Can Bhutan tap into its vast forest resources?

World Bank suggests there are avenues to tap into this sector albeit with cautions


Despite large tracts of forest cover that exceeds 70 percent of the country’s total land area, Bhutan is a net importer of wood-based products, indicating untapped potential to increase the added value of the country’s forest resources.

According to Bhutan’s national accounts, forestry contributed between 2.9 percent and 2.4 percent to the gross domestic product (GDP) between 2013 and 2017.

Different Forest Resource Assessments show that Bhutan could substantially increase its forest utilization with the availability of advanced harvesting and processing technologies, without compromising its forest cover targets.

According to Bhutan Country Environmental Assessment Report, 2024 which was published by World Bank Group, the Computable General Equilibrium (CGE) model assesses the potential contribution of investments in two wood-based products to promote higher value-added within this sector.

This includes the production of glue-laminated timber to reduce dependency on imported steel-based structures, and the production of domestic charcoal to reduce the carbon footprint of energy-intensive industries using charcoal and coke.

The macro-level results from CGE modeling show that all policy scenarios result in positive economic impacts and welfare effects, boosting the production of glulam and charcoal while moderately increasing domestic employment and significantly reducing Bhutan’s estimated greenhouse gas (GHG) emissions by 3.2 percent.

It said that Bhutan’s tourism sector could do better to fully capitalize on the country’s pristine environment. The majority accounting for 80 percent of tourists only visits the hotspot locations in Western Bhutan, where overcrowding and high seasonality could jeopardize the sector’s sustainability and future growth.

Diversifying the tourism sector by improving the quality of supply of facilities and infrastructure, and by enhancing the ecotourism segment, for which Bhutan’s environmental conservation efforts are a main input, will be a winning proposition and a long-term solution to transform Bhutan’s tourism industry and economy at large; and address the structural issues and vulnerabilities of the sector.

The report also states that the results of model simulations emphasize that diversification of the tourism sector towards a higher share of nature and community-based products would result in a spatially and temporally more balanced distribution of tourist arrivals and positive economic growth of an increase in GDP of about 0.4 percent.

Moreover, incentivizing tourists to spend days in regions outside of Western Bhutan will likely lead to an increase in average stays. The biggest setback experienced by the eco-tourism industry in the fastest-growing market, during the COVID-19 pandemic, indicates the need to explore for opportunities and alternatives for the future growth of diversified and community-based tourism.

It further said building the resilience of Bhutan’s unique ecosystems to address growing pressures will help protect the country’s pristine environment, which is the brand of Bhutan. The country has preserved its unique ecosystems, but there are growing pressures that will continue to increase in the future.

Drivers of environmental pressure need special and systematic attention to address emerging urbanization challenges and related air quality, water quality, and waste management issues. Maintaining Bhutan’s unique tourism brand will also require minimizing unwanted impacts on biodiversity and landscapes, which are particularly attractive to eco-tourists.

Nonetheless, Bhutan’s natural landscapes remain highly vulnerable to climate change impacts and natural disasters. Implementation of the National Climate Policy objectives needs to factor adaptation actions into the local-level plans to mitigate the risks to nature-dependent livelihoods.

It said, “Addressing the emerging environmental risks that Bhutan is facing requires an effective management of environmental externalities and human capacity.”

Low access to basic services like waste management, safely managed water and sanitation, and elevated threats of natural disasters in urban areas will weigh heavily on populations, leading to high mortality risks it further reported.

Further, air quality issues and potential implications on human health have been on the rise and need integrated management solutions. Part of the solutions will be to reduce pollution from inefficient energy use and the expanding transport sector.

In the long run, Bhutan’s natural resources may be on the brink of excessive pressure despite the government’s political commitment to sustainable resource use and conservation. Current development patterns, growing environmental pressures, and climate effects indicate the potential risks of degrading air and water quality, and landscapes that support important economic sectors.

The report states that linking conservation and protection with economic growth and capitalizing on the country’s bountiful natural resources to link environmental protection, economic growth, and local development could improve economic and environmental resilience through economic diversification using natural assets for adding value to the economy and creating more jobs.

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