1. State of the problem

Agricultural University of Tirana
Faculty of Forestry Science
7 May 2004
CORRUPTION AND ILLEGAL
LOGGING IN THE WOOD
PRODUCTS MARKET:
the Italian experience in
controlling deforestation
Davide Pettenella
University of Padova
1. State of the problem
• 10% of wood international trade is based on illegal
logging; a total value of 150 Billion $/year (OECD
Environmental Outlook, 2001)
• At least 50% of wood removals in the Amazon basin,
Central Africa and South-east Asia is illegal (Royal
Institute of International Affairs, 2002)
• Countries with tropical forests are still involved in
massive logging, often in illegal and unsustainable
forms. In many countries illegal logging are of the
same amount of legal ones. In other countries illegal
is much more extended than legal logging (World Bank
Paper organization
1. State of the problem
2. Are Italian companies involved in
deforestation and trade of illegal logging?
3. Which are the most affected countries?
4. Why do we need an action?
5. What are we doing to reduce the
problems?
Final considerations
• In Cameroon more than 50% of cuttings
are illegal (ITTO, 2001)
• In Cambodia, in 1997, illegal logging (4 M
cm) have been at least 10 times the legal
cutting (World Bank, 1999)
Illegal logging have external effects
Profit from illegal cutting are used for funding
regional conflicts in Cambodia, Liberia, in the
Congo Democratic Republic,… (FERN and RIIA, 2002)
Review of Global Forest Policy – 1999)
“Conflict timber” (UNSecurity Council)
An increasing problem (Å increased
trade of timber)
Indonesia
• in 1998, 40% of logging was illegal, with a total value
of more than 365 M $ (Indonesia-UK Tropical Forestry
Illegal logging is not a problem only
in LDC
In European countries with economies in transition
20-30 M cm di wood are cut in illegal form every year
(ECE-FAO, Timber Committee, 2000)
• In 2001 more than 70% is illegal (Scotland e Ludwig,
At least 20% of the wood harvested in Russia (i.e. 22
M mc) is cut in totally illegal manner or in contrast
with some of the existing legislation (Morozov, 2000).
Philippines
• The loss of revenue in the ’80s due to illegal
logging has been of 1,8 M $ (Senate of the Philippines
“At the moment forests in Serbia are not managed in
a sustainable way mainly for the need of timber
export” (declaration by the Serbian Minister of Agric. and Forests in the
Management Programme, 1999)
2002)
quoted by da D.Callister, 1992)
introductory speech at the Congress organised in Belgrade in 2002)
• The Philippines are now a net wood importer (FAO,
2002)
1
Illegal trade is not a technical
problem
2. Are Italian companies
involved in deforestation and
trade of illegal logging?
• Wood material is visible
• Satellite monitoring system are availbale
• Bottlenecks in the wood chain (roads, sawmills,
harbours)
Italy: 6th world importer of wood products
(Æ 2nd world exporter of furniture)
2nd European importer
1st importer from the Balkan area
2nd European importer of tropical timber
• Tracking system are available at low costs
Italy is the 1st export market for Cameroon,
Romania, Serbia, Bosnia, Albania…
Import
from eastern
Europe
(FAO – 1999 – 1000 $)
Croatia
119,833
Russian Federation
102,301
Slovenia
97,800
Poland
82,242
Hungary
79,993
Czech Republic
78,432
Bosnia and Herzegovina
43,460
Romania
43,244
Slovakia
35,372
Bulgaria
22,899
Yugoslavia, Fed Rep of
18,362
Ukraine
12,947
Estonia
8,607
Albania
5,327
Belarus
3,950
Lithuania
3,749
Latvia
2,939
Some examples
• Veneta Legnami: shareholder of the Société
Fostière Hazim (SFH) in Camerun
• Vasto Legnami: “We are so concerned about
the state of the forest resources in our
concessions (Camerun, Ivory Cost) that in
many cases we are directly providing the
salaries to the local forest officials”
• Forestale Veneta: wood import from the
Oblast of Lviv (Ukraine)
3. Which are the most
affected countries?
• West Africa
• Eastern Europe
– Balkan area
– Russia
Greenpeace protesting at the Ministry for Public Works:
Azobe' imported from Liberia through the Oriental Timber
Company (responsible – as stated by the UN – of illegal
trade of weapons)
• South-East Asia
A SLOW MOUVE TO THE EAST
November 2001
2
Criteria to orient key-countries
as main commercial partners
I mp o rt azio n e
(mc e q .)
Indicators
• Size of wood
import
Cm.eq. trade (average 97-00,
FAO)
Deforested areas (90-00, FAO)
• Deforestation
trends
Deforested area/total forest area
(90-00, FAO)
• Local Added
Value production
Roundwood import/total wood
import (average 97-00, FAO)
• Illegal behaviour
of forest
authorities
CPI (Corruption Perception Index)
defined by Transparency
International - 2000
Bra sile
Ind on esia
C ile
C amer un
C osta d ’Av .
R ep . Su da fr .
R ep . C on go
Gha na
Gabon
T h aila nd ia
N ige ria
Sin ga po re
U rug ua y
M a lay sia
L ibe ria
Arg en tina
M a da ga sc a r
Pa rag ua y
Ve ne zu e la
R .D .C o ng o
Bo liv ia
M e ss ico
Z imbabw e
Pe rù
R .G u ine a Eq.
Gua te mala
Be nin
An go la
M o za mb ico
R ep .C e ntr a fr.
Ecua do r
9 12 .13 8
7 24 .23 7
6 63 .53 8
4 65 .83 1
3 46 .19 3
3 04 .13 4
1 24 .48 2
1 02 .02 1
93.826
9 2.21 8
8 3.49 0
6 7.17 0
6 4.84 4
6 4.23 7
3 5.89 4
2 3.71 5
1 9.75 9
1 7.14 6
1 6.80 3
9.5 68
9.1 71
6.6 95
4.614
4.2 82
3.3 67
3.169
2.843
2.6 38
2.3 02
1.8 93
1.7 98
S u p e rficie d ef o re sta ta
( .0 00 h a)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
B rasile
In do ne sia
M ess ico
R .D .C on go
N ig er ia
Z imb ab w e
A rge ntin a
P erù
C o sta d’Av .
M ala y sia
C a me ru n
V en ezue la
C o lo mb ia
B oliv ia
E cu ad or
A ng ola
P ara gu ay
G h an a
M ad ag asc ar
P .N .Gu ine a
T ha ilan dia
K en ia
T anzania
F ilip p ine
L ib eria
B enin
M oza mbico
N ig er
H o nd ura s
Gu a te mala
P an a ma
-2.3 09
-1.3 12
-6 31
-5 32
-3 98
-3 20
-2 85
-2 69
-2 65
-2 37
-2 22
-2 18
-1 90
-1 61
-1 37
-1 24
-1 23
-1 20
-1 17
-1 13
-1 12
-9 3
-9 1
-8 9
-7 6
-7 0
-6 4
-6 2
-5 9
-5 4
-5 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Ta ss o d i
d ef o re sta zio n e
(%)
N ige r
-3 ,7
T o go
-3 ,4
C osta d ’Av .
-3 ,1
N ige ria
-2 ,6
Be nin
-2 ,3
L ibe ria
-2 ,0
Pa na ma
-1 ,8
Gha na
-1 ,7
Gua te mala
-1 ,7
Z imb abw e
-1 ,5
F ilipp in e
-1 ,4
Ind on esia
-1 ,2
M a la y sia
-1 ,2
Ecu ad or
-1 ,2
M e ss ico
-1 ,1
H on du ra s
-1 ,0
C amer un
-0 ,9
M a da ga sc a r -0 ,9
Ar ge ntina
-0 ,8
C osta R ica
-0 ,8
T h ailand ia
-0 ,7
R .Gu ine a Eq -0 ,6
Pa ra gua y
-0 ,5
Ke nia
-0 ,5
Br asile
-0 ,4
Ve ne zue la
-0 ,4
R .D .C ongo
-0 ,4
Pe rù
-0 ,4
C olo mb ia
-0 ,4
P.N .Guine a
-0 ,4
Bo liv ia
-0 ,3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Grad o d i e vo lu zio n e
I nd ice d i Perce zio n e
co m me rc ia le
d e lla C o rru zio n e (C PI)
( %)
N ig eria
1,5* 1 M a da ga sc a r 9 9,30 1
Be nin
1,5* 2 Bu rkin a F aso 4 7,00 2
N ig er
1,5* 3 R ep . C en tra f. 2 5,66 3
Pa ra gu ay
1,7 4 L ibe ria
1 0,61 4
Ind on esia
1,8 5 R ep . C on go 1 0,49 5
C amer un
1,8 6 R .Gu ine a Eq. 5,68 6
Gab on
1,8* 7 Gab on
2,66 7
Ke nia
2,1 8 N ige r
2,42 8
R ep. C ongo 2,2* 9 An go la
1,47 9
M a da ga sc a r 2,2* 1 0 R .D .C on go
0,83 1 0
R .D .C on go
2,2* 1 1 C amer un
0,82 1 1
An go la
2,2* 1 2 Pa na ma
0,52 1 2
H on du ra s
2,2 1 3 P.N .Guine a
0,35 1 3
C ub a
2,2* 1 4 T a nza nia
0,19 1 4
T a nza nia
2,2 1 5 F ilipp in e
0,18 1 5
R ep .C e ntr a fr. 2,3* 1 6 C ub a
0,18 1 6
Pa na ma
2,3* 1 7 Ke nia
0,12 1 7
Bo liv ia
2,4 1 8 Z imb abw e
0,07 1 8
Ecu ad or
2,4 1 9 N ige ria
0,06 1 9
R ep . D ome n. 2,4* 2 0 C osta R ica
0,05 2 0
Vie tna m
2,5 2 1 M o za mb ico
0,05 2 1
Ve ne zue la
2,6 2 2 H on du ra s
0,05 2 2
Gua te mala
2,9 23 Sin ga po re
0,03 2 3
M o za mbico
2,9 2 4 Gua te mala
0,03 24
F ilipp in e
3 2 5 T o go
0,02 2 5
P.N .Guine a
3* 26 M a la y sia
0,02 2 6
C osta R ica
3,1 27 Ecu ad or
0,02 2 7
C olo mb ia
3,1 2 8 Ind on esia
0,01 2 8
T h ailan dia
3,2 2 9 C osta d ’Av .
0,01 2 9
Ar ge ntina
3,2 3 0 R ep . D ome n. 0,01 3 0
Se ne ga l
3,2 3 1 C olo mb ia
0,01 3 1
SILT Indicator (Sustainability of Italian Import of Wood)
Cile
Camerun
Liberia
Nigeria
Rep. Cent raf ricana
Niger
Togo
M essico
Ghana
M alaysia
Rep. Sudaf ricana
Zimbabwe
Rep. Congo
Rep. Dem. Congo
Benin
Argent ina
Singapore
Rep. Guinea Equatoriale
Panama
Guat emala
Thailandia
Filippine
Perù
Ecuador
Venezuela
Colombia
Honduras
Gabon
Costa Rica
Papua Nuova Guinea
Bolivia
Paraguay
Angola
Kenia
M ozambico
Tanzania
Rep. Domenicana
Senegal
Uruguay
-0,200
-0,100
Cile
Camerun
Liberia
Nigeria
Vietnam
Rep. Centrafricana
Cuba
Niger
Togo
0,000
0,100
Messico
Ghana
Malaysia
R Sdfi
M adagascar
Brasile
Madagascar
Brasile
Indonesia
Burkina Faso
Costa d’Avorio
0,200
Indonesia
Burkina Faso
Cost a d’Avorio
0,300
0,400
Cluster analysis
Statistiche
Dissomiglianze originarie
Legame singolo
Legame completo
Media
23,5
16,43
27,43
Deviazione Standard
13,20
4,74
16,42
Coeff. di correlazione
-
0,37
0,40
7 groups
0,500
0,600
4. Why do we need an action?
For clear ethical consideration…
…but also because
a well-regulated
and transparent
market is more
stable, efficient,
equitable.
http://www.transparency.org
Total sample
Public works/construction
Arms and defence
Oil and gas
Banking and finance
Real estate/property
Pharmaceuticals/medical care
Power generation/transmission
Telecoms
IT
Forestry
Mining
Transportation/storage
Heavy manufacturing
Agriculture
Fishery
Civ ilian aerospace
Light manufacturing
2002
835
46%
38%
21%
15%
11%
10%
10%
9%
6%
5%
5%
5%
4%
3%
3%
2%
1%
In Bosnia:
from > 3,000
bears before
the war, to 500
now
3
Consequences
• Natural resources degradation
Immediate
sources of
income (to
• In the medium-long term a decrease in a
local source of income for the owners
and the workers
survive or to
get extraprofit)
• A reduced sources of tax revenue for
the local authorities
Increased demand of
illegal products
• Low prices
• Products
accessibility
5. What are we doing to reduce
the problems?
Different instruments available:
a. Existing legistation (binding and not
binding)
b. New (or revised) norms and
agreements
c. Voluntary initiatives by private
companies
marginalisation of companies
respecting the law
a. Existing legislation
Wood imported of species protected by CITES
Since 1994: 776.828,2 M3
950.24
0
64.6
2438.81
7999.997
9300.749
127504.5
139568
483064.7
• OECD Guidelines for trans-national corporations
• Green Public procurement policies
• Comunication to the Council and to the Europan
Parliament (COM(2002) 82 of 13.2.02) “Forest
law enforcement, governance and trade –
FLEGT”
20
02
20
01
20
00
19
99
19
98
19
97
1994
1995
1996
1997
1998
1999
2000
2001
2002
19
95
19
94
500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
b. New (or revised) norms and
agreements
Why it is useful?
• To give evidence that the problems of illegal trade does exist
• We have a specialized police to implement the law (CITES
but – in the future – the legislation)
c. Voluntary instruments of private
companies
• Compensatory investments
• Codes of Good Practices :
– In forest management
– In providing financial services (see the experience
of ABN-AMRO: a positive – limited example:
Banca Etica)
– In the insurance sector (sea transport)
• External auditing (Global Witness in
Cameroon)
• Environmental and Social Reporting
• SFM and CoC certification
= a new sector for
political action (in a very
difficilt political condition)
Bioforest Association
Since 1998
Initiator: VALCUCINE SPA
Members (2003): 30 companies
(Foppapedretti, AEF, Franke, …)
Invested capital: 580.000 €
4
Coop
•
2 afforestation programmes in
Latin America
•
A programme to reduce fossil
energy consumption in the
industrial activities of associated
members
•
Research funding
•
Environmental education in Italy
A sound practice or “green washing”?
In October and November 2002 two new
products
Now:
4 paper companies certified
In april 2002
Coop starts
selling the
first tissue
products
certified in
Italy
C ooperatives
Shops
E m ployees
Sales (m il€)
M em bers (x 1000)
2002
178
1.265
47.300
9.860
4.995
2001
-2
+3
+2,950
+682
+293
%
-1,1%
+0,2%
+6,7%
+7,4%
+6,2%
Final considerations
• A late perception of the problem
7 different types of paper products
5 new products will be introduced soon
No price premium
Political power
CSR
Corporate Social Responsabiliy
• FAO definition:
Deforestation is the conversion of forest to
another land use or the long-term reduction of
the tree canopy cover below the minimum 10
percent threshold.
• New markets: low-quality wood for energy and
pannels
• De-localization process: new problems on
monitorig environmental effects of industrial
development
Sociey - consumers
5
A prevailing horizontal (South to South
opposite to North to North) trade
Market separation
should not be an
justification to forget
the problems related
to the state of forest
resources and
people in the
developing world
6