Tuesday, January 22, 2013

Kiva Innovations: Loans that preserve our forests while helping farmers turn a profit

While it's not normally considered a development issue, deforestation impacts millions of lives around the world -- and stands to affect generations to come.

The devastation of our earth’s forests is no small matter, with the World Resources Institute estimating that over 80% of the world’s forests have been destroyed. We've been losing around 5.2 million hectares of forest per year (based on data from 2000 to 2010). The facts speak for themselves: we are irreversibly damaging our environment, and the consequences include loss of habitat for animals, increased droughts, and global warming -- just to name a few. 

In Kenya, this problem is especially acute, as demand is high for wood commodities that are essential to a wide variety of industries. Kenya remains largely a net importer of wood, and as a result, faces insufficient levels of locally sourced wood. 

Unsustainable forest harvesting is one of the primary methods for sourcing wood in Kenya, and many farmers rely on the income generated from chopping down indigenous trees. Only about 1.7% of Kenya's land is covered by forest – well below the internationally-accepted minimum of 10%. But traditional practices, driven by profit and survival, continue to intensify the destruction. 

A KOMAZA farmer planting Eucalyptus.

Kenya and Eucalyptus 

Eucalyptus, a sustainable wood species, was first introduced to Kenya in 1902. Today, it's estimated that the Eucalyptus industry contributes approximately 16.4 billion Kenyan shillings to the national economy (excluding non-traded domestic and small-scale businesses), which represents around 1% of Kenya’s total GDP. 

Of the over 100 Eucalyptus species found in Kenya, only 20 are recommended as suitable for planting. Accordingly, the continued growth of Eucalyptus trees within the country has reignited a debate about the plant’s impact on the environment, particularly the effects it has on the hydration of soil. 

When Eucalyptus is managed poorly 

The negative perception of Eucalyptus comes from the alleged large quantity of water required for growth. According to the experts, however, this is not true for all Eucalyptus varieties and applies only to a select few species, especially if they're not cultivated in the correct conditions. When properly managed, Eucalyptus poses no serious threat to local environments and, in fact, requires considerably less water than other crops like cotton, coffee, bananas and sunflowers. 

Large scale plantations are the norm for growing wood for this demanding market, and these farms can disrupt and negatively impact ecosystems and local communities. Small-scale commercial forestry has been promoted in the past, but this strategy can be economically unviable without sufficient economies of scale at the local level.

In many cases, farmers do not have the guidance or expertise to correctly assess and prepare their land for the non-destructive planting of Eucalyptus. Instead, they continue to use unsustainable planting practices. 

When Eucalyptus is managed correctly 

Sustainable farming has been defined by the OECD as “agricultural production that is economically viable and does not degrade the environment in the long run." Sustainable techniques in farming have gained attention internationally, and Eucalyptus farming best practices are now taking root in Kenya.

Komaza farmers harvesting Eucalyptus.

Best practices specific to Eucalyptus include: 

- Ensuring that plantation areas are suitable for Eucalyptus (i.e. not close to a water source).

- Managing the plantation as a longer-term crop, and not depleting minerals through constant rotation.

- Using locally-appropriate Eucalyptus species to yield best results.

The qualities of Eucalyptus make it suitable to be used as: 

- Sustainable wood source with rapid regeneration rates.

- Raw material for power transmission poles for rural electrification programs.

- An alternative source of affordable energy for the tea, tobacco, lime, cement and other industries.

- High quality fibre for pulp and paper.

Harnessing the good with KOMAZA 

A non-profit innovator in Kenya’s forestry industry, KOMAZA is Swahili for “promote development, encourage growth.”

KOMAZA works with rural families to grow trees as a cash crop. Targeting arid and semi-arid lands with marginal or degraded soils, the socially-driven company provides farmers with tools and hands-on training to grow woodlots on their unused land. Once the trees reach maturity, KOMAZA sells families' harvests as high-value wood products to generate more income and create a sustainable wood supply to decrease deforestation.

The organization has searched for the most suitable Eucalyptus species, which are ecologically sustainable, resilient to drought, and provide a regular income to smallholder farmers. The result of the search is a hybrid plant of the Eucalyptus Grandis and Eucalyptus Camaldulensis, which requires lower levels of water than other common species.

Prior to planting, Komaza conducts a site assessment to ensure the correct conditions are in place for the Eucalyptus species. As part of the planting process, Komaza ensures farmers maintain a minimum buffer of 100 meters from any water source or wetlands and only plant where the depth of the water exceeds 30 meters. KOMAZA leverages a rural-based farmer extension network to regulate planting and implement microforestry best practices.

With the right resources and correct techniques, Eucalyptus is helping to provide farmers with a sustainable livelihood. 

Kiva is on the lookout for partners interested in offering financing for small-scale, sustainable tree farming. With the right loan products, we could make a major difference in how forests are grown, used, and honored for years in the future.

This post was contributed by Eileen Silva, the research and communications intern on Kiva's Strategic Initiatives team. Stay tuned for more on how Kiva is tackling the world's biggest challenges.