Lessons Learned > Component 2 >


Income Generation and Equity within Rural Communities

LIP is proving to be an effective mechanism for enabling communities to assess their physical, social and capital assets and to link them with enterprise initiatives, though the full impact of the process has yet to be determined. Complementing this has been a program to develop business planning acumen so as to enable communities to establish natural resource-based business enterprises, while at the same time ensuring poor and disadvantaged groups receive an equitable share of the benefits. LIPs have proved to be valuable in identifying activities to improve economic wellbeing. A recent workshop found that the LIP was a strong tool in the promotion of good governance and livelihood improvement amongst disadvantaged groups. However, it was also found that to be effective it has to be combined with technical support in enterprise development and natural resource management. In line with this, there is a need for operational plans to be linked to LIP outcomes. On the other hand, regulatory demands imposed by MFSC and DFOs on the revision of operational plans, plus overly regulated approvals on felling and marketing of logs, raise the risk of limiting the scope for timely income generation from community forests. The final stage activity is to institutionalise a simplified approach to communities revising their OP and incorporating a LIP that can be rolled out nationally.

The Project has demonstrated that poverty reduction is possible through empowerment activities as well as direct interventions with poor and disadvantaged people. It has also determined that good governance, including financial transparency, is essential for the success of any common pool Natural Resource Management (NRM) enterprises. The Project needs to consolidate these approaches to promoting good governance and institutionalising them in the final stage.

A study conducted by the Project showed that financial returns from the two sawmills established under the previous Project were far less than could be obtained by direct log sales, although there was a countervailing argument that there were additional economic gains from the sawmills through employment of disadvantaged groups within the communities. As a result of the findings it was proposed that no new investments in community sawmills be undertaken under NACRMLP. An important lesson from the Chaubas and Shree Chaap sawmill experience is that projects should be wary of investing in such enterprise activities without a solid assessment of economic and financial returns and a realistic assessment of the risks associated with the operation of such enterprises, including reliance on community ownership and management of a somewhat complex operation. A further lesson learnt has been that the lack of knowledge relating to the demands and operations of log or sawn timber markets, and effective market linkages, are significant constraints on the establishment of viable wood-based community enterprises.