Illegal Logging and Related Trade:
Indicators of the Global Response
Sam Lawson
Energy, Environment and Resource Governance | July 2010 | EERG IL BP 2010/02
Summary points
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An in-depth Chatham House study of twelve producer, processing and consumer
countries demonstrates that actions taken by governments, civil society and the
private sector over the last ten years in response to illegal logging and related
trade have been extensive and had a considerable impact.
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Illegal logging is estimated to have fallen by between 50 and 75 per cent during
the last decade in Cameroon, the Brazilian Amazon and Indonesia, while imports
of illegally sourced wood to the seven consumer and processing countries studied
are down 30 per cent from their peak in 2004.
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As a result up to 17 million hectares of forest are estimated to have been
protected from degradation and at least 1.2 billion tonnes of carbon dioxide
emissions avoided over the last decade. Alternatively, if the trees saved were
legally logged this could bring in US$6.5 billion in additional revenues to the
countries concerned.
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Reducing illegal logging further will require a comprehensive overhaul of
government policy and regulation in producer countries. Japan and China must
also follow in the footsteps of the US and EU and prohibit the import and sale of
illegally sourced wood. To ensure such prohibitions are effective and encourage
broader improvements, importing countries also need to expand cooperation with
source countries along the lines of the EU’s voluntary partnership agreements.
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It is essential that initiatives to reduce greenhouse gas emissions from
deforestation and forest degradation in developing countries reinforce the existing
response to illegal logging and poor forest governance, rather than distract from it.
European Multinationals
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Illegal Logging and Related Trade: Indicators of the Global Response
Introduction
Illegal logging and associated trade in illegally sourced
wood products are important causes of deforestation and
forest degradation in many developing countries. Forest
destruction in turn contributes up to 20 per cent of global
anthropogenic carbon dioxide emissions. Illegal logging
also robs cash-strapped governments of vital revenues,
has a devastating impact on the livelihoods of forestdependent
people, and fosters corruption and conflict.
Spurred in part by a commitment in 1998 by the G8
nations to tackle the problem, over the last decade illegal
logging, associated trade and poor forest governance have
attracted increasing attention within governments and
the timber industry. Large amounts of time and money
have been spent raising awareness, analysing the problem,
identifying potential solutions and implementing actions
designed to tackle it. To assess the extent and impacts
of this effort, and to inform future actions and priorities,
Chatham House has developed a set of standardized
indicators with which to measure the response. The
indicators seek to assess all phases of the response, from
raising awareness through implementation of responses
by governments and the private sector to the ultimate end
goals of reducing illegal logging and related trade. As well
as examining the response in countries affected by illegal
logging, the indicators seek to assess the response of countries
which import, process and consume illegally sourced
timber and wood products.
Methodology
The indicators are broken down into four main categories:
media attention, government response, private-sector
response and levels of illegal logging and related trade.
Media attention was measured using a quantitative
and qualitative assessment of newspaper coverage. The
government response was principally assessed against a
standardized set of policies and regulations considered
to be necessary to tackle the problem – countries were
scored on the existence, design and implementation of
each policy. For producer countries, enforcement and
revenue capture data were also used to assess the government
response, as was a perceptions survey of relevant
experts in each country, developed by Chatham House
for the study. The survey was also used to help assess the
response of the private sector and the extent and nature of
illegal logging in producer countries.
The growing use of independent verification
schemes for establishing legality and sustainability of
wood supplies was used as an indicator of the privatesector
response, as were surveys in both producer and
processing countries. Trade data were also analysed to
assess the extent to which trade has shifted towards less
sensitive markets in response to demand-side measures
in more sensitive ones.
In addition to the survey, levels of illegal logging were
assessed using wood-balance modelling, where the difference
between total consumption and legal supply provides
a measure of logging in excess of agreed harvests. Imports
of illegal timber and wood products by consumer and
processing countries were estimated using a new and
sophisticated import-source methodology developed by
Chatham House, whereby estimates of illegality were
produced for individual flows of specific products between
specific countries in specific years (with input from
other indicators) and multiplied against trade volumes.
Discrepancies in trade data were also analysed.
A pilot assessment conducted in 2008–09 examined
the response in two producer countries (Cameroon and
Indonesia), two consumer countries (the UK and US)
and one ‘processing’
1 country (Vietnam). The full-phase
assessment in 2009–10 broadened the study to cover
an additional seven countries (Brazil, Ghana, Malaysia,
China, France, Japan and the Netherlands).
The indicators and methodology were developed with
input from an advisory group including a broad range
of stakeholders, and the results were peer-reviewed by
independent experts. More detail on the methodology
and its constraints, as well as the full results of the
research, are contained in the report which accompanies
this briefing paper.
2
1 ‘Processing’ countries were defined in the study as those where a large percentage of imports are destined for re-export as manufactured products.
2 Available online at the Chatham House illegal logging website, www.illegal-logging.info/indicators.
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Illegal Logging and Related Trade: Indicators of the Global Response
Media attention
While attention to illegal logging globally and in consumer
countries increased dramatically during the early part of
the decade, it peaked around 2007–08 and is now rapidly
declining. The reduced level of international media attention
is partly due to a shift of focus towards the part that
forest destruction plays in increasing global warming,
as well as a reduction in NGO attention to the problem.
The declining media coverage also reflects the significant
reductions in the extent of illegal logging in key countries.
The government response
The indicators showed improvements in the government
response in all twelve countries studied.
Producer countries
In the survey of expert perceptions, a majority of respondents
in Brazil, Cameroon, Indonesia and Malaysia felt
that the government response to the illegal logging
problem had improved at least slightly during the last
year, though the baseline, especially in Cameroon, was
low. Enforcement data support the conclusion that there
have been significant improvements in the government
response in Brazil, Cameroon and Indonesia in recent
years. In 2003 the Brazilian government carried out 32
enforcement operations involving around 400 officers,
mostly from the environment agency IBAMA; in 2007
they conducted 134 operations involving more than
3,000 officers, including large numbers from the police
and army. The value of fines issued increased eightfold
over the period. Indonesia launched a major crackdown
in 2005, and seizure volumes doubled before dropping
back as the problem declined. Fines and seizures have also
increased in Ghana and Malaysia.
Increased enforcement alone, however, will not solve
the problem. If producer countries are to be effective in
preventing, detecting and suppressing illegal logging,
they need to have the right measures in place and these
must be properly implemented. First and foremost, the
response must be planned and coordinated, laws need to
be coherent and harmonized, and tenure and property
rights should be clear and well protected. Checks and
balances on government procedures must be in place and
forest-related government information needs to be well
organized and transparent. Methods for allocating rights
to harvest and process timber need to be well designed.
Robust systems to monitor legal harvesting and track legal
wood through supply chains are essential, as is effective
use of available techniques to improve enforcement.
The Chatham House policy assessment found that
there have been improvements in legislation, regulation
and policy in all the producer countries studied. Brazil
scored particularly well thanks to a major policy overhaul
during the last five years. Many further improvements
were found to be in the pipeline in the producer countries,
often spurred by requirements stemming from
voluntary partnership agreements (VPAs) with the EU.
On the whole, however, the assessment demonstrated that
relevant government policy and regulation in producer
countries remains poor in most areas (see Figure 1).
3
Figure 1: Producer-country policy assessment
summary results
High-level policy
Legislative framework
Checks & balances
International trade cooperation*
Supply and demand
Tenure and use rights*
Timber tracking
Transparency
Resource allocation*
Law enforcement
Information management
Financial management
Cameroon
Brazil
Ghana
Indonesia
Malaysia
NB: Colours range from green = relatively good to red = poor.
*Because of the nature of the scoring method, the results for international
cooperation give a more negative impression and those for tenure
and resource allocation a more positive impression than they should.
3 For a full explanation of the sources and methodology behind the figures in this briefing, refer to the full report.
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Illegal Logging and Related Trade: Indicators of the Global Response
Some incoherence and ambiguity in legislation was
found to be a feature of all countries studied. The situation
appears to be somewhat less acute in Malaysia, and worst
in Indonesia. The performance of each country’s forestry
agency is subject to some form of monitoring by government,
but often this is not done well. Only Cameroon has
in place a national-level independent monitor of forest law
enforcement and governance. Timber-tracking regulations
are generally weak in most of the countries studied.
Transparency in Indonesia and Malaysia is very poor, as
are systems for allocating and managing rights to harvest.
In all the producer countries on which this study focused,
there is significant scope for improvement with regard to
policies and regulations designed to improve forest law
enforcement. While most countries already have proportionate
and dissuasive maximum penalties in their laws,
these are often not properly applied. Though detection
and seizures may have increased, follow-up – prosecuting
cases and collecting fines – remains poor. In Brazil, for
instance, only 2.5 per cent of fines are being successfully
collected. Although all countries have permit approval
systems for primary wood-processing facilities, none are
using these effectively to ensure that demand matches
legal supply. Collection, management and analysis of
forest-related information (including data on revenues)
remain very poor in most countries.
The reductions in illegal logging in Cameroon and
Indonesia over the last decade have occurred in spite of
a poor policy response in both countries. If gains are to
be entrenched and illegal logging reduced further, regulations
will need to be improved.
Processing countries
Although the Chinese and Vietnamese governments’
responses have been much less profound than those of
the consumer and producer countries studied, they have
taken several initial steps. These have often been a reaction
to pressure from consumer-country governments and
campaigning by international NGOs. All relevant government
departments in each country are now engaged and
coordinating their response, and both countries have
now studied the problem and potential solutions to some
extent. China’s 2006 Memorandum of Understanding
(MoU) with Burma (Myanmar) and subsequent regulations
contain concrete and detailed commitments which
have helped reduce illegal log imports from Burma by 70
per cent. Both Vietnam and China have established bilateral
discussions with the EU on the issue, and China has
also signed an MoU with the US.
Neither country has yet taken either of the most important
steps, however: implementing a procurement policy
for wood used in government projects, and enacting
legislation prohibiting the import and sale of illegally
sourced timber. In the past, a lack of relevant legislation
has prevented both the Chinese and Vietnamese authorities
from stopping specific shipments of timber entering
their respective countries despite requests from source
countries and evidence of illegal origin. Additional action
by China and Vietnam is needed to help improve the
response of the private sector and enable steps being taken
in consuming countries to be effective.
Consumer countries
The policy assessment demonstrates that all the consumer
countries studied have taken numerous actions over the
last ten years to help reduce illegal logging and consumption
of illegal wood. The UK has generally been the first to
take relevant actions and scores best of the five countries,
while Japan receives the lowest overall policy score. While
the US response started slowly, in 2008 it became the first
country to prohibit the import and sale of illegally sourced
timber and wood products, and the impacts are already
being felt in producer and processing countries. France,
the Netherlands and the UK are likely to be bound soon
by similar legislation being developed at the EU level.
The US, the UK and Japan have all signed MoUs with
producer countries, and the three EU countries have been
actively involved in negotiating EU FLEGT VPAs with
source countries. All the consumer countries assessed,
with the exception of the US, have adopted national
public procurement policies regarding timber and wood
products during the last seven years. These have been
important drivers of the private-sector response to illegal
logging in consumer, processing and producer countries.
The study found, however, that there was still considerable
scope for improvement. The design and implementation of
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Illegal Logging and Related Trade: Indicators of the Global Response
the government wood procurement policies in France and
Japan could be strengthened, and the adoption of such a
policy in the US would provide additional benefits and
complement the new prohibition. Japan has yet to develop
legislation to prohibit the import and sale of illegally
sourced wood, and both the US and Japan need to expand
bilateral cooperation with producer countries.
Progress by the private sector
The indicators suggest that private-sector efforts to address
the problem of illegal logging and associated trade have
grown considerably in all countries examined, and that
in most cases this growth is accelerating. Although it is
difficult to determine which drivers are the most influential,
it appears that early, key demand-side drivers such as
government procurement policies and consumer concerns
fed by NGO campaigning activity are now being overtaken
by recent or impending trade-related legislation in the US
and Europe, and by producer countries’ own efforts.
At least 70 per cent of Chatham House expert perceptions
survey respondents in each producer country felt
that larger concessionaires and companies supplying more
sensitive markets had improved their response to illegal
logging in the last year. An examination of data for relevant
schemes shows that independent certification of sustainable
timber production continues to grow in producer
countries, and has been outstripped in the last three years
by growth in legality verification. The area of sustainabilitycertified
or legality-verified production forest doubled in
Cameroon and trebled in Indonesia between 2006 and 2009
(see Figure 2). More than a third of licensed harvesting in
Malaysia and Cameroon is now independently verified
as legal or sustainable. The number of companies with
chain-of-custody certificates for handling wood certified as
sustainable by the Forest Stewardship Council in the seven
consumer and processing countries increased fourfold in
the three years to 2009.
Much more could be done, however. Most of the recent
growth in independent certification and verification has
been to a low ‘legal origin’ standard, which does not
examine actual harvesting practices. Verification of
compliance with all relevant laws would be of greater
value. No production forest has yet been certified or
Figure 2: Certified sustainable and verified legal
natural production forest in producer countries,
2006 and 2009
Source: Chatham House, 2010. Includes only certifications/verifications
of natural forest for timber. For more information, see the full report
verified in Ghana, while in Brazil growth has stalled, partly
because unclear tenure makes it difficult to prove legality.
The study’s indicators suggest that, relative to the size of
their industries, the private-sector response in France and
Japan has lagged behind the other consumer countries:
strengthening these countries’ procurement policies may
help them catch up.
Levels of illegal logging and associated
trade
Producer countries
Wood-balance analysis indicates that illegal logging has
fallen by 54–75 per cent in the Brazilian Amazon over
the last ten years. The greatest reductions have occurred
in the last five years, and show a close correlation with a
dramatic fall in deforestation rates. Equivalent analysis for
Cameroon shows illegal logging falling by about half since
the late 1990s, although this is due solely to a reduction in
illegal logging for export markets, and small-scale illegal
production for the domestic market may have increased.
Wood-balance analysis suggests that between 2000 and
0
35
25
15
10
5
50
%
45
40
20
30
Percentage of total area of licensed logging
Brazil Cameroon Ghana Indonesia Malaysia
2006 2009 2006 2009 2006 2009 2006 2009 2006 2009
Verified legal origin
Verified legally compliant
Certified legal & sustainable
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Illegal Logging and Related Trade: Indicators of the Global Response
2006 logging in excess of licensed harvests in Indonesia
was reduced by 75 per cent. Wood-balance analyses for
Ghana and Malaysia were inconclusive on long-term
trends for illegal logging.
Figure 3: Wood-balance estimates of illegal
logging in Brazil, Cameroon and Indonesia,
2000–08
0
20
40
60
80
100
2000
2001
2002
2003
2004
2005
2006
2007
2008
Brazil
Cameroon
Indonesia
Percentage of total timber production
%
The conclusions from the wood-balance analysis (which
tends to understate illegal logging because it only captures
logging in excess of approved harvest volumes, and therefore
fails to capture illegalities within them) are supported
by other indicators. A large majority of surveyed experts
in Brazil and Indonesia, including a large majority of NGO
respondents, believed that the situation had improved in
the last five years. Expert perceptions indicate that there
may also have been some improvement in Ghana and
Malaysia. An analysis of trade data discrepancies indicates
that log smuggling from Indonesia to China has fallen 92
per cent since 2004. A simple majority of survey respondents
in Brazil, Ghana and Indonesia felt timber prices
had increased recently because of a reduction in supplies
resulting from increased enforcement.
Despite the considerable reductions seen in some
cases, the study finds that illegal logging remains a major
problem in all the producer countries studied. Woodbalance
analysis and the survey of experts (the latter
generally producing the higher estimates) suggest that
illegal harvesting continues to represent 35–72 per cent
of logging in the Brazilian Amazon, 22–35 per cent in
Cameroon, 59–65 per cent in Ghana, 40–61 per cent in
Indonesia, and 14–25 per cent in Malaysia. Although there
is less illegal logging in Malaysia than in the other four
countries, both the survey and the wood-balance analysis
suggest that the problem is worse than commonly thought.
Some aspects of the problem have declined more than
others. An increasing proportion of illegal timber is now
being consumed by domestic markets in producer countries,
and much of this comes from small-scale artisanal (nonindustrial)
logging. Wood-balance analysis suggests that
such logging accounts for three-quarters of illegal timber
production in Ghana, and nearly all illegal production in
Cameroon. The perceptions surveys suggest that smallerscale
illegal logging by unauthorized companies has declined
less than that by larger concessionaires, and that artisanal
illegal logging, less easily detectable illegal harvesting practices
by licensed companies within logging concessions, and
logging-related corruption are among the most intransigent
aspects of the problem. Corruption may have actually worsened
in some cases in response to increased enforcement.
Consumer and processing countries
Detailed modelling by Chatham House suggests that
imports of illegally sourced wood products by the seven
consumer and processing countries have fallen 30 per cent
since reaching a peak in 2004 (for consumer countries see
Figure 4). The analysis also indicates that consumption of
illegally sourced wood products is falling on a per capita
basis in all seven countries. Imports of illegal wood are
falling as a percentage of overall wood imports in all of the
countries examined, with the exception of the US.
The recent economic slowdown has played a part in
reducing flows of illegal wood by reducing overall trade,
but the peak in estimated imports occurred well before
that. The main influence on the estimates is the large
reduction in illegal logging in Indonesia, although other
aspects of the response elsewhere have also been a factor.
The analysis shows that a growing proportion of imports
of illegal wood products by consuming countries are of
processed products (particularly furniture) which are manufactured
in third countries. Between 2000 and 2008, the
proportion of illegal wood which arrived in consumer countries
via such processing countries increased from 15 per cent
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Illegal Logging and Related Trade: Indicators of the Global Response
to more than 50 per cent. For the US and UK the proportion
of indirect imports is even higher. These trends present
an increasing challenge for buyers in consumer countries,
since they make it more difficult to trace timber origin and
eliminate illegal wood from supply chains. They also present
challenges for authorities charged with enforcing new prohibitions
on the import and sale of illegal wood.
Figure 4: Import-source estimates of illegally
sourced wood-product imports by consumer
countries, 2000–08
USA
Japan
UK
France
Netherlands
0.0
5.0
10.0
15.0
20.0
25.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
Cubic metres (RWE), millions
Annual imports of illegally sourced wood products by
the seven countries studied are still very large, estimated
to be worth more than US$6 billion in 2008. Of the five
consumer countries, the US imports the most illegally
sourced wood while Japan has the highest per capita
consumption of illegal wood and highest percentage of
overall imports estimated to be illegally sourced. China
now imports more than twice as much illegally sourced
timber from affected producer countries as the five
consumer countries combined.
Impacts of reduced illegal logging
The wood-balance estimates of reductions in illegal
logging in Brazil, Cameroon and Indonesia have been
used to determine the area of forest that may have been
protected from illegal degradation and possible eventual
destruction. Compared with a baseline scenario in which
illegal logging had continued at peak rates over the decade
and the timber harvested selectively at a relatively low
intensity rate, around 17 million hectares – an area larger
than England and Wales combined – has been protected.
This may in turn have helped avoid emission of between
1.2 billion and 14.6 billion tonnes of carbon dioxide over
the ten years – or up to half of total annual anthropogenic
emissions. Alternatively, if all the timber were logged
legally instead, as much as $6.5 billion in additional
revenues might be accrued by the three governments
concerned – twice what the world spends each year in
overseas aid for primary education.
Compared with a generous rough estimate of the total
amount spent worldwide on helping reduce illegal logging
in the three countries over the last ten years, these reductions
represent an impressive rate of return: possibly as
little as ten cents per tonne of carbon dioxide, or as much
as $6 in additional revenues for every $1 invested.
Conclusions
The Chatham House research has demonstrated that illegal
logging has declined substantially in recent years in three of
the countries most badly affected, and that this has been due
largely to combined efforts to tackle the problem. Increased
enforcement has been important in Brazil and Indonesia,
and the introduction of independent monitoring of forest
law enforcement and governance in Cameroon. Actions to
tackle illegal logging by governments and the private sector
in consumer countries have played an important role in
Cameroon, and have also driven progress in Indonesia.
These actions, and those in the producer countries themselves,
have in turn often been driven by awareness-raising
by non-governmental organizations.
Although illegal logging has declined, it remains a
major problem and where progress has been made additional
gains are likely to become increasingly hard to
achieve. In seeking to bring illegal logging and associated
trade to a complete end, it is important that policy-makers
and other stakeholders take note of the lessons from the
past and the changing nature of the problem.
Chatham House’s research suggests that greater effort in
the producer countries studied is now needed in aspects of
illegal logging which have seen least improvement: logging
by smaller-scale concessionaires, domestic producer
www.
chathamhouse.org.uk
page 8
Illegal Logging and Related Trade: Indicators of the Global Response
country markets for illegal wood products, and failure to
gazette forest concessions.
4 Although increased enforcement
has reduced the more blatant forms of illegal
logging, more persistent and less easily detected forms
are becoming increasingly important, including illegal
harvesting by licensed companies within concessions,
and the illegal issuance of licences to clear forest for agricultural
plantations. Addressing these forms of illegality
will require a more profound overhaul of regulations in
producer countries.
In consumer countries, the limits of what can be achieved
by government procurement policies and voluntary privatesector
action driven by NGOs are being approached.
Further improvements now depend upon enacting and
implementing well-designed prohibitions on the import
and sale of illegal wood. Although the US has already
enacted such a law and the EU is in the final stages of doing
so, Japan’s very large market remains open to illegal wood
and it is important that the country follows suit.
Initiatives to clean up complex supply chains for
products originating in China have encountered serious
problems and, with most consumer-country imports now
arriving via such third-party processing countries, it is
essential that these countries also take more substantial
action. The most important step would be to ban the
import and sale of illegally sourced wood, but this should
also be backed up with a requirement for credible evidence
of legality for timber imports, such as the FLEGT legality
licences soon to be in place for exports from producer
countries that are negotiating VPAs with the EU.
Ultimately, there will be limits to the potential of
actions in consumer and processing countries unless
they work closely with the countries where illegal logging
occurs. Chatham House’s research has demonstrated that
such engagement – in the form of EU VPAs – can have
a crucial broader role to play beyond preventing illegal
wood reaching consumer countries, including helping
improve producer-country policies and regulations and
enhance transparency. This is doubly important given that
– as this research has shown – an increasing proportion
of illegal timber is now being consumed domestically or
exported to less sensitive markets.
Attention to illegal logging by NGOs, governments and
the media has declined as the focus shifts to the role of
forests in climate change. Illegal logging and weak forest
governance are not the only drivers of degradation and
deforestation, but if they are to be effective, mechanisms
to encourage developing countries to reduce emissions
from deforestation and forest degradation (REDD) will
require secure control and sound governance of forest
resources. Efforts to tackle illegal logging and improve
forest governance have already proved to be successful
and cost-effective, and it is essential that the climate
change agenda for forests serves to reinforce this response,
rather than distract from it.
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world for all.
Sam Lawson
is an Associate Fellow in the Energy,
Environment and Resource Governance Programme at
Chatham House.
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Cover image: Illegally harvested teak, Npaba, Burma (Myanmar), June 2005
© Global Witness, 2005
4 Gazetting is the process by which the boundaries of areas licensed for timber harvesting are legally established on maps and on the ground. In most cases this
involves consultation with affected communities.
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