Why does illegal logging continue after forestry reforms?

Researchers take a closer look at the connections between regulations and local needs in Peru, Ecuador and Bolivia
A Kiwcha couple walk in the jungle to cut timber, Coca, Ecuador. CIFOR Photo/Tomas Munita

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The western Amazonian countries of Peru, Ecuador and Bolivia have implemented significant forest reforms over the last two decades to help smallholders and communities better manage and benefit from their forests.

Despite the changes, however, many continue to manage their forests in ways that result in illegal logging.

Why does illegal logging persist among smallholders and communities? In search of an answer, scientists from the Indonesia-based Center for International Forestry Research (CIFOR) traveled to community forests, agroforestry plots, sawmills, government offices and other sites in the three countries. They interviewed policy makers, government officials and people who work in different areas of the timber industry.

“We set out to answer three questions,” says CIFOR scientist Pablo Pacheco. “How do the tenure rights granted to smallholders and communities affect their decisions to use their forests? What are the main barriers that keep smallholders from adopting sustainable forest management practices? And why, after all these reforms, do many smallholders and communities continue to harvest timber without authorization?”

They found that although modified regulations mark a great step forward, they do not necessarily respond to the varied needs of smallholders and communities, according to a new paper in the journal Forests.

And when regulations do not meet their needs, people turn to a combination of legal and illegal practices for harvesting and selling their timber.

“The situation is complex and diverse,” Pacheco says. “Legality works for some and not for others.”

Policies and people

All three countries have made progress in their efforts to change regulations, but it has not been easy to address the many economic and institutional constraints facing smallholders and communities, which have become important players in the forestry sector, Pacheco says.

The countries differ in their total forest area—Ecuador has 11 million hectares, while Bolivia has nearly five times that area and Peru has 73 million. They also differ in the area occupied by smallholders.

According to official statistics—which may not be exact—smallholders or communities in Ecuador account for 7.5 million hectares, or more than half the total forest area; in Bolivia, 20.7 million, or nearly half; and in Peru just 13.2 million hectares, or less than one-fifth.

Smallholders and communities contributed a significant amount of timber to markets between 2008 and 2012, representing 84 percent of the supply in Bolivia, 35 percent in Ecuador and 22 percent in Peru. Most of that timber was sold in the countries’ domestic markets.

In the late 1990s, the three countries began promoting sustainable forest management (SFM) as a way to increase income from forests while encouraging conservation.

Policy makers assumed that SFM could increase the economic benefits smallholders and communities received from forests, thus decreasing pressure to deforest and put the land to other use. They also assumed that SFM could help supplement smallholders’ and communities’ incomes, Pacheco and his co-authors argue in the paper.

An initial set of reforms in the three countries included regulations to promote SFM, such as forest inventories, forest management plans and annual operating plans. They also granted forest tenure rights to smallholders and indigenous communities.

The new regulations provided some economic incentives, particularly reduced fees for smallholders in Bolivia, and differentiated forestry permit costs depending on the type of forest and scale of harvesting in Ecuador. All three countries also improved their oversight systems, which verify that timber is harvested legally.

It was assumed that the markets would take care of meeting their needs

Pablo Pacheco, CIFOR Senior Scientist

Changing regulations to improve forest management while helping smallholders achieve higher standards was an interesting combination with a great potential, Pacheco says. But it did not achieve the expected results.

One stumbling block, Pacheco and his co-authors argue, is that the reforms emphasized tenure, forest management and means for verifying legality, but placed substantially less emphasis on incentives and technical assistance for local forest users.

“It was assumed that the markets would take care of meeting their needs,” Pacheco says.

Despite the institutional barriers and economic constraints, however, smallholder and community forestry came to play an important role in timber supply in the three countries. And over time, local forest users began to pressure their governments to improve their situation.

A second wave of reforms began in 2010, with the goal of making it easier for smallholders to manage their forests by making forestry systems more flexible, despite concerns that more flexible conditions could lead to less-sustainable forest management.

What went wrong?

To different degrees in the three countries, those reforms improved incentives for smallholder forestry, introduced payments or other compensation for forest conservation, and streamlined systems for verifying that timber has been harvested legally.

Nevertheless, illegal timber harvesting continues in the western Amazon.

So what went wrong?

“The forest reforms still fell short of addressing key constraints facing smallholders when they try to adopt sustainable forest management systems,” Pacheco says.

Because procedures for granting land title have proven complicated, the titling process has been slow.

The cost of drawing up management plans and annual operating plans can also be prohibitive for smallholders, who do not sell enough timber to recover their investment. Many smallholders, especially in remote areas, sell timber only sporadically, as they need cash. For them, a formal management plan makes no economic sense.

“The costs involved in obtaining permits, and the often-low benefits derived from harvesting, lead smallholders to conduct their operations outside the law,” the authors write. “In addition, forest technicians may not be interested in formulating management plans in small areas,” which are less profitable than larger areas, where more timber can be extracted.

But the biggest omission, Pacheco says, is the lack of financial incentives for small-scale sustainable forest management. Because of the costs and other obstacles, such as distance from markets, smallholders in the western Amazon are at a disadvantage in the market, he says. As a result, they tend to engage in a combination of legal and illegal practices.

To lower costs, many smallholders prefer to cut timber and mill lumber themselves, with chainsaws, instead of hiring someone. But they also need capital before they can harvest timber, and often must  turn to intermediaries for high-interest loans. The alternative is to sell standing trees to intermediaries or chainsaw millers at a lower price.

Intermediaries play an important role in the market chain by providing financing, but they can also impose their conditions on the timber sale, putting smallholders at a disadvantage. Intermediaries can also obtain necessary permits and often know how to make illegal timber appear to be legal. This allows them to sell the timber in domestic urban markets.

These difficulties and constraints, combined with inadequate incentives, leads those involved in the illegal sale of timber to resist efforts to change their practices, Pacheco says.

Lack of compliance with forestry regulations represents a significant cost to governments in lost tax revenue. At the same time, however, the timber sales are an important source of income for smallholders and communities.

So what’s the answer? Although it varies somewhat from country to country, the studies point to some general principles.

Looking for solutions

Pacheco and his colleagues suggest involving smallholders and other members of the small-scale market chain in an effort to design a more flexible, integrated framework that enables smallholders to make decisions about the best way to manage their forests.

“These frameworks have to be increasingly associated with economic incentives and assistance,” Pacheco says.

It is also important to make timber markets more transparent, by making better price information available to everyone in the market chain and improving monitoring and oversight.

“Local intermediaries have to be part of the solution,” Pacheco says, “so improved partnerships have to be built throughout the value chain, from the market all the way back to the smallholders or communities and their forests.”

Government agencies at all levels would do better to shift their emphasis from command-and-control-style enforcement of regulations to facilitation of a form of forest management that is sustainable, and which also works for smallholders, he says.

He hopes CIFOR’s in-depth studies of forest management in Bolivia, Ecuador and Peru will contribute to a system that works for both people and forests.

“More flexible systems, with better monitoring, improved incentives and greater knowledge of the market demand, could make life easier for smallholders, while  ensuring that they have the resources to benefit from their forests and also to invest on them,” he says.

This research was conducted as part of the project, “Emerging countries in transition to a green economy: Will it make the difference for forests and people?”. This collaborative program aims to enhance the management and use of forests, agroforestry and tree genetic resources across the landscape, from forests to farms.

For more information on this topic, please contact Pablo Pacheco, Principal Scientist at CIFOR, Team Leader “Value Chains, Finance and Investments” at
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