Biodiversity conservation in multiple-use forest landscapes in Sabah, Malaysia

What is this project about?

Sabah is one of the thirteen states of Malaysia and is located in the northern part of the island of Borneo. Under a mild climate and supported by a diversity of soils, the biodiversity of Sabah is exceptionally high, helping to earn Malaysia its status as one of 17 mega-diversity countries.

Among Southeast Asian countries, Malaysia’s biodiversity in terms of plants, mammals, birds, reptiles and amphibians is ranked fourth after Indonesia, China and Papua New Guinea. Most of Sabah’s biodiversity is found in the forest reserves, which occupy about half of its total landmass of 7.34 million hectares. Sabah’s forest reserves are an integral part of the 20 million hectares of equatorial rainforests demarcated under the ‘Heart of Borneo’ tri-government (Malaysia, Indonesia and Brunei Darussalam) initiative aiming at conserving and managing the tropical forest biodiversity sustainably.

Over the last 30 years, Sabah has experienced rapid economic growth relying heavily on its forest resources to finance its socio-economic development programmes. There had been an acceleration of forest conversion, particularly outside the forest reserves, as well as forest degradation within the forest reserves associated with overharvesting of resources. These trends have resulted in the progressive loss and degradation of much of the biodiversity in the forest landscape. Protected areas are becoming increasingly isolated, thus decreasing prospects for viability of species.

The proposed 261,264 ha project landscape represents one such landscape, which forms an important connecting landmass to three renowned protected areas in Sabah; the Maliau Basin Conservation Area (58,840 ha) to the West, the Danum Valley Conservation Areas (43,800 ha) to the East, and the Imbak Canyon Conservation Areas (16,750 ha) to the North.

The project landscape constitutes a connecting landscape that is utilized for timber production (69% of total area), industrial tree plantation (16%), rehabilitated forests by enrichment planting (6%) and conservation purposes (6%). This landuse mix is an emerging trend in the forest reserves of Sabah driven by: (i) the comparative disadvantage in crop gestation periods between growing trees and agriculture crops, (ii) low rent capture, and: (iii) incoherent enforcement associated with the lack of expertise in multiple-use forest landscapes.

Under a business-as-usual scenario, the above protected areas will become increasingly vulnerable to fire during prolonged droughts potentially from the surrounding degraded forests.

The objective of the project is to bring the landuses in the connecting landscape and protected areas under a common and integrated management umbrella strategy in order to mainstream biodiversity, ecosystem functions and resilience, while enabling ongoing sustainable uses.

The project will meet this objective by achieving three interconnected outcomes: (1) provisioning of an enabling environment for optimized multiple use planning, financing, management and protection of forest landscapes; (2) demonstration of multiple-use forest landscape planning and management system, and (3) demonstration of innovative sustainable financing methods for multiple-use forest landscape management.

Assistance provided by GEF will strengthen the conservation of the largest area of mostly contiguous forest in Sabah, and one of the most important remaining forest landscapes in the Heart of Borneo. GEF’s intervention amounts to USD4.4 million against USD8.8 million from the Government of Malaysia and co-financing from implementing partners. The project is expected to serve as a model to draw lessons learnt in best practices for replication in other forest landscapes within Sabah and in other parts of Malaysia and the Heart of Borneo.

What is the current situation?

Major threats to globally significant forest biodiversity in Sabah are associated with the following sources: forest conversion, forest degradation, over-harvesting, fire and infrastructure expansion. Most of these threats are also present within the project landscape.

Over the last 30 years, Sabah has experienced rapid economic growth spurred by the 5-year Malaysia Plans (MP). Sabah has relied heavily on its forest resources to finance its socioeconomic development programmes, particularly in the early phase of the Malaysia Plans. Thus, over the last three decades, there has been an acceleration of forest conversion, particularly outside of the forest reserves.

Forest conversion is a serious threat to the biodiversity of Sabah. As highlighted above, the Agriculture Sector has played an important role in Sabah’s socio-economic development, contributing 38% of the State’s Gross Domestic Product (GDP) in 2009. Agriculture has replaced the Forestry Sector as the top revenue earner—with the latter now leveling off at around 10%.

This is not surprising given that the average annual per hectare productivity of the oil palm industry is about 18 times that of the forestry sector. However, growth in the sector has largely come through expansion in total area under cultivation, with area under cultivation increasing from 263,000 ha. in 1970 to 1.47 million ha in 2009 This expansion has taken place almost entirely through forest conversion.

The continued heavy reliance on oil palm to propel the economic growth in Sabah means that more native forests within the remaining 730,000 ha of undeveloped Stateland will be cleared, thereby reducing habitat while increasing the degree of forest fragmentation.

Forest conversion for agriculture is also occurring within the forest reserves, albeit at a smaller scale compared to Stateland. The Forest Enactment (1968) allows for the conversion of native forests to tree plantations only in cases where the area in question contains a low growing stock of commercial tree species.

The decision as to which rehabilitation or conversion option to choose is largely made on financial grounds. Climber-cutting is the least expensive compared to replanting, provided that the forest still contains sufficient stock of natural regeneration.

In recent years, enrichment planting using native tree species has begun to find favour, due to its lower investment cost relative to clear-fell planting, and its advantages in meeting  conservation objectives. Although rattan was used in enrichment planting, it is now out of favour in Sabah because of its low harvest yield and financial return.

The addition of rubber to the list of approved ‘tree’ crops in the last five years has made it more attractive to establish forest plantations in Sabah. Prior to this addition, the approved tree crops for forest plantation were restricted to fast growing exotic tree species (e.g. Acacia spp., Gmelina spp., Eucalyptus spp.) or species of native origins (e.g. the dipterocarps).

Financial factors thus favor short rotation crops over long-rotation crops, a fact which increases the likelihood that natural forests will continue to be cleared and replaced with monoculture plantations if left to strictly free market forces.

Forest degradation associated with unsustainable timber harvesting practices (including illegal harvesting) is the most extensive form of forest disturbance in Sabah. Prior to stricter enforcement beginning in 1997, timber harvesting damages were relatively high.The most obvious damages caused by log extraction operations are the open spaces created in the forest area, where up to 40% of a logged forest can be occupied by roads, skid trails, log yards and camp areas. 

Of particular concern now are the extensive areas that had been logged previously with unsupervised harvesting that need intensive silviculture treatments to restore their ecosystem functions and vitality. This will have implications on the economics and appropriate financial instrument (e.g. REDD+) to support forest restoration works. Over-harvesting of forest resources, including flora and fauna for trade and domestic use, has also contributed to habitat degradation and to reductions in species populations.

Among the most sought after trees is Gaharu, which is highly prized for its resin for the perfume industry. Others include dammar or resin of Agathis spp. and dipterocarps such as the Dipterocarpus spp. Hunting for Sumatran rhinoceros body-parts and wild buffalo (tembadau) meat and trophies is a pervasive problem. These hunting intrusions by outsiders, as well as by timber harvesting workers and gatherers of forest products on a continuing basis, seeking ungulates and other animals, have depressed wildlife populations in Sabah.

The long-term solution to the above threats and their underlying causes is a landscape management approach which nests PAs within a matrix of conservation-compatible land uses in order to maintain biodiversity, ecosystem functions and resilience.

Under any financially realistic version of this solution, the PAs and connecting landscape areas must also generate the large majority of revenues needed for their own optimal management. These barriers are preventing the emergence of the above-defined long-term solution and in so doing are compromising both forest resource sustainability and biodiversity conservation. These include inadequate policy framework, weak institutions and limited technical capacities at state level.

There is currently neither an adequate enabling environment for landscape-level, multiple use forest management and financing in Sabah nor sufficient qualified staff to manage such a system. Specific barriers include: (i) no regulatory or planning framework for defining a set of landscape-level conservation and sustainable use objectives, activities, budgets, indicators, etc.; (ii) no framework for managing that landscape according to the defined objectives; (iii) no policies / regulations for generating and/or reinjection of revenues from anything other than timber; (iv) no guidelines or policies for multiple use forest landscape planning, management or conservation; (v) limited technical capacities to implement multiple use strategies, and; (vi) inadequate systems of monitoring and enforcement.

How are we doing this?

The design principles of the proposed project follow the guidance of the GEF-4 strategic framework under the biodiversity portfolio in mainstreaming biodiversity in production landscapes and sectors. This will contribute to internalizing the goals of biodiversity conservation and sustainable use of biological resources into economic sectors and development models, policies and programs.

The project intervention will focus on removal of barriers to sustainable management of the project landscape, while generating spin-off benefits to adjacent protected areas networks. Barriers were defined as the sub-optimal functioning of three components ­­­of biodiversity conservation in a multiple-use forest landscape in Sabah. Funds provided under project will be used to finance the incremental costs of measures to mainstream biodiversity without subsidizing the costs of enterprises in doing regular business and taking due precautions to ensure the sustainability of outcomes.

The project objective is to institutionalize a multiple-use forest landscape planning and management model which brings the management of critical protected areas and connecting landscapes under a common management umbrella that is sustainably funded by revenues generated within the area.  The project proposes to achieve its objective through three interconnected and complementary components. The first component focuses on strengthening Sabah’s policy framework to mainstream biodiversity and to finance its conservation within the multiple-use forest landscape, along with support to improved institutional capacity. The second component involves demonstrating how to operationalize the multiple-use forest landscape management concept, with lessons learnt to be made available for replication throughout Sabah and elsewhere.  The third component focuses on developing innovative sustainable financing options appropriate to the landuses within the project landscape. 

Component 1: An enabling environment for optimized, multiple-use planning, financing, management and protection of forest landscapes
Under Component 1, GEF support will focus on ensuring that multiple use forest landscape management systems are designed, managed and financed in ways that ensure the conservation of biodiversity. This will include support for the development and implementation of policies aimed at achieving no net loss (NNL) /net gain in biodiversity through fact-finding, evaluation of policy options, development of the necessary biodiversity information, policy formulation and system design and capacity building. The Sabah Forestry Department believes that there are merits in the adoption of NNL initiative particularly to promote conservation in the State, and capturing innovative funding through this venture. GEF will also support is the creation of an enabling environment to permit the introduction and implementation of innovative sustainable funding through REDD+, bio-banking and PES mechanisms. There are five inter-connected outputs under this component.

Component 2: Demonstration of multiple-use forest landscape planning and management system
Under this component, the project will determine the optimal mix of production and conservation landuses within the project landscape to maximize sustainable revenues. In order to do this, GEF support will help to: (i) collect and compile data related to the biodiversity baseline at the landscape level; (ii) select/develop and implement an economic landuse planning model that is most appropriate to the biodiversity targets within the forest landscape; (iii) prepare a landscape management plan based on a combination of landuses, and; (iv) support pilot implementation of the landscape-level management plan.  As a result of project activities, species and ecosystem biodiversity will be conserved in 261,264 ha of the Kalabakan-Gunung Rara area within a sustainably managed forest landscape.

Component 3: Sustainable financing of protected areas and associated forest landscape areas demonstrated at the pilot site
Under this outcome, the project will support the design and development of three alternative revenue generation schemes and disbursement using pilot modalities of REDD+, biodiversity offsets and PES corresponding to output 2.4 for scaling-up to the whole project landscape. A program of capacity building will be supported to develop, implement and manage these mechanisms and instruments in a systematic and transparent manner. The overall aim will be to increase the amount of funding flowing to multiple-use forest landscape authorities while also providing financial incentives for other stakeholders to participate more actively in biodiversity conservation. The outcomes and outputs for this component are as follows:

Who are our partners?

The project is executed by the Sabah Forestry Department (SFD) as the representative of the Ministry of Natural Resources and Environment, Malaysia (NRE), which is acting as the Executing Entity (EE). The SFD will work in collaboration with two governmental agencies in providing national/state level facilitation for the project namely: NRE and the State of Sabah Economic Planning Unit (SEPU).

What have we accomplished so far?

The project has established a Technical Working Committee to support the National Steering Committee in monitoring the achievement of the output and outcomes. There is also an increase in the Protected Area within the project area. 

Who finances it?

Year Donor Amount (USD)
2012 - 2018 UNDP GEF $ 4,400,000
2012 - 2018 Sabah Forest Department Cost-share
2012 - 2018 Sabah Foundation Cost-share
$ 4,400,000
2012 - 2018 World Wildlife Foundation Cost-share
$    100,000

Delivery in previous fiscal years?

Year Donor Amount (USD)
2012 UNDP GEF $ 15,000
2013 UNDP GEF $ 90,000
2014 UNDP GEF $ 80,828
2015 UNDP GEF $ 523,274