Tropenbos International Info brief - May, 2014

Why promoting the demand for sustainably produced tropical timber?

Deforestation, forest degradation and illegal forest use in the tropics continue at a high rate. The direct and underlying causes of forest loss and degradation have many dimensions and interrelations. There is a growing awareness of the environmental, economic and social dimensions of trade and the important role that markets and demand side measures in consumer countries can and must play in stepping up transition towards sustainable forest management in the tropics. The market in the Netherlands for sustainable tropical timber is under In environmentally sensitive consumer markets, like in Europe, pressure. More and more traders governments, trade associations and companies have are looking for alternatives to introduced initiatives, action plans and legal measures to tropical wood because they think stimulate the consumption of legal and sustainably produced it is better for the conservation of timber on the market. At the same time it is noted that the the world’s rainforests. However, demand for tropical timber in Europe is declining steadily. a stable demand for sustainably A consequence of a declining share of the European market produced tropical timber is in the international timber trade is a loss of influence by important for maintaining tropical European consumers on the conditions under which tropical rainforests and supporting local timber is produced (Lammerts van Bueren et al. 2013). economic development. The status of the world’s rainforests

World’s total forest area is just over 4 billion hectares, which corresponds to an average of 0.6 ha per capita. Tropical forests may cover up to 1.7 billion hectares (figure 1) and as many as 45 tropical countries have more than 50% natural forest cover. Tropical rainforests are concentrated in three major forests blocks: the Amazon Basin, the Congo Basin and South East Asia. Countries with the largest forest cover are Brazil (520 million ha of rainforest), DR Congo (154m ha) and Indonesia (95m ha) (FAO & ITTO 2011). Biomes Source: MA 2005. Map designed by Emmanuelle Bournay, Paris. Tropical and sub-tropical moist broadleaf forest Tropical and sub-tropical grassland, savanna, and shrubland Tropical and sub-tropical dry broadleaf forest Temperate grassland, savanna, and shrubland Tropical and sub-tropical coniferous forest Montane grassland and shrubland Temperate broadleaf and mixed forest Flooded grassland and savanna Temperate coniferous forest Mangrove Boreal forest / Taiga Desert and xeric shrubland Tundra Rock and ice Mediterranean forest, woodland, and scrub

Figure 1. Distribution of main biomes in the world. Tropical forests of various types (moist, dry, coniferous and mangrove) are indicated. Source: UNEP / Grid-Arendal (2009)

Deforestation rates in the tropics are high, The destruction of the forests is occurring due but they show some signs of decline. Between to various reasons. The greatest cause of 2000-2010, annual net forest loss in the three tropical rainforest destruction today comes major rainforest blocks was 5.4 million hectares from human activities, including subsistence per year, a decline compared with the 7.4 activities, oil extraction, logging, mining, million hectares per year reported during commercial agriculture, cattle ranching, and 1990-2000 (FAO & ITTO 2011, road construction figure 2). (see figure 3).

The value of forests

Forests help stabilize the world’s climate, The proportion of forests that is sustainably provide a home to many plants and animals, managed depends on the definition of maintain the water cycle, protect against sustainability that is used. A minimum flood, drought, and erosion and are a requirement for any form of deliberate source for medicines and foods. To take care forest management is the existence of an of these material and immaterial services approved long term forest management forests need to be managed in a sustainable plan. The percentage of forest covered by a way. Sustainable forest management (SFM) management plan varies strongly by country; means the environmentally appropriate, as a general trend, forest management units in socially beneficial, and economically viable Europe mostly have a management plan (94%), management of forests for present and while in Africa (17%) and South America future generations (figure 4). Well-managed, (16%) this figure is much lower, in spite of selectively logged production forests retain regional variation (figure 6). a large proportion of their timber production potential, biodiversity and carbon storage Taking the area of FSC or PEFC certified function (Putz et al. 2012; figure 5). forests as a measure for sustainably managed forests, this total would be 417 m ha in 2013 (UNECE 2014). The world’s certified forest 1200 1000 800 1990

600 2000 a. Timber b. Carbon c. Biodiversity 400 2010 200 100 100 100

0 80 80 80 Africa Asia Europe North Oceania South and Central America America 60 60 60

40 40 40 Figure 2. Trends in forest area, 1990 - 2010 (million ha). Carbon Retained (%) Carbon Retained Source: FAO 20 20 20 Species Richness (%) Retained Timber Volume Recovered (%) Recovered Timber Volume no data Same 0 Same + Same + 0 0

Birds Plants Mammals Third harvest Invertebrates Second harvets Logging ~1-y Post-logging 5-8% Pasture (cattle ranching) 40% Figure 5: What is sustained in logged tropical forests? Small-Scale agriculture (subsistence agriculture) Diagram shows (a) the increased volume of commercial timber 15-30% after one or two cutting cycles of 20-40 years if the same tree species is harvested (‘Same’) or additional species are harvested (‘Same+’); (b) carbon in living tree biomass one year after selective logging; (c) species richness in selectively logged forests compared to undisturbed old-growth forests. Other* Large-scale agriculture 3% (soy, oil palm, maize, rice, etc.) Source: Putz et al. 2012. 15-20%

* Other includes urbanization, dams, infrastructure, mining, non-agricultural fires

Figure 3. Causes of tropical deforestation, 2000 - 2005. Source: Rhett A. Butler / mongabay.com 1050 900

750 1990 600 2000 450 Ecological 2010 300 Values 150 0 Africa Asia Europe North Ocenia South and Central America SFM America Economic Social Figure 6. Forest area with a management plan, 1990 - 2010 Values Values (million ha). Source: FAO 2010

Figure 4: Sustainable Forest management (SFM) model area, as a percentage of total forest area, production forest (c. 6%, PwC 2012, equivalent has topped the 10% mark (UNECE 2014), with to c 2% of the total forest area, UNECE 2014). some regions exceeding 50% (Western Europe: 60%, 2013). The largest producers of tropical timber (industrial round wood) are Indonesia, Progress in sustainable forest management has Brazil, India and Malaysia; the most intense bypassed the tropics. The area of certified production in terms of production per unit of forests in the tropics is growing steeply, but area occurs in Togo, Nigeria and Ghana (FAO still represents just a small proportion of the & ITTO 2011).

Wood consumption

The EU the EU-27 together import about 3.1 million m3, In 2007, before the economic downturn, the or 10.7% of its total hardwood imports EU-25 was the world’s largest single importer (cf. ITTO 2012). of timber products, accounting for 22% by value of all import trade. Since then, it has The Netherlands declined in relative importance, in 2011 The total volume of sustainably produced wood representing 17% of the market, while China that in 2011 was imported to the Netherlands accounted for 19%. accounted for 536,010 m3. Sawn hardwood imported to the Netherlands is coming mainly Although Europe’s share in the international from Malaysia, Brazil and Cameroon. The timber trade is significant, its share in proportion of tropical wood in overall supply world tropical timber consumption is limited declined from 13% in 2007 to 8% in 2011. (1.8%, varying by product category from The greater part of the certified sawn tropical almost nothing for logs to 6.2% for veneers). hardwood in 2011 has the FSC certificate The consumption of tropical timber varies (209,075 m3). There were also 27,881 m3 significantly among European countries, but certified by the PEFC standard (ETTF 2012; on total European hardwood consumption, and figure 7 and 8). the contribution of tropical hardwoods is just 3.3% (cf. ITTO 2012). The UK, France, the Estimated growth of domestic markets Netherlands, Italy, Germany, Portugal, Spain In many countries domestic trade and and Belgium import substantial volumes of consumption is a high proportion of total timber tropical sawn wood, veneers and plywood – production and comparable to exported volumes. The world population is expected to grow larger, up to 9 billion people in 2050. 40.7% Malaysia

22.0% Cameroon 74.8% Malaysia 10.4% Indonesia

9.7% Brazil 10.9% Cameroon

6.3% Congo Brazzaville 5.7% Indonesia

3.4% Gabon 3.6% Congo Brazzaville

1.4% Bolivia 1.4% Brasil 1.4% Ivory Coast 1.2% Congo Kinshasa 0.9% Congo Kinshasa 0.7% Gabon 0.2% Guyana and Suriname 0.6% Africa overall 1.4% Africa other

1.3% Asia other 0.4% Asia overall

1.1% Unknown 0.8% Unknown

Figure 7. Origin of all tropical lumber traded in the Figure 8. Origin of legally verified tropical timber traded Netherlands. Source: Oldenburger et al. 2013 in the Netherlands. Source: Oldenburger et al. 2013 Europe

North America

Middle East Asia Paci c and North Africa

Sub Saharan Africa Central and South America

100mn 2030 500mn 2009 1bn Sources: OECD, Standard Chartered Research

Figure 9: Projected global middle class growth

By 2030 we are looking at a projected global middle-class expansion will be accompanied middle class of some 4.9 billion people – more by increased purchasing power, while these than 2.5 times as many as today (figure 9). markets are not (yet) concerned about Of this growth roughly 85% will come from sustainability. Asia (mainly China and India). This massive

Initiatives to address concerns about deforestation in the tropics

To address deforestation and degradation with other land uses have further weakened the in the tropics, a range of public and private business case for certification in the tropics. policy instruments has been developed, such as forest certification, the FLEGT Action Plan, and The FLEGT Action Plan national government procurement policies. The EU FLEGT Action Plan sets out measures to prevent the import of illegal timber into Certification the EU, improve the supply of legal timber The development of voluntary certification and increase the demand for timber from schemes to guarantee consumers that the responsibly managed forests. The measures timber was produced in a sustainable way, include both demand-side and supply-side was a logical answer to short falling legislation instruments. On the supply side, the Action and law enforcement. Forest certification Plan supports timber-producing countries provides an independently verified measure of with measures that include the promotion of sustainable forest management (SFM) based fair solutions to illegal logging, through a/o on a more or less consistent set of criteria and Voluntary Partnership Agreements (VPAs). indicators. It also focuses on complementary demand- side measures to reduce the consumption Only 5% of the total area that is SFM of illegally harvested timber in the EU certified in the world is located in the tropics, (EU Timber Regulation – EUTR). VPA s are and this represents just 6% of the tropical bilateral trade agreements between timber- production forests (PWC 2012). Barriers to producing countries and the EU with the certification are often in aspects related to purpose to support countries in producing poor governance. The high direct and indirect legally verified timber. Where certification cost of certification, generally low levels of addresses individual producers, VPAs address capacity, limited demand for certified produce the entire regulatory environment in the forest and high opportunity cost of forestry compared sector. Unlike certificates for SFM, which are tied to individual producers, each shipment of licensed timber from a certain country tropical timber assuming that a significant part will have been verified. For most of the VPA of tropical timber supplies were of “unknown” countries significant progress must still be made origin and that the due diligence obligations in implementation, so it may take some time and consequent risks move importers to seek before substantial amounts of FLEGT-licensed timber from non-tropical sources. The worst timber will reach the market. The ability of case scenario may be a cycle of reduced tropical countries and producers to implement supply, reduced demand and reduced interest VPAs has yet to be demonstrated. in tropical timber, leading to a negative impact on forest management practices in the tropics. The EUTR bans illegal timber from the EU market and requires operators to exercise due National government procurement diligence and take risk mitigating measures Amongst most EU Member States, government when they place timber on the EU market. procurement accounts for between 15% and Timber that carries a FLEGT licence is exempt 25% of all timber imports (Proforest 2010). from this requirement. The requirement to proof A Europe-wide ambition to purchase only that the timber is not coming from known illegal sustainably sourced and licensed timber is sources may narrow the gap with sustainably missing. Various countries have developed a sourced timber. Alternatively, the immediate Timber Procurement Policy (TPP) but coherence effect of EUTR might be a reduced supply of among country-specific TPPs is lacking.

What happens if forests are not managed for sustainable timber production?

Over the past decades there has been a lot that we acknowledge this and continue using of focus on the legality and sustainability of it for many purposes. Using sustainably tropical timber production. The establishment produced timber will not only contribute of the EU Timber Regulation in March 2013 to the conservation of tropical rainforests, has even made the trade in illegal timber a but will also provide tropical countries with criminal act. Timber from tropical countries a sustainable income opportunity that can is seen as high risk, so traders have to do support local economic development. extra work to verify that the timber has been legally produced. The trend is that companies are refraining from the use of tropical timber because of these risks, but also because it is understood that not using tropical timber would be better for the world’s rainforests. This assumption is not correct: the forests will be exploited anyway, only the timber will then go to markets with no sustainability requirements, with the risk of more deforestation or forest degradation.

Timber is part of the productive function of a healthy rainforest, which means that trees can be harvested for timber as long as it is being done in a sustainable manner. High economic value of timber and other forest products will put a value on forests and provide an incentive for their conservation: conversion to other land uses will be less attractive. Tropical timber is a nice and durable product. It is important References:

ETTF (2012). 2011 Statistics – Netherlands. Timber trade monitoring in support of effective, efficient and equitable operation of the EU Timber Regulation (EUTR). FAO and ITTO (2011). The State of Forests in the Amazon Basin, Congo Basin and Southeast Asia. A report prepared for the Summit of the Three Rainforest Basins Brazzaville, Republic of Congo 31 May–3 June, 2011. FAO. Rome, Italy. FAO (2010). Global Forest Resource Assessment 2010. FAO. Rome, Italy. ITTO (2012). Annual Review and Assessment of the World Timber Situation. ITTO. Yokohama, Japan. Lammerts van Bueren, E., R. Zagt and H. Savenije (2013). Stimulating the demand for sustainably sourced and licensed tropical timber on the European market. Tropenbos International. Wageningen, the Netherlands. Oldenburger, J, A. Winterink and C. de Groot (2013). Duurzaam geproduceerd hout op de Nederlandse markt in 2011. Probos. Wageningen, the Netherlands. Proforest (2010). FLEGT licensed timber and EU member state procurement policies. Proforest. Oxford, UK. Putz, F.E., P.A. Zuidema, T. Synnott, M. Pena Claros, M.A. Pinard, D. Sheil, J.K. Vanclay, P. Sist, S. Gourlet-Fleury, B. Griscom, J. Palmer, R. Zagt (2012). Sustaining conservation values in selectively logged tropical forests: the attained and the attainable. Conservation Letters 5 (2012) 296-303. PwC (2012). Mainstreaming sustainability in the tropical timber industry. Phase 1 and 2 Report. Unpublished report. UNECE (2014). Forest Products Annual Market Review, 2012-2013. Geneva Timber and Forest Study Paper 33. United Nations, New York and Geneva. Prepared by: Marieke Wit, with support of Julian Murrillo

Layout: Juanita Franco

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