Paraguay

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Paraguay

Gregory E. Frey and Victor C. Vidal



Geography and Economy


Paraguay, a landlocked country in the Southern Cone region of South America, has a past and present tied directly to its forests as a natural resource. The forestry sector in Paraguay is currently in a state of flux as traditional sources of timber near depletion and multiple stakeholders in the public and private sector attempt to move the industry towards sustainable management of native and plantation forests.


Paraguay is located near the center of South America, bordered by Bolivia, Brazil and Argentina, with an area of 406,752 km2 (40.67 million ha). Paraguay is located completely within the River Plate basin, with two regions differentiated by physiographic and climatic characteristics (Figure 1 - see attachment below). The region to the east of the Paraguay River, known as the Eastern Region, contains only 159,827 km2 (15.98 million ha), but over 95% of Paraguay’s population (Gonzalez 2004). The Western Region, also known as the Chaco, has 246,925 km2 (24.69 million ha).


The Western Region falls within the Paraguay River basin, and is characterized by flat to mildly undulated terrain, while the Eastern Region is partially within both the Paraguay and Paraná River basins. The soils of the Paraná basin are the most fertile for agriculture, and rainfall is more plentiful; the soils of the Paraguay basin are more suited to livestock-raising and it has less rainfall. However, both regions have good sites for forestry when the species are appropriately matched to the local climate.


Paraguay’s population is approximately 6.7 million, with a growth rate that is the highest in South America at 2.4% annually (FAO 2005; Macedo and Cartes 2006). Expansion of the agricultural frontier as well as increased domestic and export demand for forest products has put pressure on Paraguay’s Eastern Region forests in recent decades (Macedo and Cartes 2006). Currently, there may be less than 10% of the historical forest cover remaining in the Eastern Region (Macedo and Cartes 2006). Paraguay had the second highest rate of deforestation in South America from 1990 to 2005, at 0.9% annually (FAO 2005).


Paraguay is classified as a developing country with a quite low average annual per capita income of US$ 2,116 in 2007. There is a high incidence of poverty in Paraguay, particularly rural poverty. The country’s economic system is fundamentally based on the utilization of its natural resources, among which are its forest resources.


As forests are cleared, much of the wood is used for timber or charcoal, both domestically and as exports. As of 2005, Paraguay was the third-largest producer of wood products in South America based on both dollar value and volume, mostly from native forests in the Eastern Region (FAO 2005). However, this is based on a high harvest and clearing rate of natural forests, which is not sustainable. Paraguay produces very few value-added forest products for export, although their quantity is currently increasing.


Because of a lack of past investment, Paraguay has far too little plantation forest to satisfy domestic or export demand for timber and fuelwood, so degradation of native forests is likely to continue in the near future. However, support is growing in the public and private sectors for forest investments. Most plantations are likely to be exotic Eucalyptus spp., Pinus spp., or Melia azedarach,as few native species have been studied for plantation at a relevant scale.


In the Western Region, where forests are more pristine, high-quality, large-diameter logs are still available. However, large-scale degradation from logging and land-use change to cattle-ranching and agriculture could occur very rapidly in the current social and political climate.


History


After the Triple Alliance War (1865-70), and later the Chaco War (1932-35), Paraguay had many decades of economic stagnation. Beginning in 1954, Paraguay underwent a long period of dictatorship under President General Alfredo Stroessner until 1989. Although Stroessner was elected president on eight successive occasions, a true democratic process was not established until after his presidency. In 2008, after more than six decades of single party rule, Fernando Lugo, a former Roman Catholic priest representing a coalition of opposition parties, was elected as President, signaling major reform in the country’s politics.


Only in the 1970s, with the initiation of large infrastructure projects, such as the Itaipú and Yacyretá hydroelectric dams, did the country begin to have strong economic growth. This was followed by slower growth in the 1980s and a moderate economic recuperation from the 1990s to the present.


Throughout, Paraguay’s primary resource sectors of agriculture, grazing, forests, and hydropower have been the main economic drivers. This tendency has been reduced in recent decades with the moderate growth of other economic sectors.


International trade can be a dynamic force for Paraguay’s economy, and it is in this sense that the creation of the regional trading bloc MERCOSUR in 1991 (Argentina, Brazil, Paraguay and Uruguay) has created new opportunities as well as new risks for Paraguay in its economic development.


Ecological Regions


Because of a strong precipitation gradient and differences in soils, Paraguay contains large portions of three distinct ecological regions (figure 1): the Upper Paraná Atlantic Forest (UPAF), the Humid Chaco and the Dry Chaco. In addition, Paraguay has smaller portions of two important ecological regions: the Cerrado and the Pantanal (Dinerstein et al. 1995). Three of these five ecoregions are priority regions for worldwide conservation (Olson & Dinerstein 2000).


Upper Paraná Atlantic Forest


The Upper Paraná Atlantic Forest (UPAF) is a tropical moist broadleaf forest (Dinerstein et al. 1995). Annual precipitation can reach 1800 mm in the southeastern regions. The UPAF is an ecological region of very high biodiversity, and is highly threatened (Olson & Dinerstein 2000). Physiographically, the UPAF is located mostly within the Paraná River basin (figure 1).


During recent decades, most of Paraguay’s UPAF has been deforested for conversion to agriculture or degraded by unsustainable logging practices (Huang et al. 2007).


There are several commercially important species, including Tabebuia spp. (lapacho), Cedrela spp. (cedro), Balfourodendron riedeliamum (guatambú), Astronium fraxinifolium (urunde’y), and many others (Cartes 2006). These species are quite valuable on the local and international markets for fine furniture, flooring, rafters, etc.


Forest growth rates in the UPAF are slow. Trees in the native forest probably can grow about 5 m3/ha/yr, with intense silvicultural treatments (Weichselberger 2003). However, of this total growth, only about 3 m3/ha/yr would be of commercially valuable species.


Humid Chaco


The Humid Chaco ecoregion is a mosaic of wetlands, savanna with scattered palms and open and closed woodlands. Precipitation ranges from 1300 mm annually in the east to 750 mm in the west. Important tree species are Schinopsis balansae (quebracho colorado), Apidosperma quebracho-blanco (quebracho blanco), Tabebuia spp. (lapacho and paratodo), Caesalpinia paraguariensis (guayacán), and Astronium fraxinifolium (urunde’y) (Dellafiore 2001). In the lower areas, it is common to find open woodlands of pure stands of Copernicia alba palms (karanda'y).


Dry Chaco


In Paraguay, the principal productive use of the Dry Chaco is cattle-grazing, but there are still large tracts of forest remaining. The Dry Chaco consists of mixed savanna, shrubland and thorn forest. Principal woody species include Aspidosperma quebracho-blanco (quebracho blanco), Prosopis spp. (algarrobo), and Bulnesia sarmientoi (palo santo) (Brooks 2001). All of these species have hard wood, with relative density greater than 0.75 g/cm3 (Lopez et al. 1987).


The Dry Chaco provides habitat for a number of large game species, including peccaries, armadillos and rheas.


Protected Areas


Currently, the National Wild Protected Areas System (SINASIP) includes over 2.6 million hectares (6.4% of total land area) under both private and public management (table 1) (Guyra 2007; FMB 2007). In addition, Paraguay has two UNESCO Biosphere Reserves: the Gran Chaco, along the border with Bolivia, and the Bosque Mbaracayú, the region surrounding a privately managed reserve in the UPAF (UNESCO 2007).


While larger areas of Paraguay’s Pantanal, Cerrado and Dry Chaco are protected, only about 3% to 4% of Paraguay’s UPAF and Humid Chaco are protected. Unfortunately many of these areas are protected only on paper, as funding is minimal (Catterson & Fragano 2004).


Table 1. National Wild Protected Areas System (SINASIP) (Guyra, FMB)

Image:Paraguay-01.gif


*Reserves under the “Special” domain include those managed by the public-private bi-national hydroelectric dams Itaipú and Yacyretá.
    • Mbaracayú Biological Reserve is located partially within Brazil.

(Guyra 2007; FMB 2007; Itaipú 2007)



Forest Plantations


To date, Paraguay has not had a large investment in forest plantations. Only about 50,000 hectares of plantation forests currently exist in Paraguay. Primary plantation species in Paraguay are Eucalyptus grandis and E. camaldulensis, with smaller areas of Pinus taeda, P. elliotti and Melia azedarach.


Despite little forestry research and development, Paraguay demonstrates potential for high returns on forestry investments. In the Paraná River basin, unimproved Pinus spp. can achieve 25-35 m3/ha/yr, while E. grandis can reach 30-45 m3/ha/yr on good sites. This land is in competition for agricultural production and conservation of native forest. Growth rates are significantly lower in Paraguay River basin (15-20 m3/ha/yr for E. camaldulensis, 20-30 m3/ha/yr for E. grandis). However, lower land values and wage rates would mostly compensate the lower growth rates. There is even potential in the Dry Chaco for a few drought-tolerant species.


Because of the relatively high growth rates and cheap labor, Paraguay can offer forestry investment returns in excess of 20% annually (without land costs) for certain species and sites, e.g. E. grandis and Melia azedarach on good sites in the Paraná River basin (Frey 2007; JICA 2002).


Forest Sector Development


Paraguayan political economy is based on agricultural production to a greater extent than forestry, and the political priorities are oriented towards the agricultural and livestock sectors. Because economic growth is realized in large part by expanding the agricultural frontier, the destruction of native forests has been a constant feature, about 100,000-200,000 ha lost annually over the last decade (Vidal 1995; FAO 2005). Still, the forest sector employs, directly and indirectly, more than 200,000 people in the country, and is an important component of the GDP and public revenues.


Unfortunately, activity in the forest sector in the past has often amounted to little more than high-grading. There has traditionally been little concern for maintaining a resource base or for the well-being of local communities and indigenous peoples.


The industrial index of conversion from roundwood to manufactured wood products is only 40% to 60%, indicating a low technological level in wood industries, except for a few large companies. New investment will be needed to maintain competitiveness (Vidal 2004; Bobadilla 1999).


The continuing deforestation, the over-utilization of the remaining native forests, the inefficient forest management and the poor growth of forest plantation programs, will negatively affect the productive capacity of the forestry sector over the medium to long term (Vidal 2007).


National Forest Policy


The first national forest policy, implemented by Law 422/73 in 1973, created mechanisms for the regulation of forest resources under the National Forestry Service (SFN), but lacked an adequate legal framework to lead the country towards sustainable forest development. Law 536/95 was created to resolve or mitigate these problems by providing subsidies for forest producers, but has been left unfunded. The failure of these policies to establish a sustainable forest industry could lead to lack of wood supply over the medium term.


The national forestry administration currently lacks a strategy to finance sustainable forest management; therefore, there is an urgent need to identify and analyze financial mechanisms which could be used to promote the sustainable utilization of the country’s forests in order to remove barriers to investment in forest management.


The forest sector needs to have adequate financial mechanisms to influence the flow of private costs and benefits and stimulate sustainable forest management. These mechanisms should be economic instruments that take account of political and social aspects, not solely financial aspects. Deforestation and degradation of forests is induced by a growing pressure on the resources, and by subsidies for alternative land uses such as agriculture, which make sustainable forest management unattractive (Vidal 2006).


Future of Forestry


Special mechanisms to finance political and investment reform are urgently needed in order to guarantee the conservation and sustainable use of the existing forests and to promote more active participation by local communities and the private sector in long-term forest land-use planning (Vidal 2006). One important advance has been the creation of the National Forestry Roundtable, including representatives from the public and private sectors, as a cooperative forestry endeavor. Another important place for the analysis and promotion of competitiveness in the forestry sector is the Forest Product Sector Roundtable within the Investment and Export Network (REDIEX).


The National Forestry Roundtable has created participatory forestry initiatives and support mechanisms, allowing them to achieve concrete results and a close inter-institutional and inter-sector coordination, based on objectives which are compatible with each other and within a global framework. This dynamic process constitutes an important effort to move the necessary reforms forward and to strengthen institutions for the implementation of new forest policies (Vidal 2007).


Under the framework of this cooperation, a consensus document was created, entitled “Política Forestal Nacional” (National Forestry Policy), and was presented to the national government for its adoption as a national policy. At the same time proposals for forest regulations were produced for the creation of a new, autonomous State Forestry Administration, a fund for forest development for forestry investments, a new forestry law, and the updating of forest plantation incentives (MFN 2007).


The strengthening of the forestry institutions, the adjustment of the legal forestry framework, and the more active integration of the forest sector in the national planning system and in the formulation of economic development policies will permit Paraguay to mitigate the negative impacts of the macroeconomic and sector policies in sustainable forest management and energize the actions which drive an effective development.


References


Bobadilla, R. 1999. Diagnóstico del Sector Forestal Paraguayo. ENAPRENA / GTZ, Asunción, Paraguay.


Brooks, D. 2001. Arid Chaco (NT0701). World Wildlife Fund, Washington, DC. http://www.worldwildlife.org/wildworld/profiles/terrestrial/nt/nt0701_full.html.


Cartes, J.L. 2006. Breve historia de la conservación en el Bosque Atlántico. In: J. L. Cartes, editor. El Bosque Atlántico en Paraguay, Biodiversidad, Amenazas y Perspectivas. Center for Applied Biodiversity Science, Conservation International; Guyra Paraguay, Asunción, Paraguay. 37-60.


Catterson, T.M. and F.V. Fragano. 2004. Tropical Forestry and Biodiversity Conservation in Paraguay: Final Report of a Section 118/119 Assessment EPIQ II Task Order No.1. USAID, Asunción, Paraguay.


Dellafiore, C. 2001. Humid Chaco (NT0708). World Wildlife Fund, Washington, DC. http://www.worldwildlife.org/wildworld/profiles/terrestrial/nt/nt0708_full.html.


Dinerstein, E., D.M. Olson, D.J. Graham, A.L. Webster, S.A. Primm, M.P. Bookbinder, and G. Ledec. 1995. A conservation assessment of the terrestrial ecoregions of Latin America and the Caribbean. World Bank, Washington, DC.


FAO. 2005. Global Forest Resources Assessment 2005.


FMB. 2007. Mapa interactivo y cuadro de ubicación de las Reservas Privadas reconocidas legalmente. Fundación Moisés Bertoni, Asunción, Paraguay. http://www.mbertoni.org.py/donde_trabajamos/mapa.php.


Frey, G. E. 2007. Timber investment returns in Paraguay. Unpublished report. World Bank, Washington, DC.


Gonzáles, R. 2004. Informe nacional, Paraguay: Documento de trabajo. In: Estudio de tendencias y perspectivas del sector forestal en América Latina. FAO, Rome. www.fao.org/docrep/007/j3292s/j3292s00.HTM.


Guyra. 2007. Algunas áreas de conservación. Guyra Paraguay, Asunción, Paraguay. http://www.guyra.org.py/areas_conservacion.php.


Huang, C. Q., S. Kim, A. Altstatt, J. R. G. Townshend, P. Davis, K. Song, C. J. Tucker, O. Rodas, A. Yanosky, R. Clay, and J. Musinsky. 2007. Rapid loss of Paraguay’s Atlantic forest and the status of protected areas - A LANDSAT assessment. Remote Sensing of Environment 106 (4): 460-466.


JICA. 2002. The study on reforestation plan in the Eastern Region, the Republic of Paraguay. Japan International Cooperation Agency, Servicio Forestal Nacional, Japan Forest Technology Association, Pasco International Inc., Asunción, Paraguay.


Lopez, J.A., E. Little, G. Ritz, J. Rombold, W. Hahn. 1987. Arboles Comunes del Paraguay: Ñande yvyra máta kuéra. Peace Corps, Asunción, Paraguay. 425 pp.


Macedo, A. M., and J. L. Cartes. 2006. Aspectos socioeconómicos del BAAPA. In: J. L. Cartes, editor. El Bosque Atlántico en Paraguay, Biodiversidad, Amenazas y Perspectivas. Center for Applied Biodiversity Science, Conservation International; Guyra Paraguay, Asunción, Paraguay. 107-130.


MFN. 2007. Política Forestal Nacional. National policy proposal. Mesa Forestal Nacional, Asunción, Paraguay.


Olson, D.M., and E. Dinerstein. 2002. The global 200: Priority ecoregions for global conservation. Annals of the Missouri Botanical Garden 89(2):199-224.


UNESCO. 2007. Complete list of Biosphere Reserves. United Nations Educational, Scientific and Cultural Organization, Paris. http://www.unesco.org/mab/BRs/BRlist.shtml.


Vidal, V.C. 1995. Ecología y sustentabilidad económica: El impacto de las políticas económicas en el uso de los recursos naturales. Centro de Análisis y Difusión de Economía. Revista Mes Económico 2 (5), Oct. 1995, Asunción, Paraguay.


Vidal, V.C. 1999. Análisis de políticas forestales. Proyecto FAO GCP / RLA / 127 / NET. Oficina Regional de la FAO para América Latina y el Caribe. Santiago de Chile


Vidal, V.C. 2004. Estudio sobre mecanismos financieros para el manejo forestal sustentable en Sudamérica – Fase I Cono Sur – Paraguay. Forestry Policy and Institutions Service – FAO, Rome.


Vidal, V.C. 2007. Diagnóstico y base de la estrategia nacional de financiamiento forestal. Proyecto Internacional de Cooperación Técnica. Estrategias y Mecanismos Financieros para la Conservación y el Uso Sostenible de los Bosques. FAO – HOLANDA/GTZ GCP/INT/953/NET.


Weichselberger, E.N. 2003. Evaluación de la influencia de cuatro tratamientos silviculturales en el crecimiento de un bosque nativo degradado. Thesis. Universidad Nacional de Asunción, Facultad de Ciencias Agrarias, Carrera Ingeniería Forestal, Asunción, Paraguay.


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Greg Frey is a PhD candidate at North Carolina State University, Raleigh NC. Victor Vidal is a Forest Consultant; Professor of Forest Resource Economics and Forest Policy and Administration (Universidad Nacional de Asunción); and International Society of Tropical Foresters Regional Director for Latin America (Term 2002/05).


Posted 19 May 2008


Supporting Documents

a.) Table 1 - Media:Paraguay-01.xls
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