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Nicaragua Precious Woods
Biodiversity
The plantations will be established on lands that were previously being used for cattle ranching. The predominant species will be teak. However, the result will differ considerably from conventional tree monocultures. A number of native forest species, ornamental and fruit-bearing, will be planted and will add to the zones with existing secondary forests and major single trees, which will be left standing and able to regenerate. Some tree species listed in the IUCN list of threatened species grow in the existing forest remnants and will be protected, and new trees from these species will be established in a mosaic pattern embedding secondary forest, native single trees, teak and groups of newly planted native trees.
Globally, native species will represent 40% of the trees, and in a mosaic pattern embedding secondary forest, native single trees, teak and groups of newly planted native trees.
The project will create a rich mosaic of flora giving structure to a formerly impoverished landscape. This will gradually lead to an increase in biodiversity with the return of native species of plants and animals. Recovery of the species composition and forest structure is expected within a few decades.
There is not enough evidence yet on growth, quality and market perspectives of native wood species to base a sustainable business model entirely on them. Teak has proven to be not invasive and to have no significant negative ecological impacts on other ecosystems over the last decades in Central America. The project intends to improve knowledge on reforestation of native tree species and will therefore be accompanied with a continuous research program on the suitability of different native species for commercial reforestations.
Seedlings will be produced in own greenhouses and nurseries from seeds and vegetative reproduction, and harvest will be carried out with low-impact logging techniques and the help of appropriate materials and equipment.
Importantly, it is planned to obtain certification in accordance with the criteria laid out by the Forestry Stewardship Council principles of improved forest management (FSC). The standard also ensures the maintenance of biodiversity. Additionally, continuous education and training at all levels on the principles of sustainable forestry will be carried out throughout the project life time.
Other Environmental Benefits and Risks
The main other environmental benefits will arise from the restoration of ecological forest functions such as prevention of erosion, groundwater protection, soil regeneration, improvement of the microclimate, and water balance. Erosion is often attributed to teak because the large leaves collect water and let it fall to the ground as if they were natural eaves. This problem, however, occurs only when the trees grow so densely that no underbrush or vegetation can develop. For the project, teak will not be planted in monoculture and regular thinnings and trimmings will ensure that the ground vegetation is dense and diverse. On a broader level, the project will increase the long term availability of plantation-based timber and will help reduce pressure on native forests in Nicaragua from deforestation and illegal logging.
The project will only use organic compost (produced on site from a mix of rice husk, bagasse, chicken manure charcoal and other natural components) as fertilizer and will limit the use of pesticides to the application of Glyphosate (allowed under FSC) around the seedlings to suppress weed competition.
The network of access roads will be expanded moderately during the project establishment. However, they will be unpaved and be constructed with locally sourced building material. The only medium of transport into many areas of the Fincas is horses.
The monitoring of the environmental risks will be conducted systematically as part of the monitoring and controlling procedure of the FSC. The project is the first of its kind and could potentially have a larger impact through its example and replications by other parties potentially interested in starting privately financed reforestation activities.
Socio-economic benefits and risks
The main socio-economic benefit from the project consists in providing employment opportunities. The rural region is marked by widespread unemployment and the previous land use, extensive cattle ranching, provided very few jobs. Opportunities will include permanent and seasonal jobs for activities such as planting, weeding, pruning and thinning and harvesting. The plantation establishment of 400 ha will recruit about 80 persons. Although the phases following the plantation establishment are less labor intensive, the number of jobs would be sustained on the long term through the progressive expansion of the plantation up to 4,000 ha. The project will employ both men and women, wages paid will be slightly higher than the regional average, and the rights of workers will be respected in accordance with the criteria laid out by the FSC. Precious Woods will give priority to workers living in the neighboring communities.
In addition, local wood processing is likely to be added to the plantations and provide further employment opportunities with the first quality timber becoming available. Finally, Precious Woods allows local farmers to grow beans, rice corn or tequisque between the plantation rows without payment of fees.
This new source of income will allow local communities to improve their housings, water and sanitation facilities, and access to medical treatment. This effect is also expected to impact at the municipality level through the development of the currently weak secondary and tertiary sectors, and the reduction of the emigration to urban centers and to Costa Rica.
In addition to income, the project will provide training to the forestry personnel regularly on all levels. Training will cover topics relevant to specific jobs, such as equipment maintenance, safety and waste disposal but also communication, drug and alcohol abuse, first aid and many more topics. Higher career positions will be available for the best performing staff members. They will continuously be trained in high level topics, such as forest planning, use of information technology, accounting, etc. The current head of the plantation, born in Cárdenas, where the project is located, is an example of such a career path.
The monitoring and management of the community benefits will be conducted in accordance with the monitoring and controlling guidance of the FSC and described in a specific management plan as is the case for all projects undertaken world-wide by Precious Woods. Finally, even though being a commercial enterprise, the project has been presented to local and national authorities and other stakeholders on different occasions and has received a positive and supportive response.
Leakage
Precious Woods bought the two ranches where the project takes place. It is unlikely that the former, rather wealthy, owners will move to the forested parts of the country and cut trees to establish a new cattle ranch. They intended to use the profit to pay debts and to invest in a tourism project (yacht harbor). The new reforestation activity will employ much more people than the former ranches that employed less than 15 people total, and some former employees have actually joined the project staff. No former employee therefore will move away and deforest other areas to make a living on agriculture because they lost their jobs.
Risk of Non Permanence
The project has no determined end of life. The reforestations are designed to remain in place after conclusion of the first harvesting cycle. The harvesting cycle is between 18 and 30 years according to site quality and species and the trees will be replanted immediately or regrow from coppice shoots after felling.
Forest fire represents a substantial risk during the dry season, increased by the local use of fire as a land clearing tool. However, fire is a real threat only for young plantations, and teak is not damaged by fire once the tree reaches a height of 4-6 meters. In addition, measures will be taken to prevent forest fire, including removal of weeds and ground level vegetation before the dry season, surveillance, fire-breaks and water reservoirs to fight fire.
Teak is also adapted to a pronounced dry season and grows well in regions where the dry season is much longer than in the project area. The topography of the two ranches is undulating, and therefore not exposed to the danger of floods from rivers. The project region belongs to a zone affected by hurricanes. Although a future Hurricane could incur damage, it is improbable that the plantation would be destroyed completely because of the diverse topographic structure. There is finally no knowledge of any devastating pests touching teak, neither in Central America nor in the countries where teak originates from (mostly south and East Asia).
Additionality
When monetizing the carbon assets, the rate of return achieved on 4,000 ha of plantation is sufficient to justify entering into the country risk involved. The minimum return required to Precious Woods' shareholders is at least 14%. The large plantation area reduces in particular the set-up cost per ha. Raising new capital for reforestation activities in developing countries clearly is only possible if shareholders are offered the long-term expectation of monetizing associated carbon assets.
The current plantation rate in Nicaragua of approx. 3500-4000 ha/year is very low compared to the total surface of 2.5M ha considered suitable for reforestation by the forest authorities. Most of the reforestations were done with the assistance of international organizations, with a very modest rate of success due to inadequate maintenance or management. Privately financed reforestations have been carried out in Nicaragua very occasionally. Despite improving regulatory and institutional perspectives there is little indication that interest in investing in reforestation for commercial purposes in Nicaragua will increase significantly, especially due to the large amount of capital and the know-how required as well as uncertainties about marketing the wood produced.
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