One commodity, seven countries – and multiple impacts for legal timber

Seized illegal log marked with police tag, Riau, Indonesia. Photo: Sofi Mardiah/CIFOR

In the wake of the UN Climate Change Summit in Glasgow in late 2021, a series of legal instruments aimed at tackling forest loss emerged in rapid succession.

In October, the FOREST Act was introduced in the United States Senate and the House; a few days later, the UK Environment Act was passed; and on 17 November 2021, the European Commission proposed a new regulation aimed at minimizing EU-driven deforestation and forest degradation. Each of these rules will, once finalized and in its own detailed way, potentially alter global supply chains dealing with commodities (coffee, soy, timber etc.) linked to deforestation and forest degradation.

Arguably, the precursor to most of these very welcome efforts is the European Union’s Forest Law Enforcement, Governance, and Trade (FLEGT) Action Plan, a multi-year process initiated in 2003 to stop illegal logging and related timber trade. Because the process targets the entire supply chain – from production to processing to consumption – it rests on two different yet related instruments: one to prevent the illegal harvesting of timber in producing countries, and another to prevent its importation into consumer countries.

That first instrument, Voluntary Partnership Agreements (VPAs), are trade agreements signed between the EU and any willing timber-producing country. In essence, producing countries make the fight against illegal logging a priority on the national agenda, and the EU supports such efforts in multiple ways, with financial, technical and commercial support and incentives.

So far, 15 countries are either implementing a VPA or are at various stages of negotiation with the EU. Nearly 20 years since the FLEGT Action Plan was adopted and more than a decade since the first tropical timber producing country signed its VPA (Ghana, 2009), we decided to pay a visit to 7 of those countries (see graph) to see how their VPA has impacted five core areas where improvements are expected: governance and institutional effectiveness, illegal logging, forest conditions, economic development, and livelihoods and poverty.

Impact of VPAs in seven countries. Source: the authors

Detailed results per country, with specific indicators per core area, along with a global synthesis report summarizing our findings across all seven countries can be found on the Center for International Forestry Research (CIFOR)’s website. Below, we summarize the major results which we believe also bear useful lessons for a future aimed at tackling multiple commodities rather than just one.

What have VPAs achieved so far?

Findings point to several improvements in producing countries, although the strength of evidence of VPAs’ contribution to them varies.

VPAs have been instrumental in the creation or improvement of fundamental patterns of power (re)distribution, the promotion of democratic processes, and accountability. There is strong, widespread progress in effective multistakeholder engagement, increased capacity of civil society organizations (CSOs), and evidence of their growing power in a watchdog role, and this is strongly attributed to the VPA process.

VPAs have promoted inter-agency inclusiveness and coordination. In several countries, the VPA process has brought to the table for the first time ever a myriad of interlinked topics which require discussion and decisions from multiple ministries (territorial administration, labour, finance, agriculture, mines, etc.). This has in turn led to an increased adoption and acknowledgment by various groups of stakeholders, of the forest as an integrated set of functions and services. When tackling deforestation, forest degradation, and multiple commodities, such inclusiveness and coordination should be supported and facilitated to ensure wide expertise and to avoid one ministry taking over the process.

VPAs have generated a wave of regulatory and legal streamlining. This has led in some cases to a decreasing trend in industrial illegal logging and trade, to the promotion of a ‘traceability’ mindset especially among local small- and medium-sized enterprises (SMEs), as well as better implementation of forest regulations. But this finding needs qualification. For example, while VPAs have stimulated the adoption of private third-party traceability systems (e.g. chain-of-custody), national data collection and analysis and end-to-end implementation of national traceability systems are still weak in most countries and must be improved if these trends are to be monitored.

Also, export markets, which tend to be served by large-scale industrial companies have benefited more from the regulatory focus on legality brought about by the VPA process than domestic markets, which are largely served by SMEs. This is as much the result of historically biased regulatory frameworks that favour industrial logging as it is of a generalized lack of data and information on – and political attention to – SMEs across many countries. Exceptions do exist, especially for countries more advanced in their VPA process.

Finally, the impact of the VPA process on livelihoods (such as material wealth, health, and access to public services) remains very challenging to measure and could materialize later in the process. The most noticeable outcomes – albeit with variability among countries – pertain to tax collection, which has been streamlined and improved; to better redistribution of some taxes, especially those that had not previously reached local and Indigenous communities; and to increased job opportunities, including in the informal sector.

What can we learn for the future?

Four major lessons arose from our research. The first one focuses on the governance of supply chains. The ultimate success of the fight against deforestation and forest degradation will depend on how various commodities in their country of production are governed. Notions of ‘local relevant laws’, ‘due diligence’, ‘illegal deforestation’, ‘risk assessment’, and so on – which populate the texts of the new acts and regulations – will greatly benefit in their interpretation and implementation from the VPA experience and its impacts on local governance and institutions.

However, progress on governance and institutions has many facets, and the VPAs teach us that such progress is often slow, not linear, and not conducive to a Yes/No box-ticking exercise. To take an extreme example, our findings show limited success in fighting corruption in the forest sector. But the battle is on and often led by VPA-empowered CSOs. While systemic resistance to change and historical vested interests can be expected to remain strong in some countries irrespective of the commodity, the VPA process has directly challenged them – they have been exposed.

This should neither be downplayed nor misread in a future that puts several commodities under scrutiny. The VPAs have pushed CSOs, local and Indigenous Communities, and lead innovators in government and the private sector to step into the ring. This is a legacy in need of continuous support regardless of which commodity is under the spotlight. Concerned importing countries cannot simply put a ‘high-risk’ stamp on an entire exporting country and turn their backs on these actors. That won’t save the forest.

A second lesson revolves around technology. Technological innovations will surely be a key element to support future efforts at tracing deforestation-free commodities. Yet VPAs teach us it is one thing to recognize that the main driver of deforestation and degradation is the expansion of agricultural land to produce export commodities and develop a sophisticated traceability system to monitor production; it is altogether another thing to understand whether the system can identify violated fundamental rights, systematic inequalities, or historical wrongs on that land. Such an understanding can only come if the process is allowed to be constantly questioned and monitored.

In fact, VPAs teach us a third lesson here: we should not forget that, while initially aiming at B, a certain process can actually go from A to C, and then back to B (or not). The important thing is to be able to identify where you are (more or less) at any given time. Over the years, spurred by evaluations and audits, the VPA community has expanded its monitoring reach and enhanced its inward questioning.

This capacity to continuously question and adapt its hypotheses to meet domestic context and international trade realities is arguably one of the major successes of the VPA process. At times, this may look like a messy, expensive, inconclusive, and ultimately frustrating process, especially when expected (or unexpected) results take years to start to materialize and the process can seem like it’s going in circles. And yet remaining adaptive to shifting contexts must be a key lesson adopted for other commodities.

It has been a learning process, and it has produced one key recommendation for the realization of a multi-commodity zero-deforestation future: the most relevant stakeholders in producing countries must be supported to build baselines – and conduct periodic remeasurements – that speak to those who often find themselves on the wrong side of the supply chain, i.e. millions of smallholders, individual producers, and SMEs. Our findings speak to largely non-operational National Impact Monitoring Systems. That must change, with clear incentives (for compliance) and disincentives (for non-compliance) built into these systems.

A fourth and final lesson concerns the management of expectations on the speed, direction and strength of change. Using the above example, targeting A, when should we start to worry because we don’t see any sign of B or C? VPAs teach us that observed changes and impacts vary across topics, indicators, and time and, most importantly, that one must always maintain a holistic perspective. Results show that expected impacts can be achieved both before and after any set date (e.g. before receiving a FLEGT-licence). And less material – albeit hugely important – impacts, such as being considered a reliable international trading partner, may emerge and grow throughout the process.

As the new acts and regulations set in motion various processes and procedures, and as one supply chain after another comes under intense global scrutiny and actions, we must strive to keep a balance between a holistic perspective and more tangible milestones. Multiple, commonly agreed milestones along the impact pathway to minimized deforestation and forest degradation can and should exist as political triggers to avoid stalling the process. But an inability to see the big picture can lead to focusing on any one of them to assess overall performance, to the exclusion of the others – and this will lead to very poor policy decisions and impacts on forests.