Devastated Domestic Forests: December 2001

Devastated Domestic Forests: December 2001

Domestic Forests in Ruins

Japan's forests cover approximately 25 million hectares, or 67% of the country's land area. Japan is a resource-rich country in terms of forest resources, boasting the third highest ratio of forests to total land area among industrialized countries, after Finland (76%) and Sweden (68%).

However, Japan's domestic forestry industry has been on the verge of a crisis for several decades. The reasons for this include the government's policy of afforestation, dependence on foreign timber imports, the collapse of mountain villages, and a reduction in the number of employees working on national forestry projects.

During the rapid economic growth that began in the 1960s, the government adopted a policy of afforestation to meet the rapidly increasing demand for timber by cutting down old-growth and natural forests and replanting them with fast-growing species (cedar, cypress, etc.) to convert them into planted forests. However, this resulted in the destruction of natural forests, and the forests with a wide variety of vegetation were suddenly converted to a single forest type of cedar and cypress. In the 1960s, however, nearly 80% of the forests were cleared by the clear-cutting method, and 22 to 26 million cubic meters of timber were logged per year, more than the actual growth rate, leading to the current depletion of the national forest resources.

In the 1960s, the price of lumber skyrocketed because forestry production could not keep up with the rapidly increasing demand for lumber, and imports of foreign lumber, which is generally inexpensive and can be supplied in large quantities at a uniform price, began in earnest. This has led to a slump in domestic lumber prices and instability. In 1973, the supply of lumber consisted of 22.89 million cubic meters of imported products, 52.49 million cubic meters of imported logs, and 42.21 million cubic meters of domestic lumber; in 1989, the supply was 4.807 million cubic meters and 35.19 million cubic meters, respectively, In 1999, the self-sufficiency rates were 60.26 million cubic meters, 18.78 million cubic meters, and 18.78 million cubic meters, respectively, a sharp decline. In addition, foreign timber has a large share of the lumber and plywood market, and domestic timber is used mostly for low-quality products such as bulbs and wood chips.

In parallel with the decline of the forestry industry, the rural labor force was absorbed by urban industrial workers, and the population of rural areas declined sharply. Since 1978, the government has also been promoting the securing of income, thorough downsizing of organizational structures, and reduction of personnel in accordance with the "Law on Special Measures for the Improvement of National Forestry Businesses" and the "Plan for the Improvement of National Forestry Businesses. The number of employees in the national forestry business was reduced from 89,000 at its peak in 1964 to 10,000 by the end of FY2000, and the number of forest offices was also reduced from 2,333 in 1978 to 1,256 in 1997. The number of forest offices also decreased from 351 in 1978 to 264 in 1997 as a result of consolidation and elimination. The number of forestry workers has decreased from 260,000 in 1965 to 140,000 in 1985 and 70,000 in 1999, and depopulation has continued. In addition, the number of forestry workers is aging.

Against this backdrop, the national forestry business, which accounts for about 30% of the total forest area in Japan, has been operating at a stand-alone profit since the introduction of the special corporate accounting system in the postwar period, but it has been constantly in the red since FY1975. In FY1996, the balance of the national forestry account totaled 301.9 billion yen in interest and redemption of long-term debt, compared to 88.6 billion yen in forest product income, the main source of income for the business. In addition, 314.5 billion yen was newly borrowed. Although this seems small compared to the 28 trillion yen deficit of the former Japanese National Railways (JNR), the accounting of the national forestry business has completely collapsed.

Meanwhile, forestry management in privately-owned forests is becoming increasingly difficult. Although there are forestry families, companies, and forestry cooperatives that are actively developing creative forestry operations that make the most of forest resources, 94% of all forest owners in Japan own less than 20 hectares of land, and small forest owners in particular are losing their motivation to manage forestry. The aging of the forestry workforce is also a problem, with 29% of the workforce aged 65 or older. The forestry cooperatives' forestation area accounts for about 90% of the total area of privately owned forests, and the volume of timber handled by them accounts for 30% of the total production of materials from privately owned forests.

Forests that have been converted to planted forests through the policy of afforestation expansion require appropriate forest management. However, due to the stagnation of the forestry industry and the depopulation of mountain villages in recent years, the clearing, thinning, and other operations necessary to nurture forests are not being carried out adequately. As a result, the vitality of forest growth is weakened, resulting in a vicious circle of forests that cannot be used for timber in the future and forests that have no prospects for growth due to lack of thinning and other care, which further accelerates the decline of the forestry industry. At the same time, the public interest functions of forests, such as water retention (soil conservation), have been weakened, and forests are being devastated in ways that are different from overcutting and overexploitation.

Policy Shift

The situation is slowly changing, and there is a clear trend toward forest conservation and the restoration of domestic forestry, including its role as a CO2 sink.

The first is a policy shift. Three forestry bills, including the Forest and Forestry Basic Law Amendment Bill, the Forest Law Amendment Bill, and the Provisional Measures Law on Funds for Strengthening Forestry Management Infrastructure, were passed and enacted by the House of Councillors on June 29, 2001. In December 2000, the Forestry Agency announced its Forestry Policy Reform Program, which aims to restructure forestry policy from a focus on lumber production to a policy that aims for the sustainable fulfillment of forests' diverse functions, including land conservation, water resource management, and environmental preservation. The revision of the Basic Law on Forest and Forestry is in line with this trend of forestry policy reform.

In a nutshell, the revisions are intended to shift the emphasis from forests as places for timber production to forests as "green dams," which are characterized by the three categories of forests, including "water and soil conservation forests," which will be introduced in April 2002. The basic principles of the new law include: systematic promotion of afforestation, nursery and logging according to regional characteristics; efficient and stable forestry management and human resource development for this purpose; promotion of the use of forest products; and international cooperation to ensure appropriate imports, taking into consideration the multifunctional nature of forests in importing countries (e.g., adjusting tariff rates and limiting imports in times of emergency). The Basic Law sets forth the following basic principles, and measures will be developed in line with these basic principles. While there are some issues to be addressed in terms of specific measures, such as the consolidation of management, the establishment of a forestry structure that includes the enhancement of the forestry cooperative's functions as the local forest management entity, the development of human resources, and the securing of forestry labor force, there is also a need to create a complex business entity that will be responsible for the production and processing of special forest products and other industries such as agriculture, along with forest development, the creation of an advanced mountain village model utilizing woody biomass resources, and the development of information and communication systems. The report also proposes the creation of an advanced mountain village model, the development of a system to promote forest and mountain village experience-based tourism by providing information, and the promotion of a "whole village museum," which would be a museum of the nature, lifestyle, and culture unique to mountain villages. In any case, the fact that the multifaceted function of forests has been positioned as a major turning point in the country's development.

Expanding Forest Certification

Meanwhile, forest certification systems for sustainable forest management, such as FSC forest certification and ISO 14061 (Forest Management System), are beginning to spread internationally. In Japan, these certifications are also being acquired one after another.

The Forest Stewardship Council (461 organizations from 55 countries as of January 2001) is a non-profit organization established in 1993 by representatives of environmental groups, forestry companies, timber trading companies, indigenous people's groups, regional forestry associations, and forest product certification organizations. It conducts activities to evaluate and certify forests and forest products. It aims to promote economically sustainable forest management while taking environmental conservation into consideration. The FSC logo mark is attached to certified wood. FSC logo mark can be attached to certified wood. In Europe and the United States, "Buyers Groups," groups of companies that give priority to purchasing FSC-certified products, have also been established. Currently, such groups have been established in the United States, the United Kingdom, Australia, Austria, the Netherlands, Switzerland, Sweden, Spain, Germany, Belgium, and other countries. For example, the "WWF 1995 Plus Group" of the Buyers Group in the U.K. has 90 participating companies and handles approximately 15% of the total amount of wood consumed in the U.K. Certification is a high added value for forestry businesses, material manufacturers, and product manufacturers. Companies participating in the Buyers Group and suppliers of certified wood and wood products are receiving support from environmental groups and others, as well as seizing new business opportunities that avoid environmental risks.

In Japan, Hayami Forestry in Mie Prefecture, Yusuhara Forest Cooperative in Yusuhara Town, Takaoka County, Asahi Forest, which is managed by Shobara Forestry Office, Kusaki and Oyasan Experiment Forests in Gunma Prefecture, which are owned by Tokyo University of Agriculture and Technology, and the "Asahi Forest" owned by Asahi Breweries, Ltd. and Oyasan Experiment Forest in Gunma Prefecture, Karasawayama Experiment Forest in Tochigi Prefecture, and Saitama Experiment Forest in Saitama Prefecture, all of which are owned by Tokyo University of Agriculture and Technology, have acquired forest management certifications. In addition, Mie Prefecture, which is an environmentally advanced prefecture, began an FSC certification support project in FY2001, and plans to acquire certification at two locations within the Miyagawa River basin by the end of FY2001, with the goal of acquiring certification for the entire prefectural basin in the future.

Hayami Forestry, which became the first certified company in Japan, said, "We received a string of inquiries from major housing manufacturers, 2x4 manufacturers, and designers after reading a newspaper article about the certification. We have also received inquiries from overseas." The response in the market has been positive. In Japan, WWF Japan is also promoting the creation of a domestic buyers' group, and with an eye on the international market, it appears that certification will become a necessity in the future.

Forest certification systems include PEFC (Programme for the Endorsement of Forest Certification in Europe), AP&PA (American Forest Products and Paper Association), and ISO 14061, which was issued in March 1998. The standard is designed to incorporate environmental impact reduction into forest management as a system, and companies in several countries, including Canada, Sweden, and the U.K., have acquired certification.

Deforestation Regulations and Green GDP

There is a current international call for restrictions on deforestation. In fact, many countries, such as China, Brazil, Malaysia, Indonesia, and Canada, are restricting logging or limiting exports in order to protect forests or prevent flood damage caused by over-forestation.

The concept of "Green GDP" is gradually gaining ground as a way of thinking to support these trends. Green GDP is an environmental accounting method developed by the World Resources Institute (WRI) that assesses the economic value of damage caused by environmental pollution and reduction of natural resources such as forests, and subtracts this value from the current GDP. For example, in the case of Indonesia, the average annual GDP growth rate of 7.1% between 1971 and 1984 is said to be only 4.0% per year when adjusted using this method.

In light of this, imports of lumber from abroad are expected to become even more difficult in the future. How to increase the use of domestic timber, in other words, how to revitalize the forestry industry, ensure thorough forest management, and preserve forests, will undoubtedly be a major theme of national policy in the future.

As the old saying in the stock market goes, "Ride the national policy," new business needs are often created as a result of national policies. In forest conservation-related businesses, new businesses are expected to grow in addition to existing forestry businesses, forestry enterprises, and forestry service businesses that provide services such as forestry cultivation and contracting from forestry cooperatives, which have been increasing in recent years as forestry production activities are increasingly outsourced due to the aging of forestry workers.

For example, forest management support using remote sensing and GIS (Geographic Information System), and the creation of forest GIS maps are likely to become more common in the future. A forest GIS system that allows computers to record forest plans and other drawings and correlate them with information on attributes such as area, tree species, and age of the forest will be indispensable for the proper evaluation of forests, prevention of decline in forest functions due to lack of care, and formulation of forest plans, all of which are required in the future. Several local governments, including Niigata and Mie prefectures, have already introduced this system, and the future challenge will be to combine this system with remote sensing using earth observation satellites. The system is also expected to be used in the field of remote sensing, which is currently being explored for commercialization.

In the area of forest certification systems, the audit and certification business can be mentioned, including SCS (U.S.), a certification organization accredited by FSC, and Soil Association Woodmark (U.K.), the Japanese secretariat for FSC certification, and Amita Corporation (Japan), an environmental venture engaged in waste coordination and other business activities. Amita Corporation (Chiyoda-ku, Tokyo), an environmental venture engaged in waste coordination and other activities, serves as the Japanese secretariat for the Soil Association Woodmark (UK). The company coordinates a Japanese audit team, provides support for on-site work for certification, and conducts audits of product certification by in-house audit members. The company also handled Hayami Forestry, Japan's first certified company.

In the certification business, the company has also launched a third-party forest CO2 absorption certification service in anticipation of global warming gas emissions trading. SGS and Kokusai Kogyo, which offer a variety of inspection, auditing, and certification services, have commercialized a "forest sink certification program" in advance of the Kyoto Protocol coming into effect. This service quantitatively calculates the amount of CO2 absorbed by forests owned by companies and other entities or obtained through afforestation, and certifies it from a third-party standpoint. The service is characterized by its focus on the sustainability of forests in the true sense of the word, incorporating biodiversity and environmental conservation perspectives as well as quantifying the forest's function as a sink. The company is aiming for sales of 2 to 3 billion yen in 5 years, taking advantage of SGS's expertise as an ISO and FSC forest certification organization and Kokusai Kogyo's surveying and measuring technologies.

The construction industry is likely to be a key factor in future forest conservation-related projects. One of the reasons for this is that the use of thinned wood, which is one of the keys to forest conservation = forestry reconstruction, is mostly used for public facilities and civil engineering projects, such as particle boards, wood cement boards, thermal insulation formwork, and decorative formwork. In addition, as a use of wood waste, which is obligated to be recycled under the Construction Materials Recycling Law, forestry cooperatives and local governments are now actively discussing the commercialization of biomass power generation using wood chips from thinned forests to revitalize the forestry industry and promote regional development. The two companies are also expected to launch a joint project.

In September 2001, the "Project Team for Smooth Labor Mobility in Connection with Structural Reform of the Construction Industry" (Ministry of Health, Labor and Welfare, Ministry of Economy, Trade and Industry, and Ministry of Land, Infrastructure, Transport and Tourism), which is discussing measures for the construction industry, where an increase in job turnover is expected due to the final disposal of bad debts and reduction of public works expenditures, issued a "Proposal for Measures for Smooth Labor Mobility in Connection with Structural Reform of the Construction Industry. The project team (Ministry of Health, Labour and Welfare, Ministry of Economy, Trade and Industry, and Ministry of Land, Infrastructure, Transport and Tourism) compiled a "Proposal on Measures for Smooth Labor Mobility in the Construction Industry under Structural Reform" in September 2001. The proposal included measures such as tax incentives and low-interest loans from government-affiliated financial institutions to support new businesses such as industrial waste recycling by construction companies, as well as the use of construction workers in forest conservation and management (e.g., thinning). The "Special Grants for Emergency Regional Employment," under which prefectures outsource projects to private companies, NPOs, and other organizations, will also include construction and civil engineering projects, which were not previously covered by the grants, to shift the labor force of local civil engineering workers to forest maintenance. The Ministry of Economy, Trade, and Industry (METI) will work out the details with the Forestry Agency, but if realized, it is likely to have no small impact on the forestry industry.

Thus, the devastation of Japan's forests and the decline of the forestry industry are serious problems, but there are signs of gradual improvement thanks to policy changes and the introduction of an international forest certification system. It is hoped that efforts to rebuild sustainable forest management and forestry will continue to make progress.