At present no-one knows how much industrial timber consumption worldwide is actually sustainable. Illegal logging and over extraction is occurring in some 70 countries, and accounts for approximately half of all traded timber production in tropical forests. Demand for paper, plywood and other wood products is expected to continue to rise, driven by growing and increasingly affluent populations around the world. While this demand will be met in part through sustainable sources and industrial efficiency, the pressure on natural forests worldwide, particularly in developing countries, will also continue to rise.
Supply
| • | Of the global wood harvest for industrial uses, it is estimated that 42% is used to make paper. Most of that fibre comes from wood specially harvested for this purpose from industrial plantations or within managed semi-natural forest. Existing industrial forestry in North America and Europe is primarily targeted at meeting this demand. |
| • | Before the financial crisis, global pulp and paper production was expanding rapidly into developing countries to meet increased regional and global demand while taking advantage of lower production costs, and the availability of natural or industrial forest resources. |
| • | New pulp and paper mills are planned for Australia, Brazil, China, Indonesia, Laos, South Africa and Uruguay. As new processing capacity comes on line it must be matched by new plantations that are often created at the expense of natural forests, including tropical rainforest. |
| • | Illegal logging is estimated to cost developing nations close to $15 billion annually in lost assets and revenues – over 8 times the amount spent on sustainable management in the world’s forests. |
| • | The flow of illegal timber into the global market has a downward effect on timber prices by 7-16% (depending on the product). A recent report estimates $1 billion in lost revenues for US companies through a combination of these price distortions and lost export opportunities. |
Demand
| • | Industrialized nations, with only 20 percent of the world’s population, consume the vast majority of industrial wood output. Paper is used widely in all industrialised societies from printing and packaging through to hygiene and food preparation. Growth in global demand for paper is projected to increase by 77% from 1995 levels by 2020. |
| • | The United States is by far the world’s largest importer of wood and paper products, accounting for 20% of global trade in 2006. This represented $59.6 billion in value, of which $15.7 billion was for wooden furniture and $20.8 billion in paper products and pulp. |
| • | According to WWF, as much as 28% of the EU’s timber imports could be from illegal sources. The majority comes from Russia, but at least a third comes from the tropical forests of South-East Asia. |
| • | China has emerged as a global intermediary for wood products, growing its exports to over $17 billion in 2005 – a fivefold increase in under a decade. Half its timber requirements are met by imports, but the proportion is higher in export-oriented sectors – like plywood, furniture and flooring – where tropical wood is favoured. Half of all internationally-traded tropical logs are bought by China for a total value of $8 billion. Up to 40% of its imports overall are thought to be from illegal sources. The US market alone imported 21% of China’s plywood and 40% of its wooden furniture with a market value of $8.8 billion. |
Impacts & their Management
| • | There is widespread stakeholder concern around the sustainability challenges of large scale forestry monocultures using non-native species. Extensive plantations for paper in the developing world have raised concerns around the impact on water resources and loss of agriculturally productive land. |
| • | Logging for high-value species in remote areas has a high impact on biodiversity, including threatened species, and hillsides illegally stripped of their trees throughout SE Asia have exacerbated flooding and landslides that have caused thousands of deaths. |
| • | Illegal logging promotes corruption, and undermines the rule of law, and a number of reports have connected large scale illegal logging around the world with organised crime syndicates. Revenues from illegal logging have also been used to fund conflict, most recently in Liberia and the Democratic Republic of Congo. Illegal logging also deprives governments of much needed revenue to grow and develop the legitimate economy. |
Extent of 3rd Party Certification
| • | Industry’s response to sustainability issues has been to develop third party certification systems. Amongst the largest are two multi-stakeholder initiatives, The Forest Stewardship Council (FSC) established in 1993, and the Programme for the Endorsement of Forest Certification schemes (PEFC) established in 1999. |
| • | Globally the majority of certified wood is temperate softwood, but market coverage overall is poor. In Europe and Canada it is estimated that less than 5% of forest products are certified by volume, in the US less than 2% and in Japan around 0.02%. Tropical certified wood is available in much smaller quantities and from a less stable supply base. |
Government Regulation
The EU’s FLEGT: The EU’s Forest Law Enforcement, Governance and Trade (FLEGT) policy is a voluntary measure designed to help rainforest nations halt deforestation. FLEGT supports improved governance and capacity building in timber producing countries, but also tackles problems at home by ensuring illegally-harvested timber is not admitted to the EU market. FLEGT enables businesses to exclude illegal products from their own supply chains and encourages financial institutions to investigate flows of finance to the forestry industry. A majority of African timber exporting nations are now planning to sign Voluntary Partnership Agreements (VPAs) with the EU.
The USA’s Lacey Act: In 2008, the USA became the first country to ban the import, sale or trade of illegally harvested wood and wood products. Importers of wood products must declare the species and country of origin. There are strong penalties for knowingly sourcing, or failing to exercise due care when sourcing, illegal timber. The US market for eco-friendly timber products is expected to be worth tens of billions of dollars by 2010.
