The report starts with a simple statement:
“when the expected costs of operating legitimately are higher than those facing clandestine operations, illegal clearance will continue.” It goes on to note that “Of all wood removals, 40% is used for basic energy needs such as cooking and heating and 60% is used as industrial round wood. In tropical regions wood removal for fuel wood can be as high as 80%. This suggests that illegal logging for fuel wood will only be decreased if and when adequately priced modern energy alternatives become available in combination with effective poverty alleviation policies” .
The report applies the same logic with respect to commercial timber supplies. It notes that measures that tilt the marketplace in favour of legal as opposed to illegal products must address factors on both supply and demand side that can positively influence the price spread between legal and illegal operations:
- supply side measures should increase the risk of punishment of illegal behaviour in producer countries and equally importantly decrease the cost of producing legally.
- demand side measures should reduce the financial reward of producing illegally by controlling international trade in order to discriminate between legal and illegally sourced wood products.
While emphasising that there are no simple solutions on the supply side, the report suggests that there are three issues that stand out as crucial across countries and regions:
1. Clear allocation of property rights and definition of the accompanying legal rights and responsibilities of landowners to prevent forests from overexploitation.
2. Better publicly available information to improve transparency and accountability of government decisions and the operations of logging enterprises.
3. Create incentives for legal logging by making it easy and affordable to manage the forest sustainably. Laws must not be too complex and tax and royalty systems must be designed to reward sustainable practices. Raising the costs for legal production and trade could have perverse and unintended impacts.
On the demand side, the report suggests
“an effective certification and/or licensing system is an essential prerequisite to controlling international trade in wood products in order to distinguish legal from illegal products” . However the report also highlights the numerous challenges involved and seems sceptical of the real potential to develop a truly effective system in practice. It suggests that such a system could only come about with a global multilateral agreement on a wood products licensing scheme which would take years to negotiate with no guarantee of success. Without multilateral agreement, there would remain too many opportunities for illegal products to be effectively “laundered” through third countries that are not party to the licensing system. Furthermore, the costs of such a licensing scheme may ultimately outweigh the benefits to the forest. And given that only around 50% of wood products are internationally traded it may be that licensing only causes illegal products to be directed to domestic markets while licensed products are directed to the international market.
The report does not entirely dismiss the potential role of demand side measures such as licensing and certification schemes. It notes that
“when consumer demand for sustainable produced products is high enough, producers will be inclined to licence their products as this will increase market share. Once a licensing scheme is in place the marginal costs of using it for all production will be small. In this way the international market could provide an incentive to produce legally on the domestic market as well. Although the costs of licensing schemes vary considerable between countries and companies and will therefore raise some distributional questions, they remain a relatively small part of total cost of production.”
But in the end the report concludes
“it is important to stress that actions by producer countries will always be the most effective in tackling forest crime as illegal logging takes place on their territory and stopping it is in their direct interest. Importing countries and the wider global community concerned to preserve the global public good elements of maintaining forest cover should keep this to the fore in developing their responses and assistance strategies” .
The report may be downloaded at:
http://www.illegal-logging.info/papers/OECD_background_paper_on_illegal_logging.pdf
For further information, please contact Richard Doornbosch, Principal Administrator Round Table on Sustainable Development, OECD Tel: +33 (0)1 45 24 14 57
E-mail: Richard.DOORNBOSCH@oecd.org .
