Counting the cost
- 40-61% of timber production in Indonesia is believed to stem from illegal logging
- 25% of Russia's timber exports originate from illegal logging.
- In Gabon, 70% of harvested timber is considered illegal.
- An estimated €10–15 billion is lost through illegal logging globally each year
- The European Union causes almost €3 billion of this loss due to its trade with countries in the Amazon Basin, the Baltic States, the Congo Basin, east Africa, Indonesia and Russia.
Causes of illegal loggingIllegal logging exists because of increasing demand for timber, paper and derivative products (including packaging). Illegal logging can also happen when forests are cleared for plantations such as oil palm.
But not all wood removal is due to trade. In fact, at a global level around half of removed wood is woodfuel used for basic energy needs.
Illegal logging is a major problem in the Congo Basin and the Amazon. But it also happens in Canada and across Europe.
Economic impacts of Illegal Logging
Illegal logging activities leave an obvious mark of destruction in forests - gaping holes, where once stood ancient trees.But there’s another cost: lost revenue that may have been generated from legal logging of forests. So what’s the bill for illegal logging?
When trees are cut without the right permits and are smuggled abroad, governments lose out financially in several ways including lost revenue from taxes and duties and the costs of efforts to manage illegal logging.
A vicious circle that pushes down the market price of timber
Timber that is logged without payment of duties and taxes pushes down the market price of timber, which acts as an incentive for other loggers to follow the same practice. This further increases losses to governments.
A study by the American Forest & Paper Association has estimated that illegal logging depresses world timber prices by between 7% and 16% (depending on product). This causes US firms losses of at least US$460 million each year.
Globally, billions of dollars lost each yearThe World Bank states that the annual global market loses US$10 billion annually from illegal logging, with governments losing an additional US$5 billion in revenues.
Why does it continue?
- High demand for timber products from Europe, US, Japan and increasingly from emerging economies such as China
- Weak law enforcement
- Poorly implemented trade rules
Social Impacts of Illegal Logging
Increased demand for forests products has brought some financial benefits for poor people living near to forests. But there is also evidence to show that usually, poor communities who are completely dependent on forests lose out to powerful interests, logging companies and migrant workers who reap most of the benefits.
How does this happen? Around the world, many forest-dwelling communities have little control over ownership of their land. This makes them vulnerable to outsiders who try to gain access to their forest, which may cause repression and human rights violations. Or just plain exploitation.
US$1 for a villager, US$10 from your walletFor example, a small community in Papua Province, Indonesia, can receive approximately US$11 for a cubic metre of hardwood. When the cubic metre enters a Chinese port for processing, its price has already reached US$240.
As a finished product, waiting to be bought on a furniture shop rack in a EU country or the US, this cubic metre will be worth 10 times that much. Meanwhile, back in Papua, the same community will be intently seeking buyers to sell more cubic metres – earning themselves a tiny income while they lose their forests.
Making wood legal requires more than good willWhere communities try to sell timber from their land, they often do not have the means to comply with management requirements for legal logging. Community ‘forest management plans’ are expensive and since local markets are flooded with cheap, illegal products, this makes legal produce uncompetitive.
When implementing the law can make things harderWhere strong laws exist on illegal logging, putting them in practice can still be ineffective because of lack of legal independence or because those enforcing the law may be corrupt. Too often, crackdowns unfairly single out poor people and small-scale operators and simply bypass well-connected and protected people.
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