The Saving Book Approach

General Situation

In recent years, the forest areas owned by the State Department of Forestry Agency (Leskhoz) in the Gorno-Badakhshan Autonomous Oblast (GBAO) were leased out for the long-term use to local forest users for the management and sustainable use. A new approach to restore severely degraded areas, which in the Soviet period were forested, has been tested in the district of Shughnan of GBAO. In contrast to the use of the area covered by forests, the work to transform the land devoid of vegetation into an area suitable for forestry is far significant. It is therefore necessary in the beginning to cover all the financial expenses for forest restoration, until it becomes possible to extract profit from the newly planted trees.

Approach

The approach that was initially developed in Vietnam focused on creating the source of income for small private forestry farmers that signed an agreement on the use and restoration of forests, as well as rehabilitating the previously forested but now severely degraded areas of the state forestry. To encourage a forest user to work in such a forest plot, a deposit account is open in his name on which the funds are deposited at the rate of 500 per hectare. The payment will be made within six years. Each year they set a clear objective for forest restoration (such as, construction of irrigation canals, preparation of the site for planting, reforestation, survival rate of the planting stock, care for the site, etc.). Achieving the goal is a prerequisite for the payment of the annual share of deposit and interest, earned on the account for this period.

The Savings Book Approach

During the four years of reforestation, a great work needs to be done, but returns in the form of forest products should not be yet expected. That is why a person can get paid on his savings account, if he satisfactory completes his assigned work. Starting from the fourth year, the income from forest products will gradually increase, while the annual payments on the savings book will decrease. After 6 years, the restored forest area will be managed like any other site within the framework of "The joint forest management", and the harvested products can provide both local forest users and the State Forestry with income (in accordance with the terms of the contract on the use, a certain percentage of the proceeds from the harvest will paid to the State Forestry).

The savings book approach was first implemented in the village Vuzh of Shughnan district from 2010 to 2012, within the GIZ project, Sustainable Management of Natural Resources in Gorno-Badakhshan" on behalf of the Federal Ministry for Economic Cooperation and Development of Germany. The project worked closely with the project of "Sustainable recovery and development of riparian forests in GBAO," which was carried out at the request of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety of Germany until June, 2011. Since 2013, this approach has been carried out by the Public Fund CAMP, Tabiat and the State Forestry Agency of GBAO.

Cooperation with local MFIs

The savings books for the users of woodlots have been opened and managed by a local Microfinance Institution (MFI). Such a decision at the local level provides a high level of flexibility and cooperation in the management of forest area. The control of the results is carried out by the State Forestry Agency together with the MFI, which guarantees an access to the funds on the deposit accounts, paid annually only if the task of reforestation is successfully performed. Due to its flexibility and local knowledge, the Microfinance Institution provides a high degree of closeness to the target group and is directly involved in the works with villages.

The Savings Book Approach A pilot project in GBAO

Starting from 2010, the approach of "savings book" has been carried out as a pilot project in a completely deserted area of 20 hectares in the village Vuzh of Shugnan district in GBAO. In the Soviet times, the site was covered with dense forest and irrigated from the canal, fed by glacial waters and springs. In the 1990s, the forest was cut down completely, while the canal became of no use. Currently, 15 households in the village Vuzh are involved in the restoration of the forest. According to the plan works, the area was fenced to protect it from grazing livestock, irrigation network was restored and an area of 7 hectares was planted with native tree species (willows and poplars). Based on the results of this pilot project the question of acceptability and effectiveness of the implementation of the savings book approach on a broader scale of GBAO will be decided.

The impact of the savings book approach

The direct impact is reflected in the restoration of the desert areas, owned by the State Forestry, through the participation of the local population and creating a source of income for the involved forest users and the State Forestry. Thanks to the financial incentives, the approach provides a direct participation of the rural population of GBAO in forestry and gives local people the legitimate right for a long-term use of forest resources in cooperation with the State Forestry.

The indirect effect of this approach is that households in the rural areas get acquainted with the banking procedures and the benefits of interest rates, which increases their ability to borrow and manage investments. On the other hand, the approach provides the Microfinance Institution with the influx of new customers and brings it long-term capital and increases the reserves of this financial institution.

In addition, since planted native tree species are rapidly growing, they can be used as fuel wood, which is an effective alternative to other fuels used in the Pamirs. In particular, in the Eastern Pamirs, where there are shortages of fuel and the destruction of Eurotia, one can sell the wood, harvested from the areas of forest restoration, while both increasing the marketing opportunities for forest users and potential in the field of protecting ecosystems in the Eastern Pamirs by reducing the consumption of Eurotia.