By Pedro Moura Costa, Co-founder, BVRio Institute
The illegal production and trade of tropical timber is one of the main drivers of environmental degradation worldwide, leading to loss of habitats and biodiversity, greenhouse gas (GHG) emissions, human rights abuses and corruption. Sustainable forest management can provide livelihoods for forest peoples, and economic activity in rural areas, but these benefits are erased when the timber sector is dominated by illegal production. Unfortunately, it is estimated that over 50% of tropical timber still comes from illegal sources.
Over the last 15 years, international efforts have intensified to combat illegality in the timber sector. The US Lacey Act 2008, the EU Timber Regulation, and amendments to Australia’s Illegal Logging Prohibition Act have made trading illegal timber a punishable offense. In parallel, initiatives such as the EU’s Forest Law Enforcement, Governance and Trade (FLEGT) and TREE have helped to increase capacity to implement these laws.
But the situation continues to be particularly concerning in the Amazon region. According to several studies, it is estimated that a high proportion of timber products from the Amazon may come from illegal operations, which may involve theft of wood from conservation areas and indigenous reserves, the use of slave labour, and other illegal practices.
The lower cost structure of illegal operators (with lower production costs and no tax), enables them to displace the legal sources in the market, resulting in financial difficulties for the companies involved in legal and/or certified sustainable production. The result is very negative for the sector and for tropical forests: in the absence of mechanisms that value forest conservation, the forests become more vulnerable to deforestation which in turn increases global greenhouse gas emissions significantly.
In addition to illegality, the sector is also falling short in terms of the adoption of sustainability standards. Production from FSC-certified forest management operations accounts for less than 3% of the total log production in the Brazilian Amazon, and is diminishing as a result of unfair competition from illegal sources.
The combination of these factors has resulted in a reduction in demand for tropical timber, in particular from the Amazon region. In the domestic market, there is an increasing trend of wood substitution in the construction industry. Gradually, American and European companies are refraining from buying tropical timber and replacing it with supplies from elsewhere.
On the supply side, a reduction in timber production of around 40% was observed in the Amazon over the past 10 years. A significant barrier for the production of sustainable and/or certified timber, is the unfair competition posed by illegal operations.
Need for change: The Responsible Timber Exchange
For the timber industry in the Amazon and elsewhere to recover and resume growth, it needs to undergo a process of renewal and transformation, through the adoption of new trends, market practices and sustainability standards. The first step in this process is to ensure legality in the industry. This, in turn, would require the development and adoption of monitoring, control and traceability systems for the production, processing and transportation of Brazilian tropical wood products.
As part of this process, the BVRio Environmenal Exchange has just launched the Responsible Timber Exchange, a trading platform to assist traders and buyers of timber in sourcing legal or certified products from all over the world. The platform is integrated with the due diligence and risk assessment system, which collects “big data” sets including satellite imagery and databases that track environmental infractions, slave labour, illegal deforestation and tax non-compliance. This helps timber traders and environmental enforcement agencies detect sources of risk. Since its release to the public, the Due Diligence tools have been used extensively by traders and government officials from both the US and Europe.
The objective of this initiative is to facilitate the procurement of responsible timber products in an efficient, cost effective and secure way, increasing liquidity, supply and demand for this market segment and helping to promote transparency, legality and sustainability in the timber sector.
The platform is ready to allow the screening of responsible timber products from the Brazilian Amazon, Indonesia (based on the newly issued FLEG licenses), as well as certified products (by FSC and PEFC) from all over the world. While the system was originally designed for Brazilian timber, with the support of the UK government it is already been adapted to enable the screening of responsible timber from West Africa (starting with Ghana) and Peru. Products from other sources can also be found in the Exchange, and users will be able to contract for due diligence services through the platform.
There is an urgent need to promote legality and sustainability in the tropical forest sector, to protect forests from deforestation. This, in turn, requires action to promote the use of legal timber among associations, producers and distributors of timber products; develop monitoring mechanisms; encourage the use of legal and, eventually, certified timber products among purchasing departments of public and private sector bodies; and promote the legal segment of the industry in international markets.
We believe that the combination of the measures would help revitalising the tropical timber industry, and keep more of our precious forests standing tall.
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