Forestry and Poverty Project Newsletter – Issue 14, July 2010

Chatham House on Illegal Logging: Perception is Everything

A new report from Chatham House, a UK-based think-tank, indicates there has been a substantial fall in levels of illegal logging from exporting nations.

The report states that levels of illegal logging have fallen by as much as 75 per cent in Indonesia and Brazil. It also stated that log smuggling between Indonesia and China – a result of Indonesia’s prohibition on roundwood exports – has fallen by 92 per cent since 2004.

Reinforcing the Myths of Illegal Logging

Despite the good news, the paper follows a logic and uses a methodology that reinforces pre-existing myths about illegal logging.

The data used relies primarily on perceptions of the importance of illegal logging as a problem. It also uses media coverage as a key indicator in measuring the response to the problem. This is telling. It underlines the fact that there is no robust empirical measure for levels of illegal timber harvesting, or of how much illegal harvesting contributes to forest loss more broadly.

The paper restricts itself to a definition of illegal logging that rests on the industrial commercial end-use of the timber, despite there being a consensus among experts consulted that this type of logging wasn’t necessarily the most significant type of illegal logging. In Brazil, for example, small-scale community logging and illegal logging for mining operations were thought to be much more significant.

Similarly, the paper at no point addresses the drivers of illegal logging in a substantive way.

It refers to illegal logging as being a driver of forest loss. Yet the most comprehensive methodology on determining causes of deforestation sensibly refers to illegal logging as simply being a type of wood extraction (a proximate cause of forest loss) or a variation within weaknesses in governance structures (an underlying cause of forest loss).

An Inverted Logic

In simple terms, the logic of the paper is upside down.

It sees addressing illegal logging as being an end unto itself. For example, it points to improving land tenure as being a clear step towards addressing illegal logging, yet it does not draw the conclusion that often illegal logging – like other environmental problems – is a symptom of poor land tenure.

Similarly, it states that an outcome of addressing illegal logging would be reduction in levels of poverty, yet there is no justification or theoretical rationale for this. It has about as much meaning as saying that if people steal less food, they will be less hungry.

That the paper primarily concentrates upon media coverage of illegal logging issues and of perceptions of levels of illegal logging is indicative of the ‘illegal logging’ debate generally, specifically, that this is about a perceived environmental problem.

It is merely perceived, because the media attention given to illegal logging has far outweighed the extent of the problem. Empirical work on the extent and cost of illegal logging – such as that commissioned by the Australian Government – has demonstrated clearly that it is a small problem that has little impact on importing countries. And as the Chatham House report itself states, it is outweighed by much greater causes of deforestation and other environmental problems in exporting countries.

Despite this, the paper doesn’t get beyond the second sentence in its executive summary before it links illegal logging to greenhouse gas emissions. The lack of academic rigour in making such a statement contrasts with the approach taken by other institutions such as the FAO (see below).

Perhaps the one positive that will come out of the paper is the broader understanding that ‘illegal logging’ is passing – as both an environmental problem and as a fashionable cause.

 

EU Due Diligence: A Political Solution for a Political Problem

European Parliament passed its long-awaited ‘due diligence’ requirements for timber products earlier this month.

The new regulation requires businesses placing timber or paper on the European market to undertake ‘due diligence’ to ensure that the product has been legally harvested. Businesses must implement a system that demonstrates they have assessed, mitigated and/or managed the risk of selling any illegally harvested products.  Alternatively they can purchase products from a ‘legally verified’ source.

Increasing The Cost

For suppliers exporting to the European Union, this may impose significant costs.  The regulation covers most timber products. But it also covers all pulp and paper products, ranging from table napkins and envelopes to packing materials.

This means any exporter to the EU will have to source information on where the product they are supplying is from. For, say, a napkin manufacturer in China, this will present a bureaucratic nightmare.

Anyone familiar with international pulp and paper markets will be aware that the supply chains are particularly complex. Timber harvested in Canada can be pulped in Japan, turned into paper in China and then sold into the EU. Suppliers of both timber and pulp change according to price fluctuations in the market, and capacity is switched on or off according to price levels. Any change in supplier will require a new set of information.

Already the Finnish forest industry has objected strenuously to the new laws, saying it will weaken the competitiveness of manufacturers within the EU.

If the problem is small and declining – as the Chatham House paper says it is – why implement such a complex and costly solution?

A Political Fix

The regulation is a political solution to a political problem. The biggest players – Europe’s paper manufacturers have already declared that it has not gone far enough, as printed materials – books, magazines, and greeting cards – are not included.

The European paper industry has been struggling with falling demand for their traditional products. Newsprint demand has plummeted; growth in demand for printing and writing papers is sluggish. The European industry is looking down two barrels.

First, European printing houses will be struggling to compete with printers in China. US imports of books and other printed materials increased almost 1000 percent between 1997 and 2007. If the same pattern is repeated in Europe, papermakers will struggle.

Second, China is about to increase its paper capacity significantly. China’s voracious appetite for wood fiber has pushed global pulp prices up, but paper prices in Europe are low. This has caused significant disruptions for non-integrated paper producers in Europe. The result has been that European newsprint producers are losing money with every sale. Capacity closures have been for a number of paper grades.

It is no surprise, then, that Europe’s biggest paper makers have been lobbying for anti-subsidy action against Chinese paper producers and have been advocates for the introduction of ‘due diligence’ to be introduced.

Yes, environmental campaigners have cheered this decision. But European manufacturers are cheering even louder.

 

End Poverty, End Deforestation

A new paper by published by the FAO confirms the link between deforestation and long-term poverty alleviation in Indonesia. The paper, ‘Dynamics of small-scale deforestation in Indonesia’, confirms the ‘forest transition’ hypothesis – where deforestation rises then falls as wealth increases — in an Indonesian context.

The paper examined small-scale deforestation levels in Sumatra, Kalimantan and Sulawesi over an 18-year period and linked deforestation rates to a regional wealth variable based on socio-economic conditions, not household incomes. Choosing this measure reduced the possibility of results that demonstrate a significant short-term increase in income.

The study found that deforestation in the provinces was at its lowest in the poorest districts. However, once enough capital had been accumulated for land-clearing, deforestation increased until incomes generated were sustainable without further land clearance. From this point deforestation levels decreased.

Of particular note was that deforestation levels increased further away from urban centers and in areas not well connected by road infrastructure. The explanation is that once people can access off-farm employment, they do not need to clear land for subsistence or cash crops. This counters the hypothesis that greater forest access leads to higher deforestation levels.

Policymakers in the developing world should take note of these findings. The paper presents a simple choice: people with the lowest incomes can stay poor and preserve their forests; or they can deforest in the short term and generate wealth for education, health and communities.

 

The Campaign Against PEFC and Indonesia Continues

Both WWF and Greenpeace have once again gone out of their way to criticize PEFC certification. WWF has given PEFC-sourcing companies a negative rap, while Greenpeace has attempted to smear them – just because their standards are consistent.

WWF’s newest paper scorecard – a grading of ‘fine paper’ producers – scores companies on a number of counts, ranging from fiber procurement and production processes to transparency.

Yet there is a negative score for companies that don’t express a preference for FSC fiber above PEFC fiber. In fact, only four of the five companies have such a clause in their procurement policy. The one company that does – Domtar – scored lowest out of all five.

This reluctance to choose FSC over PEFC can be put down to commercial reality – there is simply not enough FSC fiber in the market to supply pulp needs for most grades of paper. This was articulated most clearly by a report completed for Kimberley Clark, which demonstrated that the volumes of FSC fiber in North America for its paper products could not be sourced.

Greenpeace, on the other hand, has outright attacked PEFC for their certification of products from Sumatra in a recent report that criticizes the Indonesian forest industry.  The standard used by PEFC for these operations – and others in Indonesia – is the ‘non controversial sources’ standard, which is in many ways the same as FSC’s ‘Controlled Wood’ standard.

The products in question have been certified according to these standards, but Greenpeace’s missive attempts to assess the products against its own set of requirements – and then uses this as a platform to criticize both the company and PEFC.

Greenpeace has publicly called for PEFC to end their association with the certified company, Asia Pulp and Paper, despite Greenpeace’s long history of dismissing PEFC’s standards as irrelevant and refusing to take part in any of PEFC’s consultation processes.

The Greenpeace assertions of wrongdoing rely entirely upon a questionable interpretation of an Indonesian law from the 1990s.

The Greenpeace report on Indonesia follows a similar approach used against Danzer in Gabon and Rimbunan Hijau in Papua New Guinea. Namely, accusing firms of wrongdoing with little or no evidence to back up the claims.

The Greenpeace action against Indonesia’s forestry workers has continued with the blockading of export vessels off the Sumatran coast.

 

Forestry’s Contribution to Emissions: Less than 1%

A landmark paper released last month shows that the forest sector is responsible for less than one per cent of the world’s greenhouse gas emissions.

The FAO paper, ‘Impact of the global forest industry on atmospheric greenhouse gases’ assesses the contribution of the forest sector to total greenhouse gas emissions – including carbon, methane, nitrous oxide and other greenhouse gases.

The study assessed all parts of the forestry value chain, from harvesting to manufacturing and transport. The sequestration of harvested wood products in both used products and landfills was shown to offset almost half of total emissions.

However, the paper chose not to assess the contribution of land-use change for forestry. The authors rightly determined that an attempt to do so would not stand up to academic rigour. This contrasts with the approach taken by Chatham House (see above). However, the paper did note that most deforestation takes place for agricultural purposes, and that the world’s production forests and plantation forests are more likely to behave as a sink than a source of emissions.

This approach is in line with recent research from academic institutions and World Growth that de-bunk the Stern Report’s assertion that deforestation is responsible for 17 per cent of the world’s greenhouse gas emissions – a number that is regularly inflated to 20 per cent by environmental campaigners.

Brazil’s space agency, INPE, puts the figure closer to 10 per cent; World Growth estimates put it between 5 and 8 per cent.

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