Brazil Amazon forest to be privately managed

(Reuters) - Brazil will auction large swaths of the Amazon forest to be managed by private timber companies and cooperatives to help reduce demand for illegal logging, a top official told Reuters on Monday.

After years of legal battles and political opposition, the government is reviving concessions for private companies to log its national forests.

"The future of the Amazon -- combating deforestation and climate change -- is strengthening forest management. I don't see any other solution," Antonio Carlos Hummel, head of Brazil's National Forestry Service, said at the Reuters Global Climate and Alternative Summit.

The government will grant private companies logging concessions for nearly 1 million hectares (2.47 million) by year-end and, within 4 to 5 years, nearly 11 million hectares (27 million acres), the size of the U.S. state of Virginia.

Existing concessions total only 150,000 hectares (370,000 acres).

Unlike the illegal slash and burn practice that has already destroyed nearly 20 percent of the world's largest rainforest, managed logging extracts only as many trees as the forest can naturally regenerate.

When the government began preparing for concessions in 2003, it faced stiff opposition from conservative politicians who called it privatization of public assets.

"Back then we didn't explain the process well. Now, it's all cleared up. There hasn't been a questioning of privatization for over a year," said Hummel.

Concessions actually helped establish more state control in the often lawless Amazon region, where settlers and speculators often illegally occupied public lands, he added.

While illegal logging usually produces wealth for only a few, forest concessions, at least on paper, generate lasting jobs and tax revenues for the government.

Aware of failed private timber concessions in Africa and parts of Asia, Brazilian lawmakers took certain safeguards.

"We included a series of community control mechanisms," said Hummel, referring to non-government organizations that participate in public audits of concessions.

PITFALLS

Deforestation rates in Brazil's Amazon, the world's largest rainforest, have fallen to their lowest in two decades after the government stepped up policing in recent years. Authorities have fined illegal cattle ranchers and loggers, confiscated their products, and cut off bank loans to them.

But unless such tough controls are maintained, illegal logging could undermine demand for more expensive timber from managed forests, said Hummel.

"If next year controls ease off and the market is flooded with cheap wood, forestry concessions will suffer," said Hummel.

The potential for forest management is huge with state governments and private entrepreneurs also beginning to jump on the band wagon.

In addition, traditional forest dwellers have rights to about 19 million hectares (47 million acres) and resettled peasants hold 21 million hectares in the Amazon.

Currently only two cooperatives of traditional forest dwellers have a federal license to log.

The biggest challenges for cooperatives is to obtain technology, training, and financing, said Hummel, referring to red tape and a lack of environmental awareness at banks.

"Everything in this country is an incentive for deforestation, for developing destroyed forest. So we're having to change the paradigm -- finance standing forests," he said.

(Reporting by Raymond Colitt; Editing by Gary Hill)