Improving law compliance in the tropical forest sector: tracking, certification and ITTO
Steven Johnson (ITTO)
I work for ITTO 1 based in Yokohama, Japan. The organization is set up with the goal to try to promotesustainable forest management in the tropics. We have been working towards that goal for the last 25 years
or so. Most of which, I have been lucky enough to been living here in Japan. Before I start, I would like tothank my friend, Morita-san for inviting ITTO and me to come to this seminar. It is very nice to get together
and to learn what is going on in REDD+, and also to hear a little bit about the Japanese consumer sentiment.
Of course, the whole issue of motivating consumers, as we have heard a number of times this afternoon andthis morning, at least partly comes down to educating them and to giving them the information that they needto make informed choices. What I am going to be talking about today is one part of ITTO’s work withtropical countries to help them provide information on the ways that they are improving forest governanceand trying to incorporate measures such as labeling and certification to be able to show that they are
improving forest management.
ITTO is working with about 65 member countries of which about half of them are tropical accounting forabout 80% to 90% of the tropical forest in the world. We have a fairly broad coverage of the tropicalcountries. Some people from the countries that are members are here today.

The approach to this issue of improving law compliance and being able to demonstrate good forest
management is, first of all, to try to rationalize the policy and legal environment. We heard today from oneof the earlier speakers that even here in Japan, which is a very developed country, sometimes the laws are notwell implemented or well drafted. That is much more prevalent in tropical countries. Once you have arational policy and legal environment, you need to increase the capacity to enforce the rules and regulations
that are in place. You need information and you need stakeholder participation, which is part of what we aretalking about in this session.
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The International Tropical Timber Organization (www.itto.int)

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On the first item on rationalizing policy and legal environment, ITTO has done a lot of work in manycountries. A lot of that work found that the existing laws that were in place often conflicted with each other,which is a big problem. When you have an agricultural law that conflicts directly with a forestry law,something has to give. Eventually, somebody ends up breaking the law. We have spent a lot of effort,
together with other agencies like FAO and the World Bank, to try to help countries put more coherent rules
and regulations in place. This has included diagnostic missions to countries and also more specificprograms dealing with specific parts of forest or specific species that are legislatively bound for trade like inCITES, the Convention on International Trade on Endangered Species. That convention regulates the tradeof certain species of tropical wood especially. There are some temperate woods, but mostly tropical under it,
and we work a lot with those as well.

In terms of building capacity to implement these things, we have had a lot of training workshops in countries;
first of all, the very basics, to be able to collect information and disseminate information on what is going onin their forests; promoting the use of criteria and indicators and auditing frameworks. Certification isbasically somebody else telling you or telling somebody that you are doing okay. Before you can get to2

certification, you should at least be able to say yourself that we are doing okay and this is what ITTO has beenpromoting in terms of auditing based on our criteria and indicators.
We have worked a lot at promoting phased approaches to certification. I will show a little bit later thatcertification has not had a very rapid uptake in the tropical countries. One of ITTOs big initiatives has been
to try to get recognition for the progress that countries are making on the road to certification. Certainly, weheard already today about the role of NGOs here in Japan. In the tropics, we believe it is even more
important that civil society is involved in forest monitoring, in whistle blowing, if you will, when things gobadly, and in helping to promote the role of communities, and etcetera in forest management. Finally, trying
to get countries to engage in international initiatives like the FLEGT 2 initiative from Europe or here in Japan,
we have Goho-wood 3 to try to promote the import of legal wood.

In terms of getting better data and knowledge, we are also working with a lot of countries on this, providing
price information on timber products, which is still the main thing of value coming out of tropical forest;
looking at the discrepancies in trade statistics between different trading partners, which can show, over time,
patterns of illegality or at least some serious problems with statistical departments; and looking into things
like that. We have done a lot of work on tracking timber. We will hear some more about that tomorrow I
think including tracking forest degradation. In terms of log tracking, we have worked with many countries
and we recently published a compendium of log tracking and timber tracking technologies because many
countries are becoming more interested in this kind of quantitative methods to be able to track timber
products so that they can show that, in fact, this wood that we are sending you came from this forest which iswell-managed.

2The Forest Law Enforcement, Governance and Trade Action Plan: http://www.euflegt.efi.int/portal/

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Goho (=Legal) Wood Advance Mark: http://www.goho-wood.jp/world/3

We have done a lot of work with satellite imagery to look at where logging is happening outside ofboundaries. Again, I think we may hear more about that tomorrow. This slide shows output of one of thoseprojects using different resolutions of satellite and aerial photography to spot illegal forest clearing inGuyana.

In terms of promoting the involvement of stakeholders, we have had a series of grants to try to support private
sector and NGO linkups on promoting sustainable forest management, verifying legality, and moving tocertification in some cases in a number of countries. We have convened a number of conferences to discussthese issues. In the early days when ITTO first was getting going in the early 1990s, it was not even possible
in an international forum to raise the issue of illegal logging. This has been a major change in the dynamicof the international discussions over the years where people are now fully aware of the problems of
unsustainable and illegal activities in forests and how negatively they impact the future of sustainability.

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ITTO has recently established a thematic program to deal with some of these issues. It is called Tropical
Forest Law Enforcement, Governance and Trade, and this program rationalizes the work under this area.
We are distributing a fair amount of money to countries on an ongoing basis under this. The objectives arelisted here. Basically, we work to strengthen forest law enforcement in countries.

The activities under this program and more or less all of our activities in this area have been broken down
more or less about half to strengthening forest governance in countries, 20% to supporting international tradein legal and sustainable timber, and the rest of the work is on strengthening community and stakeholder
involvement including small and medium sized enterprises which are important.

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Turning specifically to work on certification, we have heard from some of the agencies that are involved herein Japan in promoting the uptake of certified wood and other products, ITTO has been working on this for along time. FSC 4, which is one of the more well known certification bodies, started operations about 20 years
ago. In fact, there were several discussions at ITTO at that time and before it whether there would be somelinkage there. In fact, the two organizations evolved separately. ITTO is focused more on providing
assistance to countries that want to move towards certification and to establish, where appropriate, national
certifications schemes.

The issue of certification and labeling, especially of timber, which we work with most directly, has proven to
be of some concern to tropical countries. In the first instance, this is because not very much tropical forest
has actually been certified over the last 20 odd years that these schemes have been operational. Worldwide
right now, from the latest information we have available, there is about 390 million hectares of forest certified
around the world by one scheme or another. That is less than 10% of all the forest in the world, which total
about 4 billion hectares. Out of that 400 million, or less than 400 million, less than 10% of that total or lessthan 40 million is found in the tropics. This accounts for less than 2% of the total tropical forest area. You4Forest Stewardship Council: https://ic.fsc.org/

6can see that really the idea that certification would have a major impact on tropical forests so far has not been
the case.
However, ITTO’s own studies have found that overall in the tropics, probably close to 10%, based on what
we know because in a lot of the areas we do not have much information, but based on what we know, about
10% of all tropical forests are under sustainable forest management. We think the potential for morecertification in the tropics is certainly there. However, there are a lot of uncertainties about the market
acceptance of especially national certification schemes on the part of tropical countries.

For example schemes like the Malaysian Timber Certification Scheme, the Lembaga Ekolabel Indonesia or
the Indonesian Ecolabelling Scheme. Some countries accept them, some do not. There is concern also
about the cost of implementing certification or of being certified. Of course, one of the reasons why most of
the certification has happened in developed countries is because the forest were, by and large, already fairly
well-managed there. There was not a need for a huge input of resources to get the management up to a level
where certification could actually be awarded.
In fact, in the tropics, there is a kind of a two-stage process where you first of all have to get the managementof the forest to an acceptable level then you invite the certifiers to come in and assess what you have done.
In many cases, the countries are not at a level yet where the certification can be awarded especially when thecertificate is kind of an all or nothing affair. This is why earlier I was referring to our work to try to promote
the idea of phased approaches to certification. In other words, maybe the first step is whether the wood you
are producing is legal and then move up the various steps of sustainability.

So far, the total in tropical countries is under 40 million hectares. FSC accounts for more than half of that.
Some of that is funded by donors. The Malaysian Timber Certification Scheme which covers almost all ofMalaysia (I believe at least one of the states on Borneo is not covered) is another fifth, and the Indonesian
scheme about 10%, a bit below, and the program for the endorsement of forest certification is less than 10%
also. We have a number of different schemes. There is difference between them. The countries in ITTO
7also worry a bit about differences in acceptance of these schemes, differences in the criteria under theschemes to be certified. In some cases, it is a bit of a moving playing field.

Of course, we want to increase the share of certified timber from natural forests. A lot of the forests that arecertified in the tropics are plantations. The natural forest is where the biodiversity is more or large that wewant to protect, so we want more certified forest there. We want more forest with community involvement
and we need to make this profitable. I think when we were talking about the industry this morning, the main
reason why industries get involved in activities, first of all at least, is to make profits. Maybe after they
make a profit, they can have a Corporate Social Responsibility scheme but before that, I think there needs tobe a profit there. The operations need to be profitable and we need to recognize where progress is being
made. This is why we think that it is not helpful sometimes when countries say or consumers say, “We will
only accept this scheme,” because that can cut off significant areas of development and revenue to countries
or communities or forest operators who may need it to continue working in those forest.

The inclusion of worker’s rights in certification schemes, while an honorable goal, may actually result in
more market barriers to tropical countries being able to comply. There are some worries about that.
8Especially in light of the theme of our seminar these 2 days, we need to ensure that projects that result inverifiable improvements in forest management are eligible for REDD+ financing. At this stage, that is still
not guaranteed. We think in ITTO and, certainly, the countries that belong to ITTO, believe that this is
crucial to promote better forest management through REDD+ because we are not going to stop logging theforests. That is not going to happen. The question is can we do it better than we have been doing it up till
now.
Finally, my last point is that so far, a lot of the work on certification and labeling has focused on timber,rightly so, because timber was the main product coming out of the forests for a long time. But we think that,and we are glad to see, that new schemes are rising for other products that are being produced on forestland
like oil palm and soybeans, etcetera, even though such schemes are still small in terms of their coverage.
But just look at the economics and I know we heard, at least from one speaker that we do not like to deal witheconomics, but I think we have to at least for a minute. Indonesia has a moratorium now on new forest
clearing and this shows the pressure on them to maintain the moratorium.

Crude palm oil is selling for close to $1000 a ton right now. It has gone down a bit in recent times, but it isstill close to $1000 a ton. Indonesia has 6 million hectares of palm oil that they put on to what used to beforest land, degraded forest land in many cases, and they generated over US $15 billion of export earnings
from that 6 million hectares in 2012. That was more than double the export value of all of their primarywood products, everything from logs up to pulp and paper, and they produced that from over 120 million
hectares of forest.
Basically, what we know in ITTO from our own studies is this that what is being earned from palm oil inIndonesia is about 8 to 10 times more per hectare than you can get from just timber. This gives us some ideaof the kind of money that we need to come up with from things like REDD+ and other activities where we canput value on the forest to keep it as forest rather than have it be turned into oil palm. Soybeans may not be as
valuable as the oil palm, but it is another case that has a fair amount of value more than standing forest in
many cases.
9The main message that I would like to leave you with is that whether we like economics or not, the decision toconvert standing forest to something else is almost always an economic decision. Somebody is doing that
because that forest is worth more to them cut down than it is standing. Ultimately, we have to deal with that
equation and get it more in balance.

Thank you very much.

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