Illegal logging and the subsequent trade of illegal timber undermines social equity, environmental conservation, sustainable development and economic growth in many countries around the world.
With a significant proportion of global wood trade estimated to be illegal, illegal logging also undermines the legitimate forestry sector by creating unfair competition with undervalued products. In 2004 it was estimated through trade simulation models that illegal logging depressed the average price of forest products by 7-16 percent.
Over the past ten years, a number of initiatives have attempted to address the 'demand side' drivers believed to be fuelling illegal logging. A number of regional FLEGT (Forest Law Enforcement, Governance and Trade) processes have been initiated in different parts of the world to further advance political awareness and commitment to combating illegal logging and to develop transnational, collaborative solutions. Furthermore, a number of importing countries are in the process of or have adopted legislation aimed at eliminating the importation of illegally harvested wood and wood products.
Timber Design & Technology invited four experts on the subject to get their thoughts and opinions on 'Legality of Timber'. The panel included Tom Ter Horst from the European Forest Institute; Dr. Scott Bowe from the University of Wisconsin; Caitlin Clarke of the World Research Institute; and Rupert Oliver, Director, Forest Industries Intelligence Limited.
The definition of Illegal Logging
As the worldwide interest in timber legality increases, so does our need to fully understand what it means and the impact it has on the globe. So we started by asking our panel of experts if there was a commonly accepted definition of 'Illegal Logging'.
All of the panelists agreed that there is no formal international definition of illegal logging. Tom Horst highlighted that the European Union refers to the legislation of the country where the timber was harvested to define what constitutes illegal logging. According to Bowe, illegal logging can be defined as the harvest, transport, or sale of timber and derived wood products in violation of any international, national, or local laws. The illegality can occur during any portion of the supply chain. The focus in often focus only on harvesting while the concept illegal logging is broader.
Clarke added that it can range from exceeding a concession's annual allowable cut to failure to follow applicable labor laws. One of the reasons mentioned was failures in forest governance, which results in illegal industrial-scale timber mining by organized crime syndicates. Oliver went on to say that this is concentrated in a few regions where severe failures of governance have allowed organized crime to thrive (such as Indonesia, Cambodia, Brazil and parts of Russia).
Current scenario
Timber Legality has always been a very sensitive topic across the globe, especially amongst governments and environmentalists. However, it is important to know how serious is the problem of illegal timber logging at present times.
"This results in enormous losses and damages not only to the environment, but also to governments and communities that cannot benefit from these resources," said Horst. "In addition, honest businesses that operate by the rules are harmed by operators that can undercut them by using illegally logged timber."
He went on to state the European Union has started to address this serious problem with its 2003 Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan. The plan includes a mix of supply and demand side activities such as new legislation (EU Timber Regulation), bilateral trade agreements and the encouragement of public and private procurement policies.
According to Bowe the greatest risk of illegal logging occurs in underdeveloped regions of the world, which lack the resources for policing and convicting cases of illegal logging activity. "Many tropical forest regions of the world fit this description where limited government and corruption allow the illegal activity to occur. In developed countries such as the United States, illegal logging is extremely rare."
Clarke highlighted a 2010 study by Chatham House, which found significant declines in both illegal logging and in the proportion of wood imports to consumer countries thought to be of illegal origin, and it's encouraging that the overall scale of the problem seems to be declining. That said, studies as well as anecdotal evidence indicate that in many places, illegal logging is still a very real and serious concern.
"Any remote area where the reach of law enforcement is limited, where governance problems are widespread, and where there is a financial incentive for bad actors to engage in illegal activity is more likely to have problems," added Clarke.
Oliver believes that by its very nature, illegal activity in any sector is 'below the radar' and goes unrecorded. He observed that the estimates of levels of illegal logging are often poorly researched, based on hearsay and drawing on far-reaching and dubious assumptions. In some instances they are still heavily dependent on how the term is defined. The level of illegal wood exported from Papua New Guinea, for example, has been variously estimated at 0 percent or 100 percent. The accepted number depends on different interpretations of the legal framework and different biases with respect to the legitimacy of industrial logging in tropical forests.
Revenue and Loss
Given that illegal logging is still a major concern, the next question that arose was if there is an estimate on the volume or value of illegal logging, and the estimated loss as a result of the same.
Horst highlighted a recent report in the World Bank, which estimated that illegal logging generates about USD 10 - 15 billion around the world each year. This results in enormous losses and damages not only to the environment, but also to governments and communities that cannot benefit from these resources. In addition, honest businesses that operate by the rules are harmed by operators that can undercut them by using illegally logged timber.
Bowe believes that illegal logging activity is hard to measure, but emphasized on some studies that suggest that 5 to 10 percent of the global industrial roundwood production could be derived from illegal sources. However, Clarke spoke about a recent World Bank study that suggested up to 90 percent of all logging in some countries is conducted illegally.
Even though there are estimates (for example from the World Bank), which are high and frequently repeated by policy makers to help generate interest in the issue and encourage action, Oliver believes that the numbers are not based on reliable research using a consistent definition of illegal logging and are therefore pretty meaningless.
Harmful effects of illegal logging
The harmful effects of illegal logging go far beyond revenue losses to governments and businesses the world over. Bowe views illegal logging to be a short-term gain by criminals at the expense of the environment, local communities, and economic interests of the region.
Speaking on the subject, Horst said: "Illegal logging has a devastating impact on some of the world's most valuable remaining forests and the people that live in them and rely on the resources they provide. Its environmental effects include deforestation, the loss of biodiversity and the emission of green house gases."
The direct impacts on people include conflicts with indigenous and local populations, violence and human rights abuses, the fuelling of corruption and exacerbation of poverty. In some cases it has even funded armed conflict.
"Besides that, it undermines the legitimacy of the forest sector and efforts of governments to implement sustainable forest management," adds Horst.
Clarke agrees with Horst in that illegal logging damages the reputation of the wood products industry and has a very broad range of serious harmful effects. These include deforestation and forest degradation, Biodiversity, carbon storage and climate change, governance and the rule of law, revenue loss, competitiveness and free markets.
Oliver quoted from the text of the 1998 G8 Summit, when illegal logging first entered the mainstream of international political discussion. He believes it to be as relevant today as it was then. "Illegal logging robs national and sub-national governments, forest owners and local communities of significant revenues and benefits, damages forest ecosystems, distorts timber markets and forest resource assessments and acts as a disincentive to sustainable forest management."
Mechanisms to counter illegal logging
The only way to stop or at least minimize the harmful effects of illegal logging is for governments to take the necessary steps to counter it. The panelists were asked to shed some light on the different government mechanisms that are in place to counter the threat of illegal logging.
Horst mentioned the EU Forest Law Enforcement, Governance and Trade Action Plan of 2003. This action plan identifies a number of supply and demand measures to deal with the issue of illegal logging. These include activities to promote trade in legal timber, adoption of legislative measures and promoting public procurement policies.
Bowe spoke about how large wood consuming markets such as the United States and the European Union are addressing illegal logging through the supply chain. These regions are implementing laws that require wood users to apply 'due care' and 'due diligence' in their procurement practices to avoid the entry of illegal wood products into their supply chains. In the United States, amendments to the Lacey Act require wood users to use due diligence in their procurement practices to avoid the entry of illegal wood products into their supply chains.
Clarke outlined a broad collection of different government mechanisms. For instance, producer-country government policies include laws and regulations such as logging bans, forest codes, and export restrictions. With a market for illegally harvested products, however, such policies are fighting an often-overwhelming economic incentive to break the law. This is why there is the second category of government mechanisms: consumer or demand-side policies. These include public procurement policies, like Denmark's or the UK's, which require the governments of those countries to source only legally (and preferably sustainably) produced forest products, in order to guarantee a market for these products.
The starting point according to Oliver is the development of an equitable forest governance framework, which gives fair and secure access to forest resources and sends out the right incentives to encourage legal and sustainable use and management. Many tropical countries - which tend to be considered 'high risk' on illegal logging - are now heavily engaged in national processes of stakeholder dialogue with the aim of improving overall forest governance. Meanwhile major timber consuming countries, including the US and the EU, are implementing timber trading laws to support these national processes in producer countries.
Implications of measures aimed at fighting illegal logging
Whilst there exist different mechanisms to fight illegal logging, we should also try and understand the implications of these measures being implemented to eliminate and/or reduce illegal logging on the industry.
These measures will mean that there will be a level playing field for timber trade in Europe, states Horst. Legitimate operators can no longer be undercut by operators who bring in illegal timber. At the same time, the operators within the EU market have to have information on the source of their timber, do a risk assessment to find out if there is a risk of illegal timber in their supply and if this is the case, they have to mitigate this risk. Industry operators in the Middle East exporting to the European Union will increasingly get requests from their clients in the European Union to give detailed information on the source of the timber and timber products they export to the European Union.
Bowe sees two main implications; firstly, the environmental benefit by protecting forest habitat, clean water, wildlife, and local communities; and secondly the expansion of market opportunities.
According to Clarke these measures change, and are meant to change, the risk calculus for the industry. She further stated that it's now very important to make sure you're conducting due diligence to avoid illegally sourced products, because if you do have illegally sourced material, you may find important markets are closed to you.
The introduction of these laws certainly creates new challenges for the wood industry as pressure mounts to provide credible assurances that wood supply is legally sourced. This will be particularly challenging for manufacturers engaged in long and complex supply chains that might be sourcing and combining wood from numerous countries and selling into a wide range of markets with differing due diligence requirements.
However, there should also be significant positive benefits for the wood industry. Progressive removal of illegal wood from trade and refinement of risk assessment and legality verification procedures should help reduce volatility in wood markets and increase financial returns for responsible producers. It should also help improve the legitimacy and reputation of the international wood products trade, contributing to greater opportunities for improved investment in the sector.
Illegal timber and the Middle East
Considering that the Middle East is an important market for timber, it is important to know if trade in illegal timber is a big problem in the Middle East. The question also arises as to what can countries that don't have natural forests and import the majority of their timber do to further the campaign against illegal logging.
Sharing his thoughts Horst said that trade data from the FAO shows that some countries in the Middle East source timber and timber products from places where there is a risk of illegal timber coming into the supply chain. One of the options to ensure that timber imports are legal is to source from countries where the European Union has a bilateral agreement with - also called a 'Voluntary Partnership Agreement' - where the partner country has agreed with the EU to only export legally verified timber, more commonly known as FLEGT licensed timber. By buying FLEGT licensed timber, the chances of sourcing illegal timber are minimal, thus enabling countries in the Middle East to further the campaign against illegal logging.
Bowe thinks it is safe to assume that some illegally produced timber is finding its way into the Middle East. As markets such as the United States and the European Union enact policies to stop the flow of illegal timber into their home markets, it is reasonable to assume that the volumes of illegal timber will increase into markets that do not have these policies. It will be up to the wood user to practice due diligence in these markets to limit the import of illegal timber.
Clarke believes the problem to be more serious in that the Middle East is a major importer of timber products, and its ports are an important transhipment point. It is still a fairly 'legality-insensitive' market - in other words, not too many questions are asked about the origin of the wood and whether it was produced legally.
Oliver on the other hand says it is almost impossible to say how large the problem is in the Middle East. The timber trade situation in the region suggests it may be significant. Middle Eastern countries are often large wood importers and many rely heavily on wood derived from relatively high risk areas in Central Africa, South East Asia, and Eastern Europe. There is also little evidence yet that importing companies in the region are working proactively to minimize the risk of handling illegally sourced wood.
Countering the threat at every level
Despite the necessary steps being taken at the macro level to counter the threat of illegal logging, it's interesting to know how joineries, interior designers and architects can play a role in countering the threat of illegal logging, if they can at all.
Horst believes they need to ensure that the timber they source or specify to use in their designs is from legal sources. Bowe feels the same in that without due diligence laws, it is up to the joineries, designers, and architects to act diligently and specify wood from responsible sources. To maintain their quality reputations, they must consider the combined picture of legality, sustainability, and quality in all of their design and building projects.
Properly sourced, wood is one of the world's most sustainable and renewable resources according to Clarke. She insists that professionals need to ask questions and take the time to inform themselves about the wood they use, beyond its physical specifications.
Finally Oliver summed up the discussion by highlighting the fact that in addition to taking their own measures, they need to encourage their own suppliers to implement due diligence systems designed to minimize the risk of illegal wood entering supply chains.
About the Panelists
Rupert Oliver
Rupert is an internationally recognized independent authority with 20 years experience on environmental issues related to the timber trade and forest management. He has traveled widely, studying forestry practices and market development in North America, Europe, the Far East, and Africa. He is regularly consulted by international and national agencies in the international forest products sector and is a regular speaker at international conventions. He is a strong believer in the contribution that forestry and timber can make to sustainable development. He holds a Masters degree in Forest Business Administration. He is Director of Forest Industries Intelligence Limited and also a consultant to the American Hardwood Export Council (AHEC) for sustainability issues.
Dr. Scott Bowe
Scott is a Professor and Wood Products Specialist in the Department of Forest and Wildlife Ecology at the University of Wisconsin. He earned his Ph.D. in Forest Products at Virginia Tech, a M.S. in Forest Products from the University of Minnesota, and a B.S. in Forest Science from the University of Wisconsin-Madison. Scott works closely with the wood products industry in Wisconsin and neighboring states. His current applied research projects focus on forest products markets, wood product life-cycle analysis, and wood manufacturing process improvement - all strategies for remaining competitive within a global forest products marketplace.
Tom Ter Horst
Communications officer for the European Forest Institute's EU FLEGT Asia Regional Programme. His work focuses on raising awareness on the issue of illegal logging and providing information on the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan initiated by the European Union.
Caitlin Clarke
Caitlin Is a research analyst with the World Resources Institute in Washington , DC, where she works with the Forest Legality Team to support legal trade in Forest products. Caitlin holds a degree in Environmental Studies from Yale University, where she studied landscape ecology and natural resource management.
© Timber Design & Technology 2012
