MARKET AND WELFARE ECONOMIC IMPACTS OF SUSTAINABLE FOREST MANAGEMENT PRACTICES—AN EMPIRICAL ANALYSIS OF TIMBER MARKET IN SABAH, MALAYSIA

The Sabah State Government has given its priority to Sustainable Forest Management (SFM) practices. The widely known tool, reduced impact logging option has been adopted in order to achieve SFM practices. Hence the main objective of this study was to analyse the impact of SFM practices on the timber market in Sabah, Malaysia. Impact analysis was conducted based on four scenarios arising from SFM practices, i.e. reduction by 24% in harvested area, increase by 49% in external cost of timber harvesting, increase by 47% in the cost of internalisation of the externalities and 20% gain in market access. Based on the first three scenarios, the results showed that the equilibrium quantity and price of timber had decreased and increased respectively after converting conventional logging (CL) practices to SFM practices. The economic impact of SFM provided empirical evidence that loss was incurred in the welfare of timber industry in Sabah. However, there was also an increase in the domestic price of timber, which would then help to compensate for the loss of timber volume. In addition, the scenario of 20% gain in the market access showed that Sabah's timber industry could benefit from this advantage. The State Government and other related agencies should be able to use these results as a reference in designing good mechanisms to strengthen the effectiveness of SFM practices. Kerajaan negeri Sabah memberi keutamaan kepada amalan pengurusan hutan secara mampan (SFM). Akibatnya, pembalakan berimpak rendah diterima pakai dengan meluasnya. Justeru, objektif utama kajian ini adalah untuk menyelidik impak SFM terhadap pasaran kayu balak di Sabah. Analisis impak dijalankan berdasarkan empat senario yang timbul daripada amalan SFM iaitu pengurangan sebanyak 24% kawasan tebangan, peningkatan sebanyak 49% kos luaran untuk tebangan pokok, peningkatan sebanyak 47% kos internalisasi faktor luaran dan 20% peningkatan dalam pasaran. Berdasarkan tiga senario yang pertama, keputusan menunjukkan yang pertukaran daripada pembalakan secara konvensional kepada SFM mengurangkan keseimbangan kuantiti dan meningkatkan harga kayu balak. Impak ekonomi daripada pelaksanaan SFM menunjukkan kerugian dalam industri kayu balak di Sabah. Bagaimanapun, peningkatan dalam harga tempatan kayu balak akan membantu meringankan bebanan industri kayu balak. Selain itu, 20% peningkatan dalam pasaran menunjukkan yang industri kayu balak di Sabah boleh mendapat faedah daripada pelaksanaan SFM. Kerajaan negeri