-6-

million cubic meters at present to some 21 million cubic meters by the year 2030.

16. Although some deforestation is inevitable and is consistent with the efficient utilization of forest resources, deforestation on a scale as rapid as in the recent years could jeopardiJ.e the longer-term availability of forest resources. Moreover, the present rate of deforestation leads to land degradation, which reduces the productivity of farmers and disrupts water supplies. Deforestation also kas a number of negative consequences of national and international concern. Large-scale clearing for agriculture provides smoke and carbon dioxide which contribute to global warming; and forest clearing threatens biological diversity and endangered spacies.

17. There are also serious inefficiencies in logging practices. Management of forest concessions is largely in the hands of private concessionaires. Recent surveys show that up to 40 percent of standing stock is damaged in logging operations and, where areas are relogged before the 35 year logging cycle elapses, the damage is higher (GOI/FAO, 1990). As valuable species regenerate slowly and only under specific conditions, selective logging also tends to preserve more robust out less valuable species. Since logged-over areas have greatly reduced value, many concessionaires do little to protect their holdings from encroachment and fire once they are logged.

18. The GOI/FAO study presents evidence which suggests that deforestation has a strong positive correlation with population density, and negative correlation with agricultural productivity and growth of real income. So, policies for improving the income prcspects of the rural poor in the Outer Islands will play an important role in reducing deforestation. However, in addition to deforestation resulting from encroachment upon forest land, other factors contributing to the inefficient and unsustainable exploitation of forestry resources include: weak incentives for concessionaires to manage their holding sustainably; low capture of rent by the Government through taxes, thereby causing excessive forest resource exploitation; inadequate capacity to implement regulations (World Bank. **1QQan.** v- e. '^^ Gillis, 1988).

# Water Resource Management

19. Water management issues are most intense on Java, with problems concerning both water quantity and aualitv. The **±4scusio**<sup>**4**</sup> **.** hsr .crncentrates on the quantity issue; the quality issue is considered later in the general context of the pollution problem. Although Java is well endowed with rainfall, most of the rivers are less than 50 km long, and very shallow catchments combined with deforestation have increased the variability in runoff and caused water shortages downstream, particularly in dry years. Under the circumstances, the allocation of surface water and groundwater for agriculture, municipal and industrial use is an issue of growing importance.

20. Java has total surface water flows of about 170 billion cubic meters (Bm3) annually, but firm water flows are onl, about 78 Bms or 42 percent (tIBRl. 1990a). Irrigated agriculture is the heaviest user of burface water, requiring about 60 BmB annually. There are serinolc re-ncetno regarding the