Follow the money or follow the logs?

It’s easy to point fingers at a particular country’s illegal log trade, but we need to keep in mind that the industry is feeding the world’s demand for timber. Illegal logging is a collective problem that requires a collective solution, says Nalin Kishor of the World Bank.

Kishor, speaking at the at the CIFOR pre-conference workshop “People, institutions and forests: Moving toward a new governance agenda” as part of the IASC 2011 conference in Hyderabad, describes collective solutions to illegal logging in terms of those that “follow” the logs and those that follow the money trail. Penalties can be linked to the timber, the money, or both. “You need as many instruments as you can get your hands on.” Since this is essentially a trade issue, one might first look to trade for a solution, but Kishor believes trade theory has little to offer in the fight against illegal logging. “Trade measures for the environment are, at best, second best solutions. We must look for more direct and more effective ways of doing things.”

What measures actually have worked and what lessons can be learned? Unilateral measures applied in the country of origin include legality verification systems such as Chain of Custody and forest certification schemes. Unilateral measures can also be instigated by importing countries; examples include the Lacey Act or green and legal procurement policies. But even with a clear legal instrument, it’s not easy to carry through to prosecution or conviction, and the best efforts to “green the demand for timber” may fail when the consumer is confronted by a higher price tag. In any case, as Kishor points out, “most tropical timber is not consumed in environmentally-sensitive markets. In Brazil, for example, 80% of the total timber harvested is consumed locally. So environmentally-sensitive markets have to be developed for domestic markets as well as globally.”

Kishor goes on to list current cooperative bilateral or multilateral measures, which may include customs agencies cooperating to alert each other about illegal shipments of timber. And recently, five international agencies established the International Consortium on Combating Wildlife Crime, which addresses wildlife crime but may also be expanded to habitats, and eventually to the timber trade.

The ability to launder money from timber operations is an important enabler underlying forest crime, and a few measures have been specifically developed to follow the money trail left by the timber trade and ensure its cleanliness. “Money laundering and asset forfeiture laws can help investigations and prosecution of illegal logging and other forest crimes, especially when money flows through financial institutions,” says Kishor.

Andrew Wardell of CIFOR’s Forests and Governance programme adds, “What we see in terms of the research agenda is a shift over the last four or five years from following the logs, adopting a new approach by trying to follow the money.” But, warns Wardell, “the techniques applied in law enforcement have not yet proven their effectiveness. To date, there have been few convictions of high profile offenders.”