Drivers at the intersection of logging, timber trade, and international investment

Andrea Johnson Director of Forest Campaigns (US)

Environmental Investigation Agency

Durban, 30 November 2011

Main points

• Let’s not forget about logging and forest degradation in this discussion

• Illegal logging offers insights on successful approaches to addressing global drivers

• International financial flows and consumer country policies must be coherent with our REDD goals in order to achieve durable change

• Wrap-up of the side event’s themes

Logging as a key driver • Logging interacts with other drivers:

– globally 28% of new ag land in 1990s created on degraded and secondary forests (Gibbs et al. 2010; Foley et al. 2007);

– In West Kalimantan, vast majority of oil palm converted from old forest concessions (Curran, unpublished)

– Revenues from timber sales necessary for short-term cash flow in agroindustrial and livestock business models

• Selective logging can destroy from 28-62% of forest (Gerwing 2002), makes forests more susceptible to fires, droughts, etc

• Still high rates of illegality in many REDD+ countries

Insights from Illegal logging • Illegal logging and associated trade cause def/deg

directly and indirectly • Basic indicator of failures in forest governance, law

enforcement, political will • Fueled by large and previously indiscriminate market

demand for artificially inexpensive pulp, paper and wood products

• Introduction of demand-side policies appears to have significant impact

• Stronger and better enforcement of existing laws can reduce deforestation and degradation

Illegal Logging and REDD

© Global Witness, 2011

Illegal logging: demand-driven

• Examples from Peru, Madagascar, Indonesia, where export markets drive trade in high-value hardwoods and pulp from lowland, carbon-rich forests

Madagascar rosewood bed, on sale in Shanghai: US$1 million

Amount left in hands of local villagers from this trade: < 0.1%

Demand-side policies are effective • Prohibitions on import, export or commerce in

illegally sourced wood products, + bilateral agreements to support legal trade

• US Lacey Act, EU Timber Regulation, EU FLEGT, as well as procurement policies have sent strong market signals over recent years

• Trade policies and laws rapidly shift legal and financial incentives for private actors with global supply chains

Law enforcement can reduce def/deg

Clearing and logging on land slated for oil palm, Central Kalimantan, Indonesia, 19 May 2011

Investment as a driver: case study

• PT Menteng, a subsidiary of Kuala Lumpur Kepong Berhad (KLK), holds Location Permit for 7400ha in Kotawaringin Timur, Kalimantan Tengah

• 19 May 2011: EIA/Telapak document clearing, planting, canals, harvesting of commercial timber species, in apparent breach of brand new moratorium on forest conversion, part of Indonesia-Norway deal

• Norway’s public pension fund is invested in KLK • Norway has over $678 million invested in forestry and

plantation companies in Indonesia

coherent policies for “all parties”

• Consumer prohibitions on illegal timber • Procurement policies, tax incentives for products

from community agriculture or forestry • Tools and req’s for supply chain transparency • Public investment fund guidelines, transparency • Private sector responsible investing and

purchasing guidelines • Assessments of donor country “REDD+ readiness”

© To

by S

mith

/EIA

Important themes today:

• Tropical deforestation and forest degradation are driven by commercial agriculture and forestry

• These are global industries, supplying markets in both ‘developed’ and ‘developing’ countries

• It is possible to produce these and other tropical products without causing deforestation

• SBSTA’s mandate must include an analysis of drivers of deforestation and degradation at a global level, including the activities, policies and consumption of “all countries” that put human pressure on forests

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