Forestry and Poverty Newsletter: Issue 39 September 2012

Australian illegal logging bill passes House

Australia’s Illegal Logging Prohibition Bill was passed by the House of Representatives last month and is now before the Senate. The passing of the Bill has prompted a backlash from Australia’s major trading partners, including Indonesia.

The opposition Coalition party voted against the legislation, citing its threat to foreign relations and potential WTO implications.

Australia’s key trading partners have voiced concerns over the Bill, telling Australian media that the legislation will be “devastating” to industries in the region. The Indonesian Government wants Australia to recognise its new timber verification system, known as SVLK, which has been accepted by the EU, and has recommended deferral of the legislation until 2015 to ensure the legislation will not have any unintended consequence.

In a recent interview, Indonesia’s ambassador to Australia said that he “lamented Australia’s refusal to postpone the landmark timber trade bill,” and that “Jakarta had hoped to have the situation settled by now.”

The Australian timber industry’s peak body – AFPA –  has now also expressed concern over the Bill in its current form after a long period of support for the Bill.  The legislation puts an equal burden on both Australian and overseas harvesters of timber to comply with due diligence procedures.

The Bill’s passage coincides with curbs on beef exports and Australian fishing licenses, both of which have been driven by highly public campaigns by Green campaign groups.  In the case of curbs on beef and timber, Indonesia has made clear it will resort to retaliatory measures if trade comes under threat.

Meanwhile, Australia and New Zealand have just signed a memorandum of understanding – an ‘Arrangement on Combating Illegal Logging and Promoting Sustainable Forest Management’ to work together on building capacity of Government and industry to manage forests sustainably and promote systems to verify the legality of timber and wood products in Australia, New Zealand and the wider Asia Pacific region.


The US revokes anti-dumping duties on Indonesia paper exports

The US International Trade Commission (USITC) has lifted anti-dumping and countervailing duties on Indonesian paper exports of paper school supplies following a five-year (sunset) review.

The duties were revoked following a USITC decision that these products would not likely to lead to “continuation or recurrence of material injury within a reasonably foreseeable time”. The USITC will continue these measures on similar products from China and India.

The petition for investigation was initiated by the Association of American School Paper Suppliers in October 2005.  In Indonesia, the case was filed against PT Tjiwi Kimia, a subsidiary of the Sinar Mas Group. Following USITC Final Consideration in September 2006, an anti-dumping duty of between 97.85 and 118.63 percent and a countervailing duty of 40.55 percent were imposed on all CLPSS products from Indonesia, China, and India.

According to a press release by the Indonesian Trade Ministry, the duties have had a severe impact on Indonesia’s paper exports. Prior to introduction of the duties, Indonesia’s exports of the paper in question stood at US$98.5 million (in 2005). Between 2006 and 2009, exports stopped completely.


New study confirms drop in Sumatran deforestation

A new study published in the Environmental Research Letters has reported a 65 per cent decline in the rate of primary forest cover change in Sumatra between the 1990s and the 2000s.

The research which was led by Belinda Arunarwati Margono of South Dakota State University and Indonesia’s Ministry of Forestry, and included co-authors from Greenpeace Russia and the Woods Hole Research Center – concluded that while primary forest extent in Sumatra nearly halved over the 20 year study period, the rate of forest loss in the 2000s was found to be less than half the rate in the 1990s.

A recent Earth Policy Institute note, reporting data from the FAO’s 2010 Forest Resources Assessment (FRA), noted that global net forest loss between 2000 and 2010 was less than half that in the previous decade (5.2 million hectares per year between 2000-2010 and 13 million hectares per year between 1990-2000). Asia was found to be the only region to show net gains in forest land-use area, mainly due to reforestation in China, Vietnam and India.

In Indonesia, the annual rate of deforestation fell by 74 per cent between the 1990s and the 2000s (i.e. 1.9 million hectares per year in the 1990s falling to 500,000 hectares per year during 2000s). While estimates for global deforestation have been revised down further since the most recent FRA (2010).

FAO’s findings from a global remote sensing survey last year indicated that total forest loss between 1990 and 2005 is 32 per cent lower than previously thought. The data was released at the UNFCCC meeting in Durban last year, but it seems FAO decided not to highlight the results.


Greenomics Indonesia: TFT and Greenpeace promoting violation of forestry law?

Greenomics Indonesia has criticised Greenpeace and The Forest Trust for their work with Indonesian palm oil producer Golden Agri Resources (GAR), suggesting the organisations have endorsed violations of Indonesian forest laws.

The Jakarta-based NGO has published a public response to claims made in a recent online interview by Scott Poynton, the Executive Director of the Forest Trust (TFT), regarding two Greenomics reports which criticized TFT for its cooperation with Indonesian palm oil producer, Golden Agri Resources (GAR), on forest conservation and emission reduction in the West Kalimantan Province of Indonesia.

In the statement, Greenomics reiterates its report findings, which it claims are based on audit reports issued by the Indonesian State Audit Board, that the greater part of GAR’s palm oil concessions are located in areas legally designated as protected forestland. Since TFT and Greenpeace both played key roles in determining which areas could be cleared under GAR concessions (i.e. the ‘Go’ and ‘No Go’ areas for land clearance), Greenomics argues that both NGOs effectively promoted the violation of Indonesian forestry law.


Forest products market across UNECE region gradually reviving, thanks to Asia

The FAO’s latest annual review of forest products markets shows a revival in demand for forest products in the region, mainly as a result of demand in Asia, particularly China.

The FAO and UN Economic Commission for Europe (UNECE) joint annual review of forest products markets in the region (Europe, North America and the Commonwealth of Independent States) showed that despite difficult economic conditions, consumption of many forest products in the UNECE region showed modest revival- growing by about 5.6 per cent in 2010.

Demand for wood products remained strong in the Asian-Pacific rim. This has helped to offset the flat demand within the UNECE region.  China’s influence has been dominant. China is a major consumer of wood, both in raw form and wood products, and is a major exporter of processed wood products, and therefore exerts considerable influence on the world market, including in the UNECE region.

The report however notes that due to rising labour costs, China has been recently losing furniture production to countries such as Indonesia and Viet Nam. The report also warns that new regulations, such as the US Lacey Act and the EU timber regulations are placing new obligations on suppliers to demonstrate legality.


APP defies critics with Chinese award and sustainability push

Indonesian paper producer Asia Pulp and Paper (APP) has defied its critics with the publication of the first progress report in its sustainability roadmap and receiving a Chinese government award for its environmental management.

APP was officially recognized by the Guangxi Province’s Science and Technology Bureau for its pioneering waste water treatment project at its Guangxi Jingui Pulp & Paper mill. The US$ 32 million project by APP allows the mill to recycle 95 per cent of the water used in chemi-mechanical pulp production, reuse 93 per cent of alkaline in its waste water and conserve energy equivalent to 33,000 tons of standard coal each year.

It has also published its first progress report as part of its major sustainability roadmap initiative. The roadmap makes a commitment to, inter alia, becoming wholly reliant on raw materials from plantations alone by 2015 and undertaking high conservation value (HCV) assessments of its concession areas.  The plan also includes a moratorium on new forest clearings.

According to the progress report, preliminary HCV assessments for its Jambi concessions are almost completed. So far four of its mills, the first in the country, have achieved SVLK certification under Indonesia’s new Wood Legality Verification System. Scientists at the company are developing faster-growing tree species that should eventually more than double plantation productivity, ending the need to cut natural forests. It is also working towards changing its product portfolio to require less wood pulp.

Despite the public commitments, campaign groups have attacked the plan, stating that the plan offers “no conservation benefit”. While this is unlikely, the critique also ignores the fact that it is the role of government – not the private sector – to define conservation areas.


CIRAD: REDD financial incentives “inadequate to address the main drivers of deforestation”

A recent report by French development agency CIRAD has stated that the basis of REDD – to reduce deforestation with financial incentives – is fundamentally flawed.  The EU-funded report examines possible options for REDD funding, but concludes that linking payments to developing better institutions is a better approach.

The report clearly states that financial incentives will be unable meet the very large opportunity costs for both governments and the private sector. It points out that the opportunity costs for petroleum, mining, and agriculture are simply too high.

This is a complete about-face from the overly-optimistic views that were published in the Stern Review five years ago. Then, it was clearly stated that REDD was an affordable means of reducing greenhouse gas emissions.

The CIRAD report instead recommends instead better regulation and NGO engagement to end deforestation. The former is an obvious response; the latter existed prior to REDD’s inception.

The report also states that clarifying local forest land tenure rights are “an unavoidable prerequisite”. World Growth has previously observed on many occasions that land tenure would be the key hurdle for REDD or any other international programs involving land-use change.  The reason for this is simple: unless property rights are clearly defined and enforced, putting incentives in place for forest or landscape protection is close to impossible

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