Principle - Society accepts responsibility for sustainability.

Criterion- There is equitable access to and distribution of economic rents.

Indicator - Wages and other benefits conform to national and/or ILO standards.

Box B: Definition:

In cases where local people are employed in forest-related businesses operating in the local area, the level of wages and benefits, and other working conditions will influence the well-being of local people. While national standards and International Labor Organization (ILO) standards are not infallible assurances of wages and benefits being "fair", they do offer at least a basic reference point for a minimum level for "fair" compensation.

Box D: Applicability to Different Landowners. Explain any differences.

N/A

Box E: Overlap.

CIFOR – BAG: L1, 1.2.1

CIFOR – ECON : C 3.3.3, "Estimated local forest-dweller rent capture"

Notes:

This classification does not apply to socioeconomic systems.

Box I: Underlying Concepts:

As Ruitenbeek (1998) suggests, measuring economic rent can be complicated. Related to forest management, it is typically divided among five key players: owners, managers, consumers, governments, and, local individuals and communities. The actual level of rent realized, and the division of rent among these players, depends on a large array of institutional, policy, legal and technical circumstances. The royalty, fee or tax regime can have a significant effect on how much resource value is generated, and how much of it accrues to each of the actors, such as wage payments to local individuals for labor services. Comparing the rate at which local labor is compensated with national and/or ILO standards provides an indication of "fairness" related to the distribution of some of the economic rents associated with forest management.

Box J: Relevance to Sustainable/Unsustainable Management :

Fair wages and benefits are relevant in two senses. First, they are important from the perspective of justice, which relates to human well-being; human well-being, in turn, has been identified as forming a part of sustainability. Second, a decent benefit and wage increases the actual economic well-being of the local people. This is relevant because there is some evidence that the rural poor can be driven by the tenuous conditions of their existence to destructive resource management practices based on meeting immediate needs. Conversely, increased economic well-being in such settings may decrease the impact on local resources, by increasing people’s security and their ability to take a long-term approach to resources.

Box K: Measurement Methods:

The following steps are suggested:

• Compare details of wages and benefits from employment with ILO or national standards such as minimum wage rates;
• Compare wages and benefits from employment records with prevailing local wage rates;

The following measurement methods can be used:

• Use a scale of 1-10, taking into account whether national and/or ILO wage and benefit standards are met (suggested by CIFOR);
• Indicate local wages as a percent of national, ILO and/or local wage and benefit standards.

Box L: Data Required:

The data required includes:

• Local employee wages and benefits;
• ILO, national and/or local wage and benefit standards.

Wage and benefit information should be readily available, as should ILO information.

Box M: Data Used for the North American Test :

Average wage per job data for the counties in the study area were obtained from the Regional Economic Information System (U.S. Department of Commerce, Bureau of Economic Analysis). Average wage per job data for forestry-related sectors (SIC 08 and 24) were obtained from IMPLAN (MIG, 1995). Minimum wage rates were obtained from the U.S. Department of Labor.

Box N: Example Results:

Forestry-Related Wage Rates Compared to Minimum and Local Average Wage Rates, 1995

Box O: Assessing the Practicality:

National and ILO standards are intended only to reflect the minimum appropriate wage, and thus in some cases their use as an indicator may not correspond with what the employees or the community perceive as "fair", especially vis-à-vis the size of profits potentially made by timber companies.

In a practical sense, the application of this indicator in the North American test is rather insensitive to wage variations. The existence of mandatory minimum wage laws in the U.S. makes it unlikely that wage payments below the minimum will occur. Comparing forestry-related wage rates to prevailing local average wage rates gives a comparison for "fairness" with respect to contemporary workers.

Box P: Assessing the Information Value:

The indicator is a proxy for the fairness in the distribution of economic rent, in this case the distribution of rent to local workers as compensation for labor services.

Box Q: Overall assessment:

Accepted

Strengths:

1. It is relatively easy, inexpensive indicator to measure.
2. Indicates direct comparison of fairness.

Weaknesses:

1. National and ILO standards are intended only to reflect the minimum appropriate wage, and thus in some cases their use as an indicator may not correspond with what the employees or the community perceive as "fair", especially vis-à-vis the size of profits potentially made by timber companies.
2. The existence of mandatory minimum wage laws in the U.S. makes it unlikely that wage payments below the minimum will occur. This makes the indicator relatively insensitive in this particular application.

Box R: Did you rewrite or revise to a new indicator. If so what?

No.

Box S: References:

• Colfer, Carol J. Pierce, R. Prahbu and E. Wollenberg. 1995. Principles, Criteria and Indicators: Applying Ockham’s Razor to the People-Forestry Link. CIFOR Working Paper No. 8. CIFOR, Bogor, Indonesia.
• MIG, Inc. (Minnesota IMPLAN Group, Inc), IMPLAN System (1995 data and software), 1940 South Greeley Street, Suite 101, Stillwater, MN 55082, www.implan.com, 1997.
• U.S. Dept. of Commerce, Bureau of Economic Analysis. 1997. Regional Economic Information System, CD ROM. U.S. Government Printing Office, Washington DC.
• US Department of Commerce. 1987. Standard Industrial Classification (SIC) Manual. U.S. Government Printing Office, Washington DC.
• US Dept of Labor. 1998. History of Changes in the Minimum Wage, http://www.dol.gov/dol/esa/public/minwage/chart.htm
• Prahbu, R., C. J. P. Colfer, P. Wenkateswarlu, Lay Cheng Tan, R. Soekmadi, and E. Wollenberg. 1996. Testing Criteria and Indicators for the Sustainable Management of Forests: Phase 1 Final Report. CIFOR, Bogor, Indonesia.
• Ruitenbeek, H. Jack and Cynthia Cartier. 1998. Rational Exploitations: Economic Criteria & Indicators for Sustainable Management of Tropical Forests. CIFOR working paper, draft of April 1998.

Please record your notes on evaluating the indicator here.