19th round table on sustainable development oecd

25-26 January 2007 Chatham House, Illegal Logging Update and Stakeholder Consultation

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19TH ROUND TABLE ON

SUSTAINABLE DEVELOPMENTOECD

The Economics of Illegal Logging and Associated Trade

Paris, 8/9 January 2007


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OECD Round Table on Sustainable Development

Ministerial level, multi-stakeholder, informal dialogue forum– Achieving a shared understanding– Alternative to formal negotiating structures– Catalyst for action on global issues

Objectives for meeting on illegal logging– Analyse progress made to date– Discuss ideas for practical action (‘no regrets’)– Engage ministers and representatives with different backgrounds

and portfolios www.oecd.org/sd-roundtable see ‘meeting

papers’


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Analysis

Increased cost of compliance on the supply side– Licensing and certification

No discriminating market on the demand side– Trade displacement

No shared long term objective– Make UNFCCC, BDC and MDG goals operational for forest


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Unit Cost of Certification (in $)

Per ha Per M3

IMPACEL, Brazil (plantations) 8.75 0.04

CIKEL, Brazil (Natural Forest) 7.25 2.55

DRT, Indonesia (Natural Forest) 31.72 10.06

KPKKT Malaysia (Natural Forest) 2.76 0.67

PITC, Malaysia (Natural Forest) 25.53 4.60


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Number of hectares under different certification standards

Source: Cashore et al, 2006


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Area certified under each system as a % of total regional forest cover

Source: Cashore et al, 2006


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Analysis



No shared long term objective– Make UNFCCC, BDC and MDG goals operational for forest


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Secondary Products

10 million m3

5 million m3 Intra-EU trade omitted

Arrow width directly proportional to RWE volume;

minimum shown: 1 mi m3Primary Products

Congo Basin as a unit

Scale

To Finland

To Rest of EU

European Union as

a unit

Major ‘high risk’ trade flows


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Analysis



No shared long term objective– Make UNFCCC, BDC and MDG goals operational for

forest


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FLEGT ‘No regret”? (1)

FLEGT ineffective– Geographical coverage limited, – and not likely to be expanded….– Referring to FLEGT as ‘second best’ is ambiguous

but holds promise– financial assistance – Market pressure by creating awareness – Learning experience for multilateral trade agreement


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’No regrets’ (2)

Positive incentives climate change regime– High potential, high risk

– How to allocate benefits?

Closing information gaps for sound policy– Impact of illegal logging on the forest

– Interaction with deforestation

– Trade flows

– Cost of certification and effect on market prices

– Cost of certification and competitiveness

– Long term projections for demand and supply of wood products


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‘No regrets’ (3)

Improving information flows and cooperation between agencies and companies– engaging custom offices– engaging ministry of finance

Using modern technologies to increase transparency and governance– Satellite images– Web based tools– Log tracking technologies

19th round table on sustainable development oecd

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