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Illegal logging: a threat to Climate Change efforts.

Report: Forest crime may undercut efforts to halt climate change. Timber criminals carry much more than the theft of logs on their conscience. Shady timber deals not only harm nations, people and wildlife by destroying forests; they also endanger global efforts to halt climate change.

17th October 2012

Report: forest crime may undercut efforts to halt climate change

 

12 October 2012

Timber criminals carry much more than the theft of logs on their conscience. Shady timber deals not only harm nations, people and wildlife by destroying forests; they also endanger global efforts to halt climate change.

This is one of the key messages contained in the report ”green carbon, black trade”, published by the United Nations Environmental Programme (UNEP) and INTERPOL on 27 September 2012.

According to the report, the volume of black money stemming from illegal timber trade is so enormous that it could significantly undercut global initiatives for mitigating climate change, such as REDD (Reduced Emissions from Deforestation and Forest Degradation).
Will timber crime undercut climate actions?

Up to 17 % of global greenhouse gas emissions are currently thought to be caused by deforestation. Halting deforestation is regarded as one of the fastest ways to address climate change, and therefore many stakeholders have high hopes for the short and medium term impact of the REDD scheme.

However, halting illegal harvesting in one area could speed up logging in another, offsetting the benefit obtained in the first place. This sort of pattern may have been visible in the early 2000s, when illegal logging in Indonesia was temporarily declining. Timber harvesting was then seen to take speed in other parts of the world, such as Papua New Guinea, Myanmar and the Congo Basin.

Billions of dollars are being invested into the REDD scheme. But illegal timber trade is a billion-dollar business, too; according to the report it currently stands at 30-100 billion USD per year, including processing.

Due to its enormous value, illegal timber harvesting has the potential to offset the positive impact of REDD. The report concludes: “If illegal logging cannot be controlled, it is inevitable that the global community’s efforts to reduce and offset carbon emissions will be undone”.

Graphic from the report

The report reveals that illegal logging is not on the decline as was thought five years ago; illegal timber trade is as pervasive as ever, thanks to the existence of global timber crime syndicates and a creative mix of old-fashioned tactics such as bribery and advanced methods like computer hacking and log laundering.

While the report estimates that illegal logging accounts for 10 to 30 per cent of the global timber trade, the scale of illegal timber trade is reported to be even higher in the world’s key tropical timber producing countries where 50 to 90 per cent of the total logging is estimated to be illegal. Actions to crack down on the more obvious forms of illegal logging have apparently just resulted in a shift towards more subtle tactics.
Thirty ways to steal a forest and get away with it

The report presents 30 ways that forest criminals may employ to enrich themselves while inflicting irreparable damage to the world’s forests and causing untold harm to some of the poorest people on Earth. The methods range from good old run-of-the-mill strategies, such as the use of bribes to obtain logging permits, to more creative and advanced forms of crime.

One method which appears to be on the rise consists in laundering illegal timber by establishing roads, ranches, palm oil or forest plantations.

Illegal logging often takes place beyond the area that is legally converted into plantation. The illegally harvested timer is subsequently mixed with legal timber during transport or in mills. Timber produced in plantations may also be mixed with illegal timber in mills, for example for pulp production.


“In many places, plantation permits are issued for operations but production is never started. The plantation is a cover for the actual purpose which is logging”, the authors state, observing that ”the number of companies registered as plantations has sky-rocketed in tropical deforestation regions in the recent years”. For what purpose one can only guess. Ironically, as the report dryly notes,”many of these operations are established with substantial government subsidies”.

Other methods include falsification of eco-certificates, false declaration of tree species, understatement of volumes, hacking government websites or using bribery to obtain transport permits and a number of other inventive defrauding schemes.
How to effectively address forest crime

Previous attempts at halting illegal timber trade have largely failed partly because they were too localised or did not take the full scope of the crime into account.

As reported in our previous article, the project LEAF (Law Enforcement Assistance for Forests) launched by INTERPOL and UNEP takes a new approach to tackling forest crime. Recognising the transnational and often well-organised nature of this type of crime, the project is setting up a global network of national task forces that collaborate on investigating and prosecuting the white-collar timber criminals on top of the illegal timber syndicates.

Concerted global action is clearly needed, also to avoid situations where enforcement actions in one country just lead to growing illegal activities in other countries. The report also identifies bottlenecks in the black timber trade – such as transportation routes and entry to mills – as focus point for intensified control.
The dark side of investment funds

A look at the money flows for the initial investments by the criminals completes the picture.

Where does the “seed money” for getting the black trade going – e.g. for establishing roads and plantations used for money laundering, or for paying large sums in bribes - come from? Quite substantial sums are involved, and according to the report they are funnelled by investors often located far away from the crime scene:

“Much of the laundering of illegal timber is only possible due to large flows of funding from investors based in Asia, the EU and the US, including investments through pension funds”.

Only four of the world's markets - the US, the EU, China and Japan - are reported as the end destination for as much as 80 % of the world's illegal timber. However, this figure only refers to the part of the illegally harvested timber which is exported; domestic trade in illegal timber is not included in the calcultation, which would likely change the figure significantly. Still, import markets no doubt do play an important role as sinks for illegal timber.

The report suggests a new approach to disrupting the links between illegal harvesting and global investors: a system where dubious companies are assigned a risk rate used as a reducing factor when calculating returns on investing in the company. As the authors note, “if this was implemented then ethics would really be communicated in a language the financial system understands”.

Download the report ”Green Carbon, Black Trade” from UNEP’s website

RELATED ARTICLES

INTERPOL enters battle against forest crime (13/7 2012)
World Bank: time to get tough on forest crime (3/4 2012) 

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