Environmental News

Armenia’s Forests Are Vanishing; Greed and Corruption Aren’t Helping
By Armen Hakobyan

Armenian Reporter
July 7, 2007

Yerevan -- In 1993, Armenia’s forested territory amounted to around 300,000 hectares, and industrial roundwood resources were estimated at around 38 million cubic meters. By 2006, these figures had diminished drastically: forests occupy only 232,000 hectares of Armenia, and wood resources amount to 28 million cubic meters. These and other alarming findings have been assembled in a detailed study titled “The Economics of the Armenian Forest Industry,” released by the Economy and Values Research Center. The report was recently presented to public at the American University of Armenia (AUA). The study reflecting the badly degraded condition of Armenian forests was initiated and financed by the “EcoArmenia” consortium, whose members include the Armenian branch of the World Wildlife Fund, AUA’s Environmental Conservation and Research Center, Armenia Tree Project, and the Armenian Forests NGO. The OSCE office in Yerevan and the British Embassy in Armenia also took part in the initiative and its funding. With less than 10 percent of the country’s overall area covered by forests, Armenia today qualifies as a “low forest-covered country.” Manuk Hergnyan, head of the Economy and Values Center, said in his presentation that Armenia’s wood processing industry involves 362 small and medium companies, whose main activity is storing and processing industrial roundwood, and the trade and industrial use of wood products. (“Roundwood” refers to any length of cut tree having a round cross-section. “Roundwood products” include logs, bolts, or other round sections cut from trees for industrial or consumer use.) According to Hergnyan, the study found that illegal logging significantly distorts the official figures on wood consumption. “The mentioned enterprises are mainly using illegally logged roundwood,” he said. “The actual turnover in the field is 10 times greater than the official data suggest; the actual volume of exports exceeds the official data by a factor of three.” At that rate, the study calculates, Armenia’s wood processing sector takes in close to $132 million per year -- 13.5 times greater than the official statistics state.

70,000 hectares of forest lost in 18 years

To substantiate these figures, the study draws on a variety of independent sources and specialized publications, and applies established economic research methods to the array of information. An important source of information came from “Landsat” images – satellite pictures of Armenia’s forests – which could be compared over time, and which provide a way of evaluating official statistics. The picture that emerges is discouraging. In 1987-88 the Landsat images showed Armenia as having 9.8 percent of its overall territory forested (this would already be below the threshold for the “low forested” category). But by 2000 this indicator had fallen to 8.2 percent, and in 2006 it clocked in at 7.7 percent. In other words, within the last 18 years, Armenia – already forest-poor – has lost as much as 24 percent of its forested territory: nearly one-quarter. Differentials between the rates of deforestation and reforestation add to the urgency of the situation. The study notes the average rate of deforestation during the period 2000-2006 as 2,500 hectares per year, as compared to a reforestation rate of 1,200 hectares per year in 2000-2005 – itself a substantial diminution of the reforestation rate between 1970 and 1980, of 3,000 to 5,000 hectares per year. The study also notes some regions of particular damage, such as the area around Lake Sevan and the big cities. Deforestation also seems more localized to the north and northeast of the country. At the same time, illegal logging activity has dropped from an estimated 1.46 million cubic meters per year (in 1993-2000) to 627,000 cubic meters per year (2000-2006). It’s a positive sign that tree-cutting has been reduced; still, a serious effort to restore Armenia’s forests may require excluding logging altogether, and taking up a major reforestation program.

Barbecued forests and coffin wood

Armenia's forests were dealt a sever blow during the energy crisis of 1991-92; for the subsequent four to five years trees were viewed largely as a source of fuel for heat and were cut down in huge numbers, for the most part illegally. The end of the crisis and improvements in living standards have reduced – but not entirely halted – this factor in the logging problem. Almost nine percent of Armenia’s households still use wood as heating fuel, according to the study – usually due to the non-existence of gas supplies to a given region, or the relative expense of electricity. (The same source finds almost 36 percent of households relying on electricity for their heating, and 55 percent on gas, which is expanding year by year.) Today, fuel use accounts for some 270,000 cubic meters of wood per year – 84,000 cubic meters of which is consumed by the food services industry, where having firewood to barbecue kebabs apparently trumps the preservation of forests. But this is only small change. The main motivation for devouring forests is to obtain timber and raw-wood for woodworking – which includes uses in parquetry (40 percent), and the manufacture of doors (30 percent), furniture (20 percent), coffins and barrels (10 percent). Official statistics put the annual rate of trees cut for this purpose at 6.6 thousand cubic meters, yielding around $10 million in revenue. By contrast, the Economy and Values Center study places the woodworking figures at 339,000 cubic meters of logging, with revenue of $132 million per year. This tremendous discrepancy between the official figures and the study data sheds light on the “shadow economy” in woodworking that operates using illegally cut wood. The study emphasizes that “the gap between the legal and illegal prices on wood is the main reason for illegal logging, turning the financial instruments into an essential factor of unlawfulness.” Legal acquisition of one cubic meter of timber costs 70,500 drams. But the same purchase made through illegal channels, including the costs of bribing officials, costs only 7,000 drams. That difference of 63,500 drams -- around $200 -- is a serious stimulus for unlawful purchases. Interestingly, in the case of firewood the price differential is not great – 6,500 drams for a legal purchase versus 5,000 drams for illegal wood. This may in fact have a bearing on the decrease in the use of illegal wood as fuel – and may suggest that economic incentives can play a role in ameliorating Armenia’s illegal logging crisis.

Zealous exporters of wood

The arithmetic of forest-depletion would be incomplete without mentioning the problem of exports, which mainly involves the export of raw wood. The Economy and Values study assesses the actual volume of wood exported from Armenia as being almost three times greater than the official statistics. Again, the discrepancy between official and study figures is arresting. In the case of the study, the authors compared data from the National Statistical Service of Armenia with data from the United Nations statistical services. According to the NSSA, in 2005 Armenia’s wood exports amounted to $920,000; the UN statistics stipulate export in the amount of $2,686,000 – representing around 12,000 cubic meters of wood. Countries receiving Armenia’s exported wood include Iran, the Czech Republic, Russia, the U.S.A., Spain, France, Greece, and Malaysia. A country-by-country analysis of the wood export figures shows the same discrepancy between the Armenian and UN calculations, with the latter sometimes being more than 10 times greater than the former. Such huge discrepancies between the state and international data testify to the influence of official corruption in Armenia’s wood export field, the study says. But again, if profiteering is the main engine for such activities, then economic incentives and alternatives may provide a pathway out of the problem.

What can be done?

This is in fact the path proposed in the Economy and Values study. Among the proposed solutions offered in the study are suggestions to exempt industrial roundwood imports from the VAT tax, and to issue micro-credits that would encourage the installation of gas pipeline systems to Armenia’s rural households. The study also proposes promoting recycling and renewable energy production as additional alternatives to wood fuel. Hand-in-hand with these are proposals to facilitate tree farming, promote “green consumerism,” and enhance Armenia’s eco-tourism and forestry sectors. The study also advances several “industrial policy” reforms: establishing an integrated timber market and wood industry association; imposing an export ban on industrial roundwood; creating an independent monitoring and information system on forest resources; implementing forest certification procedures; exerting control over financial flows from the wood processing industry; and generally tightening regulatory enforcement. In addition, the study recommends reorganizing the governance of the Armenian State Forest Service to include key “stakeholders” in its decision-making. All this will require significant action on the part of official Armenia; but it’s still an open question whether even the present urgent situation is enough to inspire the political will to tackle the problem.

Not just a crisis of ecology

At a press-conference following the AUA presentation, the sponsor organizations affirmed their willingness to cooperate with the relevant Armenian authorities to begin the restoration of the country’s forests. Armenian Forests NGO president Jeffrey Tufenkian, speaking on behalf of the EcoArmenia consortium, said, “Our common objective is to protect Armenian forests. The main goal of EcoArmenia is helping Armenia to turn from de-forestation to re-forestation. We understood that in the so-called ‘shadow economy’ there is a lack of good information. This exceptional study spreads light on this branch of the shadow economy of Armenia. With this study, we want to involve the Armenian government, civil society, as well as international structures to jointly work and solve this problem. Therefore, this study is not an ultimate goal for us, but a starting point to help Armenia switch from deforestation to the restoration of forests.” The Deputy Ambassador of Great Britain in Armenia, Richard Hyde, spoke in a similar vein: “We have funded this wonderful research initiated by EcoArmenia because we believe that we have to support the Armenian people to address and solve this problem of deforestation. For us, this is only a beginning of the process. We hope that in the nearest future we will see a much more large-scale campaign, initiative, and action to make sure that the future of Armenia is secured from the ecological point of view.” Of particular note was the British diplomat’s point that the approaches displayed by official Armenia on ecological problems would become one of the components of the Armenian-British relationship – and even of Armenia’s relationship with the West as a whole. That point underlines the extent to which deforestation is not simply a problem to be dealt with by Armenia’s Ministry of Ecology, but rather a crisis that impinges on many facets of Armenia’s present and future development.

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