Forest legislation, institutional development and forest policy study of the Republic of Srpska - Executive summary, 2001

Technical Assistance to the Implementation of the Bosnia and

Herzegovina Forestry Programme -

Support to Forest Policy Reforms

FOREST LEGISLATION, INSTITUTIONAL

DEVELOPMENT AND FOREST POLICY STUDY

OF THE REPUBLIC OF SRPSKA

EXECUTIVE SUMMARY

by

Franc FERLIN

International Forest Legislation and Policy Expert

Banja Luka & Ljubljana, February 2001

CONTENTS

1. STUDY BACKGROUND
2. OBJECTIVES AND APPROACH OF THE STUDY
3. KEY DEFINITIONS
4. HISTORY AND DEVELOPMENT OF FOREST LEGISLATION AND
POLICY
5. SITUATION OF FORESTS AND FORESTRY
6. SITUATION OF FORESTRY INSTITUTIONS
7. INTERNATIONAL LEGAL AND POLICY DOCUMENTS ON
SUSTAINABLE
FOREST MANAGEMENT AND BIODIVERSITY PRESENTED AND USED
8. FORESTRY ORGANISATION MODELS OF EUROPEAN COUNTRIES
PRESENTED
9. ASSESSMENT OF SUSTAINABILITY OF FORESTRY AND FOREST
MANAGEMENT
9.1 L EGAL / R EGULATORY F RAMEWORK (F OREST L AW )
9.2 I NSTITUTIONAL F RAMEWORK (F ORESTRY O RGANISATION )
9.3 E CONOMIC F RAMEWORK
9.4 I NFORMATIONAL F RAMEWORK
9.5 F OREST M ANAGEMENT S USTAINABILITY
10. ASSESSMENT OF PRIVATISATION STRATEGY AND ITS
SUSTAINABILITY
11. PROPOSALS AND RECOMMENDATIONS FOR CHANGE AND
HARMONISATION OF FOREST LEGISLATION
12. RECOMMENDATIONS FOR NATIONAL FOREST POLICY AND
PROGRAMME
13. PROPOSALS OF FUTURE FORESTRY ORGANISATION AND ITS
DEVELOPMENT - WITH CORRESPONDING LEGAL SOLUTIONS
13.1 I NTERNATIONAL P ROPOSALS

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13.2 L OCAL P ROPOSAL
13.3 G AP A NALYSIS OF THE L OCAL P ROPOSAL
14. PROPOSED FURTHER STEPS
15. SUMMARY
16. ACKNOWLEDGEMENTS
17. LIST OF ANNEXES

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1. STUDY BACKGROUND

In Bosnia and Herzegovina the National Forestry Programme (NFP) was designed by the
World Bank in 1998 with the main objective to support the sustainable management of
forests and the revival of the forestry and wood processing sectors in order to ensure the
long term economic and ecological sustainability, meet urgent needs for reconstruction
material and increase employment in rural areas.

The NFP has three main components: (1) Support to forest management, (2) Protection and
rehabilitation of forests and (3) Rehabilitation of State Forest Enterprises operational
capacity. These components are further divided by various sub-components.

The PHARE project "Technical Assistance to the Implementation of the Bosnia and
Herzegovina Forestry Programme" (BH/FOR/01/98) covers majority of these sub-
components, among others also the Support to Forest Policy Reforms, which is the subject
of this study.

2. OBJECTIVES AND APPROACH OF THE STUDY

In conformity with the basic ToR of "Technical Assistance to the Bosnia and Herzegovina
Forestry Programme (TA)" project, "The World Bank Memorandum" (from August, 1999 and
May, 2000), and the needs and requirements of the Ministry for Agriculture, Forestry and
Water Management (MAFWM) and Public Forestry Enterprise (PFE) "Srpske šume", the
general working objectives of the Support to the Republic of Srpska Forest Policy Reform,
covered by the International and Local Forest Legislation and Policy (FLP) Expert, were
following:

1. Detailed analyses and assessments of sustainability of forestry, especially institutional
frameworks (organisation and functioning) of forestry, and sustainability of forest
management;
2. Presentation of topical international forestry commitments / initiatives and international
forestry organisation-privatisation models to local foresters (based on reviews of
international documents and organisation of study tours);
3. Detailed forest legislation analysis with proposals and recommendations for change /
supplementation, taking into consideration the legislation related to forest and forestry
and international forestry commitments (harmonisation);

4

4. Preparation of proposals and recommendations for incorporation of basic international
forestry commitments / initiatives and other guidelines from the field of sustainable forest
management in national forest(ry) policy.
5. Professional support to the process of privatisation in the Public Forestry Enterprise with
the assessment of its privatisation strategy;
6. Preparation of a proposal of possible State forestry reorganisation model(s) and its
institutional development.

Because of the complexity of the study, a holistic approach was applied, based on deep
analyses of forest situation, forest management, forestry organisation and functioning, forest
legislation etc., using actual international forestry guidelines, criteria and indicators and
positive experiences of other countries - adapted to the special circumstances in Republic of
Srpska. Philosophy of the main study proposals and recommendations, especially
institutional, was based on step-by-step approach.

3. KEY DEFINITIONS

Within this Study the following national terminology 1 has been used (based on Republic of
Srpska forest legislation):

Enterprise for Forest Management (EFM or Gazdinstvo) is a relatively independent
organisational unit of the Public Forestry Enterprise (PFE); before the integration into PFE
this enterprises were independent State Forest Enterprises (SFEs).

Forest cadastre represents a database for state forests (forest areas, growing stocks,
increment, allowable cut etc. by forest categories) which has been renewed every year.

Forest management (gazdovanje šumama) includes particularly: silviculture (simple
and expanded forest reproduction), forest protection against all kinds of damages, utilisation
of forests and forest lands and other forest potentials (production and transport of forest
assortments), production and collection of other forest products, tourist and recreational
services, breeding, protection and hunting of game, building and maintenance of forest
communications, and improvement of all (economic and multiple-benefit) forest functions.

Forest Management Region (FMR or šumskoprivredno područje) represents the
area of forests and forest lands, which is formed according to the natural, site, geographic,
economic and other conditions that provide multiple-benefit forest functions, uniformity and

1 In the local version of the Report some other (international ) definitions are presented.

5

complexity of the region, progressive and dynamic sustainability of forest yield and revenues
and forest production, forest reproduction, and optimal openness of forests. FMR consists of
several smaller Forest Management Units (FMU or gospodarska jedinica) , which
are further divided to Compartments (odjel) and Sub-compartments (odsjek) as the
smallest units of forests.

Forest reproduction:
 Expanded forest reproduction comprises following measures / activities in forests:
reconstruction of degraded and coppice forests, afforestation of bare areas and Karst,
biological control of soil erosion, repair planting, tending of forests and plantations in
young and mid-age phases, forest protection measures, reclamation of degraded high
forests, production of seeds and planting material, building of forest roads, etc..
 Single forest reproduction comprises following measures / activities in forest: soil
preparation for natural regeneration, tending and cleaning of stands, repair planting and
afforestation, forest protection measures, production of seeds and planting material,
building of forest roads, etc..

Multiple-benefit forest functions are particularly: protective, hydrological, climatic,
hygienic-health, tourist-recreational, economic, educational, scientific-research and defence
functions.

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4. HISTORY AND DEVELOPMENT OF FOREST LEGISLATION 2 AND
POLICY

Bosnia and Herzegovina have a very long tradition of forest legislation. The first institutional-
legal foundation was the Forest Law in 1286, by which forests were divided into municipal-
town ("BALTALIK") and the so-called free ("DŽIBOLI MUBAH") forests. In the first half of the
19 century, by Omer-Pasha's decree (1851), all forests were declared as State forests.
Ramadan Law in 1858 recognised the right to private ownership of forests. By Omer -
Pasha's or Sheval Law on Forests in 1869, the forests of the Turkish Empire were classified
into four categories: State, Church, Municipality and private.

Between 1878 and 1929, the Forest Law (1852) of the Austro-Hungarian Monarchy was in
force. According to that Law, forests and forest lands were designated the goods of general
interest (State welfare), administered by the State. In this period, the cadastral surveying,
forest maps and land registry were established. A strong system of State authority was
developed. In this period, the provisions of the following Laws were also in force: the Forest
Law of the Kingdom of Serbia (from 1891 to 1904), the Forest Law of Vojvodina (from 1879
and 1898), Amendments to the Forest Law of the Kingdom of Croatia and Slavonia (from
1894 and 1901), Law on the Protection of Forest Ownership in Bosnia and Herzegovina
(1913), Amendments to the Forest Law of the Kingdom of Yugoslavia (passed in 1927). In
1929, a unique Forest Law of the Kingdom of Yugoslavia was enacted, by which all forests
and other wooded land were divided into State forests and non-State forests.

In 1947, the General Forest Law of the FNRY was passed and in 1948 the Forest Law of the
NR BiH. After this Law, all forests were protected by the State. National Parks and Protection
Forests were designated based on this Law. Forest management was supervised by
Republic, district and town organs of State authority.

The Forest Law of the NR BiH in 1956 prescribed that forests and forest land in social
ownership were administered by forest enterprises, scientific and other organisations. The
Fund for the Development of Forestry (FDF) was formed. The Law on Wood Saving of the
PR BiH (1957) prescribed the measures for rational utilisation of wood raw material. By the
Law on Amendments to the Forest Law of the PR BiH (1960) forest enterprises were
transformed from the status of institutions into economic organisations. The elaboration of

2 Based on the article: ČOMIĆ, R. 2000: Overview of Forestry and Hunting Legislation History of Bosnia and
Herzegovina. Forestry Faculty Banja Luka, 8 p. (in local language, prepared for publishing).

7

Forest Management Plans (FMPs) was compulsory, Forest Management Regions (FMRs)
were established for the forests and forest land in public ownership.

The General Forest Law of the FNRY was enacted in 1961. This Law defined the
strategic measures of forestry and wood industry development in Bosnia and
Herzegovina. Based on this Law, the Forest Law of the NR BiH was passed in 1961. The
emphasis was on the formation of FMRs as naturally and economically rounded-up entities.
Private forest owners were obliged to pay a part of the means for the elaboration of FMPs
and for investments in silvicultural works and forest protection.

Forest Law of the NR BiH in 1965 introduced Municipality, district and Republic Forest
Inspection, for the supervision of forest management in State and private (citizen)
ownership. The Social Plan of Forestry and Wood Processing Development of the SR BiH
(1965) prescribed and implemented the measures for the enhancement of the condition and
structure of the forest fund, as well as the reconstruction and modernisation of the capacity
for wood processing. Forest Law of SR BiH (1968) prescribed the method and conditions of
management in protection and special-purpose forests, elaboration of Forest Management
Plans, etc.

The Forest Law of the SR BiH in 1971 laid down the commitment to operational projects
designed by professionals. The Law defines the organisation for forest management - so
called forest economic enterprise for State forests and Municipality for forests in private
ownership. For the management of forests and forest lands in Karst region a special Forest
Management Region was formed, financed by the funds of the community and other
subjects, which have a direct or indirect benefit from this region. The Law on the Designation
of Karst Regions in SR BiH (1974) also defined the participation in the financing of
operations in Karst area. This was the base for the Social Agreement on the establishment of
the area, extent and dynamics of operations and afforestation of Karst area (1975).

The Forest Law of SR BiH in 1978 prescribed that forest protection and silviculture, as well
the enhancement of forest multiple-benefit functions, were the functions of special public
interest. The forests of one Forest Management Region was administered and managed by
one Basic Organisation of Forestry (BOF). The allocation of the funds for forest
reproduction is compulsory. The base for the allocation of these resources was 10% of
wood assortment selling price and 5% in the Karst region. These resources were kept at
the special account of forest enterprises. Forest owners are obliged to pay the funds for
forest reproduction to special accounts of the municipalities. From the above funds it was

8

th2
necessary to afforest at least 14 m of treeless wooded land - for each cubic metre of the
gross felled wood volume.

In the period between 1978 and 1987, the following significant regulations were passed in
the field of forestry: Amendments to the Forest Law of SR BiH (1981), Resolution on the
adoption of the Programme of afforestation of degraded and coppice forests and bare land in
BiH for the period 1986 - 2000 (1986) and Public Agreement for the implementation of the
Programme of afforestation of degraded and coppice forests and bare land in BiH for the
period 1986 - 2000 (1987). This programme contains, inter alia, the following basic principles
or objectives of forest policy in BiH: (1) tending, protection, conservation and utilisation of the
forest fund, wildlife and other forest products and forest lands, (2) higher rate of utilisation of
natural forest resources by the faster reconstruction (of degraded) high and low forests and
afforestation, (3) extension of forestry activities by organised and planned utilisation of
secondary forest products and by adequate evaluation of forest functions, (4) significantly
higher rate of forest openness by the construction of forest roads, (5) enhancement of the
elements and processes of forest production and (6) creation of favourable working
conditions in forest production.

The establishment of forestry of the Republic of Srpska within Dayton borders is based on
the Amendments to the Forest Law, adopted by the RS Parliament in 1992. Based on this
Law, the Public Forestry Enterprise "Srpske šume" was established (in 1993). In 1994 a new
Forest Law of the Republic of Srpska was enacted.

5. SITUATION OF FORESTS AND FORESTRY (ANNEX 1)

Overall area of State forests and other wooded land is 972,640 ha, of which 57% are high
forests and 26% are low forests. Private forests occupy about 256,000 ha, of which only
20% are high forests. The total area of forests and other wooded land in the Republic of
Srpska is 1.228.650 ha, of which 49% are high forests, 33% low forests and 18% other
wooded and bare land (including Karst).

3 3
Total growing stock in State forests is 164 million m (166 m /ha), of which high forests
3 3 3 3
account for 144 million m (256 m /ha), and low forests 20 million m (78 m /ha). The
proportion of coniferous : broad-leaves is 34 % : 66 %. The growing stock in private forests
3 3
amounts to 35 million m . Annual volume increment in State forests is 4.96 million m of
3 3
which in high forests 4.30 million m and in low forests 0.66 million m , while in private forests
3
it is 0.60 million m .

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According to valid and expired Forest Management Plans (FMPs), allowable cut in State
3 3
forests of the Republic of Srpska was 3.956.820 m of which 1.377.040 m conifers and
3 3 3
2.579.780 m broad-leaves (in high forests 3.546.420 m and in low forests 410.400 m ). In
3
1998 the planned felling volume was 2.392.131 m of wood volume (net volume 1.662.292
3 3
m ) and it was realised 79%. The planned annual cut for 1999 was 2.463.983 m , and it was
90 %. In 2000 it is planned at similar extent.

The allowable has been realised with 72% when compared with its amount from the valid
and expired FMPs (from the beginning of the planing periods till 1999), but only at 57,5 % of
forest areas (see also Annex 6). The structure of felling in state forests (situation in 1999) is
characterised by very high (68%) percentage of logs (85% conifers and 53% broadleaves),
minor percentage of technical wood (6%) and pulpwood (3 %) and relatively high amount of
fuelwood (23 %).

Openness of high forests is about 8.5 m roads per hectare and 5.6 m per hectare in coppice
forests, which is far below the optimal openness.

State forests (99 %) are administered and managed by the Public Forestry Enterprise
"Srpske šume" (PFE). It employs more than 6200 workers (data from 1999). Total annual
income from (State) forest management in PFE in 1999 were 123 million KM. There are large
debts by wood industry (more than 18% of the expected total forestry revenues). Annual
extent of all forest investments is less than 7 % of the PFE total income. The share of private
sector in the performance of forest operations in PFE is above 50 % in fellings, about 70 % in
skidding and about 90 % in the transport of forest assortments. In 2000, the programme of
full privatisation of forestry operations/services was adopted. 37 newly Basic State
Enterprises for performing forest operations were formed (after separation from PFE), with
the value of the capital about 16 million DM and with about 2600 employees (see also
Annex 2).

The prices and sale of forest assortments are regulated by the State (see also Annex 8).
Log prices are far below central European prices, especially for broadleaves. The demand
for logs is extremely high (see also Annex 6 and sub-study of SCHARPENBERG 3). The
export of logs was prohibited in 1998 (in the entire BiH), and in 2000 it was liberated again,
with the introduction of a special export tax.

3 Wood Pricing and Marketing Study (draft), PHARE TA, München 2000.

10

In the Republic of Srpska today there are more than 700 primary wood-processing
enterprises. Most of them are illegal (total number of registered wood industry enterprises is
270). The total processing capacity of these enterprises is high above the present and also
the potential capacity of forest production (of high quality assortments). Pulpwood factories in
the Republic of Srpska do not work and there is no reliable market for pulpwood and less
valuable wood (smaller quantities are exported to Serbia and Slovenia).
6. SITUATION OF FORESTRY INSTITUTIONS (ANNEX 2)

The supreme forestry authority is the Ministry of Agriculture, Forestry and Water
Management (MAFWM) of the Republic of Srpska with its Department for Forestry. The
Department is headed by the Assistant-Minister. The Department systematises the positions
of Councillors to the Minister for four Sectors: forest management planning and utilisation,
silviculture and forest protection, National Parks, and hunting. MAFWM also includes the
Republic Inspection for forestry and wildlife management as the supreme supervision organ
for (all) forests. Along with the Republic Inspection, there is also Municipality and town
forestry inspection, as the first-degree organs of supervision.

The Public Forestry Enterprise "Srpske forests" (PFE) was established in 1993 for the
administration and management of State forests and the performance of professional
operations in private forests. The PFE integrated the former State Forest Enterprises (SFE),
as the independent forest enterprises or as parts of the previous State enterprises for wood
industry. By Forest Law (1994), they were separated and all SFEs were integrated in the
PFE. Internal organisation of the PFE (before status changes) are based on relatively
independent organisational units as legal persons: Research-Development and Project
Centre (RDPC), Enterprises for Forest Management (EFM or Gazdinstvos) (42) and
Production, Trade and Services Enterprises (PTSE) (5). The central administration of PFE is
performed by General Directorate (Banja Luka) and its one Department (Sololac). In the
PFE, all forestry functions/activities are integrated (situation before privatisation). The
Enterprise performs professional forest service for State and private forests (based on
contracts with the latter), certain State-administrative functions, ownership-administration
functions (in the name of the State as the owner of State forests), and production-commercial
functions in the fields of forestry, hunting and in other fields. Productional activities (except of
seed-nursery production and hunting) are planned for privatisation (by the privatisation
programme in 2000).

11

Along with the PFE, there are other two public enterprises (National Park Sutjeska and
National Park Kozara) and the Army of the Republic of Srpska, which manage State forests
(only 1 % of forest of special purpose).

University education of forestry engineers and research is carried out by the newly-
established Faculty of Forestry Banja Luka (1994). Forestry technicians and forest workers
are educated at Secondary Forestry Schools (Banja Luka and Srbinje). Other State forestry
institutions do not exist.

Along with State institutions, there is a non-governmental organisation of forestry:
Association of Forestry Engineers and Technicians of the Republic of Srpska.

7. INTERNATIONAL LEGAL AND POLICY DOCUMENTS ON SUSTAINABLE
FOREST MANAGEMENT AND BIODIVERSITY PRESENTED AND USED
(ANNEX 3)

In the FPR study framework following international legal and policy documents on the
protection, sustainable forest management and conservation of biodiversity of forest
ecosystems are presented and used: Geneva Convention on Long-Range Transboundary Air
Pollution (1979), Rio Agenda 21- The UN Programme of Action for Sustainable Development
(1992), Rio Principles on the management, conservation and sustainable development of all
types of forests (1992), Rio Convention on Biological Diversity (1992), Resolutions on
protection and conservation of forests in Europe (1990, 1993, 1998), Pan-European Strategy
on the Conservation and Enhancement of Biological and Landscape Diversity (1996) with its
Work-Programme for Forest Ecosystems (1997-2000), EU Strategy on Biological Diversity
(1998) and EU Forestry Strategy (1998) with the forestry action programme and
corresponding regulations.

Bosnia and Herzegovina has not signed these international documents yet because of
objective reasons (with the exception of Geneva Convention, which was undersigned by the
former Yugoslavia).

8. FORESTRY ORGANISATION MODELS OF EUROPEAN COUNTRIES
PRESENTED (ANNEX 4)

12

For the needs of the study a greater number of European countries forestry organisational
models (seven PHARE and five European Union Member States) has been reviewed and
presented. Selected European forestry organisation models have been summarised into
following general models:
(a) Model with integrated supervision, ownership-management and support functions
(Germany, France, Poland, Czech Republic),
(b) Model with integrated supervision and support functions and separate ownership-
management function (Austria, Sweden, Finland, Slovakia, Latvia, Hungary),
(c) Model with integrated ownership-management and support functions and separate
supervision function (Lithuania),
(d) Model with all organisational functions separated (Slovenia).

Cognition of organisational models of these countries has been one of the important
grounding for local foresters and institutions (besides the study tours to the selected
European countries in transition, their own experiences in the development of the existing
organisation, as well as the experiences of foreign experts) in searching for the most
appropriate future forestry organisation model.

The actual situation of forestry organisation in the Republic of Srpska generally corresponds
to the model "C", with a strong ownership-management function, small forest inspection and
relatively weak support to private forests.

9. ASSESSMENT OF SUSTAINABILITY OF FORESTRY AND FOREST
MANAGEMENT (ANNEX 6)

The assessment of the Republic of Srpska forestry and forest management sustainability is
based on a deep analysis of the existing legal, institutional, economic and informational
frameworks, cognition of the situation of forest, forest management and forestry, working
meetings with the policy working group and discussions with numerous other local experts.
Assessment was made with a help of the international (European) forestry criteria and
indicators, supplemented by (possible) national indicators.

9.1 L EGAL / R EGULATORY F RAMEWORK (F OREST L AW )

In the Republic of Srpska exists a firm forestry legal and regulatory framework (Forest Law,

1994 with amendments to the Forest Law till 1999 and regulations), which in principle

13

ensures the sustainability of forest management (continuity of yields and revenues), forest
protection and enhancement of multiple-use functions (see also Annex 8).

The Forest Law contains various provisions which enable sustainable forest management,
such as: obligation for performance of forest management inventories, elaboration of forest
management planes (FMPs) and operational projects for all forests; a new amendment for
establishing of bigger forest management regions (FMRs) - as a naturally and economically
rounded-up forest areas - for State forests; united State forest administration and
management (predominantly by one public enterprise); regulation of operational forest
management and utilisation in all forests (by an important obligation for professional marking
of trees in all forests and strict control of the movement of felled trees from State forests);
obligation of financing of forest simple reproduction (by allocating or paying of 10 % value of
sold wood assortments); obligation for payment of an extra-budgetary tax (0,1 % of the total
turn over from all economy subjects in the country) for enhancement of multiple-use forest
functions; regulation of protection forests, special-purpose forests and general forest
protection (e.g. prohibition of forest clearing and devastation, prohibition of felling of rare and
valuable tree species) and regulation of the use of other forest products; regulation of
revitalisation and management of Karst forests and forest lands; obligation for keeping forest
database (cadastre) for State forests; provisions for forestry inspection with a wide
competence, which is organisationally separated from the forest management; transitional
provision for separation of forestry from the wood industry enterprises, etc.

The Law enables also privatisation of forest operations and services by auctioning the
operations to private forest entrepreneurs. Long-term arrangements (contracts up to 10
years), which are very important precondition for qualitative and sustainable performing of
forest operations, are anticipated.

The Law contains also various provisions which disable or make sustainable forest
management difficult, such as: the definitions of simple as well as expanded forest
reproduction are to wide (collected / allocated means could be used also for other purposes);
the 10 % rate for simple forest reproduction is to low; an important legal barrier regarding the
cross-financing of simple reproduction of forests exists (solidarity between the richer and
poorer FMRs is disabled); forest service functions (with some administrative functions) are
integrated with, and subordinated by the production (commercial) functions within the PFE;
PFE (or municipalities for private forests) is responsible for the adoption of FMPs instead of
the Ministry; prices of wood assortments are regulated (by the Government) and are the
minimum and maximum prices at the same time; selling of wood is regulated by Law (local

14

wood processing enterprises have the priority right to buy wood assortments); penalties for
serious offences (e.g. forest devastation, non-realisation of the FMP, non-allocation or non-
purposed use of founds for forest reproduction) are much to low (both, for forest managers
and individual persons) , etc..

Important legal provisions for enabling sustainable forest management, which do not exist,
are particularly following: obligations for implementation of international commitments in the
field of protection, conservation and sustainable management of forests (e.g. performing of
inventories and monitoring of forest health condition and biodiversity); obligation for multiple-
use forestry planning with appropriate inventories at a higher spatial level (larger regions)
independently of the forest ownership; obligation for formation FMRs, which would include all
(also private) forests; obligation for a centralised collecting of means for simple reproduction
of forests (within the PFE and / or a Forest Fund for single reproduction within the MAFWM));
independent institutional solution for gathering and use of means for expanded reproduction
(e.g. within a Found for expanded reproduction); obligation for keeping the forest cadastre
database also for private forests (e.g. as an obligation for the forest service within the PFE or
MAFWM); obligation for co-ordination of forestry with the Federation (by possible institutional
solution) etc..

In general, the degree of implementation of the Forest Law provisions, crucial for sustainable
forest management, is much to modest, what is the central problem of the legal / regulatory
forestry framework in Republic of Srpska.

There exist also other Laws related to forest and forestry (National Parks Law, Water Law,
Hunting Law, Concession Law etc.). The first three are well harmonised with the Forest Law.
The Forest Law and Concession Law are not correspondingly harmonised (e.g. while the
Forest Law grants the forest management right to the PFE - for state forests, the Concession
Law enables concessions for management and exploitation of State forests at the same time,
or, the Forest Law imposes harmonisation of contracts for performing operations with the
Concession Law, although the institute of concession is totally different from that one of
auctions of forest operations) (see also Annex 7).

9.2 I NSTITUTIONAL F RAMEWORK (F ORESTRY O RGANISATION )

In the Republic of Srpska there is a firm and centralised institutional framework regarding the
administration and management of State forests, which was (by the Law on Amendments to
the Forest Law in 1992 and by the new Forest Law in 1994) entrusted to the Public Forestry

15

Enterprise (PFE). The capacity of this framework is strong and in principle it enables the
sustainable management of State forests. However, the capacity of State forestry authority
and supervision is very poor, and other State forestry institutions do not exist (see also
Annex 2).

The elements of the institutional framework (organisation) of forestry, which enable the
sustainable forest management, are especially the following: firm and integrated organisation
of State forest administration and management (in the PFE); strong personnel capacity of the
PFE (more than 450 forestry engineers); existence of special service for forest management
planning in PFE (RDPC); possibility of integral approach to management of State forests
(thanks to the integration of the functions of planning and operational forest management in
one PFE system); professional support to private forests (through PFE / EFMs
(Gazdinstvos)); existence of firm elements of State forest management policy (within PFE) as
well as basic principles of forest policy at the non-governmental level (in the framework of the
Association of Forestry Engineers and Technicians); the separation of the functions of forest
inspection from the functions of administration and management of State forests (in principle,
independent supervision is possible), etc..

The elements of the forestry institutional framework, which make difficult or disable the
sustainable forest management, are especially the following: subordination of Forest Service
functions to production-economic functions (in the framework of PFE); a powerful political
influence on the PFE functioning; low qualification, professionalism and capacity of private
contractors; poor material and staff capacity of the separated enterprises for performing
forest operations (which will be privatised); very low capacity of State forestry authority and
supervision (personnel and material); due to material and other reasons, in practice the
inspection does not function independently (from PFE or Municipalities), etc.

Institutional elements, which are an important precondition for the sustainable management,
but do not exist, are especially the following: a special section for private forests (within the
PFE) or an independent Forest Service (in the framework of MAFWM); State institutional
framework (e.g. Forest Fund) for the centralised financing of forest reproduction; other State
forestry institutions (e.g. Forestry Institute); shortage of scientific and research workers; non-
governmental forestry organisation, which would be independent from the governing policy,
etc..

9.3 E CONOMIC F RAMEWORK

16

The degree of sustainability of forestry economic framework is very low and it results in a low
degree of economic sustainability of forest management. This is the greatest problem of
forestry.

The positive elements of the economic framework of forestry are the following: extremely
high demand for quality wood assortments (logs); special Sector / Service for marketing and
prices of wood assortments (within the PFE); elaborated programme of the privatisation of
production activities / operations in forestry, in order to improve the economic situation of
forestry (rationalisation); a small-scale, non-budgetary source of means for the financing of
measures for the enhancement of multiple-benefit forest functions, paid by all economic
enterprises, and the latest Decision (at the level of BiH), by which budgetary means from
export taxes (for saw-logs) are used for the needs of forest reproduction.

The elements of the economic framework of forestry, which make difficult or disable the
sustainable forest management in the economic sense are especially the following:
unfavourable general framework of economic policy in the country; absence of free market in
forestry (the prices are fixed by the Government, they are simultaneously minimal and
maximal and therefore too low; in the sale of wood products, there is a legal monopoly of the
State wood industry enterprises); high amounts of liabilities of the State wood industry
enterprises to PFE (total debts in 1999 were 22% of PFE revenues); prohibited export of logs
(after 1998) and export taxes for logs and sawnwood (introduced in 2000); there is no
capacity and a reliable market for less valuable roundwood (pulpwood); capital outflow from
forestry (to wood industry, for additional needs of Municipalities and for other purposes);
barrier for centralised collection of revenues in the State forests (between FMRs); outflow of
means of multiple-benefit forest functions into the State budget; absence of a budgetary
source of funds for the financing of measures of sustainable forest management (incentives,
subventions); low capacity of the State budget for the financing of the State forestry
administration, etc..

The consequence are the considerably lower revenues from forest management and
therefore a very low accumulation capacity of forestry, which does not allow sufficient
investments in biological and technical forest reproduction and forestry.

9.4 I NFORMATIONAL F RAMEWORK

17

The general informational framework in forestry is still modest for the time being. It does not
offer much required information for the implementation of sustainable, multiple-use forest
management and conservation of forests / biodiversity.

The elements of the informational framework of forestry, which support sustainable forest
management are the following: a long forestry tradition; existence of forest inventories (for
FMP drafting) and the elaboration of Forest Management Plans (FMPs), based on which the
cadastre of (State) forests is made annually; tradition of forest management planning on the
principles of continuity of revenues and yields; existence of a unique methodology of
elaboration of FMPs (special Role-book), based on the original BiH school of forest
management (Professor Matić's school); existence of classical guidelines for the
implementation of forest management system in practice; Forest Management Regions
(divided into Forest Management Units) as the territorial informational framework; elaboration
of operational projects of forest operations; existence of annual production-financial plans
and reports on State forest management (in the PFE framework), etc..

The elements of the informational framework of forestry, which do not support sustainable
forest management are especially the following: expiration and low coverage of forests with
valid FMPs (only 43% State forests have valid FMPs), particularly in private forests; outdated
methodology of forest management planning and elaboration of operational projects; poor
quality of FMPs and operational projects (e.g. regarding selective approach to forest
management); unreliable forest cadastre as regards the basic information on forest condition
and development (e.g. of areas and growing stocks per forest categories); out of date and
inadequate curricula at the Faculty of Forestry, etc.

The elements of the informational forestry framework significant for the sustainable forest
management, which do not exist, are the following: multiple-purpose forest inventories and
multiple-purpose planes of forests development at a higher spatial level (larger regions); up-
to date FMPs and operational projects; modern guidelines for sustainable forest
management and conservation of biodiversity; the cadastre for private forests; information on
health condition, natural values and forest biodiversity; annual reports on the situation of
forests and forestry (responsibility of MAFWM); modern informational (e.g. GIS) and
communication tools (e.g. Internet); deficiency of scientific and research work and workers;
training and extension for private sector (contractors and forest owners); participation of
stakeholders and the public in the process of decision making in forestry, public relations,
etc..

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Regarding the system of forest management planning, the assessment of gaps is as follows
(see also Annex 5): planning methodology is not based on the so-called selective approach
within management classes and compartments (as regards the real situation, forest
accessibility, conservation of forest functions, etc.). This results in unreal high plans of
allowable cuts, which non-selectively take into account the overall area of forests (e.g. for the
calculation of the allowable cut, which is in practice implemented over substantially smaller
areas, also due to objective reasons); FMPs do not contain all the necessary information on
forest situation (e.g. health condition, conservation of stands, natural values and rarities,
other forest functions); prescribed average relative errors of individual taxation elements are
very low (allowed errors could be higher), so the cost of forest inventories are very high; the
method of current increment determination (by boring and measuring in the field) is burdened
with high possible errors (especially in broadleaves), because it is not based on the control
method (on permanent sample plots); allowable cut (for FMRs, FMUs and FMCs) is generally
based on the increment measured in the above way, which is considerably higher than the
real usable increment; increment and allowable cut are represented in the so-called total
wood volume, and the realised fellings are calculated from the net volume (by the deductive
method); site class is assessed by the average tree height in the stands (instead of by so
called Site Index), which results in lower estimated site classes and therefore the lower
normal growing stock (in all stands, in which natural structure was disturbed by the
management); in felling volume, the data for management classes are not presented per
diameter structure, so that it is nearly impossible to assess the diameter structure of the
fellings, as one of the key indicators of sustainable management; in the planning of
silvicultural works (in high and coppice forests) too much attention is focused on
afforestation, compared to tending and selective thinnings (the latter are not even planned in
many FMPs), by which the development of younger natural stands and plantations is not
improved from the aspect of the stability of quality; operational projects do not have the
character of complex, long-term operational plans of forest management (management
system as a whole), etc.

9.5 F OREST M ANAGEMENT S USTAINABILITY

Regarding the maintenance and enhancement of forest resources (first Helsinki
criterion) the assessment is following: The area of high forests is most probably also further
decreased (reliable information is not available) due to excessive fellings and degradation in
accessible forests. A very modest economic capacity of forestry does not enable a large
extent of afforestation, an appropriate maintenance of the growing stocks and tending /

19

thinning of young stands. The decreasing of growing stock has been recorded in accessible
high forests, which may result in the reduction of the total growing stock of all forests.
Consequently, the degree of maintenance of forest resources at the national level is very
low. Forest management still does not contribute to the appropriate enhancement/increase of
forest resources.

Regarding the maintenance of forest health and vitality (second Helsinki criterion) the
assessment is following: The degree of maintenance of forest health and vitality (regarding
all aspects of damage) at the national level, for the time being, is also relatively low, but the
trends are encouraging in this respect (with international assistance).

Regarding the maintenance and enhancement of production functions (third
Helsinki criterion) the assessment is following: The theoretical balance between annual
growth and removals at the national level is favourable, but the real balance resulting in the
actual growing stock trends, is not favourable. The trend of fellings is permanently
increasing (after the war), but it is not followed by an appropriate level of biological and
technical investments in forest. Because of forest inaccessibility and non-openness, the
fellings are not performed throughout the whole area of high forests. Consequently, the
intensity of fellings in accessible forests is significantly higher. Mainly, only the highest quality
trees are removed from the forests. The consequence is an intense degradation of diameter
and quality structure of accessible / open high forests. The feelings have mainly
exploitational rather than silvicultural character. Therefore, the degree of maintenance and
enhancement of production functions of forests at the national level is still very low,
particularly because of the low accessibility / openness of forests and very low investments in
biological and technical forest reproduction.

Regarding the maintenance and conservation of biological diversity (forth Helsinki
criterion) the assessment is following: Active maintenance and conservation of biological
diversity in production forests, except for the certain protection measures (e.g. prohibited
felling of some rare tree species) and natural regeneration (of lower extent), is absent.
Measures for the appropriate enhancement of biological diversity in production forests do not
exist. On the other hand, the passive maintenance of biological diversity in the conserved
(inaccessible) forests is very important. Biological (primarily structural and functional)
diversity is reduced in the accessible forests.

Regarding the maintenance and enhancement of protective forest functions (fifth
Helsinki criterion) the assessment is following: In practice, insufficient attention is focused on

20

the maintenance and enhancement of protective forest functions (the level of maintenance is
low and there is no enhancement) primarily because of the non-existing economic
frameworks, although legal framework enables it.

Regarding the maintenance and enhancement of other socio-economic functions
and conditions (sixth Helsinki criterion) the assessment is following: The degree of
maintenance of socio-economic functions of forestry for the society is rather high (in the
sense of direct material support and the local population employment), although the extent of
direct support decreases. The public participation, public access to forestry information,
popularisation of sustainable forestry and public relation do not exist yet. Other social
functions of forests and forestry are also not developed, and they are also not yet actual in
the present stage of social development.

***

Taking into account special circumstances in Republic of Srpska, where forestry has started
practically from the beginning in 1992, faced with the war and its consequences, and where it
is still faced with the exceptionally poor general situation in the country (great economic and
social problems, great pressure/impact of politics at the Republic and local levels, general
"non-legality" of the State institutions, non-market economy, difficult economical problems in
the wood industry, lack of active capacities for the processing of less valuable timber,
general problems of transition etc.), it can be concluded that the present forestry and forest
management, particularly if it is compared with the Federation, has already reached a solid
level, although it can not be proclaimed as sustainable yet.

10. ASSESSMENT OF PRIVATISATION STRATEGY AND ITS
SUSTAINABILITY (ANNEX 2)

In accordance with the Privatisation Law and the corresponding regulations, as well as
according to the guidelines in the framework of the Forest Policy Reform Study, the State
capital in PFE, i.e. its organisation units, has been divided into strategic and non-strategic
capital. In addition to forests and forest land, which are not the subjects of privatisation, the
strategic capital also includes forest communication (roads and bridges), forest nurseries
with the accessory facilities and means of production, facilities in the function of hunting and
forest infrastructure in the function of administration and management of State forests,
except for the infrastructure for forest exploitation. In 2000, the non-strategic capital, which
mainly refers to the performance of forest operations, was separated into special, so-called

21

Basic State Forestry Enterprises (BSFE) for the performance of forestry operations. The
BSFE are going to be fully privatised (by direct or voucher sale). The number of such new
BSFE is 37 (44 enterprises were separated out, seven of them were joined to the
neighbouring ones). Overall book value of the State capital in the newly established BSFEs
is 16,4 million DM. The value of the majority of these BSFEs is very modest (about half of
them is below 300.000 DM, only few BSFEs the State capital is higher than 1 million DM) as
well as the capacity for professional, qualitative and efficient performance of forest
operations. Altogether 2.633 workers were transferred to these BSFEs, which means that still
a great share of production manpower (along with administrative employees) remained within
the strategic part of the PFE.

As the RS Government has decided that the PFE strategic capital is not privatised, the
elaboration of the privatisation strategy for the strategic part (within the special privatisation
programme), required by the Privatisation Law (1998), is no more actual. The privatisation of
PFE has thus been practically concluded. By separating (privatisation) of forest operations,
PFE has considerably reduced the scope of its own productional activities. The performance
of these activities will be offered by auctions to private contractors. The productional activities
still performed by the PFE are seed and nursery production, hunting management and
utilisation of other forest products. The PFE will also have commercial functions (marketing
and sale of timber and other forest products) which will not be privatised (see also Annex
10).

By the privatisation of forest operations/production services, the PFE has been reorganised
in a form of forestry organisation with State forest service (for State and private forests) and
commercial (with the remaining production) functions. Forest service in State forests within
PFE will perform predominantly professional, co-ordination and supervision functions
(supervision of private contractors) to ensure the commercial (and the remaining production)
functions of the Enterprise.

Mean problems of such a (re)organisation i.e. privatisation are the following (see also sub-
study of GERELY 4):
 The strategy of privatisation of the non-strategic part did not lead to a privatisation of
overall forest utilisation (performing of all operations/productional services in forestry,
including the sale of timber products), which would result in (State or privatised)
Enterprises for operational forest management. Therefore the motivation for the

4 Privatisation of forestry in Bosnia and Herzegovina. Final Report, PHARE TA, Sarajevo and Banja Luka,
2000.

22

allocation of capital and manpower (professional and productional) to the separate
enterprises was much lower.
 Preparation of the strategy of privatisation for the non-strategic part was not performed
parallel with preparation of the privatisation strategy for the strategic part - within the
special privatisation programme, which would also include the future model of
organisation of the present PFE and resolve its major problems (problem of surplus
manpower by social and other programmes, problem of large debts by State wood
industry, problem of including external capital, etc.).
 The income from the privatisation (sale) of non-strategic capital will not remain in forestry,
which is very unfavourable (i.e. because of the need for resolving its own economic and
social problems).
 The separated BSFEs, which are going to be fully privatised, have a very poor material
and often also personnel (professional) capacity. The prospects of these Enterprises are
uncertain, and also the maintenance of professionalism and the quality of performing
forestry operations, as the main precondition of sustainable operational forest
management. This is especially important because of the previous unplanned
privatisation of the means of production in many EFMs (Gazdinstvos), before passing the
Law on Privatisation of State Capital in Enterprises (in 1998), which was not followed by
an adequate extent of allocation of (professional and production) manpower. Such an
unplanned privatisation weakened the PFE capacity for the performance of operations
and it resulted in an exceptionally high number of small private contractors (mainly non-
foresters), poorly equipped and insufficiently qualified for forest operations. On the other
hand, in addition to numerous private contractors, the PFE was charged with the surplus
manpower without the analogous capacity (means of production) for its own performance
of operations. Such an unplanned privatisation was a large step backwards regarding the
quality and sustainability of performance of forest operations.
 After the preparations for the privatisation of non-strategic capital, some production
functions still remained in the Enterprise (e.g. seed and nursery production, other forest
products), which could be the subjects of further privatisation. At the moment, it is better
(because of surplus manpower) that these activities remain in the strategic part of the
Enterprise which will perform them on its own.
 An important problem of the PFE status transformation is (still) the issue of merging the
functions of forest service (and some administrative functions) with the commercial
functions of the Enterprise i.e. the problem of subordination/dependence of forest service
(profession) on commercial functions.

23

 Due to a fact that the sale of forest assortments is not privatised, and that it remains in
State hands (PFE), it is real to expect a further strong impact of unfavourable general
economic, social and political conditions and interests (at State and local levels). This will
(at least for several years) make the PFE business on market principles difficult also in
the future (e.g. free pricing and sale of wood assortments).
 One of the problems is also the problem of suitability of PFE internal organisation (with
relatively independent EFMs (Gazdinstvos)) for performing its future mission (such State
Enterprises, which also include the forest service functions, are most often fully
centralised in other countries).

For the time being, such strategy of privatisation (except for the unplanned "privatisation" of
the working means, which occurred before passing the Law on Privatisation of State Capital
in Enterprises in 1998), resulting in separated enterprises for performing forest operations,
can generally be assessed as acceptable - taking into account a very poor starting conditions
(regarding capacities and value of working means), unplanned "privatisation" partly
concluded, and pre-decided general privatisation policy (by the PFE) - although the final
results of privatisation regarding both the quality and the capacity (of separated enterprises)
are not encouraging.

After this privatisation and especially also the privatisation in wood industry has been
completed, and the market conditions have been established, a substantial enhancement of
the economic situation of forestry of the Republic of Srpska can be expected.

Forestry in Republic of Srpska excels forestry in the Federation regarding privatisation and it
is on its good way to carry out the reforms necessary for its transition to market economy
relatively quickly.

11. PROPOSALS AND RECOMMENDATIONS FOR CHANGE AND
HARMONISATION OF FOREST LEGISLATION (ANNEX 3, ANNEX 8)

Principal proposals and recommendations for changes and amendments of the Law
(concrete organisational solutes not included here) are following:

General legal provisions:
1. Amendment the general legal commitment regarding the method of forest maintenance,
regeneration and utilisation, by the international (Helsinki) definition of sustainable forest
management;

24

2. Redefine the multiple-benefit forest functions (e.g. with the extension regarding nature
conservation functions and functions of biodiversity conservation), which would not
include production functions;

International legal commitments:
3. Current legal provisions should be amended by the obligation to adopt the national
forestry policy and national forestry programme (programme of sustainable forest
development) by the Government and the Parliament;
4. By Law Amendment, ensure the participation of stakeholders in the forming of forest
policy and forest management planning;
5. The Law should include the obligation of monitoring and assessment of forest biological
diversity;
6. The current provision regarding the monitoring of health condition of forests, endangered
by emissions should be amended with the commitment for performing inventories and
monitoring of health condition in all forests; the methodology should be defined by a
special regulation (apply ICP methodology);
7. The Law should include the commitment to establish / extend the protected forest areas,
forest reserves and representative or unique examples of forests.

Forest administration and management:
8. Correct the definition of forest management (which now also contains other functions,
such as hunting, tourist and catering functions, fishery), based on the standard forestry
definition;
9. Define the function of ownership-administration of State forests (independent of the
functions of forest management);
10. Correct the inconsistency of the Law regarding the administration and management of
private forests (which should be administered and managed by the owners, no matter
whether the private forests are within or outside the FMRs):
11. Define the functions of the (professional) Forest Service for the directing of forest
management, which are in public interest (for all forests), together with the definition of
the institution(s), which perform(s) the service;

Administration functions of the Public Forestry Enterprise:
12. The certificates to forest engineers for tree marking in private forests should be the
responsibility of State administration or a special independent institution (e.g. Chamber of
Engineers);

25

13. Licences for felling in private forests should be transferred to be the responsibility of State
administration (e.g. Forest Service for private forests in the framework of MAFWM).
14. Licences for the clearing of forests (also below 0.5 ha) should be transferred to MAFWM,
at the proposal of PFE / EFMs (Gazdinstvos) ;
15. Adoption of FMPs, wildlife management plans (WMPs) and programmes of forest
management in the Karst area should be transferred to MAFWM, at the proposal of PFE /
EFMs (Gazdinstvos);

Forestry planning:
16. The Law should include the provision for the establishment of FMRs, which include all
(inclusive private) forests;
17. Consider the potential establishment of larger spatial units of forests and wooded lands
(larger regions) for the need of regional forest development planning (and its possible
introduction) with the appropriate forest inventories;
18. Supplement the methodology of forest management planning (the Rule-book) so as to
ensure the needs of sustainable forest management and biodiversity conservation (based
on the European criteria and indicators of sustainable management, as well as the
European operative guidelines for sustainable management);
19. Include the commitment to maintain the cadastre for private forests (e.g. the commitment
to Forest Service within PFE or MAFWM);

Forest reproduction:
20. By the amendment of the Regulation, the private forest owners should also be able to
use the resources of multiple-benefit forest functions and extended forest reproduction;
21. Eliminate the legal provision, which prevents the cross-financing of simple forest
reproduction between FMRs;
22. Introduce the commitment to central accumulation of the funds of simple forest
reproduction for State and private forests, including the appropriate institutional solutions;
23. Redefine the measures of simple and extended forest reproduction (primarily in the
sense of clarification of definitions) and exclude the purposes which do not belong to
forest reproduction (e.g. purchase of the means of production);
24. Increase the legal rate of allocation or payment the funds for simple reproduction of State
and private forests (to minimum 15% of the value of sold forest assortments); annual
allocation of means above the legal minimum should be specially regulated for State
forests (e.g. by the Minister's Regulation);

Forest protection and conservation:

26

25. The Law should include the commitment to establish the Prognostic-Diagnostic and
Reporting Service (for forest protection);
26. The Regulation on Forest Order should be amended or a special regulation should be
adopted, which would include even the minimal ecological requirements regarding the
forest management techniques and biodiversity conservation (e.g. based on the
European operational guidelines for sustainable forest management);
27. The Law, i.e. Regulation should define the method and limitations of the utilisation of
other forest products (in the sense of nature conservation), especially rare and
endangered species (i.e. plants);
28. Introduce the commitment to forest fire monitoring and database keeping (according to
the provisions of the European "databank" on forest fires).

The Karst Area:
29. Solve more efficiently the problem of financing the protection, afforestation and
reconstruction of forests in the Karst area, optimally by a special Law (especially because
of the need for introducing budget funds) and by the corresponding national programme
on its basis.

Forest utilisation, timber sale and prices:
30. Adopt the Regulation on the minimal (personnel and other) conditions, which must be
satisfied by contractors in forests (per categories of forest operations);
31. Change the legal provision regarding the contracts for the performance of forest
operations / services in forestry based on auctions, which should be harmonised with e.g.
the Public Procurement Law (instead of with the Concession Law);
32. Repeal the legal provision of the priority right of the local wood industry to buy
forest assortments;
33. The Law should define additionally that the prices, fixed by the Price List (the
Government, i.e. PFE) should be used approximately as minimal; by the Law
amendment, a special commission should be formed for pricing, composed of
stakeholders and supported by the corresponding professional service for marketing and
prices;

Forest Inspection and penalties:
34. Penalties for major offences should be higher (e.g. for forest devastation, non-
implementation of FMPs, non-allocation or non-purposed utilisation of the funds for forest
reproduction) both for forest managers and for responsible and individual persons, all
penalties should be defined at the lower level only (that they can be only higher).

27

Forest legislation, institutional development and forest policy study of the Republic of Srpska - Executive summary, 2001

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Forest legislation, institutional development and forest policy study of the Republic of Srpska - Executive summary, 2001