: Look for Bark or Plant Fibres from trees or swamp vegetation.
: Use a Crafting Bench or a specific Drying Rack to turn the wet pulp into usable sheets of paper. File: The_Last_Goblin_v0.3.1_Win.rar ...
Since the file version you mentioned (v0.3.1) is an early development build, you might also find paper by looting desks or bookshelves in ruins if the crafting recipe hasn't been unlocked or implemented yet. The Last Goblin Walkthrough : Look for Bark or Plant Fibres from