E CO L O G I CA L E CO N O MI CS 63 ( 20 0 7 ) 7 07 7

a v a i l a b l e a t w w w. s c i e n c e d i r e c t . c o m

w w w. e l s e v i e r. c o m / l o c a t e / e c o l e c o n

ANALYSIS

Profitability and social impacts of reduced impact logging in

the Tapajs National Forest, Brazil A case study
Carlos Jos Caetano Bacha, Luiz Carlos Estraviz Rodriguez
Luiz de Queiroz College of Agriculture, University of So Paulo, Avenida Pdua Dias, 11, caixa postal 09, Piracicaba, State of So Paulo,
13418900, Brazil

AR TIC LE I N FO

ABS TR ACT

Article history:

Brazil contains the world's largest tropical rainforests, most located in the Amazon River

Received 22 June 2006

Basin. Over the last three decades, rapid growth of this region's deforested area has had

Received in revised form

negative impacts. To minimize these impacts and maintain biodiversity, the Brazilian

16 September 2006

Government has established several national forests in the Basin. The ITTO Project, a

Accepted 21 September 2006

reduced impact logging (RIL) operation, was recently carried out at one of these forests: the

Available online 21 November 2006

Tapajs National Forest, also known as Flona Tapajs. This paper evaluates the Project's
profitability and its effect on local residents. The Project, which ran between 1999 and 2003,

Keywords:

was coordinated by the Brazilian Institute of Environment and Renewable Natural

Logging

Resources (IBAMA), with funding for planning and monitoring provided by the United

National forests

Kingdom's Department of International Development (DFID) working through and approved

Profitability

by the International Tropical Timber Organization (ITTO). Treviso Agropecuria Ltda, a private

Social impacts

logging company, carried out timber extraction on the Project site. Our evaluation found the

Brazil

ITTO Project to have been highly profitable for Treviso, even after their compliance with all

JEL classification:
Q2;Q23;Q28

Brazilian labor and environmental laws. This finding was based on field interviews and the
examination of documents from IBAMA and Treviso. Treviso's mean internal rate of return
from the Project was calculated to have been 35.79%, considerably higher than that
generated by the region's farms and ranches. The ITTO Project positively impacted Project
workers, providing employment and exposing them to rainforest management techniques
that maximize timber production while minimizing forest destruction. The paper closes by
suggesting that more of the direct and indirect benefits of new reduced impact logging
projects on Brazilian national forest land need to be channeled to the local population to
increase the probability of them act as capable forest custodians.
2006 Elsevier B.V. All rights reserved.

1.

Introduction

Brazil contained 478 million hectares of forest and other wood

lands in 2005, equal to 12.1% of the world's wooded area
(GFRA, 2005). Between 1990 and 2005, a total of 42 million
hectares were deforested in Brazil, representing 33.7% of the
area deforested in the world during that period and 9% of

Brazil's total forested area. The great majority of Brazil's

forested area is located in the Amazon River Basin, and it is
there that deforestation is most pronounced.
The Brazilian Federal Government has tried to curb
deforestation by creating conservation units, banning agricultural activities on a share of private farms, requiring official
approval for any type of clear cutting, and supporting reduced

Corresponding author. Tel.: +55 19 3417 8719.

E-mail addresses: cjcbacha@esalq.usp.br (C.J.C. Bacha), lcer@esalq.usp.br (L.C.E. Rodriguez).

0921-8009/$ - see front matter 2006 Elsevier B.V. All rights reserved.
doi:10.1016/j.ecolecon.2006.09.024

EC O LO G I CA L E C O N O M I CS 6 3 ( 2 00 7 ) 7 07 7

71

Fig. 1 Brazil (map on left side), the state of Par (pointed out on bottom left side) and Tapajs National Forest location (white
area on western Par). On right side, map of Tapajs National Forest, where ITTO Project area is highlighted in red at
Northeastern Flona Tapajs (For interpretation of the references to colour of this figure legend, the reader is referred to the web
version of this article).

impact logging (RIL) operations. For several reasons, these

measures have failed to impede deforestation (Bacha, 2005).
The slow acceptance of RIL as the preferred Amazonian
logging technique by risk adverse Brazilian loggers may be
due to a dearth of local data regarding its profitability and
applicability.
In this context, the objective of this paper is to evaluate a
RIL Project conducted inside the Tapajs National Forest from
1999 to 2003. This project is locally known as ITTO Project.
The Tapajs National Forest conservation unit, also known
as Flona Tapajs, covers almost 600 thousand hectares in the
Brazilian state of Par's western region (Fig. 1). This state is
suffering rapid deforestation caused by the expansion of
agricultural production and unsustainable forest exploitation.
Frequent conflicts between environmentalists and both legal
and illegal commercial enterprises have attracted considerable media attention to the Flona Tapajs area.
Created by the Brazilian government in 1974, Flona Tapajs
is one of 37 national forests in the Amazon River Basin and
contains 3.41% of the Amazon Basin's national forest area. It is
bordered by the Tapajs River on the west and Federal
Highway BR163 on the east. This highway links the city of
Santarm in the state of Par with the transit hub of Cuiab,
capital of Mato Grosso more than 1600 km to the south. The
forest land on both sides of this partly paved road is rapidly
being replaced by cattle ranches and farms, for the most part
soybean plantations. If the highway were to be totally paved,
deforestation pressures on private land adjacent to BR163 will
intensify (Alencar et al, 2004), making the preservation of
Flona Tapajs integral to the maintenance of biodiversity
along this transit corridor.
The Brazilian Government divided Flona Tapajs into nine
zones in 1999 (IBAMA, 1999). Land rights of local ribeirinhos
and colonos were recognized in one zone; and Zone 2, a

191,000 hectare tract, was dedicated to RIL projects. From 1999

to 2003, a reduced impact logging operation was at work on a
3130 hectare tract in Flona Tapajs Zone 2.
The Project was the result of efforts by the International
Tropical Timber Organization (ITTO, an NGO), the United
Kingdom's Department of International Development (DFID),
and the Brazilian Institute of Environment and Renewable
Natural Resources (IBAMA). DFID and ITTO together spent US$
989,322 on the Project for planning, supervision, worker
training, and independent evaluation, with the great majority
of the funding coming from DFID. Empresa Agropecuria Treviso
Ltda was selected to run the entire Project logging operation
and retained all profits. The ITTO officially titled the operation
Project 68/89 Rev.1 (F) Management of the Tapajs National
Forest for Sustainable Production of Industrial Timber. However, locally it is known as ITTO Project.
ITTO Project was developed by the DIFD and ITTO in an
effort to set up a realistic reduced impact logging undertaking
in a large Brazilian tropical national forest. Empresa Agropecuria Treviso Ltda (commonly known as Treviso) signed a
government timber concession contract on December 4, 1998,
and harvesting began the ITTO Project's 3130 hectare concession within the Tapajs National Forest (the ITTO Project is the
red area on the right side of Fig. 1). The Project ran from 1999
through 2003 and was responsible for the extraction of
63,392 m3 of high, medium, and low value timber (averaging
6.4 m3/tree or 20.25 m3/ha).
Two timber extraction projects had been implemented in
the Tapajs National Forest before the ITTO Project began.
Both were coordinated by the Tropical Forest Foundation
(TFF), a non-governmental organization specialized in RIL,
with actual logging operations again under the control of
Empresa Agropecuria Treviso Ltda. One 100 ha project was
conducted in 1986 and the other on 105.66 ha in 1997.

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E CO L O G I CA L E CO N O MI CS 63 ( 20 0 7 ) 7 07 7

Experience gained from both these projects contributed to the

ITTO Project's development.
This study develops data and evaluates features and
impacts of the ITTO Project, as well as reveals methods to
evaluate the benefits of reduced impact logging in the
Amazonian National Forests.

2.

Review of literature

Very little analytical inquiry has been focused on conservation

units in the Amazon River Basin. The largest share of
conservation unit areas of all conservation units created in
Brazil is located in the Amazon River Basin (Andrioli, 2003). Of
the 37 Amazonian National Forests, only Flona Tapajs has
been subjected to human population, fauna, and flora
analyses. Works by Faria et al. (2003) and Soares (2004)
describe this area, its population and problems, but they did
not analyze ITTO Project impacts directly.
IBAMA (1999) describes all Flona Tapajs nine zones,
identifying activities and population inside them. No comment is paid to the ITTO Project.
Reduced impact logging (RIL) in the Amazon River Basin
has also been given scant attention by rigid research. Studies
by Barreto et al. (1998) and Homes et al. (2002) evaluated data
collected from small, privately owned rainforest tracts worked
with RIL techniques. Both papers show RIL projects to have
been profitable.
Our study adds accurate data to the Amazon River Basin's
data base and provides an analysis of the economic and social
impacts of a RIL project operating in a Brazilian national
forest. The nature, quality and scope of this study's data is
superior to that used by other authors who have analyzed
economic activities in the Amazon River Basin (see: Mattos
and Uhl, 1994; Arima and Uhl, 1997; Barreto et al., 1998; Homes
et al., 2002).

3.

Region under study

Flona Tapajs was established on December 19, 1974, by

Federal Decree 73,684. It was created when occupying the
Amazonian Region became political objective of the military
governments ruling Brazil in the 1970s. To reach this goal, the
government adopted a two-fold approach: road building and
colonization. A road was built and settlers were enticed to
occupy lots on both sides of the new transit corridor. Some
conservation units were established close to these roads as
well as settlement projects, as in the case of Flona Tapajs.
The construction of BR163, the over 1600 km long highway
linking the Santarm on the Amazon River with Cuiaba in
west central Brazil, began in 1973 and finished in 1976. Tapajs
National Forest was created in the state of Par on both federal
and state-owned land located adjacent to BR163 between
kilometer markers 51 and 211.
Unfortunately, preservation of Flona Tapojs as a conservation unit was made much more difficult by governmental
omissions, lack of focus, and inconsistent policy goals. During
its national forest development planning process, the government ignored the existence of a resident population within the

new national forest or along river banks abutting the forest. To

exacerbate the problems created by this omission, while one
governmental agency was creating a conservation unit close
to the new highway, another government agency, the National
Institute for Settlement and Agrarian Reform (INCRA), was
allotting land within the new unit for future settlement
projects. By disregarding those that lived within the conservation units and bringing in new settlers, the government
overlooked and exacerbated the greatest threat to their newly
created conservation units: humanities drive to convert virgin
forestland into crop and pasture land. These two resident
groups have threatened the conservation unit status of
Flona Tapajs since its inception.
Prior to 1830, only native indigenous populations made their
homes within the boundaries of what is now Flona Tapajs,
occupying the margins of the Tapajs River. Since 1830, several
new non-indigenous groups have moved into the area. The
more recently arrived settlers, some with legal deeds to their
land, have multiplied along the eastern edge of Flona Tapajs.
In 2003, Tapajs National Forest was the home of 25
communities, 20 on the western banks of the Tapajs River
and 5 on the eastern shoulder of BR163 (Table 1). These
communities compose more than 876 families (5102 individuals). This total does not include the 5000 people in the
sprawling municipality of Aveiro who live within Tapajs
National Forest. The municipality occupies both sides of the
Tapajs River; one side is part of the National Forest. It seems

Table 1 Villages within and inhabitants of Flona Tapajs

in the year 2003
Communities

Number of
families

Number of
inhabitants

36
52
19
21
22
49
70
n.a.
n.a.
18
38
57
30
n.a.
38
15
36
12
11
13
208
42
24

190
230
76
78
110
260
370
n.a.
n.a.
100
200
300
150
n.a.
266
112
176
72
47
78
1500
350
144

26
39
876

118
175
5102

Western edge So Domingos

(near Tapajs Maguari
River)
Jamaraqu
Acaratinga
Jaguarari
Pedreira
Piquiatuba
Marituba
Bragana
Marai
Nazar
Tauari
Pini
Takuara
Prainha
Prainha II
Itapaina
Paraso
Jutuarana
Itapuama
Eastern edge
So Jorge
(edging road Chib
BR163)
Nossa Senhora
de Nazar
Nova Vida
Santa Clara
Total
Source: Faria et al. (2003, pp. 7 and 9).
Note: n.a. data not available.

EC O LO G I CA L E C O N O M I CS 6 3 ( 2 00 7 ) 7 07 7

reasonable to assume that the 15,000 Aveiro residents who

live on the opposite side of the river also have an impact on
the National Forest.
From 1973 to 1993, Federal environmental agencies tried
unsuccessfully to expel intruders from the Tapajs National
Forest. The conflicts caused by this new policy abated in 1994
when a federal decree gave the National Forests management
(IBAMA) power to permit residence of traditional populations
within any National Forest. Since then, IBAMA has considered
community residents living on the banks of the Tapajs River as
traditional inhabitants. These traditional residents, called Ribeirinhos (people who live near the river), are subsistence farmers
that have integrated with the forest ecosystem. Ribeirinho
communities produce rice, beans, corn, pumpkin, and cassava,
selling only cassava flour, and obtain animal protein from
hunting and fishing. They have their own code of conduct when
it comes to land allocation and are supervised by IBAMA.
Contrasting with the Ribeirinhos are the Colonos,
residents of communities located on the edge of highway
BR163. Portions of the Colonos settlements are located in the
Tapajs National Forest. Colonos living in these areas do so
without IBAMA's permission, although, some have preexisting
titles to this land. Preponderantly immigrants from Southern
Brazil, Colonos are commercial farmers little integrated with

Table 2 Average cost of reduced impact logging

operations
Activity

Task

PreTrail opening and area

harvesting demarcation a
100% inventory b
Liana control c
Harvesting Roads and log landings
construction d
Skid trails planning e
Felling f
Skidding g
General
Data processing
expenses
Training
Mapping
Roads planning
Log landing operations
Support, logistics and
supervision
Wages of permanent crews
and equipment cost
Lodging
Depreciation of tractors,
vehicles and heavy
machinery
Partial cost
a

Productivity

Cost
US$/
ha

117.21 m/HH

3.45

1.10 ha/h
0.70 ha/HH
591.82 m2/
HM
1.52 trees/h
1.43 trees/h
2.93 trees/h

12.31
4.71
54.09

55.83

31.95
80.30

4.09
21.25
82.42
1.33
4.26
4.02
0.81
23.42
4.92

389.17

Average 2.68 men/crew opening 2607.18 m/day (HH = human

hour).
b
Average 1.44 men/crew inventorying 1.10 ha/h.
c
Average 2.31 men/crew controlling 11.12 ha/day.
d
Average 2.00 men/crew constructing 4372.32 m2/day (HM =
machine hour).
e
Average 3.16 men/crew marking 37.78 trees/day.
f
Average 7.28 men/crew, 3.39 crews/day felling 38.62 trees/day.
g
Skidder working an average of 8.06 h/day to move 23.47 trees/day.

73

the forest. They locate their settlements in close proximity to a

link with external markets, BR163, and raise coffee, pepper
and cattle on plots ranging from 0.25 to 170 ha, thereby
converting large tracks of native forest to agricultural production. These farming practices, especially when put into effect
by those living without government permission in Flona
Tapajs, have put them in conflict with IBAMA.

4.

Methodology

This study's primary dataset came from technical information

meticulously gathered from the ITTO Project's 38 working
units by IBAMA and Treviso personnel, who then rigorously
checked and recorded it. The study also relies on questionnaire responses, interviews, and reports from other private
and public sources. All data was gathered by this paper's
authors between May 27, 2004 and June 02, 2004.

4.1.

Profitability indicators

The internal rate of return (IRR), net present value (NPV) and
total profit were calculated for Treviso's share in the ITTO
Project and used to evaluate Project profitability. Both deterministic and risk analysis were conducted. Risk analysis was
first performed considering the effect of a 10% increase or
decrease in Project revenue, as determined by the prices paid for
Project timber, on Project IRR and NPV. One thousand Monte
Carlo simulations were then run to gauge the effect of a 10% or
20% deviation in mean Project costs, produced quantities, and
prices on maximum, minimum, and mean Project IRR and NPV
values.1 Due to the scarcity of information about these three
variables probabilistic distribution format, normal distribution
was assumed. IBAMA's fees were also estimated and compared
with IBAMA's expenditures for the entire ITTO Project.
IBAMA and Treviso employees accurately noted all technical operations conducted on ITTO Project land, but they did
not employ the same rigor when recording the cost of inputs.
For this reason, IRR calculations were carried out under the
assumption that Treviso paid the highest regional input prices
and wages for its activity on the ITTO Project, which most
likely caused Project costs to be overestimated and, consequently, IRR and NPV to be underestimated. Project input cost
information was collected from IBAMA's Santarm office.
We first estimate the average productivity of labor and
machines for each of Treviso's main harvesting operations
directly linked with the ITTO Project using the company's
information (see Rodriguez and Bacha, 2004). The unit costs of
these resources are them used to determine the per hectare
operational costs of Treviso's main harvesting operations. The
results from these calculations are presented in Table 2.

4.2.

Questionnaires

Five different questionnaires were constructed to evaluate

the actual working conditions at the Project site and the
1

Sawnwood price fluctuation in the state of Par has been

between 10% and 20% from average price, according to Informativo
CEPEA Setor Florestal (see at http://www.cepea.esalq.usp.br).

74

E CO L O G I CA L E CO N O MI CS 63 ( 20 0 7 ) 7 07 7

Table 3 Simplified cash flow from ITTO Project

Moment

0
1
2
3
4
Total
a
b
c

Month

% of Total project logs delivered a

Nov/99
Nov/00
Nov/01
Nov/02
Nov/03

38.46
15.73
22.13
23.68
100

Log volume delivered by

category (m3)
Class I

Class II

Class III

4854
1985
2793
2989
12,621

9145
3740
5262
5631
23,778

10,381
4246
5974
6392
26,993

Costs b (US$)

Revenues c (US$)

737,755.84
301,739.45
424,506.94
454,239.69

1,918,241.92

1,001,817.68
409,739.78
576,448.91
616,823.78
2,604,830.15

Total production was 63,392 m3.

Considering the total mean cost of delivered logs equals to 30.26 US$/m3.
Considering values paid for each m3 in each quality class indicated in the table.

Project's impact as perceived by local stakeholders. The

applicable questionnaire was then applied to one of five
different groups linked with the ITTO Project: 1) four village
leaders; 2) four former ITTO Project workers; 3) six local
inhabitants not employed by the Project but who wished to
take part in similar projects; 4) eight members of the local
IBAMA field office; and 5) two of Treviso's owners. Twentyfour questionnaires were completed. To crosscheck
responses, all five questionnaires contained some common
questions regarding Project working conditions and logging
practices.
Respondents were intentionally selected from key personal
willing to collaborate in our research. Our choice of interviewees was also restricted by a lack of infrastructure (there
are few local roads).

5.

Results

5.1.

Financial analysis

The mean volume of commercial logs extracted from ITTO

Project territory over the Project's life was 20.25 m3/ha.
Considering the values presented in Table 2, and adding
taxes, fees and freight (US$ 11.04/m3), the Project's mean total
production cost per m3 was US$ 30.26/m3.
In order to estimate IRR and NPV, we reorganize data and
follow the below steps:
i) Costs and revenues were added and evaluated at
November prices each year although they took place
along the year. Costs were allocated from 1999 to 2002
and revenues from 2000 to 2003. During the first year
only pre-harvesting activities took place and the last
year of the project was only for removing logs from
forest to sawmill;
ii) Four loads of logs were extracted from the Project area
and delivered to a sawmill each year: 38.46% of the total
logs extracted were delivered in November 2000, 15.73%
were delivered in November 2001, 22.13% were delivered
in November 2002, and 23.68% were delivered in
November 2003. These percentage values reflect real
production values during each of the four phases of
extraction;

iii) The logs delivered were divided into three quality

classes: 19.91% were Class I; 37.51% were Class II; and
42.59% were Class III.
iv) Log value was determined by log quality: US$ 83.33/m3
for Class I logs; US$ 41.67/m3 for Class II logs; and US$
20.83/m3 for Class III logs.
Despite these simplifications, all information came from
ITTO Project records and reproduces the Project reality. The
above data is shown in Table 3.
IBAMA, the governmental agency involved in the ITTO
Project, obtained direct returns from the fees it charged the
concessionaire, Treviso, to cut the National Forest's timber.
Concession fees fall into three classes, dependent on type of
timber logged: US$ 4.14/m3 for Class I timber, US$ 2.48/m3 for
Class II timber, and US$ 1.15/m3 for Class III.
Table 3 shows cash flows derived from the log pricing and
quantity mentioned above. Tables 4 and 5 show the IRR and
NPV values derived from deterministic and risk analyses.
Under determinist conditions using a 6% discount rate, the
internal rate of return was 35.79% and the net present value
was US$ 500,740 (Table 4). A 10% increase in wood prices was
estimated to increase IRR to 49.37% while a 10% decrease in
wood price would lower IRR to 22.21%.
The mean IRR and NPV resulting from Monte Carlo
Simulation (Table 5) were very close to the deterministic
values shown in Table 4. There was little change in the mean
Monte Carlo Simulation IRR and NPV when standard deviation
increases from 10% to 20%, but this change causes negative

Table 4 Internal rate of return (IRR) and net present value

(NPV) of the ITTO Project under different conditions
Conditions

Actual
Assuming 10%
higher wood
prices
Assuming 10%
lower wood
prices

IRR (%)

NPV at
NPV at
6%-discount rate 8%-discount rate
(US$ thousands) (US$ thousands)

35.79
49.37

500.74
728.98

448.20
667.19

22.21

272.51

229.21

Source: calculated by the authors.

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EC O LO G I CA L E C O N O M I CS 6 3 ( 2 00 7 ) 7 07 7

Table 5 Internal rate of return and net present value according to Monte Carlo Simulation
Situation

Internal rate of return (%)

Net present value at 6%discount rate (US$ thousands)

Net present value at 8%-discount

rate (US$ thousands)

Minimum Average Maximum Minimum Average Maximum Minimum Average Maximum

Considering
10% standard
deviation in
relation to the
medium values

Jointed
price,
production
and cost
fluctuation
Only price
fluctuation
Only cost
fluctuation
Only
production
fluctuation
Considering
Jointed
20% standard
price,
deviation in
production
relation to the and cost
medium values fluctuation
Only price
fluctuation
Only cost
fluctuation
Only
production
fluctuation

3.42

36.89

112.58

37.1

501.66

1152.05

65.02

449.17

1084.36

4.88

36.04

63.45

18.81

504.86

965.66

50.3

452.15

894.28

13.26

36.47

78.10

164.91

498.37

806.90

114.75

445.93

751.93

11.59

35.89

51.38

116.98

499.81

752.52

71.91

447.38

690.3

16.46

38.00

184.57

616.03

473.72

1772.67

629.25

422.42

1676.71

17.91

34.90

84.39

401.87

485.71

1317.63

417.84

433.78

1231.98

2.93

38.88

121.99

224.33

496.69

1121.20

263.56

444.20

1052.69

8.56

35.89

72.87

48.31

493.88

1029.09

10.19

441.86

959.19

Source: values calculated by the authors.

minimum simulated values. Every case considered showed

that the ITTO Project would be very profitable for the
concessionaire: Treviso.
We found that the ITTO Project was more profitable than
the most profitable cattle project studied in the Amazon River
Basin.2 Mattos and Uhl (1994) determined that eastern
Amazonian cattle project IRRs ranged from 2% to 12%;
Arima and Uhl (1997) found Amazonian cattle project IRRs
ranging from 3% to 9%; and ANUALPEC (2003) found Amazonian cattle project IRRs ranging from 4% to 11%.
Agropecuria Treviso Ltda was solely responsible for all field
operations over the Project's first three years of operation,
selling logs extracted from the Tapajs National Forest to Comercial Madeiras Exportao S.A. (CEMEX). In 2002, Treviso outsourced all these operations to Manejo Florestal e Prestao de
Servios (MAFLOPS Forest Management and Service Leasing), paying a pre-contracted US$/m3 price for its services.
Table 6 shows the values paid to MAFLOPS and the cost of
fees (to IBAMA), taxes, and freight during the years MAFLOPS
administered field operations. The average of these costs was
very close to the average total cost for timber extraction
calculated using the values in Tables 2 and 3, i.e., US$ 30.26/
m3.

2
Note that projects with cattle include land cost at IRR
calculation and in ITTO-project's IRR land cost was not included,
because land belongs to Federal government and it charged taxes
and fees from the concessionaire enterprise. However, both taxes
and fees were included in ITTO-project's IRR calculation.

Based on the volumes and values of the logs extracted, the

ITTO Project should have generated US$ 150,465 in fees paid to
IBAMA; however, this Federal agency was not an efficient fee
collector and collected less. Total taxes and fees paid by the
concessionaire, estimated at US$ 298,000, represent close to
20% of the amount IBAMA estimated its personnel's effort on
the Project was worth; but as the IBAMA employees involved
with the ITTO Project were not hired for that specific purpose
and continued to fulfill their normal duties, IBAMA's budget
was unaffected by Project costs.
The ITTO Project was found to be profitable for the concessionaire. Benefits flowing to other local Project stakeholders are
discussed in the following section. Due to the unfortunate dearth
of measurable direct benefits flowing to these stakeholders,
especially to the local communities and to the IBAMA field office
responsible for overseeing the ITTO Project (in Santarm),
secondary benefits became the focus of evaluation.

Table 6 Values paid for the logs transported to the

CEMEX sawmill
Year Paid to MAFLOPS IBAMA fee
for services
(US$/m3)
3
(US$/m )
2002
2003
2004

10.83
15.00
20.83

Exchange rate: 3.00 R$/US$.

4.00
5.00
6.00

Freight
(US$/m3)

Total
(US$/m3)

6.67
8.67
9.17

21.50
28.67
36.00

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E CO L O G I CA L E CO N O MI CS 63 ( 20 0 7 ) 7 07 7

5.2.
Results from questionnaire responses, interviews, and
other reports
Information in this section comes from analysis of questionnaire responses, interviews conducted with the Project's local
stakeholders, Treviso and CEMEX documents, and an examination of Brazilian labor law. Interviews were conducted and
questionnaires completed between May 27 and June 2, 2004.
The Brazilian Federal Government has established a
minimum wage in all national territory, a normal work week
of 44 h, and a wage increase of 50% for hours worked that
exceed this limit. Full time workers have the right to a 30-day
paid vacation each year and one extra month's pay per year
(the 13th). Employers pay several labor related taxes, which
range in total from 49% to 102% of payroll, depending on the
economic activity. These substantial labor related taxes,
complex labor laws, and an amply supplied labor pool, as
indicated by the country's high unemployment rate, motivate
employers to use unregistered workers, pay below minimum
wage, circumvent pension plan obligations, and avoid taxes.

5.2.1.

Jobs generated

From the information gathered during interviews, the following conclusions arose:
a. The ITTO Project employed from 42 to 51 workers per
month, which would average one job for every 19 families
living in the Tapajs National Forest;
b. There were 43 jobs offered during the last year of the
Project: one forest engineer, one forest technician, one
accountant, three loader operators, one tractor operator,
two skidder operators, one cook, one cooking assistant, one
mechanic, one tire fitter, eight chainsaw operators, eight
chainsaw assistants, four skidding planners and assistants,
eight log landing inventory keepers, and two security
guards;
c. Initially, Project employees were non-local; at Project close,
60% of its employees were from local communities;
d. The local workforce occupied low and medium level
positions, such as chainsaw operators, cooks, tree markers,
mechanics, log counters, and other support roles;
e. Most of the Project's local workforce came from communities with access to graded dirt roads passable in dry
seasons. No workers were employed from the almost
inaccessible communities of Piquiatuba, Marituba, and
Marai, spite of they neighbor ITTO Project's area;
f. The initial level of Project job security was low: of the 50
employees working the first year, only 17 were kept to work
the second year.
As a note, ITTO Project planners anticipated the local
population's slow integration into the early phases of the
Project.

5.2.2.

Wages and labor rights

Treviso paid a starting wage of one minimum salary to Project

laborers and two minimum salaries to Project mechanics, with
overtime adding to the base wage. The company also
implemented a three tier wage scheme, with raises of up to
50% determined by the amount of on-the-job experience and

the completion of a formal training program. It is important to

note that all interviewees reported that Treviso's employment
practices met all governmental regulations, an uncommon
occurrence in western Par where illegal labor practices affect
from 47% to 62% of total workforce (Sant'ana, 2005). It was
found that Treviso's Project workers were among the best paid
in the Flona Tapajs area.

5.2.3.

Working conditions

The following is a summary of interviewee responses when

questioned about working conditions at the ITTO Project:
a. Treviso constructed adequate on-site employee lodgings.
b. Treviso provided daily meals to its workforce at the
worksite.
c. Overtime was very common, with employees working for
twelve days followed by two days rest. There were
instances of employees working for 25 days straight
followed by five days rest. Sunday afternoons were always
free.
d. Treviso paid overtime for all work in excess 8 h per day.
e. Workers had no complaints about lodging, food, or labor
journeys.
The interviews reinforced our impression that ITTO Project
workers were adequately paid and enjoyed the best possible
work conditions in the Project region.

5.2.4. Perceived and actual ITTO Project benefits to local

residents
Most of the interviewed Project workers said their welfare
increased while working for the ITTO Project and that their
earnings bought needed durable, semi-durable, and nondurable goods. According to our interviews and other less
formal visits to local communities, the Project did not alter the
local level of investment except in two cases: establishment of
a small meat packing business and an equally small ecoleather craft manufacturing plant.
All interviewed ex-workers declared they would like
another job in a similar logging operation. The six interviewed
local workers with no prior experience on the ITTO Project also
said they would like a logging operations job similar to those
provided by the Project. All interviewed Project ex-workers
were certain that they had learned new skills through their
work on the Project, especially the techniques of reduced
impact logging. Some considered that they had acquired a new
profession, such as tree identifier or loading site inventory
controller.
Treviso widened and improved local dirt roads that
connect BR163 with Pedreira and Piquiatuba, two communities near the ITTO Project area. It is a benefit for the
communities residents, but may damage the Tapajs National Forest if new residents move into it.

5.2.5. Perceived ITTO Project negative impacts on local

residents
Residents of Piquiatuba, the outside community closest to the
ITTO Project's zone of control, complained the number of
animals in the area (especially jaguar, deer, tapir) had fallen
because of Project logging operations. However, this could not

EC O LO G I CA L E C O N O M I CS 6 3 ( 2 00 7 ) 7 07 7

be verified. Piquiatuba community residents were not

employed on the ITTO Project, then this claim could be related
to this fact.

6.

Conclusion

Our study examined the ITTO Project, a reduced impact

logging project in the Tapajs National Forest. The Project
was coordinated by the Brazilian Institute of Environment and
Renewable Natural Resources (IBAMA), with funding for
planning and monitoring provided by the United Kingdom's
Department of International Development (DFID) working
through and approved by the International Tropical Timber
Organization (ITTO).
The concessionaire, Agropecuria Treviso Ltda, was found
to have made a very reasonable profit from its Project activities
while complying with all Brazilian labor laws. Treviso's IRR
from Project operations was 35.79%, above that obtained from
Amazon Basin cattle ranches. The Project was also found to
have contributed to the perceived general welfare of all its local
workers and provided what they considered to be an instructive exercise in forest management. For the most part, local
residents favorable perceptions of the Project were most likely
a result of the relatively excellent job opportunities it provided
in an area where jobs are scarce.
Although the ITTO Project's area was tiny in relation to all
Brazilian native forests, it provided proof that reduced impact
logging (RIL) techniques applied within a national forest can
generate jobs, income, and profit while maintaining the forest
ecosystem.
If one goal of reduced impact logging projects on Federal
forest land is to involve local community residents in the
forest's maintenance, more project benefits must be transferred directly to these local populations. These benefits
should include long term training in RIL techniques and
more local community control of the royalties, fees, and taxes
paid to the government by the concessionaire.
IBAMA, in conjunction with local community members,
has begun a new 100 hectare experimental RIL project in the
Tapajs National Forest. This project will put into play all the
reduced impact logging techniques proved to be effective by
the ITTO Project and employ many of its local ex-employees.
The initiation of this new RIL project in Flona Tapajs
reinforces this study's finding that the ITTO Project was not
only profitable for the concessionaire but also an instructive
exercise in forest management for local community members.

77

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