Illegal logging: It's not just about law enforcement

Illegal logging: It's not just about law enforcement

Luca Tacconi, Senior Economist, Center for International Forestry Research
(CIFOR), Jakarta

In 2001, the most recent year for which relatively accurate
statistics are available, Indonesians consumed some 19 million
cubic meters of timber in the form of paper, sawn timber,
plywood, and other products. In the same year, Indonesia exported
the equivalent of 40.7 million cubic meters of timber, again
mainly as pulp and paper, plywood, and sawn timber.

The trees harvested to produce this amount of timber products
would cover an area of some two million hectares of forest, or
some 2.4 million soccer fields. In 2001, forestry products
contributed 1.1 percent to Indonesia's Gross Domestic Product,
and about US$5.1 billion in exports. The officially reported log
harvest for 2001 was an estimated 10 million cubic meters.

This means that of the total harvest of about 59.7 million
cubic meters, about 50 million cubic meters were logged
illegally. In other words, the volume of illegally harvested logs
was almost five times greater than legally harvested logs. From
this, it is obvious that large-scale operations are involved in
the illegal logging, rather than the odd small-scale operators
often singled out to show that law enforcement is working.

It also implies that illegal logging involves issues that go
far beyond mere law enforcement. Quite clearly, illegal logging
also involves a range of structural and capacity issues across
Indonesia's timber industry.

Some of those concerned about the conservation of forests in
Indonesia have proposed downsizing the forestry industry to a
level that matches sustainable levels of timber production. The
Ministry of Forestry has set the annual allowable cut for 2003 at
6.3 million cubic meters. To operate at this level, the forestry
industry would have to reduce its timber output by roughly 90
percent compared to 2001.

But this begs the question: Where will the products demanded
by Indonesian and overseas consumers come from if the Indonesian
timber industry is downsized? The answer is probably from other
tropical forests, which would almost certainly mean shifting
illegal logging and deforestation to other countries. Although,
over a period of time, these products may also eventually come
from already developed countries that are experiencing an
increase in planted forests.

The Indonesian government has made a commitment to the
international donors participating in the Consultative Group on
Indonesia to downsize the timber industry so as to reduce illegal
logging and to achieve sustainable forest management. It is
apparent to most observers that the Indonesian government has
been reluctant to act on that commitment. This reluctance may be
explained by two simple reasons.

First, downsizing the forestry industry has obvious economic
costs, represented by increased unemployment and a reduction in
gross domestic product and exports. Second, the negative economic
impacts could have serious political ramifications for national
and local politicians seeking re-election.

But these arguments are insufficient reason for doing nothing
to change in the Indonesian forest sector. It is clear that the
forest sector does not have a long-term future if current
policies remain unchanged and the industry continues to over-
exploit and illegally use the nation's forest assets.

However, the solution is not simply a matter of downsizing the
forestry industry. The solution also requires providing
inducements to industry to establish plantations and removing the
incentive to carry out illegal logging.

Such changes would require a mix of regulatory and market
oriented approaches. For example, trade barriers such as the ban
on the export of logs -- which in effect reduce domestic log
prices -- would have to be removed. And illegal logging
activities would need to be made prohibitively more expensive by
introducing chains-of-custody systems to ensure timber products
reaching the markets are manufactured from legally harvested
timber. Implementing independent and honest monitoring systems
would also make it tougher for illegal loggers.

As with so many of Indonesia's development challenges, not
just the government but each and every single Indonesian citizen
must get genuinely serious about fighting corruption. It is a
public secret that companies have to pay bribes whether they deal
with legal or illegal timber. Less corruption will bring about
considerable improvement in the sector. To achieve this,
politicians and senior managers need to show the way. Committed
and honest leadership is crucial to reducing corruption.

Solutions to the forest sector's existing problems must be
found both within Indonesia and in the international arena. It
should not be forgotten that at least one third of the wood
products manufactured in Indonesia are also consumed
domestically. Nor should we forget that although most of
Indonesia's timber exports leave the country legally in the form
of plywood, pulp, and paper, most of them are sourced from
illegal logging. The illegal export of logs accounts for only
between five and ten percent of total log production.

Unless regulatory and market reforms take place, the economic
and environmental benefits the forest sector currently provides
will not last much longer. Then we certainly will see not only
considerable job losses and serious economic impacts, but also
the loss of one of the world's greatest natural treasures -- the
Indonesian rainforests.