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Opinion Piece: States need to look beyond land-based activities for alternative sources of income

A royal statement by the Pahang palace, dated 7 July 2021, calls for exploring the possibilities of gazetting a 500m strip of land along the Pahang border as forest reserves. 

An unbroken line of natural forest creates conservation benefits. Large mammals such as the Malayan tigers, Asian elephants and tapirs need large connected forests to roam and forage for food. Today, many of our forest blocks are isolated. This causes inbreeding among wildlife, resulting in lack of genetic diversity and bringing about local extinction. 

Adopting the same principle of connectivity, WWF-Malaysia would like to call for entire strips of land within and bordering linkages in the state of Pahang to be gazetted as protected areas. Pahang is the crucial link in the Central Forest Spine (CFS) Masterplan that provides the overarching framework of connectivity throughout Peninsular Malaysia. 

In welcoming the royal call for protection of border areas, WWF-Malaysia also hopes that Fraser’s Hill and the surrounding forests would be elevated as a state park. Spanning 83,000 hectares with very rich biological diversity, Frasers Hill consists mainly of mountains, valleys and foothills, and is a source of rivers that provide vital ecosystem services such as provision of freshwater. 

In the royal statement, the Pahang palace also called for the State to identify alternative sources of income. Traditionally, states in Malaysia obtain income from land-based activities such as royalties from logging and mining operations. Our constitution was crafted under this context in the 1950s, expecting exploitative land-based activities such as mining, plantations and logging to continue providing income for States, while taxes would be paid to the Federal government. We must now shift to a sustainable economy benefiting both nature and people. States, therefore, need to look beyond exploitative land-based activities for alternative sources of income. 

In line with the royal statement, WWF-Malaysia recommends three alternative sources of income based on the environmental, social and governance (ESG) values. 

The first is Ecological Fiscal Transfer (EFT), as a direct incentive to the states for maintaining and keeping forests healthy. Forests provide important ecosystem services beyond state borders, such as reliable and clean water, reductions in the severity and number of floods and droughts, and increasing food security. As such, it is only logical for the Federal government to provide these payments to States that protect their natural environments. 
Initiated in the 2019 national budget and repeated in the 2021 budget, the Federal Government allocated RM70 million under the EFT initiative. Unfortunately, the amount is inadequate to offset state governments’ loss of revenue from the cessation of logging and other activities.  Looking to the future, WWF-Malaysia hopes to see an allocation based on a natural capital valuation system that would give states sufficient incentive to maintain or even increase their areas of healthy forests. 

The second set of ESG values relates to maintaining forests as a carbon sink to combat global warming. Through absorbing carbon dioxide and generating oxygen, forests provide a service that can be traded through carbon financing to generate revenue. In addition, forests also help us in reducing our net emission of carbon dioxide and Green Houses Gases (GHG) from polluting activities. More than 120 countries have committed to a transition to a net-zero emissions economy, which requires reducing and capturing carbon emission. In this, forest plays a crucial role. With our large forest cover absorbing emissions, Malaysia is a country with competitive advantage towards the transition, and in attracting foreign investment to a net-zero emissions economy. 

A third set of new revenue generation relates to the Living Landscape approach. Living landscape fosters the creation of new, as well as enhancement of ESG values placed upon our timber and plantation commodities. For decades, timber harvesting and large scale oil palm plantations have been seen as being exploitative, and associated with deforestation and loss of wildlife habitat. To address this, our government has mandated compulsory compliance with certification standards for both forest management and palm oil. However, the present system does not address the issue of deforestation and loss of wildlife habitat. 

In contrast, the Living Landscape Approach creates a comprehensive land use system that protects forest and wildlife habitats. It is based on three key principles, which are the protection of forests and natural habitat, sustainable production of palm oil and timber, and restoration of degraded landscapes. The end effect of the Living Landscapes is a balance of human needs and nature conservation that fulfils the requirements of ESG, where eventually such areas thriving with wildlife can be marketed as a wildlife friendly landscape.

WWF-Malaysia hopes that the royal statement would pave the way for the formulation of a land use policy that fosters public-private-partnership to make Pahang a sustainable state, characterised by a balance of human needs and healthy ecosystems. 

Dr. Henry Chan
Conservation Director, WWF-Malaysia

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