Economic Contribution of Forestry Sector
Executive Summary
The human dependence on forests is as old as the beginning of times. Thus, the conservation of forests is important, both for the existence of human beings and the protection of renewable natural resources. The forest ecosystems play a significant but often unrecognized role at multiple scales of human organization. At the mirco-level, this extends from households to community. On the macro level, it encompasses overall human well-being inhabiting the Earth’s biosphere.
The current study aims to estimate the economic contribution of forestry sector in GDP. To accomplish the study, both the primary and secondary data is used to quantify the value of forestry products and services including carbon and non-carbon products. Both the timber and non-timber forest products have been quantified in this report.
Forests and plantations play an important role in supplying timber and fuelwood for meeting the demands of the ever-growing population of Pakistan. The total wood supply in the country is estimated at 52 million ㎥, out of which timber is 29% (15 million ㎥) and fuelwood is 71% (37 million ㎥). The government-managed forests provide 12% and private land supplies 88% of the total wood. Public forests provide 2% of timber and 16% of the fuelwood requirements in the country. On the other hand, plantations on private lands provide 98% of the timber demand and 84% of fuelwood demand.
The annual fuelwood supply from the public forests has been estimated at 5.94 million ㎥, out of which the shares of KP, Sindh, and Punjab are 35%, 34%, and 14% respectively. The average annual out-turn of timber from the government-managed forests has been estimated at 0.289 million ㎥ for the period 2017-2021. About 84% of the total out-turn of the timber is contributed by the forests of KP, AJK, and GB with respective shares of 43%, 28%, and 13%.
The total wood supply from private lands has been assessed as 45.34 million ㎥, out of which timber is 14.34 and fuelwood is 31 million ㎥. Farmlands provide 32.59 million ㎥ and wasteland supply 12.75 million ㎥. Wood production on farmlands has increased from 7.7 million ㎥ per year in 1992-93 to 32.6 million ㎥ in 2021. The highest wood production on farmlands is found in Punjab (55%), followed by KP (20%) and Sindh (15%). The remaining 10% of production has been recorded in Balochistan (6%), AJK (2%), and GB (2%).
Apart from this, the total wood demand in the country has been estimated at 69 million ㎥. Out of this, total timber demand is 19 million ㎥ and fuelwood demand is 50 million ㎥. About 65% of the timber is used by major wood-based industries and 35% is consumed by small wood-based industries. The household sector consumes 90%, the commercial sector uses 7%, and the industrial sector 3% of the total fuel- wood. Per capita consumption of timber is estimated at 0.084 ㎥ per year and fuelwood consumption is 0.240 ㎥. Currently, there is a gap of 17 million ㎥ which is met from import and un-recorded supply from urban settings, roadside plantation pro- xi jects, such as the Billion Tree Afforestation Project in KP and Ten Billion Trees Afforestation Project in the country, the gap is expected to narrow down in the future and the country is expected to become self-sufficient by 2035.
Regarding industrial utilization of wood, it is estimated that the timber consumption within the industry across Pakistan is 19.122 million ㎥ with per capita 0.084 ㎥, showing an increase of 56% over the last 20 years vis-à-vis a population increase of 47% during the same period. This can be further segregated into major and small wood-based industries, consuming 12.50 million ㎥ and 6.63 million ㎥ respectively. The production value shows that the overall monetary value of the major wood-based industry is around PKR 1,165 billion, excluding the industrial value of brick-kiln, tobacco curing, and charcoal kiln industry. If we add these industries the value is around PKR 1842 billion. Moreover, there are around 293,439 small wood-based industries within the country. The analysis reveals that overall the consumption of wood in these industries is around PKR 825 billion and the total value of products generated is around PKR 1,421 billion.
The study also estimated that 45% of households across the country still use firewood for cooking purposes. On an aggregate level, the household consumption of fuelwood is around 46 million cubic meters. Across provinces, the per capita rate is the highest in Gilgit Baltistan province. The estimates suggest that province-wise, Gilgit Baltistan, AJK, Khyber Pakhtunkhwa, and Balochistan are the major consumers of firewood for cooking purposes with a whopping 81%, 71.8%, 66.2%, and 53%, respectively. The estimates reveal that domestic fuelwood consumption in 2021 stood at PKR 871 billion. In addition, the commercial fuelwood (catering, hamam and tandoor) was around PKR 189.4 billion. It is worth mentioning that the estimates of fuelwood consumption has not covered the hotels and restaurants.
Pakistan is a net importer country of wood and its products. Over the last 15 years, the exports are almost stagnant, whereas imports has a rising trend. For the year 2020/21, the exports stood at USD 36 million, whereas imports were USD 161 million. The major imports are from USA and Germany. The estimates reveal that demand will remain high than the supply till 2030; however, the ongoing projects will help the country to meet the demand by 2035.
Non-Timber Forest Products (NTFPs) meet the traditional income, livelihoods, health, and nutritional needs of local communities as well as the raw material requirements of herbal, pharmaceutical, and cosmetic industries in the country. NTFP sector lacks any policy and proper registration. The average monetary value of herbal industry is estimated to be PKR 8.1 billion and the wholesale market value is estimated to be around 0.3 billion. The sector has a comprehensive supply-chain but it has been facing a number of constraints, especially lack of a clear government policy, research and development and proper marketing.
57% of the total land is used as grazing purpose where the rangelands have an important contribution in the livestock sector. The estimates reveal that overall, 88 million of the livestock is dependent on rangelands which provide an annual fodder value of PKR 1394.10 billion to the country. xii Various sorts of forest ecosystem services (i.e., provisioning services, regulating services, supporting services and cultural services) have a number of economic and non-economic benefits. The study found that forest-based tourism value is around PKR 62 billion per annum. The analysis on water and soil conservation reveals that forests have an important contribution in raising the life of 10 major reservoirs in the country by stopping soil erosion and sediment retentions.
Forests and forestry sectors are important for overall job creation, livelihoods improvement, achievement of SDGs, promotion of a green economy, low-carbon economic development, and contribution to GDP. The monetary value of carbon benefits, in this regard, are estimated to be around PKR 21 billion annually. Moreover, the direct employment in forestry related services is around 7% of the total employment. By adding the livestock, the number will go to around 10%. The current study found that around 600,000 workers are employed in the wood-based industries. Besides that, this study found out that most of the people living in rural areas depend on non-timber forest products to supplement their income.
Forestry sector’s direct contribution to GDP stands at a mere 0.4%. It is important to note, however, that GDP calculations to a large extent reflect only the direct production contribution of the sector (only from public sector) with no representation of the regulatory, supporting, and cultural services that these precious ecosystems render and the forward and backward linkages of forest with the other economic sectors. The estimates of current study show that that forest’s share in GDP is 11.48% while beholding its contribution in livestock, industry, fuelwood, tourism, carbon capture, etc. Still the numbers are under-reported as a number of forestry’s based services are not part of the study due to data and time limitation. The table on next page shows the overall contribution of forestry sector to the national GDP.
