelwood efficiency through improved stoves also needs to be evaluated. The use of other non- mber forest products including niche products, such as honey and pollen, medicinal plants, and balsam resin need to be assessed and best prac ces for management and replica on need to be iden fied by the MAG and/or the DGFCR. The key ac ons are summarized in Table 13. Table 13. Summary of key ac ons and poten al stakeholders (Color code: green = short-term, yellow = medium term) Theme Ac on Stakeholders involved Legal framework Modify norms to clearly establish harvest rights MAG of planted trees; close legal gaps that promote deforesta on Improved Establish an ins tu onal coordina on mechanism MARN, MAG, the DGFCR, MINEC, ins tu onal MDL, Min. of Housing, and municipal coordina on governments Promote and strengthen Sustainable Local Development MARN, MAG, municipali es Plans for FMCR Harmonize agriculture, forestry, road infrastructure, and MAG, MARN, MOP, MDL, Min. of urbaniza on policies Housing, and municipali es Create strategies for genera ng greater community and MARN and MAG private sector involvement in FMCR Ins tu onal Modify the DGFCR ins tu onal agenda; improve forest DGFCR strengthening and product monitoring; procedures for mber control and legality; give greater a en on to NTFPs, forest restora on, and conserva on Increase technical capaci es related to produc on of DGFCR and Environmental Units of wood and NTFPs, forest restora on, and conserva on municipali es Improve monitoring of forests, products, and services MARN and MAG Improve technical assistance, credit, and incen ves for CENTA/MAG sustainable agriculture and forestry Forest conserva on Assess management opportuni es and feasibility MARN, MAG, and producer and restora on of fallows and young secondary forests for mul ple associa ons products and services Design and implement incen ves for forest restora on MARN and MAG and conserva on Design a monitoring system for incen ves MARN and MAG Wood value chains Formulate and assess strategies for organizing value MAG, municipali es, and the private chains and upgrading logging and wood processing sector ac vi es including access to credit Assess private sector engagement and investment MAG, MINEC, and the private sector promo on opportuni es Firewood and Analyze the sub-sector and the feasibility of MAG charcoal interven ons NTFPs Assess poten al and needs MAG Other Create on- or off-farm employment MINEC, MDL, CONAMYPE, and the private sector El Salvador: Country Forest Note | 43 ENGAGEMENT OF THE WORLD BANK AND OTHER DEVELOPMENT PARTNERS IN EL SALVADOR’S FOREST SECTOR The World Bank The World Bank’s current Country Partnership Framework (2016-2019) (CPF) has two pillars: 1) reinforcing the founda ons of inclusive growth and 2) fostering sustainability and resilience, and six objec ves. One objec ve of the sustainability and resilience pillar is to build capacity to manage disasters and environmental challenges. This objec ve mainly focuses on reducing carbon emissions via strengthening the na onal REDD+ program and financial protec on against disasters. It also recognizes that deforesta on and land degrada on in the upper reaches of river basins, inadequate land-use management in both rural and urban areas, and urbaniza on cause increased pressure on water resources that intensifies the risks of natural disasters and that building capacity to manage disasters and environmental challenges has important implica ons for poor-inclusive economic growth. With the Bank’s support of REDD+, El Salvador has assessed the causes of deforesta on and forest degrada on, formulated a na onal strategy, and is developing ins tu onal arrangements, policy instruments, and monitoring/evalua on systems that will provide the founda on for the country’s par cipa on in any future REDD+ mechanism under the UN Framework Conven on on Climate Change.65 The Bank has also supported the PREP. Two projects in the Bank´s por olio are closely related to forest resource management (see Annex 10): the El Salvador FCPF REDD Readiness Project (currently ac ve with a budget of $2.5 million) and the El Salvador Integrated Landscape Management and Restora on Project (in the pipeline with a budget of $4.0 million). Both projects are mainly aimed at reducing and controlling deforesta on and forest degrada on, improving forest governance, and building the forest monitoring system necessary for the country’s par cipa on in REDD+ results-based payment schemes. Two other projects have the poten al to be adapted to the needs of forest management and green infrastructure. The Geothermal Energy for a Sustainable Economic Recovery from the COVID-19 crisis in El Salvador Project ($235 million) could promote the use of residual heat to dry wood and could help reduce emissions from the harvest and use of fuelwood. The El Salvador Local Economic Resilience Project ($200 million), which finances credit and equipment for resilient development at the municipal level, could poten ally be used for assis ng wood energy woodlots, upgrading wood processing and wood storage infrastructure at the municipal level, and the crea on of a virtual collabora ve pla orm for the commercializa on of forest goods and services as part of the proposed forest-based green infrastructure interven ons that are suppor ve of local economic development. In addi on, lessons learned from three past projects may be relevant for forest management and green infrastructure: experiences with agroforestry from Agricultural and Energy Risk Management: An Integral Strategy to Cope with Drought and Food 65 Indicator 6.3 of Monitoring and Evalua on of the CPF Results Framework: The Na onal REDD+ Strategy includes the expansion of agroforestry systems and the promo on of resilience to climate change; conserva on of forest ecosystems and protected areas; restora on of gallery forests; promo on of green infrastructure for reten on, collec on, and management of water; applied research, training, and educa on; and ins tu onal strengthening. 44 | El Salvador: Country Forest Note Insecurity (closed in June 2014); the pilo ng of a market-based system for environmental services in the Ecosystem Services Project (PO64910, closed July 2012); and the Disaster Risk Management Development Policy Loan with a CAT DDO (closed February 2011). Looking forward to the prepara on of a new Country Partnership Framework, this CFN offers a clear vision of the mul -purpose role of forests in the economy and for providing resilience to natural disasters and climate change. As such, the Bank’s support to the forestry sector should not be viewed only as a poten al area of lending for economic, policy, or ins tu onal development but also an environmental safeguards mechanism for the Bank´s future por olio. There are a number of gaps in El Salvador’s FMCR implementa on that the Bank could help fill (Table 14). Among these, the most important are related to governance and Table 14. Poten al country partnership interven ons for El Salvador (FY2020-FY2023) WBG interven ons for Poten al WBG interven ons FY2016-FY2019 Objec ve 6: Build Capacity WBG should con nue with support of the na onal strategy and implementa on framework to reduce to Manage Disasters and carbon emissions from Deforesta on and Forest Degrada on (REDD+), focusing on: Environmental Challenges A. Improvement of Natural Resources Governance. Close coopera on and coordina on among The WBG supports the different levels of government and sectors and with private sector actors is needed. This implies: climate resilience agenda in 1) the crea on of pla orms for inter-ins tu onal and inter-sectoral coordina on and dialogue a selec ve manner, focusing including a natural resource policy framework that harmonizes agriculture, forestry, road on carbon emissions and infrastructure, and urbaniza on policies, and 2) the formula on of strategies for genera ng greater on financial protec on community and private sector involvement in FMCR. against disasters. Within B. Ins tu onal Strengthening. Including physical, personnel, and financial capaci es, poten ally those the framework of the of the DGFCR and its Forestry Division and the CENTA; at the municipal level, Local Sustainable Forest Carbon Partnership Development Plans or Environmental Units and urbaniza on planning, monitoring, and enforcement Facility (FCPF) grant, the also need to be strengthened. Changing behaviors at the farm level requires be er technical WBG supports El Salvador assistance, informa on, access to credit, and incen ves or compensa ons for forest conserva on in assessing the causes of or restora on. Pla orms for technical assistance and credit exist within the MAG and could be deforesta on and forest expanded to include private sector technical assistance providers as well as forest-related themes degrada on and developing and ac vi es. a na onal strategy and implementa on C. Improvement of NNRR Monitoring. Con nuing support to the development of the Na onal Forest framework for reducing Reference Level, the Na onal Forest Monitoring System, the Cancun Safeguards Informa on carbon emissions from System, and the REDD+ Strategy within the UNFCCC framework. The implementa on of these Deforesta on and Forest elements will allow El Salvador to access sources of climate finance, such as the Green Climate Fund Degrada on (REDD+). for implemen ng forest management and restora on programs. Under this framework, D. Crea on of a Collabora ve Virtual Pla orm for the Marke ng of Forest Goods and Services. El Salvador will have the Achieving sustainable forest management in El Salvador requires overcoming the problem of free- opportunity to access riders and linking forest goods and services to the formal economy. A key ac vity is establishing significant resources from a system of user fees or payments for ecosystem services. On the other hand, more sustainable carbon finance en es, management of secondary forests can be incen vized by improving profitability and legality of such as the Carbon Fund wood and forest products value chains. It may be possible to organize groups of forest producers Window of the FCPF. through a public-private collabora ve pla orm aimed at accessing new and be er markets for forest goods - fine woods and services (water and carbon) while reducing transac on costs associated with legality and informa on asymmetries. The pla orm would group mber owners, loggers, and wood processors and be supported by a small technical team to provide technical assistance related to logging, processing and marke ng, and keep the system organized and running. There is also an opportunity for the IFC to finance credit for wood processing infrastructure. E. Finance Credit for Wood Energy Woodlots for Reducing Forest Degrada on. There are favorable condi ons for profitably producing charcoal and fuelwood in El Salvador. However, the extrac on of both is unsustainable and is a significant driver of forest degrada on. Demand for fuelwood and charcoal represents an opportunity for the IFC to finance credit for renewable wood energy woodlots and processing infrastructure. F. Coordina on with other donors. Donor support for sustainable agricultural, soil protec on, agroforestry, and forestry projects in El Salvador could benefit from a more strategic orienta on. Clear needs exist for the promo on of mul -level and mul -sectoral coordina on that includes municipali es and the private sector as well as innova ve funding mechanisms for forest conserva on and restora on via mechanisms, such as environmental service user fees and environmental compensa on. The Bank is well posi oned to assume a role in donor coordina on or facilita on due to its past and present support to El Salvador’s Na onal REDD+ program and the flagship PREP, resilience to climate change, and inclusive economic development, especially access to finance and sustainable local development at the municipal level. El Salvador: Country Forest Note | 45 coordina on, ins tu onal strengthening, incen ves and financial mechanisms, especially compensa ons or payments for environmental services, and the coordina on of donor assistance. In this context, the Bank could also provide technical services and help fill knowledge gaps (Table 15). These gaps affect ins tu onal planning and decision-making, forest management, as well as produc ve and commercial ac vi es of the private sector. Table 15. Poten al World Bank assistance related to knowledge gaps and technical services Knowledge gaps Technical services Evalua on of forest tenure by type of owner and farm Coordina on of agricultural, forestry, size to be er design and target interven ons infrastructure, and urbaniza on policies Gather data on flows and value of non-regulated Re-engineering of the DGFCR mber and NTFPs to be er assess their importance and poten al commercial opportuni es An analysis of farming systems for iden fying barriers to Design of forest conserva on or restora on the adop on of sustainable prac ces incen ves Iden fy characteris cs and opportuni es for fuelwood/ Technical assistance systems for sustainable charcoal management and commercializa on agriculture and FMCR Assess op ons for improved fallows and management of Credit policies for sustainable agriculture and fallows and secondary forests by subsistence farmers for forest restora on mul ple products and services Es mate the impact of forest restora on and Design a virtual pla orm for the organiza on, conserva on prac ces on climate change vulnerability registra on, and facilita on of mber produc on and economic losses to be er target interven ons and mber commercializa on Promo on and formula on of strategies for private sector engagement and investments in FMCR Other donors and projects There are 12 ac ve forestry, agroforestry, and sustainable agriculture projects with a total of $175.74 million and 6 projects totaling $104.1 million that are in various stages of formula on, nego a on, and approval (Annex 11). The donors include: BCIE, the Buffet Founda on, the European Union, FIDA, FONAES, the Forest Carbon Partnership Facility, the French Environmental Fund, German Ministry of the Environment, the Green Climate Fund, Koica, JICA, the UNDP Adapta on Fund, and USAID. Of the ac ve projects, three account for a majority of the funding: the Reclima/Green Climate Fund project ($38.5 million), the Buffet Founda on project (Raices) ($40 million), and the IFAD project ($70 million). All address agroforestry/agriculture, forestry, soil conserva on, and water, and thus could contribute to more sustainable agriculture and forest restora on. Of the projects in the pipeline, two account for 93% of the funding: the $87 million loan from the BCIE for coffee renova on, technical assistance and technology transfers, and ins tu onal strengthening, and the $10 million GEF project on increasing forest cover, sustainable agricultural alterna ves, and strengthening local capaci es. It may be possible to include some of the interven ons men oned in this document (e.g. gourmet mber species in renovated coffee or cocoa and fallow and woodlot management) in these future projects. 46 | El Salvador: Country Forest Note ANNEX 1. LEGAL, POLICY, AND INSTITUTIONAL FRAMEWORKS Regulatory framework The regulatory framework of the forestry sector is based on the current Forestry Law No. 852 enacted in 2002 and the Environmental Law and its complementary norms and regula ons. In 2004, regula ons of the Forestry Law established the Ministry of Agriculture and Livestock (MAG) as the rector of the forestry sector. The Forestry Law has a strong forestry produc on focus, emphasizing the management and sustainable use of forest resources, reforesta on, and the development of the mber industry. It enables the use of forestry incen ves and the promo on of the use of industrial systems and equipment for adding value to forest products. Under the law, forest clearings, forest conversion to planta ons, other forms of land use, and the harvest of forest products are permi ed with appropriate authoriza ons by the DGFCR, the MARN, or municipal governments. In contrast, conversion of land classified for forestry use to other non-forest ac vity or use, the unauthorized extrac on of products, the use of fires that affect forests, and forest ac vi es that affect water sources are considered illegal. It should be noted that the maintenance, thinning, and harvest of planted forests including coffee agroforests and tree planta ons, do not need authoriza on or management plans (Annex 2, Polí ca Forestal Nacional 2019). The Forestry Law was implemented by the Na onal Forestry Policy in 2016, and the Na onal Forest Strategy in 2018. The Forestry Policy and Strategy include a greater emphasis on climate change and forest services than the original law. The strategy defines ac ons aligned with the strategic guidelines of the Na onal Forestry Policy. These strategic ac ons are: a. Classifica on and zoning of forest lands b. Promo on of sustainable forest management (informa on, technical norms, management plans, planning, and formula ng a plan of incen ves) c. Restoring ecosystems and increasing forest cover (promo on of conserva on, afforesta on, reforesta on, agroforestry, restora on, and urban forestry for increasing forest goods and services; and the crea on of forestry incen ves including those for reforesta on) d. Protec on and reduc on of forest vulnerability (fires, pests, and disease control) e. Valua on of forest products and ecosystem services (increasing the value of mber and non- mber forest products; iden fying, valuing, and formula ng voluntary compensa on mechanisms for forest ecosystem services; fomen ng the development of forest chain technologies including credit; promo ng the commercializa on of forest products) f. Strengthening the capaci es of actors in the sector (promo ng and strengthening forest producer organiza ons) g. Ins tu onal strengthening and improved coordina on (coverage, infrastructure, personal, inter-ins tu onal coordina on in the control of mber produc on, forest informa on system - SIFES). h. Forestry research (research, educa on, training, and dissemina on) El Salvador: Country Forest Note | 47 Principal environmental policies and plans in the area of forests and climate change stem from the framework 1998 Environmental Law. The law regulates the protec on, conserva on, and restora on of the environment and the sustainable use of natural resources. It establishes and regulates: public and private environmental management and protec on as a basic obliga on of the State and civil society; a general framework for informa on and par cipa on in environmental ma ers; and liability for environmental damage. The regula ons approved in 2000 designate the Ministry of the Environment as the competent authority for the applica on of the law. It also established the Na onal System for Environmental Management (SINAMA) formed by the MARN, Environmental Units of each Ministry, and Autonomous Ins tu ons. Key policies and plans under the Environmental Law include: Five-year Development Plan, 2014-2019. Guide for the planning of ini a ves focused on mee ng needs, such as: water supply and food security. Establishes ac ons for resilient, sustainable, and low-carbon development. Na onal Environmental Policy. Provides a strategic framework for adapta on. It aims to reverse degrada on and reduce environmental vulnerability to climate change. Na onal Strategy for Climate Change (ENCC). Addresses three fundamental areas: i) mechanisms for addressing losses and damages due to climate change, ii) adapta on, and iii) mi ga on. The Na onal Climate Change Plan. Within the framework of the ENCC, the Na onal Climate Change Plan is a five-year roadmap for the implementa on of adapta on and mi ga on ac ons and the restora on of cri cal ecosystems. It has 8 components, 4 of which refer to the water, forestry, and biodiversity sectors: Component 3 - Management of biodiversity and ecosystems for adapta on and mi ga on to climate change; Component 4 - Transforma on and diversifica on of agricultural, forestry, and agroforestry prac ces and ac vi es; Component 5- Integral adapta on of water resources to climate change; and Component 8 - Crea on of enabling condi ons and capaci es for facing climate change. The forestry and environmental as well as other sectors coordinate on the following strategies or programs in the area of forestry and climate change. Many of these more recent policies were s mulated by a series of natural disasters that awakened civil society to the need for environmental ac on. The Environmental Strategy for Adapta on and Mi ga on to Climate Change in the Agriculture, Forestry, and Aquaculture Sector. The strategy promotes: technical assistance and training for producers for the sustainable and adequate management of natural resources and of solids and liquids as well as their use in produc on processes; the crea on of ecological markets in the territories; the provision of technology and informa on necessary for be er adapta on to and mi ga on of climate change for producers; and good produc on, safety, and phytosanitary prac ces in all areas of the agricultural, aquaculture, fisheries, and forestry sectors. Na onal REDD+ Strategy. This strategy has the overall objec ve of reducing and capturing GHG emissions produced in the rural areas. Its focus is on adapta on based on mi ga on through the large-scale restora on of ecosystems and landscapes. Ecosystem and Landscape Restora on Program (PREP). This Program forms an important part of the Na onal REDD+ Strategy and generates condi ons for the reduc on of clima c vulnerabili es and guides mi ga on ac ons based on adapta on. The Program has the following components: sustainable agriculture at the landscape level; restora on and conserva on of cri cal ecosystems; synergis c development of grey and natural infrastructure; and strengthening governance and local management. 48 | El Salvador: Country Forest Note isa The Restora on Ac on Plan (2018-2022). n&L The Ac on Plan iden fies poten al areas : Aaro for restora on in the country; develops an Photo economic and financial analysis of the selected restora on ac ons to evaluate cost-effec veness and possible financing mechanisms; and analyzes problems to be solved and the actors who should be considered in the implementa on of the project. Inter-ins tu onal coordina on is led by the General Directorate of Ecosystems and Biodiversity of the MARN. Other laws and norms that complement the Environmental and Forestry Laws are: The Law of Protected Natural Areas (2005), whose objec ve is regula ng the administra on, management, and increase in natural protected areas to conserve biological diversity, to assure the opera on of the essen al ecological processes, and to guarantee the perpetuity of the natural systems through sustainable management. The Wildlife Conserva on Law (1994) for the protec on, restora on, management, use, and conserva on of wildlife, as well as ac vi es, such as hun ng, gathering, marke ng, and other forms of use and exploita on of this resource. The Special Regula on for Environmental Compensa on (2004), which establishes regula ons that recognize direct forms of environmental compensa on, facilita ng the development of a system of payment for environmental services that support environmentally produc ve ac vi es and financing mechanisms for environmental management. The Law of Irriga on and Drainage (1970) whose purpose is increasing agricultural produc on and produc vity through the ra onal use of soil and water to benefit the largest number of inhabitants. The Law for the Integrated Management of Water Resources (1981) and its regula ons, which provide for the integrated management of water resources, water quality, and control of discharges and zones of protec on to avoid, control, and reduce water contamina on. Ins tu onal framework The principal ins tu ons in the area of forests, ecosystem services, and climate change are the General Directorate of Forest Classifica on, Watersheds, and Irriga on (DGFCR) of the Ministry of Agriculture and Livestock (MAG), the Ecosystems and Biodiversity Division and the Climate Change Unit of the Ministry of the Environment (MARN), and local municipali es (Table A1.1). Besides the DGFCR, the MAG also contains various offices or directorates dedicated to the agriculture and livestock sectors whose policies and ac vi es o en conflict with forest management. These include principally: The Office of Sectorial Policies and Planning, the Sector Environmental Unit, the General Directorate of Agricultural Economy, and the General Directorate of Livestock. Many NGOs are also involved in the conserva on of protected natural areas (PNAs) as well as natural resource, environmental conserva on, and rehabilita on projects. El Salvador: Country Forest Note | 49 Table A1.1 Summary of ins tu onal roles and responsibili es for forests66 Areas of Responsibility MAG MARN Municipali es Private natural forests Natural protected areas Trees in urban areas Private forest planta ons Interna onally important wetlands, Trees in areas of restricted use RAMSAR sites covered by municipal regula ons Areas of restricted use (if not covered Biosphere reserves by municipal regula ons) Na onal forests Saltwater forests Trees within coffee, agricultural, or Protected or endangered tree species livestock systems. Source: General Directorate of Forest Classifica on, Watersheds and Irriga on (DGFCR). MAG and the General Forestry, Watershed, and Irriga on Directorate The Ministry of Agriculture and Livestock (MAG) and the Ministry of Environment and Natural Resources (MARN) are the primary government ins tu ons responsible for the administra on of the forest sector but their agendas are, at mes, unaligned. Within the MAG, the General Directorate of Forest Classifica on, Watersheds, and Irriga on (DGFCR) has primary responsibility for ensuring compliance with Forestry Laws and is responsible for forest produc on, management, and use, as well as increasing agricultural produc on and produc vity through the ra onal use of soil and water resources. The Directorate’s budget (about $1.94 million + fees collected from various permits or services) appears to be inadequate compared to its responsibili es. A large majority of the budget is used for paying salaries to its 83 employees assigned to 34 offices sca ered around the country´s 4 regions: 10 in the central office, 16 in Region I, 20 in Region II, 8 in Region III, 17 in Region IV (in a total of 34 regional offices), 9 in the Forestry Development Center (CEDEFOR), and 3 in the Na onal Bamboo Program. Of the total staff, 24 are professionals (29%), while the rest are administra ve personnel or technical assistants. Within the DGFCR, the Forest Resources Division’s objec ve is contribu ng to the management and promo on of the sustainable use of forest resources. It should: a) promote sustainable forest management; b) coordinate or conduct research; c) coordinate forest management plans; d) coordinate with public and private organiza ons and ins tu ons involved with forestry; e) design and administer a forestry informa on system; f) promote sustainable forest management and use; g) promote and enforce compliance with forest policies, laws, strategies, and ini a ves; and h) provide resources (financial, logis cal, and technical) necessary for compliance with the Na onal Forest Policy. In prac ce, the Forestry Resources Division concentrates on two areas: forestry administra on, which emphasizes the supervision, regula on, and sustainable management of forests, and the promo on of sustainable development of forestry through technical assistance, training and management incen ves. Most of the Division’s ac vi es and personnel concentrate on the first area, which includes ac vi es, such as reviewing, gran ng, and supervising forest management plans and permits, the emission of transporta on documents, as well as control of mber mainly through highway checkpoints in concert with the police. 66 Plan Nacional Forestal 2019. The MAG and MARN. 50 | El Salvador: Country Forest Note Logging is usually based on forest management plans (FMPs). However, the use of forest resources in rural areas for domes c purposes, planted trees in coffee systems (if coffee cover is less than 35%), and forest planta ons do not require a forest management plan or authoriza on for their harvest.11 The FMP requirements are contained in a 90-page document and are summarized below. Elabora on of technical study 1. If the forest is less than one ha in area, a silvicultural recommenda on prepared by and issued by the Forestry Resources Division of the DGFCR is required. 2. For forests that are 1-10 ha in area, a Forest Management Plan must be presented. 3. In forest areas larger than 10 ha, a Forest Management Plan and an Annual Opera ng Plan (AOP) must be formulated and submi ed. Applica on, review, and approval of FMP and AOP • Wri en request from the owner or landholder is submi ed to the Central or Regional Offices of the Division of Forestry Resources. • Pay the Plan Review and Approval Fee ($1-$2.5/ha up to a maximum of $65). • The forester must present the FMP to a commi ee designated by the DGFCR. Review and evalua on • Review of the FMP documenta on by the DGFCR and its legal department. • Technical field inspec on by the DGFCR officials. • Prepara on of visit report and response to observa ons. Approval of the MFP A resolu on of approval of the FMP is issued authorizing the owner to harvest mber. The owner is given the permit, which allows logging. Wood transport documents Permits for mber transport are delivered when the management plan is approved. A set of 10 permits (1 per trip) costs $7.00. A permit for the transport of NTFPs costs $2.00 per permit. While these permits by themselves do not represent an important cost, the cost of forestry plans and their requirements (e.g. establishment of permanent plots) is high, between $20-$250/ha depending on the area of the plan, plan approval is slow requiring from 6 months to a year, and usually requires about 12 visits to the central or regional forestry office as well as the considerable me, travel costs, and lost income that these visits entail. These costs make compliance of legal requirements by small landholders difficult. The DGFCR in general, and the Forestry Division in par cular, appear to garner li le poli cal support and the ins tu onal importance of the la er appears to be on the decline: a. its staff is being reduced via a ri on since many are over 60 years of age. Their func ons are mainly administra ve (permits and procedures) in nature. b. There is li le decision-making autonomy. c. The budget is small. El Salvador: Country Forest Note | 51 d. Forestry carries li le weight within the MAG. e. As a result, forest control appears to be largely ineffec ve since es mates suggest that non-registered mber produc on is about 80% of the total produced (see below). The DGFCR also contains the Climate Change Division whose responsibility is coordina ng the adop on of climate change mi ga on measures, especially the par cipatory management of watersheds but in prac ce Division’s 8 staff are limited to dissemina ng informa on on watershed management and par cipa ng in the formula on of projects. Other ins tu ons within the MAG related to the forest sector are the Forestry Development Center (CEDEFOR) and the Na onal Center for Agriculture and Forest Technology (CENTA). CEDEFOR currently has 9 staff members and runs a small tree seed collec on and commercializa on center and the Bamboo Program, which receives support from the GIZ. In contrast, the CENTA’s 2019 budget was $12 million but there are no line items related to forestry. However, 47 CENTA agroforestry extensionists par cipate in the RECLIMA project financed by the Green Climate Fund focused on sustainable agriculture and climate change adapta on in 114 municipali es, s majority in the eastern half of the country. The Ministry of Environment and Natural Resources (MARN) The Ministry of Environment and Natural Resources complements the MAG in the area of natural resources, climate change and forests, with a greater focus on environmental threats, forest conserva on and natural protected areas, forest monitoring, and forest ecosystem services. The Ministry was established in 1997; it coordinates the Na onal System of Environmental Management (SINAMA) and is made up of five directorates: 1) the Natural Resources and Threats Observatory; 2) Environmental Evalua on and Compliance; 3) Water Security; 4) Territorial Management; and 5) Ecosystems and Biodiversity. There is also a Climate Change Unit that reports directly to the Technical Cabinet. The General Directorate of Ecosystems and Biodiversity (DGEB) aims to ensure the sustained provision of cri cal ecosystem services and the protec on of habitats and related species, guaranteeing inclusive management and use rights by local communi es. Its main func ons are: a) promo ng the restora on and inclusive conserva on of cri cal ecosystems and wildlife habitats; b) applying the Law of Natural Protected Areas and the Law of Wildlife Conserva on; c) expanding and ensuring the right of use and sustainable management of biological resources by local communi es; and d) studying and making an inventory of ecosystems, threatened and endangered species, and others considered part of the natural heritage. The directorate also issues permits (Research and Management Authoriza ons) for natural resource management and use. Within the DGEB, these func ons are addressed by the following management units: Resource Conserva on and Protec on (resource rangers), Protected Natural Areas and Biological Corridors, and Wildlife. The staff includes 194 persons: 4 directors, 20 administra ve personnel, 24 technicians, 2 assistant technicians, and 144 natural resource rangers. The Directorate has an annual budget that ranges between $1.4-$1.6 million. The Directorate leads inter-ins tu onal coordina on of the Restora on Ac on Plan. The Climate Change Unit supports the MARN in the area of climate change, through the genera on of scien fic and technical knowledge, instruments for na onal monitoring for mi ga on and adapta on, as well as compliance with the requirements to generate low-carbon development. Its principal func ons are: developing the policy and technical bases for the elabora on of strategies, policies, plans, projects, and other instruments for climate management; genera ng strategic guidelines for low-carbon development in the country; advising and suppor ng the design of na onal and local strategies for mi ga on 52 | El Salvador: Country Forest Note and adapta on to climate change; and advising the design of regulatory instruments for the reduc on of the impact of climate change in the country by different sectors. Its staff is comprised of 3 persons at the na onal level who coordinate with the Territory Management and Water Security Directorates and the MARN’s Threat Observatory. The Ministry also administers the Environmental Fund of El Salvador (FONAES), whose objec ve is the capture and administer financial resources for the protec on, conserva on, improvement, restora on, and the ra onal use of natural resources and the environment in accordance with the priori es established in the Na onal Environmental Strategy (ENA) (see sec on on Incen ves below). Besides the na onal agricultural and environmental ministries, under the Municipal Code of 1986, municipali es also regulate and develop plans and programs focused on the preserva on, restora on, and ra onal use and improvement of forestry and natural resources. They are responsible for trees in urban or restricted municipal areas, vigilance of saltwater forests, and par cipa ng in forest planning (e.g. program of compensa ons). Although the municipali es have Environmental Units, they are not opera ng effec vely to control or discourage deforesta on. Photo: Mesoamérica Sin Hambre FAO- AMEXCID El Salvador: Country Forest Note | 53 ANNEX 2. INTERNATIONAL COMMITMENTS El Salvador has signed the following interna onal trea es, conven ons, and commitments:  United Na ons Framework Conven on on Climate Change (UNFCCC) and the Kyoto Protocol  Conven on on Biological Diversity  RAMSAR Conven on on Interna onally Important Wetlands  Conven on on Interna onal Trade in Endangered Species (CITES)  Statutes of the Interna onal Union for the Conserva on of Nature and Natural Resources  Sustainable Development Objec ves  20 x 20 Ini a ve  Na onally Determined Contribu ons of the UNFCCC  The World Bank Country Partnership Framework .The country also par cipates in a number of regional trea es:  Treaty among El Salvador, Guatemala, and Honduras for the Execu on of the Trifinio Plan for the management of natural resources of the territory at the confluence of their three borders.  The Central American Environment and Development Commission for regional coopera on, natural resource management, and pollu on control.  The Central American Alliance for Sustainable Development, a comprehensive framework for achieving poli cal, economic, social, and environmental solu ons to problems in the region.  The Central American Regional Environmental Plan for contribu ng to the sustainable development of the Central American region by strengthening coopera on and integra on for environmental management.  The Central American Forestry Strategy for promo ng sustainable forest development and reversing the process of deforesta on in the region.  The Central American Plan for the Integrated Management and Conserva on of Water Resources for promo ng a regional and integrated approach to solving water resource problems based on conserva on and sustainable management.  The Mesoamerican Biological Corridor, a regional territorial planning network, which seeks to create and strengthen protected areas throughout the region and the development of sustainable agriculture and ecosystem rehabilita on ac vi es in the interconnec on zones between the above-men oned protected areas. 54 | El Salvador: Country Forest Note ANNEX 3. INVENTORY OF COMMERCIAL TREE SPECIES Value Num Species Volume/ha (m3/ha) Total BF/ha CF/ha SC/ha SMF/ha Medium 6 Cordia alliodora 7.4 0.0 2.3 0.0 9.70 Low 21 Gliricidia sepium 2.3 0.0 1.4 0.0 3.74 High 27 Samanea saman 6.2 0.0 0.4 0.6 7.14 Low 40 Pinus oocarpa 1.7 41.7 0.1 0.0 43.47 High 20 Diphysa americana 0.7 0.1 2.7 0.0 3.50 High 22 Hymenaea courbaril 1.1 0.0 0.1 0.0 1.15 High 25 Myroxylon pereirae 0.1 0.0 2.9 0.0 2.98 Medium 10 Cupressus lusitanica 0.0 17.7 1.0 0.0 18.70 High 11 Albizia niopoides 0.9 0.0 0.0 0.0 0.90 High 29 Cedrela odorata 0.4 0.0 1.6 0.0 1.96 Medium 42 Karwinskia calderonii 0.8 0.0 0.2 0.0 1.00 High 32 Swietenia humilis 0.4 0.0 0.5 0.0 0.87 Low 23 Lonchocarpus rugosus 0.9 0.1 0.1 0.0 1.08 High 1 Astronium graveolens 0.3 0.0 0.5 0.0 0.76 High 43 Ulmus mexicana 0.0 0.0 1.4 0.0 1.38 High 9 Terminalia oblonga 0.1 0.0 1.1 0.2 1.38 High 5 Tabebuia rosea 0.3 0.0 0.3 0.0 0.51 High 3 Tabebuia donnell-smithii 0.2 0.0 0.2 0.0 0.42 Low 41 Pinus tecunumanii 0.0 4.9 0.0 0.0 4.89 Medium 8 Calophyllum brasiliense 0.0 0.0 0.4 0.0 0.46 Medium 45 Maclura nctoria 0.1 0.0 0.0 0.1 0.23 High 30 Cedrela salvadorensis 0.0 0.0 0.4 0.0 0.43 High 44 Tectona grandis 0.0 0.0 0.0 0.0 0.04 Medium 28 Juglans olanchana 0.0 0.0 0.1 0.0 0.12 High 2 Tabebuia chrysantha 0.0 0.0 0.0 0.0 0.02 Low 36 Pinus ayacahuite 0.0 0.2 0.0 0.0 0.16 High 19 Dalbergia tucurensis 0.0 0.0 0.0 0.0 0.01 Commercial Sum of BF/ha Sum of CF/ha Sum of SC/ha Sum of SMF/ha Value High 10.64 0.10 11.97 0.75 Medium 8.40 17.67 4.03 0.10 Low 4.96 46.78 1.61 - BF = broadleaf forest, CF = conifer forest, SC = shaded coffee agroforest, SMF = saltwater and mangrove forest Source: Na onal Forest Inventory, 2018. El Salvador: Country Forest Note | 55 ANNEX 4. FOREST VALUE CHAINS AND ACTORS Economic contribu ons of mber produc on and value chains Although El Salvador’s forest infrastructure is fragmented and young, it produces significant value, about $173-$188 million annually from mber, fuelwood, and charcoal (Table A4.1). About 70%-80% (215,000 m3)67 of the total volume of mber (approximately 283,000 m3) is non-regulated, as is fuelwood and charcoal. Porous fron ers for non-registered wood products among El Salvador, Honduras, and Nicaragua make es ma on of product flows difficult. Table A4.1. Es mated annual volume and value of El Salvador’s forests Product Year Volume (m3) Value (million $) Source Timber Logs 2015 283,100 $88.3 Santamaria and Aquino, 2016 & CCAD, 200868 Added-value processing 2015 100,000 m3 domes c products $127.5 (imports Santamaria and Aquino, (not included in total) not included) 2016 & CCAD, 2008 Non- mber Fuelwood 2017 1,241,00069 $60.8 UNDATA70 Charcoal 2017 22,858 tons, equiv. to 457,160 $8.9 FAOSTAT72 m3 of woody material71 Other: medicinal plants, 2010 Unknown $15-30 WRI, the World Bank,73 honey, forage, fruits, and and FAO74 animals/insects from forests Services Recrea on, water, and 2015 $51.5* WRI, the World Bank34 habitat/biodiversity Total 1,981,260 $352-$367 Note:* Recrea on value of 138,000 ha of coffee agroforests is assumed to be 0. 67 This study and DGFCR, 2013. Diagnós co del sector forestal en el municipio de Ciudad Delgado, San Salvador. 68 This study is based in part on data from Santamaria and Aquino, 2016 and also CCAD, 2008 cited in MAG, 2016. Polí ca forestal de El Salvador, 2016 -2036. Reports of annual mber produc on vary greatly: 682,200 m3 (FAOSTAT) versus 68,000 m3 of legal wood with permits versus an addi onal 127,000 m3 (approximately 195,000 m3 in total) needed to balance imports, exports, and domes c use based on the former es mate. 69 $49/m3, equivalent to a price of $25/month for household consump on. h ps://www.paho.org/hq/ dmdocuments/2016/HAP-Perfil-ElSalvador-eng.pdf 70 h p://data.un.org/Data.aspx?q=fuelwood+El+Salvador&d=EDATA&f=cmID%3aFW%3bcrID%3a222 71 $388/ton. The density of charcoal is 0.208 t/m3. To convert raw biomass into charcoal, volume to weight conversions can vary widely between 10-27 m3/ton depending on species, ini al moisture content, type of kiln used, etc. (fao.org/3/q1085e/q1085e0c.htm). We used a conversion ra o of 20 m3/ton, which is typical of hardwood species under rus c charcoal making condi ons. 72 h p://www.fao.org/faostat/en/#data/FO 73 According to J. Siikamäki, F. J. San ago-Ávila, and P. Vail. 2015. GLOBAL ASSESSMENT OF NONWOOD FOREST ECOSYSTEM SERVICES. PROFOR.INFO Working Paper. Resources for the Future, World Bank WAVES, Program on Forests, the value of NTFP is $99.88 million based on the 2018 es mate of forest area (excluding coffee agroforests). h ps://www.wavespartnership.org/sites/waves/files/kc/Global%20Assessment%20of%20Non- Wood%20Forest%202-25-16%20%281%29.pdf. Also see FAO. 2010. Evaluación de los recursos forestales mundiales 2010. Informe de El Salvador. 74 FAO, 2010.Evaluación de los recursos forestales mundiales 2010, El Salvador. 56 | El Salvador: Country Forest Note Wood value chains processed about 100,000 m3 of wood products and added significant value, about $127.5 million. The products consisted of:  Pallets and packing crates used by agro exporters: 14,000 m3 ($3.5 million)  Sawn wood and plywood: 31,000 m3 ($12 million)  54,000 m3 of secondary products including furniture, doors, and other products ($112 million) Exports and imports represent about 20%-25% of domes c value of wood produc on. Registered exports include about 37,000 m3 of added-value products worth $38 million, mainly furniture, doors, and other secondary products and 21,000 m3 of logs. Registered imports include 148,000 m3 of wood products with a value of $55 million, mainly sawn wood from Guatemala and Honduras: sawn wood and plywood (107,000 m3), furniture (22,000 m3), pallets (15,000 m3), and fuelwood (4,000 m3). These values, however, are likely to be greatly underes mated due to the flows of non-regulated products. El Salvador has an apparent nega ve export-import balance related to wood products of -$17 million in value and -90,000 m3 in volume but these es mates are uncertain. This apparent deficit is principally due to sawn wood and plywood for construc on and furniture since El Salvador produces about 145,000 m3 of sawn wood annually but consumes another 107,000 m3 of imported sawn wood and plywood. Timber Wood originates mainly from natural broadleaf and conifer forests and from shade trees in coffee agroforests; planta ons contributed only about 45,000 m3 of legal wood in 201575 (Table A4. 2). Teak, balsam, ipe, Spanish cedar, and cypress are high value mbers; teak is mainly produced in planta ons and is exported due to lack of domes c processing capacity. Pines, monkey pods, laurel, and other species originate from planta ons and natural forests but are of lesser value and may be used in construc on or local furniture making. Non- mber forest products In 2017, the country produced about 1.241 million m3 of fuelwood76 valued at $60.8 million and 22,858 tons of charcoal, equivalent to 46,716 m3, with a value of $8.9 million77 (Table A4.1). Most (76%) of the fuelwood as well as wood for charcoal is gathered by individuals or small groups from secondary forests and prunings of shade trees in coffee planta ons; the remaining 24% of the fuelwood is supplied by various commercial channels involving individuals and about 65 businesses, crea ng almost 200 jobs.78 Fuelwood (948,000 m3) is consumed by about 11% of the households in El Salvador, and 29% of rural households;79 these households spend $15-$25/month (September 2015) on fuelwood for cooking.80 Another 293,000 m3 of fuelwood were transformed or used by industry and other uses. Charcoal is used in the restaurant, agriculture, and gardening sectors and small quan es are also exported.81 75 Santamaria and Aquino, 2016, op cit. 76 h p://data.un.org/Data.aspx?d=EDATA&f=cmID%3aFW. Data for fuelwood produc on are variable and inconsistent (see FAOSTAT, UNDATA h p://data.un.org/Data.aspx?d=EDATA&f=cmID%3aFW). Total produc on reported by FAOSTAT appears to be over-es mated compared to UNDATA but UNDATA and the 2016 Household Survey es mates of household consump on, which accounts for about 76% of firewood use are consistent. 77 FAOSTAT. h p://www.fao.org/faostat/en/#data/FO 78 MARN, 2005, cited in FAO, 2006. Estrategia Forestal de El Salvador. 79 Conversion based on the following: household fuelwood consump on of 948,000 m3, a wood density of 0.65 ton/m3, and a user popula on of 13% (3.5% in urban areas and 29% in rural areas, equivalent to approximately 711,000 people), according to the 2016 Household Survey (h ps://www.ilo.org/surveydata/index.php/ catalog/1635/datafile/F6/?offset=300&limit=100) 80 Paho, 2015, h ps://www.paho.org/hq/dmdocuments/2016/HAP-Perfil-ElSalvador-eng.pdf); Santamaria and Aquino, 2016. 81 Santamaria and Aquino, 2016, op cit. El Salvador: Country Forest Note | 57 Table A4.2. Legal mber produc on, by forest type (2015) Forest Type Volume (m3) Natural broadleaf forest and agroforestry systems 20,875 Balsam (Myroxylon balsamum) 99 Ipe (Tabebuia donnell-smithii) 720 Monkey pod (Enterolobium cyclocarpum) 14,542 Spanish cedar (Cedrela odorata) 735 Laurel (Cordia spp.) 1,129 Other species 3,650 Natural conifer forests 2,057 Plantaciones 44,916 Eucalyptus (Eucalyptus spp.) 7,469 Pink cedar (Acrocarpus fraxinifolius) 11,138 Teak (Tectona grandis) 23,106 Cypress (Cupresus lusitanica) 510 Pine (Pinus spp.) 2,693 TOTAL (m3) 67,848 El Salvador´s forests also produce forage, honey, medicinal plants, animals/insects, ar san goods, and recrea on but their value is uncertain, around $44/ha forest/yr.82 This value does not include the value of supplemental fodder during the dry season, such as ramon (Brosimum alicastrum), gliricidia (Gliricidia sepium), poro (Erythrina spp.), guacimo (Guazuma ulmifolia), espino (Pithecellobium saman), and guanacaste (Enteralobium cyclocarpum), or fruits. Coffee agroforests in par cular provide fruits for household consump on. Wood value chains Wood value chains processed about 100,000 m3 of wood products and added significant value, about $127.5 million. Furniture, doors, and other products accounted for a li le over half the volume (54,000 m3) but almost 90% of the value added ($112 million) by the processing sub-sector. Micro and small actors are predominant in all steps of the wood value chain from logging to commercializa on but are responsible for less than 50% of the mber logged, processed, or sold. Logging and processing opera ons are characterized by the use of small-scale or obsolete technology but account for majority of the direct jobs created in the wood sector. The number of actors in the forest/wood value chains is shown in Table A4.3. There are about 179 loggers, many of whom also par cipate in other links along the value chain. Medium and large loggers produce most of the mber, while small loggers are largely informal and buy standing mber from landowners. There are about 44 registered sawmills. About two-thirds use chainsaws, portable saw mills, and manual sawing for processing logs into boards usually near the fallen mber, 82 Siikamäki et al. 2015, op cit. 58 | El Salvador: Country Forest Note while the other 33% use band or circular saws. More than 90% of the sawmills are small or micro opera ons employing 4 people or less; they are responsible for about 60% of the round wood processed. The remaining are medium and large sawmills that employ 15-40 people/mill and process 40% of the mber produced. Table A4.3. Wood supply chain actors in El Salvador (2015)83 Ac vity Regions (MAG, MARN) Total RI R II R III R IV Loggers 34 126 8 11 179 Biomass 0 2 0 62 64 Saw mills 11 11 19 3 44 Carpentry shops 118 163 23 21 325 Exporters 0 101 0 0 101 Importers 12 75 1 5 93 Distributors/sellers (hardware and construc on 25 30 5 157 217 material stores) Total 200 508 56 259 1,023 There are 325 secondary processors who manufacture furniture, doors, parts and pieces, and other wood products from boards or logs. They tend to be concentrated in certain towns or regions, such as Nahuizalco and Izalco in the west (Region I), Ciudad Delgado, Aguilares, Santo Tomás, Ciudad de La Palma, and San Vicente in the central region (Region II), and Jucuapa in the east (Region IV). Many of these ci es specialize in certain types of products. About half the processors are micro or small size with less than 5 employees; they process about 15% of the product volume. The medium and large processors have between 11 and 42 employees and process a large majority of the products. Secondary processors sell to about 217 distributors or consumer sale businesses (e.g. hardware, construc on, and lumber stores) and directly to the public. Distributors or stores sell domes cally produced or imported wood but do not produce or transform wood products. Micro and small businesses account for about 85% of the commercializa on businesses but 15% of the product volume. The micro and small vendors usually sell domes c wood and pine lumber from Guatemala and Honduras, while larges stores sell treated and dried pine lumber from the US, Chile, and Canada. A rela vely low demand for domes c wood is a ributed to scarcity, poor quality (knots, inadequate dimensions, and milling defects), and lack of receipts. 84 Final buyers include construc on companies, independent construc on foremen, and the public sector, i.e. local governments, na onal ministries or programs, and individual consumers. About 19% of wood demand by construc on companies is related to public contracts.85 Employment generated by the wood value chain is shown in Table A4. 4. These ac vi es generate direct employment for about 11,600 people. Both businesses and employment are concentrated in the country’s central region (Region II) but a number of towns across 83 Santamaria and Aquino, 2016, op cit. 84 Santamaria and Aquino, 2016, op cit. 85 Ibid. El Salvador: Country Forest Note | 59 the country specialize in certain types of wood products. About half of the businesses and jobs are in logging and secondary wood processing. These two opera ons have rela vely high average ra os (about 14) of direct employment/business compared to the other links along the value chain (about 3-5 jobs/business). Table A4.4. Direct employment in the forestry sector (2015)86 Ac vity Region (No. of persons) Total RI R II R III R IV Loggers 122 2,236 106 122 2,586 Saw mills 93 21 53 15 182 Biomass - 12 - 186 198 Furniture industry 1,534 2,988 81 63 4,666 Construc on sector 19 463 6 46 534 Distribu on and sales 71 74 18 76 238 Public sector 21 42 8 23 94 Sub-total 1,849 7,359 269 347 10,021 Exporters - 1,515 - - 1,515 Importers 10 63 5 25 103 Total 1,859 8,937 274 372 11,639 Problems and barriers Timber and NFTP value chains are characterized by mul ple small actors limited by the availability of legal mber, trained personnel, capital, and informa on; inefficient or obsolete technologies; the demand for low-cost products; and external compe on in local markets and the scale and quality standards of interna onal markets. Forest produc on and processing is mainly “hormiga” or ant-like in nature (i.e. mainly small-scale, unorganized, widely disseminated, non-regulated, with limited capital and technology). Na onal market demand is not sa sfied and is mainly for low cost products; it is limited by wood supply, legality, price, and product variety, and suffers from compe on from abroad. In general, informa on and knowledge gaps regarding technical informa on, markets, and prices exist along the value chain. Among the wood value chain actors, processors are the most vulnerable since they suffer supply and market limita ons as well as constraints within their own sub-sector (Table A4. 5). The NFTP value chains face addi onal challenges related to the size of demand, supply capacity, and market consolida on. Informa on on the importance and poten al of NTFPs for contribu ng to on-farm economies is lacking. Such informa on is needed for assessing the feasibility of investments for further development of this sub-sector. 86 Ibid. 60 | El Salvador: Country Forest Note Table A4. 5. Forestry value chain barriers87 Challenge Supply Processing Markets Bureaucra c permi ng process Wood scarcity Timber illegality Weak value chain linkages Small size of businesses and the domes c market Informa on asymmetries and limited availability Inefficient or obsolete technologies Lack of drying or treatment facili es Lack of alterna ve uses of residues Difficult access to credit Limited trained personnel Low product quality Increased foreign compe on Increased use of wood subs tutes Color code: dark green = very important, light green = less important. Pho to: M eso am éric a Si nH am bre FAO - AM EXC ID 87 MAG, 2016. Polí ca forestal de El Salvador, 2016-2036. El Salvador: Country Forest Note | 61 ANNEX 5. DEFORESTATION AND FOREST DEGRADATION Deforesta on Historical dynamics During the last 30 years, El Salvador´s forest cover has been dynamic as the country went from having 15%-20% forest cover in the early 1980s to 39% cover in 2018. By the beginning of the 1980s, less than 6% of El Salvador’s natural forest was considered undisturbed due to the widespread expansion of agro-industrial, peasant agriculture, and livestock in prior decades.88, 89 During El Salvador´s civil conflict during 1980-1992, perilous condi ons in the countryside led to the exodus of rural inhabitants to the ci es or the US and a growth in remi ances from abroad. Combined with the subs tu on of local grains by food imports, subsistence pressures on the landscape were reduced as agricultural ceased to be the dominant sector; as a result, deforesta on sharply declined and forest cover increased.90 Between 1990 and 2000, the country suffered the final stages of the civil conflict and the na onal development model shi ed from export agriculture to one based on industrial and banking services, the liberaliza on of food imports, and sharply limited credit to rural areas, all of which undermined internal agricultural markets, economic support, and returns for small farmers even as half the popula on remained rural.91 Remi ances (received by approximately 25% of rural families, doubling their incomes), off-farm job crea on and wages, and reduc on in agricultural prices, and real returns to agriculture (27% of the value in the 1970s) were further disincen ves for agriculture. As a result, agricultural produc on and employment con nued to decline and forest cover increased by approximately 480,000 ha (22% of the total land area).92 Between 2001 and 2011, there was a net loss of 65,248 ha of forests (gross deforesta on of 146,433 ha and regenera on of 81,185 ha) (Table A5.1), reflec ng the influence of agricultural prices and government policies on agricultural employment. During this period, world food and El Salvadoran producer prices for corn, beans, coffee, and sugar cane increased, peaking around 2011-2013.93 This served as a s mulus for agricultural employment and for an expansion of cropped area (an excep on is coffee) and fer lizer use. In turn, these condi ons posi vely impacted cereal crop yields/ha, the food produc on index, the added value of agriculture, and agriculture’s share of GDP.94 Beginning in 2009, the GES also implemented policies to support the agriculture sector including new social programs that have benefited the rural poor, such as the Family Agriculture Plan (PAF) and credit policies suppor ng agricultural produc on and increased technical assistance. 88 H.J. Leonard. 1987. Natural Resources and Economic Development in Central America: A Regional Environmental Profile. New Brunswick (NJ): Transac on Press. 89 S. Hecht, and A. Cockburn A. 1989. The Fate of the Forest: Developers, Destroyers and Defenders of the Amazon. London: Verso. 90 S. Hecht, and S. Saatchi. 2017. Globaliza on and forest resurgence: Changes in forest cover in El Salvador. BioScience 57(8): 663-672. 91 S.B. Hecht, S. Kandel, I. Gomes, N. Cuellar, and H. Rosa. 2006. Globaliza on, forest resurgence, and environmental poli cs in El Salvador. World Development 34: 308–323. 92 Hecht and Saatchi, 2017, op cit. 93 h p://www.fao.org/worldfoodsitua on/foodpricesindex/en/ 94 FAOSTAT, op cit 62 | El Salvador: Country Forest Note Table A5.1. Es mated forest loss and regenera on (ha) by forest type Forest Type Forests Forest loss Forest loss Forest Forest Net Net Net 2001 2001-2011 2011-2018 addi on addi on change change change 2001-2011 2011-2018 2001-2011 2011-2018 2001-2018 Broadleaf forests 646,332 136,179 46,056 76,136 56,350 -60,043 10,294 -49,749 (-0.45%) Coffee agroforests 147,294 6,062 6,038 1,049 981 -5,013 -5,057 -10,070 (-0.40%) Saltwater and 44,461 1,719 1,029 518 754 -1,201 -275 -1,476 mangrove forests (-.20%) Natural conifer 32,544 1,978 678 1,970 933 -8 255 247 forests (0.04%) Forest planta ons 6,620 495 467 1,512 901 1,017 434 1,451 (1.29%) Total 877,251 146,433 54,268 81,185 59,919 -65,248 5,651 -59,597 (-0.43%) By 2014 these trends started reversing again. Agricultural prices and subsequent agricultural employment declined and remi ances from abroad increased. These changes were associated with a net increase of 5,651 ha of forest cover, the result of an addi onal 59,919 ha of forest regenera on and deforesta on of 54,268 ha (Table A5.1). The majority of the deforesta on occurred in the eastern half of the country, while forest regenera on was more prominent in the western half, especially in the north (Figure A5.1). FIGURE A5.1. DEFORESTATION AND FOREST REGENERATION 2001 2011 AND 2011 2018 Taking the 2001-2018 period as a whole, there was a net loss of 59,597 ha (rela ve annual loss of 0.43%) of forests. Broadleaf, coffee, and saltwater/mangrove forests had net losses but forest planta ons and natural conifer forests exhibited net increases (Table A5.1). The absolute and rela ve losses were the greatest in broadleaf and coffee forests. Losses of saltwater and mangrove forests were small but important due to their high economic and ecological value. As a result, land distribu on in El Salvador currently includes about 900,000 ha of agriculture, 817,000 ha of forests, 275,000 of urban or semi-urban areas with sca ered individual or groups of trees, and 109,000 ha of treeless areas (Table A5.2, Figure A5.2). Forest and coffee agroforest cover is only about half what should exist (65% of the na onal territory) according to El Salvador’s land classifica on scheme. El Salvador: Country Forest Note | 63 Table A5. 2. El Salvador’s forests (2018) Forest Type 2018 % na onal land area Broadleaf forests 595,892 28.3 Coffee agroforests 138,021 6.6 Saltwater and mangrove forests 42,941 2.0 Pine forests 32,492 1.5 Forest planta ons 8,307 0.4 Total 817,655 38.9 FIGURE A5.2 LAND USE IN EL SALVADOR 2016 Deforesta on and ecosystem services Deforesta on has been implicated in the loss of various ecosystem services: Biodiversity. El Salvador has lost most of its primary forests yet it s ll has high levels of biodiversity supported by forest farms in highly variable anthropogenic landscapes in bio c zones that range from mangroves to cloud forests. These forests have a high degree of endemism; Salvadoran coffee agroforests maintain a much more diverse overstory than is characteris c for most of Central America, and incorporate more than 123 tree species,95 of which 16% are old-growth species. Moreover, forests provide cri cal habitat and biodiversity corridors and are an important part of the Mesoamerican Biological Corridor. Recent history has shown that they enable rapid landscape recovery if allowed to grow undisturbed. Land and forest degrada on. Deforesta on associated with tradi onal hillside agriculture has resulted in degrada on affec ng about 50% of the agricultural land on moderate slopes and 80% on steep slopes, with 25% of farm households suffering significant soil losses each year; it is also implicated in erosion and superficial landslides. These hillside farms account for about 60%-70% of the total agricultural produc on of basic grains. 95 V.E. Méndez, S.R. Gliessman, and G.S. Gilbert. 2007. Tree biodiversity in farmer coopera ves of a shade coffee landscape in western El Salvador. Agriculture, Ecosystems, and Environment 119: 145–159. 64 | El Salvador: Country Forest Note Poor water management. Deforesta on and agriculture reduce infiltra on and can decrease water availability on farms. Greater runoffs from farm plots can increase flooding and droughts, reduce recharge of aquifers, and adversely affect irriga on and municipal water supply. An es mated 1,970 km2 are exposed to moderate or severe impacts of flooding, 4,040 km2 are exposed to landslides, and more than 10,000 km2 are under threat of moderate or severe drought episodes.96 Changes in water flows, quality, and sedimenta on also affect hydroelectric facili es and degrade downstream rivers, wetlands, and mangroves that provide ecological services crucial for both biodiversity and human produc on systems, such as fisheries. Because upstream land users reap most of the benefits and bear li le of the costs of prac ces that degrade water services, they have li le economic incen ve to change such prac ces. Carbon sequestra on. On average, deforesta on results in a loss of about 170 tons of CO2 per hectare, while forest recovery sequesters between 10-20 tons CO2/ha/yr. Reduc on in forest losses or increase in their recovery thus have the poten al to contribute significant income from carbon markets. Forest degrada on Fuelwood and charcoal The main drivers of forest degrada on include logging, fuelwood extrac on, charcoal produc on, and forest fires. Es mates of the volume of these products are shown in Table A5.3. Their overall effect of degrada on Table A5.3. Es mated annual forest losses due to forest on forests is large and similar in degrada on and deforesta on (ha/yr) magnitude to forest loss caused by gross 3 deforesta on. Agent of Volume (m ) Deforesta on forest loss equivalence Fuelwood and charcoal produc on and (ha/yr)97 logging are principal direct drivers of Forest Degrada on forest degrada on. Tendencies suggest that charcoal produc on is rela vely Fuelwood 1,241,000 3,597 constant but that fuelwood produc on Charcoal 457,160 1,325 has decreased by about 38% since 2001 as a result of decreases in rural popula ons Logging 283,100 820 and rural poverty.98 It is es mated that Fires 4,190 3.5% of the urban popula on consumes fuelwood versus 29% rural popula on. Degrada on sub-total 9,932 Gross deforesta on (avg. 2001-2018) Although there are li le or no data on the types of forests, loca ons, or the actors Agriculture 9,828 involved, data suggest that secondary forests and coffee agroforests are a likely Urbaniza on 1,852 major source of fuelwood and charcoal Other 124 for poor subsistence farmers in areas with rela vely large forests, such as the Deforesta on sub-total 11,804 departments of Cabañas, Chalatenango, Total Loss 21,735 (2.6%) La Unión, San Miguel, San Vicente, and 96 MARN, 2004. Informe de País El Salvador. Conferencia Mundial Sobre Reducción de Desastre, Kobe – Hyogo, Japón, 2005. Gobierno de El Salvador. h ps://www.unisdr.org/2005/mdgs-drr/na onalreports/El-Salvador- report.pdf 97 To convert degrada on to hectares equivalent to deforesta on, the volume of each log and firewood was transformed to biomass using a density of 0.60 t/m3. This quo ent was then divided by the weighted average biomass/ha of El Salvador´s forests, 103.5 t/ha, for obtaining hectares equivalent to deforesta on. Since it was impossible to ascertain whether firewood, charcoal, or logs originated from standing forests (degrada on) or cleared plots (deforesta on), we assumed that half came from each. 98 h ps://data.un.org/Data.aspx?d=EDATA&f=cmlD%3.FW El Salvador: Country Forest Note | 65 Morazón.99 Coffee agroforests may also be an important source in the western half of the country. Despite the uncertainty with regard to their origin, it is clear that these uses have a large impact on forests and carbon dioxide emissions. Fires El Salvador reports an average of 135 fires a year that affect a total of 4,190 ha/yr;100 a majority of fires occur during the dry season from December to May. The main causes are of anthropogenic origin and are frequently associated with agriculture, sugar cane, pastures, tourism, hun ng, and beekeeping, and to a lesser extent forest residue burns. In 2012-2017, 56% of the fires were caused by agricultural ac vi es; 22% were caused by wildlife extrac on; and 22% were used to change land use. The MARN has implemented a system for monitoring forest fires that involves monitoring hot spots via satellite imagery that ac vates an ins tu onal ac on protocol depending on the level of advance warning, alert, and degree of emergency. Drivers of deforesta on and forest degrada on The above descrip on of historical tendencies in agricultural and forest land use as well as forestry sector diagnoses, suggest the following conceptual model of deforesta on and forest degrada on (Figure A5.3). In essence, El Salvador is a small country where various factors within and outside its control affect land use. FIGURE A5.3. CAUSES OF DEFORESTATION AND FOREST DEGRADATION Impacts DeforestaƟon DegradaƟon Fires Direct ReducƟon of off- Unregulated Inadequate Fuel wood Logging Causes farm employment urban growth farming pracƟces & charcoal Underlying InsƟtuƟonal Economic/ProducƟve Causes - Low opportunity cost/low value of forests Weak Limited - Low yields due to obsolete technology ReducƟon of IneffecƟve monitoring awareness and and control of environmental - Limited access and use of credit off-farm incenƟves employment natural educaƟon of civil - Limited investment resources society - Commercial compeƟƟon and wood subsƟtutes - Under valuaƟon of forest ecosystem services and environmental externaliƟes of forests - Illegality and shortage of Ɵmber Insufficient Limited Lack of Deficient - High demand for fuel wood insƟtuƟonal and resources poliƟcal regulatory policy and - Over-exploitaƟon and agriculture coordinaƟon capaciƟes support framework - Perverse incenƟves (agricultural subsidies) External Land tenure Demographic pressure Poverty RemiƩances Social conflicts/insecurity Causes Intl. agricultural prices Intl. trade policies Global economic cycles Climate events In the El Salvadoran context, direct drivers of deforesta on are agriculture and the encroachment by urbaniza on, while those of forest degrada on are logging, fuelwood and charcoal produc on, and fires. The intensity and direc on of these drivers are influenced by demography, poverty, urban employment, social conflicts and insecurity, and slow economic growth, as well external causes, such as interna onal commodity prices 99 Oscar Cabrera. 2013. La Agricultura Familiar en El Salvador. Estudio para RIMISP. 100 Comision Nacional de Incendios Forestales – CNIF, 2017. 66 | El Salvador: Country Forest Note and trade policies, global economic cycles, and clima c events and climate change (Figure A5.3). The impact of these internal and external factors is modulated by the ins tu onal and legal frameworks and economic or produc ve enabling condi ons. Ins tu onal factors exert their influence mainly through agriculture and forestry policies, incen ves, and ins tu onal enabling condi ons that affect forest control and use. At the ins tu onal level, limita ons of resources, capaci es, coordina on, and poli cal backing of the forestry sector give rise to non-integrated and o en contradictory forestry and agricultural and climate change policies, weak monitoring and control of forests, li le public awareness, and few incen ves for forest management. Various economic condi ons affect the value, produc vity, and compe veness of forests vis-à-vis other land use alterna ves (Figures A5.3 and A5.4). Illegality, scarce capital, inefficient and low-quality processing, interna onal compe on, and subs tutes for wood products result in reduced compe veness of forest products in domes c or interna onal markets. In combina on with the lack of recogni on of the importance of forest ecosystem services they contribute to the low value of forests and as a consequence their conversion to other uses. Moreover, policies favoring agriculture while simultaneously ignoring its environmental effects tend to favor agricultural land use. In combina on with a high demand for fuelwood these factors result in deforesta on and forest degrada on. FIGURE A5.4. CAUSES OF FOREST REGENERATION IN EL SALVADOR RegeneraƟon Impacts Direct Abandonment of Planning and zoning reduce Economic opportuniƟes Causes agricultural land urban encroachment for sustainable forestry Economic/producƟve Enabling Underlying disincenƟves to conven- Displacement of InsƟtuƟonal agricultural labor InsƟtuƟonal socioeconomic Ɵonal agriculture condiƟons BeƩer land use Low crop prices and CreaƟon of urban Policies that foment Increased public planning, zoning, and increased input employment agricultural and awareness of enforcement prices forestry forests’ importance Increased migraƟon and remiƩances Limited support for InsƟtuƟonal Access to credit, Increased external capaciƟes for markets, TA, TA, inputs, accessible Reduced social compeƟƟon monitoring and technologies credit status of agriculture enforcement Climate: External Reduced demographic Poverty droughts, storms, Factors pressure reducƟon hurricanes Agriculture With regard to direct drivers of deforesta on, agriculture is the principal driver. During 2001-2018, 83% of gross deforesta on and 53% of net deforesta on was associated with agriculture mainly due to increases in the areas of annual crops (95,233 ha) and grasslands and bush fallows (between 31,000 and 34,000 ha each) (Table A5.4). Net deforesta on, however, was only one-third (59,597 ha) of gross deforesta on and was mainly associated with a net increase of 77,503 ha of annual crops and a net expansion of grassland, sugar cane, and fruit planta ons of less than 5,133 ha each. In contrast, bush fallows contributed 55,939 ha of forest regenera on. El Salvador: Country Forest Note | 67 Overall changes in agriculture and other non-forest land use categories are a result of forest-based changes as well as conversions among non-forest uses (Table A5.4). During 2001-2018, there was a net loss of forests, a net decrease of 14,861 ha (10%) of agricultural land but a 30% increase (73,711 ha) in urban and semi-urban areas. The overall net reduc on in agricultural land use was due to large net reduc ons in grasslands and bush fallows of about 87,000 ha each that exceeded net increases in annual crops (123,193 ha), sugar cane (29,086 ha), and fruit planta ons (6,369 ha). Forest conversion contributed to a majority of the net increases in annual crops but the net increases in sugar cane and fruits mainly came from the conversion of non-forest uses to these crops (Table A5.4). Sugar cane, however, may cause deforesta on indirectly since the conversion of annual crops to sugar cane may displace these producers to forested areas. Ca le and grasslands are the second most important direct driver of gross deforesta on, accoun ng for the loss of 31,515 ha of forests, which was par ally offset by 26,382 ha of forest regenera on from grasslands (Table A5.4). Another 92,000 ha of grasslands were converted to other non-forest uses: about 41,000 ha to annual crops, 16,000 ha to sugar cane, 17,000 ha to other forest patches, and 9,000 ha to shrubs/bushes. In contrast, during 2001-2018 sugar cane increased by about 29,000 ha but only 3,881 ha came from forests (Table A5.4). The main contributors to the increase in sugar cane were the conversion of grasslands (about 15,500 ha), annual crops (about 8,000 ha), and Table A5.4. Changes in non-forest land uses (2001-2018) Land use Addi ons Losses Net change Net change Total net from to forest due to among non- change deforesta on regenera on deforesta on forest uses Ha Crops 95,223 18,170 77,053 46,140 123,193 Grasslands 31,515 26,382 5,133 (92,312) (87,179) Sugar cane 3,881 411 3,470 25,617 29,086 Fruit planta ons 2,417 191 2,225 4,144 6,369 Bush fallows 34,048 89,987 (55,939) (30,390) (86,330) Agriculture sub-total 167,084 135,141 31,942 (46,801) (14,861) Other woody vegn. 26,478 4,347 22,131 24,157 46,288 Urban 1,659 164 1,496 4,308 5,803 Semi-urban 3,358 148 3,211 18,410 21,620 Semi-urban/urban, 31,495 4,659 26,838 46,875 73,711 sub-total Salt ponds 399 108 291 183 475 Water 822 638 183 830 1,013 Rock, lava, beaches, bare 901 558 343 (1,085) (742) soil Soil and water, sub-total 2,122 1,304 817 (72) 746 Total 200,701 141,104 59,597 0 59,597 Notes: Crops: Annual grains, vegetable, bananas/plantains, papaya, pineapple, ornamentals, nurseries. Grasslands: cul vated and natural. Bushes/shrubs: Young secondary vegeta on less than 4 m in height. Other woody vegeta on: Forested areas in built-up areas or outside forests including home gardens and gallery forests that may not meet the criteria for “forests.” Also includes fragments or patches of forest vegeta on with a height of 5-20 m and an area greater than 0.5 ha, con guous with water bodies (ocean, lakes, and rivers). Areas dominated by monospecific fruits are not included. 68 | El Salvador: Country Forest Note about 3,000 ha of shrubs/bushes. In the past, sugar cane was a principal driver of the loss of saltwater and mangrove forests but more recently its role in these losses has reduced. Nevertheless, its produc on causes a high ecological impact due to soil mechaniza on, high input use, and the use of fires that can cause soil loss, contamina on of water, and forest degrada on. Within this forest-agriculture scheme, coffee agroforests occupy a unique place since they are classified as forests but include one of the five most important agricultural crops in El Salvador. These systems retain many of the structural and func onal characteris cs of forests and are an important clima cally friendly agriculture alterna ve. Historically, coffee has displaced natural forests (Figure A5.5). During 2001-2018, coffee agroforestry systems suffered a net loss of around 10,000 ha (Table A5.1). About 43% of the decrease in coffee agroforests was due to their conversion to annual crops, another 35% to urban or semi-urban areas, and about 13% to sugar cane and fruit planta ons. This decrease in coffee is a ributed to generally low and fluctua ng world coffee prices, increased interna onal compe on, aging planta ons, the effects of coffee rust, which affected about 50% of El Salvador´s coffee holding since 2016, and higher land prices near urban areas. Since 1980, the area under coffee in El Salvador has decreased by about 30%. FIGURE A5.5. RELATIONSHIP BETWEEN COFFEE AND FOREST COVER 60 50 40 Forest cover (%) Y = -0.6353x + 38.73 R2 = 0.5025 30 20 10 0 0 5 10 15 20 25 30 35 40 Coffee (1000 ha) The rela onship between forest and agricultural cover is affected by the agricultural labor force, which has varied inversely with forest cover since the 1980s. During the 1980s and 1990s, rural popula ons and agricultural employment decreased mainly as a result of the civil conflict and forest cover increased by about 480,000 ha. Between 2001 and 2011, an increase in agricultural employment, despite a reduc on in rural popula on was associated with net deforesta on but between 2011 and 2018, a decrease in the agricultural labor force was associated with a net increase in forest cover (Table A5.5). Fluctua ons in the agricultural labor force with agricultural condi ons is related to the fact that a majority of the farmers are subsistence oriented and have a mul -income livelihood strategy. Table A5.6 shows that three-quarters of agricultural land is worked by non-owners of the land, two-thirds of whom have agriculture as a secondary occupa on. Their involvement in agriculture and their impact on forests ebb and flow depending on El Salvador: Country Forest Note | 69 the current alignment of internal and external condi ons that affect agriculture. When condi ons are favorable, these farmers expand their agricultural opera ons and when they are unfavorable they fall back on other income sources. Table A5.5. Changes in rural and economically ac ve agriculture popula ons and net changes in forests (1990-2018) Variable Year 1990 2000 2011 2018 Urban popula on (million) 2.597 3.469 4.119 4.624 Rural popula on (million)1 2.665 2.410 2.085 1.793 Na onal labor force (million)2 1.92 2.29 2.56 2.85 Agricultural employment (% of total labor force)2 28.1 21.61 21.59 18.53 Popula on employed in agriculture (1,000s)3 539 495 552 528 Net change in forest area (ha)4 480,000 -65,248 5,651 1 fao.org/forestal/en/#country/60 2h ps://www.theglobaleconomy.com/El-Salvador/labor_force/ 3 Calculated 4 Table A5.1 Table A5.6. Land tenure (ha) of primary and part- me farmers (2014)101 Land tenure Agricultural Dedica on Full- me Part- me Total Owned 61,549 38,974 100,523 Rented 71,748 115,148 186,896 Shared 7,519 9,069 16,588 Lent free of charge 37,831 74,790 112,621 Total 178,647 237,981 416,628 Urbaniza on Growing urbaniza on has also resulted in the encroachment of agricultural and forest areas. Increase in urbaniza on during 2001-2018 tracked closely the growth of urban popula on and employment. Urban or semi-urban land growth of 73,711 ha during 2001- 2018 was associated with 31,495 ha (15%) of gross deforesta on and 26,838 ha (45%) of net deforesta on and the addi onal conversion of 46,875 ha of annual crops, pastures, and shrubs/bushes. Rural poverty and the lack of economic opportuni es in rural areas underlie rural-to-urban migra on that combined with demographic growth and the remi ances of migrants distort the prices of land fueling the spread of urbaniza on at the expense of good agricultural land and forests.102 An analysis of land use changes suggests that to a significant degree the expansion in these areas appears to have been preceded by road infrastructure combined with weak land use zoning and development control mechanisms around secondary ci es and in the southwest. 101 E. Baumeister. 2017. El Salvador: Evolución de la agricultura y las estrategias de los pequeños agricultores. Fundación Prisma, San Salvador. 102 The World Bank. 2012. El Salvador Country Land Assessment. Report Number 82312-SV. 70 | El Salvador: Country Forest Note Forest degrada on Forest degrada on is caused by small-scale subsistence and commercial ac vi es, such as fuelwood extrac on, charcoal produc on, and selec ve logging that are associated with poverty. Although fuelwood produc on has decreased by about 38% since 2001103 as a result of the reduc on in rural popula on and rural poverty, its impact is s ll large. Most (76%) of the fuelwood as well as wood for charcoal is gathered by individuals or small groups from secondary forests and prunings of shade trees in coffee planta ons; the remaining 24% of fuelwood is supplied by various commercial channels involving individuals and about 65 businesses, crea ng almost 200 jobs.104 Fuelwood (948,000 m3) is consumed by about 11% of the households in El Salvador but 29% of rural households;105 these households spend $15-$25/month (September 2015) on fuelwood for cooking.106 Another 293,000 m3 of fuelwood were transformed or used by industry and for other uses. Charcoal is used in the restaurant, agriculture, and gardening sectors and small quan es are also exported. Photo: M aren Barb ee 103 data.un.org/Data.aspx?d=EDATA&f=cmlD%3.FW 104 MARN, 2005, cited in FAO, 2006. Estrategia Forestal de El Salvador. 105 Conversion based on the following: household fuelwood consump on of 948,000 m3, a wood density of 0.65 ton/m3, and a user popula on of 13% (3.5% in urban areas and 29% in rural areas, equivalent to approximately 711,000 people), according to the 2016 Household Survey (h ps://www.ilo.org/surveydata/index.php/ catalog/1635/datafile/F6/?offset=300&limit=100). 106 Paho, 2015 h ps://www.paho.org/hq/dmdocuments/2016/HAP-Perfil-ElSalvador-eng.pdf); Santamaria and Aquino, 2016. El Salvador: Country Forest Note | 71 ANNEX 6. AGRICULTURE IN EL SALVADOR Since agriculture is the main driver of deforesta on, a closer look at its characteris cs and dynamics is needed. General trends In recent decades, the agricultural sector´s economic importance has diminished as El Salvador’s tradi onally agriculturally oriented economy has shi ed and now depends much more significantly on the service sector and industry. In 2017, contribu ons to GDP were es mated to be: services (60%), industry (28%), and agriculture (13%); the current contribu on of agriculture to GDP is probably around 10%. Chief agriculture products are coffee, sugar, corn, rice, beans, oilseed, co on, sorghum, beef, and dairy products of which coffee and sugar are important export products. Between the 1990s and 2010-2012, agricultural produc on and value increased mainly as a result of government assistance and increases in agricultural prices but these have since declined. Associated with these changes, total agricultural area and employment (38% of total employment in 1991 versus 19% in 2018107) and farm size have decreased while the number of farms has increased due to inheritance, remi ances, and structural changes in the economy. Since the early 1990s, structural changes in the economy and condi ons in rural areas caused increasing urbaniza on at the expense of rural areas. Approximately 73% of the popula on now lives in urban areas and current growth of the urban popula on is about 1.6% annually compared to an annual rate of decrease of rural popula ons of 0.7%. Rural popula on has been declining since the 1990s as people migrate to the ci es or other countries in search of economic opportuni es or greater security. Agricultural employment declined from about 38% of the total employment in 1991 to 19% in 2018.108 The por on of total women employees who work in agriculture is small, around 15%. The agricultural sector has the highest propor on of poor workers and the lowest average wages. Climate change is expected to affect the long-run viability of many crops which could have nega ve impacts on forests. The Interna onal Food Policy Research Ins tute in its report on the impacts of climate change on the agricultural sector reveals that by 2050, sorghum will experience climate-related losses of about 14%; maize 13%; and rice 11%.109 Sugar cane will poten ally lose 36% of its produc on due to climate change. In addi on, El Salvador is likely to be the most affected country in the coffee sector in the world with a loss of more than 35% of its coffee growing area. These decreases in produc on could provide the s mulus for further deforesta on. Farm characteriza on Subsistence level family farms account for about 85% (about 325,000) of all farms, 51% of the agricultural labor force, and about one-third of agricultural land. On average, farmed areas are less than 3 ha in extent but 87% are smaller than 1.4 ha. A typical head of a farm 107 FAOSTAT fao.org/faostat/en/#country/60 108 FAOSTAT fao.org/faostat/en/#country/60 109 M. Salazar, T.S. Thomas, S. Dunston, and V. Nazareth. 2019. Climate Change Impacts in El Salvador’s Economy. The Agriculture Sector. IFPRI Discussion Paper 01826. 72 | El Salvador: Country Forest Note family is 49-years-old and has 2.6 years of schooling on average. Most family farms do not par cipate in producer associa ons; only 8% have access to credit and 10% have access to technical assistance.110 Although large percentages of subsistence farmers use fer lizers, improved seeds, and agrochemicals as a result of government assistance programs, agricultural produc vity is rela vely low by world standards as a result of limited access to technical assistance, credit, technologies, markets, and educa onal levels. Of the total area under crop cul va on in El Salvador, about 55% is occupied by grains, 42% is devoted to agro-industrial products, such as sugar cane and coffee, 2% is covered by fruits, and 1% by vegetables.111 Table A6.1 shows that family subsistence farms (average size 1.4 ha) and family business farms (average size 86 ha) produce most of the beans, sorghum, and rice while coopera ves and corporate farms (average size 366 ha) produce most of the fruits, coffee, sugar cane, and other agro-industrial crops. Corn is produced mainly by subsistence farms and coopera ves and vegetable and ca le produc on are spread among the farm categories (Table A6.1). Table A6.1. Crop produc on in rela on to type of farm (2016) Products Family Farm Employers Coopera ves Corporates En dates de Farm & associa ons Gobierno Maize 44.2% 6.6% 49.2% 0.1% 0.0% Bean 75.4% 11.6% 3.5% 0.0% 9.4% Sorghum 67.1% 13.9% 8.1% 0.0% 11.8% Rice 46.7% 50.5% 0.6% 0.0% 2.2% Hor culture 29.7% 19.4% 8.8% 40.4% 1.7% Fruits 10.0% 7.5% 44.8% 37.4% 0.3% Sugar Cane 0.4% 1.8% 32.2% 65.5% 0.1% Coffee 0.8% 0.5% 67.0% 31.6% 0.0% Crops Agro-industrial 1.8% 0.1% 54.8% 43.4% 0.0% Forests 42.4% 2.3% 52.5% 1.4% 1.3% Nursery 0.0% 3.3% 19.1% 77.6% 0.0% Animals 9.2% 21.0% 20.8% 48.0% 1.0% Pigs 0.2% 0.1% 0.0% 99.3% 0.3% Poultry Eggs 0.1% 0.0% 2.6% 97.2% 0.0% Meat 4.8% 1.1% 4.9% 89.1% 0.0% Other Species 25.9% 11.9% 47.2% 15.0% 0.0% Beekeeping 27.9% 16.4% 38.2% 17.3% 0.2% Fish farming 5.3% 2.0% 56.4% 36.2% 0.1% Garden 97% 3% 0% 0% 0% Total 4.2% 2.9% 23.7% 68.9% 0.3% Source: FAO World Agriculture Watch (h p://www.fao.org/world-agriculture-watch/our-program/slv/en/) 110 Na onal Census, 2007. Na onal Household Survey, 2010. 111 CGIAR h ps://ccafs.cgiar.org/el-salvador#.XnvOJ4hKhRZ El Salvador: Country Forest Note | 73 Agriculture in El Salvador thus exhibits a dual nature: there are rela vely few commercial farms that produce for exports or the food industry but are major contributors to agricultural GDP while a large majority of farmed areas (almost 90%) are small (less than 3 ha), oriented to subsistence or sales of surplus in local markets, and are important for food security.112 Moreover, farm size correlates directly to farm income, which jumps from an average of about $2,400 for family farms (1.4 ha average size of cropped area) to $10,190 for commercial family farms (average size of cropped area = 8.5 ha), to $2,780,000 for corporate farms (average size of cropped area = 366 ha) (Figure A6.1). FIGURE A6.1. DISTRIBUTION OF PRODUCERS BY FARM TYPE LEFT AND BY NET AGRICULTURAL INCOME RIGHT 2016 1% 4% 3% 0% Family farming 3% 0% 9% Family business farming 24% CooperaƟves & 87% associaƟons 69% Corporates State enƟƟes Agricultural policies Government agricultural policies and assistance to small farmers have fluctuated with me and have contributed to the dynamics of deforesta on. Between 1990 and 2009, a period of forest recovery, public sector support to the agriculture sector decreased to low levels, with nega ve effects on research and extension, ins tu onal capaci es, and financial support. Beginning in 2009, the government established the Family Agriculture Plan (PAF), which coincided with net forest losses. The Plan consisted of: 1) a na onal food and nutri on security program (PAN); 2) a family agriculture program for produc ve linkages (PAP); 3) a program for agricultural innova on (PIA); and 4) an industry and trade program (PEIC). The PAF promoted corn and beans and dairy farming. As a whole, the PAF represented a large part of the MAG budget including interna onal loans and funds. Under the PAF, half of the budget was dedicated to the PAN, which distributed a “package” of improved corn and bean seeds and urea sufficient for 0.7 ha to small farmers. The PAP received 25% of the budget for support to food value chains including the provision of informa on and TA related to primary produc on, post-harvest, storage and marke ng, as well as incen ves for the provision of equipment and technology for produc on. The PAP was par ally implemented and concentrated on valida ng improved varie es of beans, corn, and sorghum seeds received in the majority from the CYMMYT and the CIAT, and small-scale processing of agricultural-based products (for fied corn flour, fruit jam, honey candy, cassava and sweet potato snacks). The PEIC received a small propor on of the Program’s budget for strengthening the purchase of grains by: the corn flour and animal feed industries, the la er mainly for poultry farms; the World Food Program; the MAG; and the school nutri on (glass of milk) program. During the succeeding government administra on (2014-2019), the “Livelihood Plan” was implemented to provide con nuity to the PAF. Similar to the PAF, the Livelihood Plan 112 The World Bank; CIAT; CATIE. 2014. Climate-Smart Agriculture in El Salvador. CSA Country Profiles for La n America Series. Washington, DC: The World Bank Group 74 | El Salvador: Country Forest Note included incen ves, technical assistance, advice for marke ng, and strengthening the business management of basic grains, livestock, and other value chains:  Basic grains: Agricultural package (seeds and agrochemicals); marke ng agreements for the purchase of corn for poultry agribusiness and the corn flour industry; government purchase of corn and bean seeds; technical assistance; favorable lines of credit; demonstra on plots; and a mortgage guarantee fund. Business development centers for marke ng, business plans, assistance in agribusiness, business roundtables, and equipment for collec on.  Ca le: Seeds of sorghum fodder; dona on of milk cooling tanks; animal vaccina ons; ar ficial insemina on; milk equipment; the purchase of powdered milk powder by the Ministry of Educa on for school nutri on programs; special lines of credit in certain years; and technical assistance and training. Non-tariff health measures were also imposed to contain imports of dairy products from Nicaragua.  Fruits and vegetables: Plan ng material; irriga on systems and technical assistance; incen ves for demonstra on plots; and agribusiness and business counselling.  Sugar cane: Tariffs to protect raw and white sugar and maintain domes c sugar prices at levels higher than interna onal prices; technical measures to limit external compe on; and preferen al access for Salvadoran sugar under free trade agreements. However, most of the budget was directed at suppor ng corn and beans. Despite these favorable agricultural policies, large areas of grasslands and bush fallows were converted to forests, likely as a result of a mul ple-year drought beginning in 2014 and especially affec ng the eastern Dry Corridor that s mulated rural-to-urban migra on and emigra on.113 Remi ances also increased by 38% between 2013 and 2018114 and may have acted as a disincen ve for agriculture by raising income levels beyond those provided to agricultural labor. Overall, public investments in rural and agricultural development have been decreasing since the 1980s, the scope of work in R&D services has been narrowed to subsistence crops, and the geographical coverage of the public extension services has been diminished substan ally.115 The country faces limita ons in terms of human and financial resources for the delivery of efficient and comprehensive public services in agriculture. It has not had the capacity to create a coherent na onal plan for agricultural development, nor has it created a transparent fast track for financial execu on of external funds as an integral part of its na onal budget. External funding originally intended for strengthening government services has been directly executed by donors or assigned to NGOs or private ins tu ons. At the same me, there is tension within the MAG of compe ng agendas for the agriculture and forestry sectors. Un l now, the greater rela ve economic and poli cal weight of the agriculture sector compared to the forestry sector has given a reduced role and public funding to the la er. This is exhibited in the Environmental Strategy for Climate Change Adapta on and Mi ga on in the Agriculture, Forestry, and Aquaculture Sector, which was launched by the MAG in 2012 to complement the forest restora on program of the MARN and contribute to climate change adapta on through the sustainable management of watersheds. No budgetary provisions have been made for the MAG and the CENTA to implement the strategy. 113 https://blogs.scientificamerican.com/eye-of-the-storm/fifth-straight-year-of-central-american- drought-helping-drive-migra on/ 114 h ps://www.theglobaleconomy.com/El-Salvador/Remi ances/ 115 Salazar et al. 2019, op cit. El Salvador: Country Forest Note | 75 ANNEX 7. LAND TENURE Forest land tenure and property rights Prior to the agrarian reforms of the 1980s and the peace accords of the 1990s clearing land was a mechanism for claiming legal holding of land, which s mulated deforesta on. However, these reforms, which distributed 401,232 ha or a fi h of the na onal territory among 120,597 beneficiaries and about 25% of the rural households in El Salvador provided legal security even for wooded land and affected natural resources through forest co-management, fire control, watershed councils, and hun ng controls. Reforms also s mulated the crea on of complex, mul use, and mul purpose agricultural landscapes (e.g. small farms with mixed-produc on systems that supply coffee and other diverse products). In El Salvador, land may be owned individually, jointly, by collec ves or coopera ve farms, or by the government but holdings, with some excep ons, cannot exceed 245 ha. There are four basic types of private land tenure holders in El Salvador: 1) landowners; 2) land renters; 3) Decree No. 207 beneficiaries (those former tenants working on the private plots that they received during Phase III of the Agrarian Reform); and 4) Reform Coopera ve beneficiaries (those former farm workers who now collec vely own and run large farms received during Phase I of the Agrarian Reform). Decree No. 207 and Reform Coopera ve beneficiaries can include individual, joint, and collec ve ownership and may be limited in terms of rights to sell, rent or segregate smaller plots of land.116 With regard to land use, 24% of the approximately 930,000 ha of agricultural area is exploited by owners, 45% is rented, and 31% is lent free-of-charge or shared (Table A7.1). Forty-three percent of the land is worked by farmers dedicated exclusively to farming, while the other 57% is worked by farmers whose primary source of income is not agriculture but construc on, manufacturing, commerce, or other economic ac vi es. The recent tendencies of increasing farm atomiza on and produc on by non-owners and part- me farmers represents a challenge for increasing sustainable produc on systems based on interven ons requiring investments or rela vely long periods of me. Table A7.1. Land tenure (ha) of primary and part- me farmers (2014)117 Land tenure Full- me Part- me Total Owned 61,549 38,974 100,523 Rented 71,748 115,148 186,896 Shared 7,519 9,069 16,588 Lent free of charge 37,831 74,790 112,621 Total 178,647 237,981 416,628 116 USAID Landlinks. El Salvador, 2011. h ps://www.land-links.org/country-profile/el-salvador/#land 117 E. Baumeister. 2017. El Salvador: Evolución de la agricultura y las estrategias de los pequeños agricultores. Fundación Prisma, San Salvador. 76 | El Salvador: Country Forest Note El Salvador also has 179 protected natural areas, a majority very small in area (Table A7.2), as well as 3 biosphere reserves and 7 RAMSAR sites that in total cover more than 520,400 ha. The legal framework for protected areas was established in 2005 and via subsequent policies, such as the Na onal Policy and the Na onal Strategy for Natural Protected Areas, as well as the Na onal Strategy for the Par cipatory Management of Natural Protected Areas (Table A7.2). These areas are funded by the na onal budget, interna onal coopera on, a Special Ac vi es Fund that corresponds to contribu ons from income from the sale of products and services from the protected natural areas, as well as projects funded by the FIAES and the FONAES. Principal threats to these areas include: land invasions (encroachments), advance of the agricultural fron er, forest fires, boundary conflicts with individuals or communi es, entry of livestock, and extrac on of firewood, wood, and other products, such as vines for handicra s, orchids, and wildlife (hun ng and poaching). Table A7.2. Number and area of protected natural areas Type Number Area (ha) Forest Area (ha) Protected Natural Areas 179 44,930 < 21,000 Biosphere Reserves 3 268,684 120,000 RAMSAR sites 7 204,479 ?? Total 189 518,093 141,00 . ee Barb aren to: M Pho El Salvador: Country Forest Note | 77 ANNEX 8. ECONOMIC CHARACTERISTICS OF INTERVENTIONS Interven on Comparison Addi onal Ecosystem Economic Characteris cs employment services (days/ha/yr) Year 1 Later Interven on Interven on Difference in Return Cash years Annualized Annualized annualized NPV period flow Costs NPV (Interven on – ($/ha/yr) ($/ha) comparison) ($/ha) Coffee renova on with Tradi onal 241 40 H 2562* 1547* 1276* I V gourmet mber; coffee Gourmet mber only 19 1 367 95 95 Substn. coffee for Tradi onal 139 45 H 2733* 4479* 1604* I V cocoa with gourmet coffee mber; 19 1 367 95 95 Gourmet mber only Agroforestry with Annual crops, 60 32 L-M 2071* 521* 36* C C annual crops no fallows Silvopastoral system Tradi onal 140 85 M 2882* 2146* 1258* C C pasture Fruit planta ons Corn-sorghum -40 -18 to L- M 597+ 1148+ 885+ I V (2 year)- -38 fallow (5 year) rota on Fuelwood lots Unproduc ve 50 12-22 M 171# 340 340 S C fallow SFM for gourmet Informal mber 0 0 H 641 2148 462 S C mber from secondary harvests forests and coffee forests Conserva on of Unproduc ve 8 1 H 10 177 177 S C natural regen. based fallow on water user fees Keys: Ecosystem services: qualita ve evalua on of impact on water infiltra on, soil protec on, biodiversity, and carbon sequestra on. Abbrevia ons: Ecosystem services L = low, M = medium, H = high; Return period S = short, I = intermediate, L = long; Cash flow C = constant, V = variable Sources: # D. Current, E. Lutz, and S. Scherr (eds), 1995. Costs, benefits, and farmer adop on of agroforestry. Project experience in Central America and the Caribbean. World Bank Environment paper 14. *L. Raes, T. Nello, M. Nájera, O. Chacón, K. Meza Prado, and A. Sanchún. 2017. Análisis económico de acciones para la restauración de paisajes produc vos en El Salvador. Gland, Suiza: UICN. + CENTA, 2002. Guia Técnica. Cul vo de Mango. MAG , 2014. Costos de producción 2012-2013. Volumen 22. Descrip on of Interven ons Coffee renova on with gourmet mber: High al tude (> 1200 masl) rust-resistant coffee varie es interplanted with high value mber species (60 trees/ha) and fruits. Cocoa with gourmet mber: Subs tu on of coffee <900 masl by cocoa interplanted with high value mber species, plantain (temporary shade), and fruits. Agroforestry with annual crops: Alley cropping with basic grains and reten on of other sca ered fruit or fuelwood trees within the plot for fuelwood and fruit produc on. 78 | El Salvador: Country Forest Note Silvopastoral system: Rota onal grazing system with improved forage and trees within paddocks or as living fences or barriers, gene cally improved livestock and animal management, and produc on of silage. Fruit planta ons: Mango established with basic grains in taungya systems. Fuelwood lots: Enriched (par ally planted or selected) natural vegeta on allowed to grow with minimal management. Other versions could include intercropping with annual crops, improving fallows with fast-growing leguminous woody vegeta on, and the introduc on of tree species for poles and mber. SFM for gourmet mber: Sustainable forest management based on 20-year rota ons. Gourmet mber is high commercial value mber, such as Spanish cedar and cocolobo. Conserva on: Natural restora on or conserva on of natural forests with li le management besides marking the boundaries. Income is produced by water user fees (approx. $192/ha/yr). Tradi onal coffee: Tradi onal coffee varie es grown under the shade of fruits, leguminous, and natural trees. Tradi onal corn-sorghum relay: Clean cul va on of corn and sorghum planted in relay, with few or no trees/ha. Crop residues burned. Two years of cropping are followed by 5 years of vegetated fallows. Tradi onal grazing: Na ve forages with no agronomic management; stocking rate is 3 head/ha; few trees (18 trees/ha). Unproduc ve fallow: Young secondary vegeta on that regenerates a er cropping. No produc on of economically useful products. Conclusions 1. Agroforestry systems have high annualized costs but also the highest NPVs and the greatest differences with respect to baseline comparisons. They also create the most addi onal employment. An excep on is agroforestry with annual crops which has a rela vely low NPV and produces li le benefit with respect to its baseline comparison. 2. Among the other systems, the harvest of mber from secondary forests has lower costs and a similar NPV compared to the agroforestry systems but its rela ve return is lower and it produces no addi onal labor. 3. Fruit planta ons have intermediate annualized costs, NPV, and benefits with respect to the baseline comparison. However, this interven on requires less labor than the baseline comparison (annual crops). 4. Fuelwood lots and forest conserva on based on user fees for water have the lowest costs, NPV, and returns in rela on to baseline systems (unproduc ve fallows in both cases). 5. For small subsistence farmers, fuelwood lots and forest conserva on may be the best op ons due to their low costs, short return periods, constant cash flows, and high level of ecosystem services. More capitalized farmers or those with more land may opt for sustainable forest management (SFM). 6. For farmers who are able to assume greater costs, fruit planta ons and coffee and cocoa with valuable mber species offer a range of greater returns, intermediate return periods, and variable cash flows. Ecosystem services are high for coffee and cocoa but low-medium for fruit planta ons. 7. Silvopastoral systems have high costs, high returns, and a large difference with respect to tradi onal pasture management; the return period is short and the cash flow is constant but ecosystem services are medium. El Salvador: Country Forest Note | 79 ANNEX 9. GENERATING GREATER INCOME FROM FORESTS BY IMPROVED TIMBER PRODUCTION AND WATER USER FEES According to the 2018 Na onal Forest Inventory, about 13.3 million m3 of commercial mber existed in secondary forests. These data suggest that 665,000 m3 could be harvested annually based on 30-year rota ons, which would enable a harvest volume that is almost 2.5 mes that of es mated exis ng mber extrac on. Ac ve or abandoned coffee planta ons may also be a source of valuable mber, such as Spanish cedar, laurel, and cocolobo. Logging prac ces and primary processing commonly used by small loggers with limited capaci es working in steep topographies include: chainsaws for tree felling and bucking, primary processing in the field using chainsaw guides or portable saw mills, and animal trac on for transport to mber pa os. Timber plans could be developed to gradually harvest these trees. The results of a mber produc on model are shown in Figure A9.1 comparing business-as-usual prac ces (BAU) with improved mber extrac on and processing based on using a collabora ve virtual pla orm for organizing logging, primary processing, and commercializa on. Highly fragmented property holdings, lack of organiza on, limited access to informa on, and high levels of poverty are barriers to achieving economies of scale, be er prices, and cost-effec ve technical assistance. Therefore, the model is based on the no on that farm incomes from forest resources can be improved by providing forest producers with technical and marke ng support and providing access to economies of scale. FIGURE A9.1. A COLLABORATIVE PLATFORM FOR MARKETING FOREST GOODS AND SERVICES Wood energy <5 ha woodlots Forest $ Timber and fuelwood Better Owners Procducer markets $ Market registry intelligence Valuable Coffee commercial Merchandising agroforestry timber, fuelwood and carbon CO2 fil ar nd at s in al s a tr ea n er tic r io at cri ne $ $ r w in ow fo FS est A or F Result based payments of REDD+ Water Fund $ Water fee FIAES / FONAES Environmental $ compensation 80 | El Salvador: Country Forest Note We propose to overcome these barriers by organizing groups of forest producers through a public-private collabora ve pla orm aimed at accessing new and be er markets for forest goods - fine woods - and services - water and carbon - while reducing transac on costs associated with legality and informa on asymmetries. The pla orm would group mber owners, loggers, and wood processors and would be supported by a small technical team to assist with the organiza on of logging, processing, and marke ng and keeping the system organized and running (Figure A9.1). In this partnership, the State would finance forest management plans but extrac on would take place under a quota system based on annual limits whereby loggers or producers would register and pay fees for the mber logged. This would reduce bureaucra c procedures, lower the costs of legality, and provide be er informa on on mber flows. The mber would be placed in virtual or real deposits (centros de acopio) where all users would have access to price informa on. Sales would happen either through specific purchase orders or by auc ons. This increased transparency would reduce informa on asymmetries and result in fair and likely higher prices. At the same me, the pla orm could help organize mber supply and provide technical support to individual or groups of producers and processors to assure sustainable and profitable produc on. Through be er organiza on of logging, harves ng, transport, and processing, transac on costs could be reduced and a more stable mber supply assured. Assistance by the pla orm could also aid at iden fying and accessing more lucra ve markets for high value or sustainable mber. In case the forests managed under this system become eligible for REDD+ payments, the pla orm would allow par cipa on of small landholders in this system and could also assist in benefit distribu on (Figure A9.1). The assump ons and results of the model are given in Table A9.1. Table A9.1. Results and assump ons for the analysis of mber harvest and processing from secondary forests No. Parameters BAU Inter- Units Source Observa ons ven on 2 Avg. area of forests 10.00 10.00 ha Assump ons: Farms have 10 ha of forests. Farms smaller than this might have greater legality costs per hectare. 3 Cost of legality 0 $/10 DGFCR, Forest management plans cost from - 650.00 ha-1 personal $250 for very small land areas to $20/ communica on ha for large areas. We assume $50/ ha for the forest management plan + travel costs and days or work lost ($160 in total) in obtaining legal permits. Given the very limited number of forest management plans currently ac ve, the BAU scenario assumes that no owner legally harvests mber from natural forests. 4 Commercializa on cost 0 $ m-3 The cost of commercializa on is based (virtual pla orm) - 4.83 on office and technical staff. The staff includes a director, 2 forestry engineers, 2 forestry technicians, a commercializa on and marke ng specialist, an informa on specialist, and 2 support staff for the virtual pla orm. 5 Total volume of high 10 10 m3 ha-1 INF, 2018. The analysis considers only broadleaf quality wood species. However, the pla orm could also support conifer value chains. El Salvador: Country Forest Note | 81 No. Parameters BAU Inter- Units Source Observa ons ven on Total volume of medium 8.5 8.5 m3 ha-1 INF, 2018. quality wood Total volume of low 5.5 5.5 m3 ha-1 INF, 2018. quality wood 6 Percentage of total 5% 5% 9 5% of the area would be harvested each volume harvested year during a rota on of 20 years. annually 7 Harvest costs, mber 45.5 41 $ m-3 Santamaria and It is assumed that the pla orm would placed in wood pa o Aquino, 2016. reduce transac on costs by 10%. 8 Compensa on for CO2 0 0 $ ha-1 Forest management could reduce emission reduc ons deforesta on and increase the accumula on of biomass/ha. Given that El Salvador’s reference level is under development, this value could be provided at a later date. 9 Price for high quality 203 203 $ mr-3 Santamaria and Actual mber prices according to wood placed in the Aquino, 2016. Aquino and Santamaria, 2016. mber pa o Price for medium quality 203.00 203.00 $ mr-3 Santamaria and wood placed in the Aquino, 2016. mber pa o Price for low quality 129.00 129.00 $ m-3 Santamaria and wood placed in the Aquino, 2016. mber pa o 10 Increase in price for 1.00 1.50 It is assumed that the pla orm´s gourmet wood placed in commercializa on efforts will result the mber pa o in a 50% increase in the price of high value sustainable mber but the sale prices of the other mber categories are unchanged with respect to the BAU scenario. It should be noted that prices of the la er mber categories may also increase as a result of the use of mber auc ons and the dissemina on of market informa on among producers. 11 Percentage log yield 0.60 60% Santamaria and It is assumed that via the pla orm Aquino, 2016. wood processors will reduce their costs by 15% due to lower transac on costs, economies of scale, and greater processing efficiency achieved through technical assistance. 12 Saw mill costs 92.00 78.00 $ m-3 Santmaria and Aquino, 2016. 13 Price of sawn and 602.00 602.00 $ m-3 Santamaria and planed wood, na onal Aquino, 2016. market (m3) 14 Discount rate 0.1 0.1 15 NPV 14,358 17,995 $ The NPV is for logging and transport to the mber pa o, which can be real or virtual. 16 Annualized NPV 1,686 2,113 $ /yr Primary Processing Includes logging through primary processing. See notes #11 - #13. 17 NPV 27,087 34,719 $ 18 Annualized NPV 3,181 4,078 $ /yr 82 | El Salvador: Country Forest Note Besides income from mber produc on, ecosystem services and soil protec on can be maintained or restored through forest conserva on and regenera on. On-farm conserva on and restora on can be financed by user payments for water, crea ng a win- win situa on whereby farmers gain income and increase infiltra on and reduce erosion from their holdings while crea ng improved water supply for downstream users. This conserva on measure is based on an incen ve ed to forest conserva on or restora on of farms found on steep slopes or the headwaters of watersheds. The incen ve would l be equivalent to the opportunity costs of agricultural labor of subsistence farmers (approximately $190/ha/yr) and would be generated by a small fee paid by approximately 488,000 downstream water users (Table A9.2). Preliminary es mates suggest that a monthly water fee of $ 1.70 per family would raise sufficient funds to promote conserva on or natural regenera on on 50,000 ha of steeply sloping agricultural land located in the headwaters that supply water to the San Salvador municipal area. Alterna vely, benefits could be pegged to the value of ecosystem services, approximately $71/ha/yr but farmer adop on would have to monitored to determine if this level of payment is adequate for inducing behavioral change. El Salvador has the necessary experience to implement a water fund financed by user fees. Both the FONAES and the FIAES environmental compensa on funds have the technical and administra ve capacity to implement a compensa on system for subsistence farmers located in cri cal areas for water infiltra on. Table A9.2. Assump ons for conserva on based on water user fees Parameter Quan ty Units Labor, subsistence farmer 192 $/ha/yr Agricultural area restored 50,000 ha Opportunity cost of labor 9,585,500 $/yr Per capita water consump on in San Salvador 165 lt/person/day Popula on of San Salvador with water connec ons 1,780,862 persons Annual water consump on, San Salvador 107,252,414 m3/yr Average family size 3.80 persons/family Monthly water fee/family 1.70 $/month Annual water fee/family 20.45 $/yr El Salvador: Country Forest Note | 83 ANNEX 10. THE WORLD BANK’S PROJECTS IN EL SALVADOR Table A10.1. Ac ve and pipeline World Bank projects in El Salvador Project Abstract Synergies with Country Forest Note El Salvador FCPF REDD The grant for this project is funded by the Forest Carbon • Forest governance Readiness.118 Partnership Facility (FCPF) of which the World Bank acts as a • Control of forest fires Ac ve. Closing FYI 2021 trustee. The grant amount for this project is $2.5 million. • Forest monitoring The Project Development Objec ve (PDO) is “to strengthen the enabling condi ons for the implementa on of the • Result based payments for Na onal Strategy for the Restora on of Ecosystems and carbon emission reduc on Landscapes (EN-REP), through the following ac vi es: from deforesta on and • Component 1 - Readiness Consulta on and Organiza on degrada on of forests (Forest governance). • Component 2 - Prepare the REDD-plus Strategy and Enabling environment to tackle wildfires. • Component 3 - Na onal Forest Reference Levels /Na onal Forest Emissions Levels. • Component 4 - Na onal Forest Monitoring System.” El Salvador Integrated The proposed Project Development Objec ve is to • Control of forest fires Landscape Management restore degraded land in El Imposible-Barra de San ago • Forest governance and Restora on. Conserva on Area. The financing amount for this project is Pipeline119 $4.0 million. This project aims at inves ng in the restora on • Riparian forests and of degraded land and improving biodiversity in sugar cane mangroves restora on dominated landscapes in two key Conserva on Areas of El Salvador. Technical assistance to small and medium cane producers to adopt best produc on prac ces and farm management plans that enhance ecosystem services of the surrounding wetlands and mangroves will be delivered. • Component 1 “Enabling condi ons for integrated landscape management” (local governance). • Component 2 “Ecosystem restora on to secure the flow of ecosystem services within the produc ve landscape.” ES Geothermal Energy The Development Objec ve is to increase electricity • Emission reduc on from for a Sustainable genera on from geothermal resources in El Salvador. The forest degrada on related Economic Recovery financing amount for this project is $235.0 million. to firewood consump on from the COVID-19 The following are the key results of the proposed project: • The use of residual heat crisis in El Salvador. • Confirma on of total availability of geothermal resource in could lower the cost Pipeline120 Chinameca and San Vicente geothermal fields. of drying the wood, • Installa on and commissioning of two small power plants improving its quality with an aggregate power of around 20 MW. • GHG emissions avoided (tons-equivalent of CO2), displacement of pollu ng thermal power genera on units. • Engineering design and planning for u lity scale power facili es. 118 h p://documents.worldbank.org/curated/en/424191588049324839/pdf/El-Salvador-FCPF-REDD-Readiness-Prepara on-Support-Project- Restructuring.pdf 119 h p://documents.worldbank.org/curated/en/425861576613694803/pdf/Concept-Environmental-and-Social-Review-Summary-ESRS-El- Salvador-Integrated-Landscape-Management-and-Restora on-P170854.pdf 120 http://documents.worldbank.org/curated/en/177861555693498605/pdf/Concept-Project-Information-Document-PID-ES-Increasing- power-genera on-from-geothermal-resources-in-El-Salvador-P170089.pdf 84 | El Salvador: Country Forest Note Project Abstract Synergies with Country Forest Note The project will include a component for incen vizing produc ve uses of residual heat from the geothermal fluid a er the power genera on process. LaGeo has used different pilots for developing technical solu ons in coopera on with local universi es for using the residual geothermal heat to accelerate the drying of coffee, fruit dehydra on, and milk pasteuriza on processes in support of local coopera ves, farmers, and small businesses. Building on the successful experience of different pilots developed by LaGeo and supported by the GIZ in Ahuachapan and Berlin geothermal plants, the Bank will assess opportuni es to replicate and scale up these pilots in the municipali es around the Chinameca and San Vicente geothermal fields. El Salvador Local The objec ve of the Local Economic Resilience Project • Promo ng green Economic Resilience for El Salvador is to improve ins tu onal performance of infrastructure to improve Project. municipali es and increase access for ci zens to services and resilience, including Ac ve. Expected resilient infrastructure. The financing amount for this project wood energy planta ons, closing date is $200.0 million. The project has 5 components. by offering credit or 31 December, 2024121 equipment for wood (1) Investments in services and in resilient municipal processing and wood infrastructure to support Local Economic Development. energy value chains The component will finance resilient municipal (Component 1) infrastructure including the prepara on of technical designs, as needed, in municipali es that meet certain • Includes the crea on of a minimum condi ons and incremental goals. virtual and collabora ve (2) Compe ve fund for high-impact investments on pla orm for the regional economic development. This component will commercializa on of support the government’s territorial development forest goods and services strategy by financing strategic investments for local as a mechanism for local economic development. economic development (Component 2) (3) The ins tu onal strengthening and capacity building component will finance ins tu onal strengthening • Includes nature-based ac vi es at two levels: solu ons in disaster risk management plans (i) support to municipal governments to help them (Component 3) achieve the minimum condi ons and goals, as well as technical support to government commonwealths; (ii) support to government agencies at the na onal level. (4) The con ngent emergency response component will provide immediate response to an eligible emergency, as needed, and is intended to strengthen the country’s fiscal resilience and immediate response capacity, safeguarding against higher levels of disaster vulnerability. 121 h p://documents.worldbank.org/curated/en/575231554150322237/pdf/El-Salvador-Local-Economic-Resilience-Project.pdf El Salvador: Country Forest Note | 85 Table A10. 2. World Bank closed projects in El Salvador Project Abstract Synergies with Country Forest Note EL SALVADOR: The $1.99 million grant will assist poor farmers  Lessons learned related to: Agricultural and Energy living in the dry eastern region adapt their farming – Agroforestry systems Risk Management: An prac ces to be er cope with drought, food insecurity, – Alterna ve energy Integral Strategy to Cope and high and vola le prices of agricultural and energy produc on with Drought and Food inputs (Selected communi es of the Departments Insecurity. of Morazán and La Union.). The farmers have Closed 25 June, 2014122 been affected by the global crisis, which severely contracted the economy, and which was only partly mi gated by a temporary safety net mostly for vulnerable urban poor. The grant will help the farmers increase their produc vity through the introduc on of innova ve agroforestry prac ces and irriga on and energy technologies, which will also increase their resilience to drought, food insecurity and input price vola li es. The grant will be implemented by groups of smallholders assisted by local community-based organiza ons and coopera ves. An es mated 2,000 small scale farmers of both genders will be assisted and lessons learned will be used to replicate and scale-up the approach to boost yield and develop a green revolu on in the eastern region of El Salvador. Disaster Risk The overall development objec ve of the proposed  Lessons learned related Management opera on is to enhance the Government of El to including nature-based Development Policy Loan Salvador's capacity to implement its Disaster Risk solu ons in disaster risk with a CAT DDO. Management Program for natural disasters, through management plans Closed 1 February, 2011 budget financing that will in turn support policy and ins tu onal reforms. The financing amount for this Project was $50.0 million. In recent years, the country has taken important steps toward implemen ng a sound disaster risk management framework, focusing on ac ons to mi gate natural disaster risks and lower the country's vulnerability in the context of the 'hyogo framework for ac on 2005-2015: building the resilience of na ons and communi es to disasters.' The program supports the Millennium Development Goals by addressing disaster risk issues that affect the most vulnerable segments of the popula on. El Salvador The global environment objec ve of the project was  Lessons learned related to Environmental Services to enhance and protect biodiversity by preserving market-based systems for Project. important forest and protected ecosystems. This contract environmental services Closed 15 July, 2012 would have been done by pilo ng a market-based system to contract environmental services. Such a system would have protected, and expanded forest cover and biodiversity-friendly land uses in biological corridors and the buffer zones of protected areas and reduced perverse land use incen ves that nega vely affect biodiversity and wildlife in general. The total project cost was $14.5 million. 122 h p://ieg.worldbank.org/sites/default/files/Data/reports/ppar_elsalvadorincome.pdf 86 | El Salvador: Country Forest Note ANNEX 11. ON GOING OR PLANNED PROJECTS IN EL SALVADOR Ac ve Forest Restora on Ini a ves Project Focus Amount Source of funds Implementer Loca on Status (million $) RECLIMA Agroforestry, forestry, and 35.8 Green Climate FAO/ MAG / 115 municipali es. Execu on organic agriculture Fund MARG Dry Corridor (Usulután, San Miguel, La Unión, and Ahuachapán Sur) KOICA Restora on of water recharge 5 KOICA KOICA, MAG 9 municipali es. Execu on zones in Morazán and Norte de San San Miguel watersheds: Miguel, sur reforesta on, agroforestry, soil Morazán conserva on; water capture and storage for irriga on and domes c use IFAD (Phases I Phase I: 1) Strengthening 70 IFAD MAG Phase 1: Usulután, Execu on and II) capaci es for sustainable San Miguel, produc on (5 value chains La Unión, and of which 3 are presently Morazán, 17 iden fied: fruits, dairy products, municipali es. and vegetables); 2) climate Phase 2: Northern change adapta on and climate Dry Corridor informa on dissemina on; 3) Public policy dialogue Green Restora on of ecosystems 1.5 European Union MARN Ahuachapán Sur In Development and landscapes; Watershed prepara on Fund, GIZ mgmt. and adapta on to (pre- (ini al fund) climate change; Agroecological approved) prac ces and agroforestry systems for resilient livelihoods; reduc on and mgmt. of risks of climate change related disasters Regional Collect, preserve, and 0.5 Enviromental MARN/MAG Na onal Nego a on Forestry Seed distribute good quality forestry Ministry, of contract Center germplasm for reforesta on Germany and restora on programs Landscape Forest landscape restora on 0.1 Enviromental MARN, local El Imposible-Barra In restora on, to improve ecosystem services Ministry, implementers de San ago/ prepara on GIZ within the na onal REDD+ Germany Apaneca- (pre- framework Ilamatepec approved GOES: Coffee Coffee renova on 5 MAG GOES Na onal Execu on renewal (15 million plants) BCIE/CAFÉ Coffee renova on, transfer 87 BCIE (loan) MAG Na onal Approved of sustainable technologies, increased capacity for resilience, improved ins tu onality related to coffee UNDP/ 1. Integrated forest landscape 5 Adapta on Fund MARN Ahuachapán Sur Being Adapta on restora on; 2. Promo on formulated Fund of sustainable produc on alterna ves; 3. Strengthening local capaci es and informa on for climate change adapta on El Salvador: Country Forest Note | 87 Project Focus Amount Source of funds Implementer Loca on Status (million $) UNDP/GEF Increase forest cover, promote 10 GEF MARN/MAG Ahuachapán Sur Being sustainable agriculture formulated alterna ves, and strengthen local capaci es to confront climate change FONAES Agroforestry and reforesta on, 0.26 Environmental Local Chalatenango, La Execu on green infrastructure for compensa ons implementers Libertad, La Paz, conserva on and Santa Ana FONAES Agroforestry and reforesta on, 0.58 Environmental Local ANP, Fuentes de Execu on green infrastructure for compensa ons implementers Agua: La Libertad, conserva on, restora on, and Ahuachapán, protec on of the PNAs Cabañas, Usulután, La Paz, La Libertad, Chalatenango, and Cuscatlán Coastal Promo on of biocommerce, 5 USAID IUCN Los Cóbanos, Barra Execu on biodiversity improved governance, de San ago, and (regional) landscape mgmt., Garita Palmera communica on, and social inclusion as strategies to increase local prosperity in coastal ecosystems on the Guatemala, Honduras, and El Salvador fron er La Reorient agricultural 1 French MARN, La 7 municipali es of Execu on Montañona: produc on towards sustainable Environment Montañona Chalatenango climate agroforestry and silvopastoral Fund commonwealth change systems to assure income, adapta on food security, water, and the based on restora on of biodiversity agroforestry, silvopastoral systems and forest protec on FIAES 1. Restora on of ecosystems 7.1 7 na onal Execu on (2016-2019) and landscapes conserva on areas incorpora ng climate change adapta on 2. Protec on, conserva on, improvement, restora on, and ra onal use of natural resources and the environment JICA Wetlands Par cipatory formula on 4.5 JICA MARN/NIPPON El Jocotal/ Olomega Execu on (2015-2020) and implementa on of wetland mgmt. plans: wetland restora on, environmental educa on, model farms, and good agricultural prac ces GEF Wetlands Promo on of conserva on and 1.5 GEF MARN La Unión, San Execu on sustainable use of biodiversity Miguel, and and maintenance of ecosystem Usulután wetlands services through crea on of new RAMSAR sites, as well as improved administra on of exis ng protected wetlands RAICES Water and soil mgmt., 40 H Buffet CRS/CARITAS Execu on agroforestry Founda on Total 279.84 88 | El Salvador: Country Forest Note