Timber certification is one mechanism for ensuring sustainable forest management. Here are certified timber in a log pond in PT. Sumalindo Lestari Jaya 2, West Kutai district, East Kalimantan, Indonesia. Photo by Michael Padmanaba for Center for International Forestry Research (CIFOR).

BOGOR, Indonesia—Faced with growing pressure to root out “illegal timber” from international trade, some tropical timber-producing countries have a choice.

On one hand, they can adopt and enforce a legality verification system that instantly covers their entire timber supply chain, from large-scale industrial logging for export markets to small-scale artisanal operators serving the domestic market.

On the other: They can start “small” and ramp up enforcement slowly.

The decision could have wide implications for the short-term success and long-term sustainability of the initiative.

For a decade, the European Union (EU) has been negotiating with tropical timber-producing countries to stem illegal logging. Recent research indicates that they may have to leave small-scale producers aside—temporarily—to bring their joint efforts to fruition.

Formal agreements are now in place to clean up several major trading routes from Africa and Asia to Europe. A recent paper by the Center for International Forestry Research (CIFOR) suggests, however, that their gradual implementation could avoid disrupting the livelihoods of many thousands of people in timber-producing countries. This could be done with “the ‘weakest’ parts of the sector, notably current informal operators, being granted a grace period of learning before implementing and fully enforcing any new rules,” the authors write.

Recent developments illustrate why.

OUTLAWS, OVERNIGHT

Since 2003, the EU has developed a Forest Law Enforcement, Governance and Trade (FLEGT) action plan to use its weight as a major importer to promote legally sourced timber from tropical countries. European importers must now conduct mandatory checks to ensure that the products they buy were accessed, logged, processed, transported and sold according to the laws of their country of origin. The EU has also signed Voluntary Partnership Agreements (VPAs) with six tropical countries to overhaul their legality assurance systems; negotiations continue with others.

Most VPA signatory countries have chosen to take advantage of this big push against illegal logging to increase and improve control not only of their timber exports, but of their domestic sector—the multitude of small-scale loggers and traders who often eke out a living under the radar of the law while officials look the other way or, in some cases, extort bribes from them.

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Yet research shows that the gap between current legal requirements and the capabilities of smallholders and artisanal operators remains too wide.

“I am of two minds. For how politics work in many countries, starting with a focus only on industrial loggers means that we risk forever postponing implementation for the rest,” said CIFOR Senior Scientist Paolo Cerutti. “But one of our main findings is that existing legislation is not ready for small-scale operators, and seeking blanket compliance will outlaw them overnight, with many potential negative consequences on their livelihoods.”

ALONG CAME REDD+

The CIFOR scientists who conducted the EU-funded Pro-Formal research project on the options for the formalization of the domestic timber sector in five countries between 2010 and 2013 now warn against “the risk of exclusion of smallholders, chainsaw millers and domestic timber traders” as VPAs move into their implementation phase.

Following initial efforts, notably by the EU, to include all stakeholders in negotiations in the mid-2000s, interest waned in producing countries as delays mounted. Even then, small-scale operators, who are generally weakly organized and absent from capital cities, were poorly represented. Attendance at meetings declined after a milestone agreement was signed and further discussions focused on the nitty-gritty of market monitoring or administrative and tax reforms.

Meanwhile, climate change talks grabbed the attention of negotiators: “REDD+ [Reducing Emissions from Deforestation and forest Degradation] came, and largely the same ministries and civil society organizations involved in FLEGT were caught up in those discussions, where billions of dollars were said to be at stake,” Cerutti said. “REDD+ took center stage, and FLEGT was no longer attractive for many.”

But the larger aims of FLEGT remain valid, and representatives from Europe and tropical countries now face the delicate task of rekindling interest among small-scale loggers and traders through incentives such as better tenure rights for those who choose the legal path, without turning implementation talks into a catch-all debate on forest policy that Cerutti warned could “push the process back 10 years.”

LESSONS FROM LATIN AMERICA

Much remains to be done to make legal requirements accessible to smaller stakeholders, who are unable to travel hundreds of miles or submit often complex forest management plans to obtain a logging or trading permit. There, lessons can be learned from other regions.

“The main markets for Latin America are the regional markets and the U.S., so governments have not felt the need there to enter negotiations with the EU” said CIFOR Principal Scientist Pablo Pacheco. “Yet Latin American countries have driven many reforms internally, and they have been making significant progress.”

Policy options:

For improved forest use by smallholders in the Ecuadorian Amazon

Ecuador, for example, has enacted simpler legislation to facilitate small-scale logging operations undertaken in smallholder lands and introduced an online system to obtain permits from remote locations. Pacheco, however, noted that this may not be enough.

“Some smallholders who make use of their primary forests often harvest only two or three trees a year as a safety net, to pay for school fees, for example. The transaction cost of obtaining a permit for that use remains too high for them,” he explained.

Ecuador is also running pilot schemes to move controls from the supply side—deep in the forest and along the main roads—to market sites in cities, where they are cheaper and more efficient, and to share data between the tax revenue agency, which keeps good records, and the weaker forestry administration. This may also encourage industry and buyers in the cities to feel jointly responsible for supporting legal timber supply.

Now that the scale and problems of the informal sector are better known, CIFOR scientists say that testing and refining policy options is the next step in research on the formalization of small-scale artisanal operators and enterprises engaged in the domestic timber markets—as is assessing economic impacts on the supply chain.

“Can we compensate increased taxes on smallholders and artisanal operators by removing bribes? Is there a domestic or regional market for more expensive, legal timber? These are the kind of questions we are now trying to answer with our research,” Cerutti said.

For more information on the topics of this research, please contact Paolo Cerutti at p.cerutti@cgiar.org or Pablo Pacheco at p.pacheco@cgiar.org.

This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry.