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International Forest Conference in Berlin

Finding the balance between conserving tropical forests and using wood as a raw material


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The concurrence of three special anniversaries for the forestry sector was the reason why the German Federal Ministry for Economic Co­op­er­a­tion and De­vel­op­ment (BMZ) invited experts from politics and business to the in­ter­na­tional conference "Forests for Future Generations – Public and Private Responsibility for Sustainability" in Berlin: the 300th anniversary of Hans Carl von Carlowitz’s concept for sus­tain­able forestry, 20 years of forestry certification and 10 years of the EU FLEGT Action Plan on Forest Law Enforcement, Governance and Trade.

How can tropical forests be used and at the same time be effectively conserved? How is it possible to bring certified sus­tain­able wood products out of their market niche so that instead of over-exploiting forests their sus­tain­able management can be fostered? And how can investments for this be mobilised? "We have to make better use of the synergies between state regulations and private business initiatives to conserve tropical forests," is how Federal Minister Dirk Niebel summed up the position of German de­vel­op­ment co­op­er­a­tion on protecting tropical forests in his opening speech. The aim of the conference was to set incentives for verifiable legal and sus­tain­able wood supply chains and their financing. Over 160 representatives from politics, business, science and civil society from a total of 37 coun­tries emphasised that an effective dialogue between regulators and private sector sustainability initiatives could make an im­por­tant contribution towards achieving this.

Passing on knowledge and learning from each other. Bringing together stakeholders from producer, processing and consumer coun­tries. Discovering potential for joint action in order to promote sus­tain­able forest management in tropical regions and demonstrating interactions between the supply and demand sides for wood products from the tropics.

These were in short the most im­por­tant objectives of the expert conference. The discussions showed how different the perspectives of the individual stakeholders along the wood supply chains are.

"In 300 years burning wood may be prohibited because it is too valuable," was one of the theses offered by Prof. Jürgen Blaser for consideration in his keynote speech. Climate change and human intervention will quickly change the site conditions and status of forests. In his opinion, in the future there will be no more continuous primary forests in tropical areas, but rather landscapes made up of a mosaic of forests of various sizes all shaped by human hand.

"Only legal" or also "sus­tain­able wood"?

How are the European Union’s efforts to prevent illegal harvesting and the import of illegal wood into the EU by Voluntary Partnership Agreements (VPAs), as part of the FLEGT process and the EU Timber Regulation, affecting the issue of sus­tain­able forest management by certified companies? Although Cristiana Pasca Palmer from the European Commission's DG De­vel­op­ment and Co­op­er­a­tion emphasised that the two approaches are complementary, a range of serious questions still arose. Faced with the still limited number of certified businesses in tropical regions, some participants pointed to the risk that VPAs could unintentionally give legitimacy to legal yet unsustainable forestry. Whereas one side viewed the legality of wood harvesting as an im­por­tant step in the right direction, the other side warned about lowering requirements at the expense of sus­tain­able forest management.

This was accompanied by the concern of those companies that are already investing in voluntary sustainability standards that their investments will not be valorised. It remains therefore to be seen whether the increased efforts to ensure the legal harvesting of wood will also result in higher demand for sustainably produced wood products.

Alliances between governments and business - who needs to move?

The need to better exploit the relevant advantages of regulatory and private sector approaches using the principle of co-regulation were emphasised repeatedly ("additional layer of control"). The conference participants repeatedly requested a clear signal that the EU would in future put more emphasis in VPA negotiations on sustainability criteria and would soon include them in the regulatory requirements of the EU Timber Regulation.

Hugo Maria Schally from the EU Commission's DG Environment described the FLEGT process as the means of choice to counteract illegal wood harvesting nation-wide at the state level. Faced with the lack of a binding in­ter­na­tional definition for sus­tain­able forest management, comprehensive national definitions of legal wood are formulated for the first time in the partnership agreements with coun­tries that export tropical wood products. It was not enough to push the willing forward with voluntary standard initiatives but rather there was a need also to ensure that the un­willing comply with the regulations. Schally clearly stated that VPA negotiations were an inter­govern­mental ne­go­tia­tion process taking place between the EU and tropical timber producing coun­tries. Private standards initiatives could however contribute with their instru­ments and ex­perience in fulfilling due diligence under the EU Timber Regulation.

Accordingly Kim Carstensen, Managing Director of the Forest Stewardship Council (FSC), explained that the FSC would modify its standards for forest management and chain of custody certification to the requirements of the EU Timber Regulation and the national FLEGT requirements. For example, the indicators of the Cameroonian legality definition would be integrated into the national·​FSC standard there.

Who are key actors in the timber trade and thus in conserving tropical forests?

This was one of the issues that revealed how difficult it is to agree on a common understanding of how to manage different types of forests (natural forests, plantations, etc.) in the tropics and the associated trade in forest products. The EU is an im­por­tant import market and, given the growing demand for wood, will also remain so. But large emerging coun­tries that are experiencing economic booms are increasingly using wood for their own consumption. For example, Marcus Alves from the Brazilian Forest Service reported that the major share of wood harvested in his coun­try was destined for the domestic market. Jirawat Tangkijngamwong from the Thai Timber Association views the EU voluntary partnership agreements as an opportunity and a big step forward in improving the statutory conditions for trading in wood. His pragmatic approach was that legality is the foundation. For the few Thai companies that could afford the certification costs, FSC was the right way - but not for the mass of small producers and companies in Thailand. Just like other wood processing coun­tries, such as Vietnam and China, Thailand imports a lot of wood from other tropical coun­tries. This emphasises the importance of seeking an active dialogue with emerging nations in the discussion about boosting global demand for sustainably produced wood products.

On the corporate side, the discussion was above all about how to comply with the different regulatory requirements such as the EU Timber Regulation or the US Lacey Act. Following the amendment of the US Lacey Act in 2008, companies in the US can be prosecuted if they import wood products that are illegal according to the legal requirements of the coun­try of origin. As a consequence, as many participants emphasised, it is becoming more and more im­por­tant that the vast quantities of information available are made properly accessible.

Who is investing in the forestry sector?

Key to conserving forests is not only the monetary valuation of the renewable raw material wood but also the appropriate valorisation of its ecosystem services. Sustainable forest management requires investment that also generates economic returns. Many forest areas are converted because other land uses such as arable farming and cattle breeding frequently promise more profit. It is therefore of great importance that there are more, attractive investment models and respective insurance systems for forests and sus­tain­able forest management. But it is precisely here that the problems arise: the finance industry generally thinks in short-term periods whereas trees need decades to grow.

Tuukka Castrén, forest expert at the World Bank, explained that especially in tropical coun­tries, rapid rates of growth could generate high yields, but weak gov­ern­ment, corruption and unresolved tenure rights created high investment risks. Thus 70 per cent of forestry investments are currently being made in non-tropical coun­tries such as the US. Despite the growing general interest in tropical forestry as an investment asset, many potential investors are scared off by the risky conditions.

Public funds are significantly lower than private investments in the forestry sector. It is therefore all the more im­por­tant that public funds such as those of the World Bank are used in a targeted manner in order to create the appropriate conditions, motivate more private investors, and promote sustainably operating companies in tropical forest coun­tries and their supply chain management. Nevertheless, forestry had evolved into an attractive investment class, said Castrén, in particular for those investors who are investing for the long term, such as pension funds or "impact investors", whose primary objective is to make a positive contribution towards achieving social or environmental objectives. Intelligent interaction between public and private finance can set valuable accents.

Federal Minister Dirk Niebel pointed out that from 2013 onwards Germany will increase its commitment to conserving forests and other eco-systems. With 500 million Euros p.a. Germany is one of the biggest donors in forest protection. "With these funds we want to contribute to putting a halt to the ongoing deforestation, especially the loss of tropical forests, which are essential for the well-being of future generations and the growing global popu­la­tion," the Federal Minister stressed.

Is it enough to focus on the forestry sector?

During the conference, it also became clear that just focusing on the forestry sector alone was too narrow if the aim was to use forests sustainably. Philipp Schukat from the GIZ Program for Social and Environmental Standards pointed out that sus­tain­able management went beyond individual certified units. So land use planning at the national level and co­op­er­a­tion between different product-specific standards initiatives and companies was par­tic­u­lar­ly im­por­tant in order to reduce further deforestation resulting from ag­ri­cul­tur­al expansion.

How attractive are sus­tain­able tropical wood products for consumers?

On the issue of sus­tain­able forest management and legal harvesting of timber, the end consumers are im­por­tant actors at the end of the supply chain. In particular, the wood industry representatives warned about regulating wood too much in comparison with other raw materials. Wood as a raw material and renewable energy source must remain attractive otherwise businesses and consumers would turn away from it. It was not only Vicky Vaughan, manufacturer of FSC-certified furniture from certified com­mu­ni­ty forests in Nicaragua, who reminded the conference that, at the end of the day, the price had to be right for the seller and the buyer.

According to representatives of the wood industry, the poor image of wood and wood products from tropical coun­tries played an im­por­tant role. This was the result of continuing forest destruction in many tropical forest coun­tries, the lack of control along wood supply chains and above all by a lack of information for consumers. Only very few know that the most influential driver of deforestation is not illegal harvesting but rather the conversion of forests into ag­ri­cul­tur­al land. In particular in Germany, the perception that using any kind of tropical wood is responsible for the destruction of the tropical forests is widespread. One of the working groups therefore recommended improving the image of tropical wood in consumer coun­tries with reference to the availability of sustainably produced tropical wood products.

One participant gave an example of what happens if certified tropical wood is avoided by consumers. Many classical wood products, such as garden furniture, were being replaced by non-renewable raw materials, especially aluminium and plastics. Many of these alternative products require lots of energy in the production process.

How can politics support certified wood products?

Politics can be a good role model in particular when it comes to improving the image of wood and wood-based products from the tropics. So one working group recommended that EU member states should use public procurement policies to give priority to sustainably produced wood products - including from the tropics - in order to send a signal to private consumers. At the same time, the EU member states were also encouraged to harmonise the different requirements of national procurement rules and integrate FLEGT-licensed timber.

With all the legislative progress in restricting the trade in illegal wood, the main challenge and re­spon­si­bil­i­ty is to make global wood supply chains trans­pa­rent and traceable back to the original forest in order to increase the confidence of consumers in tropical wood products. One participant summarised it as going back to the "carrot and stick" approach, i.e. improving the links between control instruments and incentives.

Summary

The conference was a success as it brought together participants from different contexts who have a common interest in promoting sus­tain­able and legal forest management as well as the use of wooden products. They were able to clarify the understanding of the roles of the market participants and the complementary nature of the instruments in their efforts to step up the conservation of tropical forests and their sus­tain­able use. The discussions made it clear that there is still a long way to go until there is comprehensive implementation of sus­tain­able tropical forest management. Forest enterprises, the processing industry and trade throughout the whole supply chain are therefore challenged to strengthen their efforts for sus­tain­able tropical wood production and the use of tropical wood. A lack of investment, low willingness to invest and poor investment conditions represent a particular challenge for tropical forest coun­tries.

On this, Ulrike Haupt from the hosting Federal Ministry for Economic Co­op­er­a­tion and De­vel­op­ment (BMZ) announced that the Ministry would continue to work on the recommended issues in co­op­er­a­tion with committed partners.

Authors: Ulrike Haupt, Head of Division 311 Environment and sustainable use of natural resources, and Birgit Joussen, Desk Officer Division 311, Federal Ministry for Economic Cooperation and Development (BMZ), Germany

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