Illegal Logging and the Adoption of Reduced Impact Logging
1 Patrick B. Durst and Thomas Enters2Introduction
In recent years, a great deal of attention has focused on low-impact logging, or reduced-impact logging (RIL), as one approach for moving toward sustainable forest management. As an example of the interest in RIL, earlier this year more than 260 people participated in an international conference on the application of reduced impact logging, convened in Kuching, Malaysia. The conference was organized by the Asia-Pacific Forestry Commission, FAO, and nine other organizations.
While there are some who insist that the only way to protect forests from destruction is to ban all forms of timber harvesting, economists have been quick to point out that if timber production were to cease, tropical forests would be viewed by many
governments and individuals as a resource of little value, perhaps more logically and profitably converted to other productive uses. Hence, there are a growing number of pragmatists who promote the improved management of the majority of the world's forest that will likely remain outside of protected forest areas. They contend that improved logging can greatly reduce damage to forests, and help maintain a natural resource whose productive and sustainable use is important to many national
economies. However, even proponents of RIL recognize that RIL alone will not bring about sustainable forest management—it may be a necessary condition, but it is not a sufficient one (Leslie, 2001).
There are a number of linkages between RIL and other necessary conditions for sustainable forest management. This paper draws attention to these linkages, particularly those that exist among RIL, illegal logging, profitability of logging operations, and forest law enforcement. The link between illegal logging and RIL may not be readily obvious, since the application of RIL neither stops illegal logging nor the trade of illegally cut timber. The links only become apparent when examining the impediments to the adoption of RIL, and in particular, the effects that illegal logging has on profitability and decision making by forest concessionaires.
What is RIL and why is it important for forest management?
RIL is actually a package of practices and technologies. RIL is nothing new for the most part; it is simply the transfer of well-established approaches from temperate forests to the tropics. Although practices vary somewhat according to local conditions and circumstances, RIL generally includes the following (Dykstra, 2001):
§ Pre-harvest inventory and mapping of individual crop trees
1 Presented at the Forest Law Enforcement and Governance: East Asia Regional Ministerial
Conference, 11-13 September 2001, Denpasar, Indonesia.
2 Senior Forestry Officer and Forestry Sector Analysis Specialist, respectively, FAO Regional Office
§ Pre-harvest planning of roads, skid trails, and landings to provide access to the harvest area and to the individual trees scheduled for harvest while minimizing soil disturbance and protecting streams and waterways with appropriate crossings
§ Pre-harvest vine cutting in areas where vines bridge across tree crowns
§ The use of appropriate felling and bucking techniques, including directional felling, cutting stumps low to the ground to avoid waste, and optimal crosscutting of tree stems into logs in a way that will maximize the recovery of useful wood
§ Construction of roads, landings, and skid trails so that they adhere to engineering and environmental design guidelines
§ Winching logs to planned skid trails and ensuring that skidding machines remain on the skid trails at all times
§ Where feasible, utilizing yarding systems that protect soils and residual vegetation by suspending logs above the ground
§ Conducting a post-harvest assessment in order to provide feedback to the concession holder and logging crews and to evaluate the degree to which RIL guidelines were successfully applied
When properly applied, these techniques can have dramatic results. A recent review of 266 studies and articles on RIL and conventional logging in tropical forests revealed the following environmental benefits from RIL (Killmann et al., 2001):
§ On average, RIL results in 41 percent less damage to residual stands when compared with conventional logging systems.
§ The area covered by skid trails in RIL operations is almost 50 percent less than in conventional logging.
§ The area damaged by road construction is about 40 percent less with RIL than with conventional logging.
§ Overall site damage (compaction, exposure of soil, etc.) in RIL operations is generally less than half that in conventional logging.
§ Canopy opening is generally about one-third less in RIL compared with conventional harvesting practices (16 percent versus 25 percent).
§ The volume of lost timber (i.e. merchantable logs that have been prepared for extraction but not found by skidder operators) is reduced by more than a third in RIL operations.
The financial costs and benefits of RIL
Financial factors are crucial in motivating the adoption or rejection of RIL at the forest concession level. While environmental concerns are a part of many companies’ efforts to be “good corporate citizens,” the overarching reality is that logging
companies are in the business to make money. Technologies and practices that enhance profitability have a good chance of being adopted; those less certain to contribute to profit margins will be given lower priority.
Unfortunately, there is a great deal of uncertainty and confusion over the actual costs of implementing RIL, and the implications for company profits. The majority of studies that have been conducted lack standard methodology and consistent definition of RIL components and costs. Smith and Applegate (2001) argue convincingly that even the term “conventional logging” is misleading since most analysts do not consider re-entry logging—a practice not foreseen by RIL, but common under
conventional logging. Moreover, the actual costs of RIL, and the profitability of logging operations, vary significantly from location to location due to differences in biophysical conditions, costs of labor and equipment, and other operating inputs, as well as socio-economic and institutional factors (Hammond et al., 2000). Therefore, it is difficult to generalize about the financial costs and benefits of implementing RIL and the resulting profitability of logging operations.
The common perception is that the costs of planning and pre-harvest preparations, felling, road construction, and supervision are significantly higher with RIL than with conventional logging. These added costs have led some in the industry to argue that RIL stands for “reduced-income logging,” and many company representatives continue to insist that they cannot afford RIL.
Others, however, argue that some, if not all, of the added costs of RIL are offset by potentially lower costs of skidding (better planning and skid trail layout presumably result in improved skidding efficiency and lower costs) and transporting of logs. Higher rates of log recovery also help offset costs. Finally, the improved quality of the residual stand represents a financial benefit to the logging company—assuming the company retains future access to the forest—although these benefits may come so far in the future that they are considered largely insignificant.
Recent reviews by Smith and Applegate (2001) highlight the diversity of findings related to the costs of RIL. They note two detailed studies from Pará State in Eastern Amazon in Brazil that indicate RIL does not necessarily increase costs and can even result in cost savings. Barreto et al. (1998) estimated that profits from using RIL are 35 percent higher than under conventional logging, although the advantage falls to 13 percent when the increased salaries of workers trained in RIL are taken into account. Other estimates (Holmes et al., 2000; Holmes et al., 2001) from the same area in Brazil found net receipts from RIL to be 18 to 35 percent higher than from conventional logging.
In contrast, studies from a dipterocarp forest in Sabah, Malaysia, are consistent with the more widely held perception that the financial profitability of RIL is lower than that of conventional logging. Tay et al. (2001) estimated that profits generated under RIL are reduced by 62 percent compared with conventional logging. The biggest factor in this reduction can be attributed to lower volumes of timber harvested under RIL. Nearly half of the forest areas currently accessible under conventional logging in Sabah would be placed off limits under RIL restrictions that prohibit harvesting on steep slopes, and volumes removed from areas where logging is permitted are reduced relative to conventional logging. Interestingly, the studies found that if only
extraction costs are considered, RIL actually appears to be slightly cheaper than conventional logging. The decreased profitability is primarily due to reduced volumes of timber extracted.
In reviewing studies of RIL costs at four sites in Indonesia, Applegate (2001) found similar ambiguity. At two sites where planning costs were estimated, the costs under RIL, as expected, were higher than the costs of planning for conventional logging. Felling costs were estimated to be the same at two of the sites, but slightly less with RIL at one site. At two of the four sites, skidding costs in RIL operations were lower than in conventional logging.
Overall, it is obvious that the costs of implementing RIL and the impacts it has on profitability vary considerably from place to place. However, the costs appear to be manageable in most instances. And while profits may be adversely affected in some cases, they may actually be enhanced in others.
Impediments to the adoption of RIL
Given the obvious environmental benefits of RIL, and evidence indicating that financial costs would not be insurmountable in most cases, or could even be favorable, why isn’t RIL being adopted at a more rapid pace?
There are many factors constraining the adoption of RIL (Putz et al., 2000; Hammond
et al. 2000; Dykstra, 2001; Blate et al., 2001; Klassen, 2001). Among them are the following:
Lack of awareness and appreciation of the benefits of RIL. Despite the attention focused on RIL in recent years, there remains a great deal of unawareness,
uncertainty, and skepticism regarding the potential benefits of RIL. This is particularly true at the important decision-making levels in governments and
corporations. Without strong leadership from above, progressive mid-level managers and field workers and supervisors have little incentive to change the status quo, although there are exceptions to the rule (Suparma et al. 2001).
Lack of security of tenure. One of the greatest impediments to the adoption of RIL is lack of resource security. Illegal logging and unplanned forest conversion represent major deterrents to the implementation of RIL (Blate et al., 2001, Smith and
Applegate, 2001). Since many financial benefits of RIL are only realized at the time of future harvests, forest managers have little incentive to log forests carefully if they anticipate the forest will be occupied, taken over, or damaged by others. Some companies even resist marking trees during pre-harvest planning since they are concerned that by the time the felling crews return the marked trees will have disappeared. The situation is exacerbated in many countries by the lack of strong judiciaries needed to help resolve land disputes and uphold the rights of concession holders or forest owners.
Lack of trained and experienced personnel. One of the most critical requirements for the successful application of RIL on a wide scale is the availability of skilled logging personnel at all levels (Dykstra, 2001; Vergara, 2001; FAO/APFC, 2001). There is an urgent need for large numbers of skilled personnel who understand both why and how to carry out RIL. Without such numbers, there is little hope that timber concession holders will be able to effectively implement RIL even if they want to do so. So far, the private sector, with few exceptions, has shied away from providing training. While the lack of appropriate trainers is certainly one major constraint another problem is that training is expensive and companies hesitate to invest in upgrading skills when returns to training remain uncertain.
Lack of government policies and incentives to encourage RIL. Most countries in Asia and the Pacific have adequate laws governing forest harvesting and management. Many have even developed national codes of practice for forest harvesting (Durst, 2000), RIL guidelines, and detailed harvesting regulations. What is lacking are not laws and regulations, but rather effective enforcement and incentives for compliance. So long as concession operators know they can easily circumvent laws and
regulations, compliance will remain lax—especially if adherence to regulations is perceived to reduce profits. While traditional command-and-control approaches to changing forest practices have had little effect in most developing countries (Putz et al., 2000), there would seem to be considerable scope for improving enforcement and compliance. Complementing the “stick” approach are a number of “carrots” in the form of market-based incentives that have emerged in recent years with the potential to encourage RIL adoption (e.g., tax breaks for environmentally sound forest
management, reforms in timber royalty assessments, certification, RIL-based carbon offsets, etc.) (Bennett, 2001).
The high relative costs of implementing RIL. As indicated above, studies of the costs of RIL versus conventional logging remain inconclusive for a number of reasons. Nonetheless, evidence gathered from several examples around the world indicates that sustainable timber production can produce acceptable financial returns. However, the evidence also shows that, at least over the relatively short periods of time considered by most private investors, unsustainable practices are even more profitable (Contreras-Hermosilla, 1999), in particular where re-entry logging can be practiced (Smith and Applegate, 2001). When even basic regulations and guidelines for conventional logging can easily be circumvented, profits can be overwhelming relative to those derived from logging with strict adherence to RIL prescriptions. The paramount need for wood. An extremely important factor constraining the adoption of RIL is the voracious appetite that the timber processing industry has for wood—especially in Asia, where processing capacity has expanded rapidly. While RIL clearly has the capacity to reduce the volume of logging waste (due to less damage in felling, better bucking decisions, and fewer lost logs left in the forest), it can also yield substantially less wood overall because many areas are excluded from harvesting due to steep terrain, wet conditions, protection of wildlife habitat and cultural features, etc. When exclusion zones under RIL are as high as in Sabah, Malaysia, for example, the effect of foregone timber more than offsets the effect of waste reduction. Another important feature is that in vertically integrated companies (common in Asia), more than three-fourth of net receipts may come from processing, while logging generally accounts for less than one-fourth. This implies that increases in the efficiency of logging under RIL, or even small increases in the profitability of logging, are likely to be overwhelmed by the need to ensure a steady supply of logs to the company’s mills to avoid foregoing processing profits (Smith and Applegate, 2001).
Effects of illegal logging on RIL implementation
As the discussion above has stressed there are many impediments to the adoption of RIL, even without considering such constraints as high fire risks or the difficulty in obtaining appropriate equipment. In many ways, however, one cannot escape coming
back to the issue of profitability, as it should be obvious that the private sector would change and adopt RIL if it was in its interest. It is in the economic sphere where illegal logging poses the major impediment to RIL implementation.
Although comparative studies of the costs and benefits of RIL versus conventional logging are becoming more comprehensive, few have elaborated on the effects of timber prices and price distortions. In fact, some might argue that illegal logging is so pervasive in some countries that it would be more meaningful to compare the costs of RIL with the costs of illegal logging rather than conventional logging. Illegal timber harvesting often avoids royalties, taxes, license fees, and costly management and operational requirements. As a result, illegally harvested timber can be sold at a fraction of the cost of legal wood, depressing the entire market and dramatically undermining efforts to promote RIL and other more costly sustainable forest management practices (Adinegoro, 2001).
Under circumstances where illegal activities are widely tolerated, even the concession holders highly committed to implementing RIL will become disillusioned. As they witness their profit margins shrink due to depressed timber prices, they can hardly be expected to invest in the training, equipment, improved supervision, and worker incentives needed to install RIL.
While deflated timber prices due to illegal logging can wipe out the potential for legitimate profits under RIL in the short-term, illegal logging also has the long-term effect of reducing resource security. The timber industry therefore has reasonable grounds to resist long-term investments in equipment or human resource
development. By the time, capacities have been strengthened, so they argue, the timber to be harvested may well be gone.
Conclusions
Obviously, the stricter-than-normal requirements of RIL suggest a direct linkage with stepped-up enforcement of regulations. Effective RIL programs by necessity include elements of monitoring, auditing, and enforcement of rules, laws, regulations and guidelines—be they government imposed or company policy. Outside the narrow aspects of RIL compliance, enforcement of forest and land-use laws and assertion of land ownership and resource tenure are crucial.
But the impacts of forest law enforcement on RIL implementation extend far beyond the immediate forests where RIL is to be implemented. Most importantly, as
illustrated above, are the negative impacts that failure to curb illegal logging and trade has on the price of timber. When profitability of legal logging is undermined by illegal activities, there is little that can be done to motivate investment in harvesting improvements—even if the costs of making those improvements are minimal. RIL initiatives will therefore have little chance of success if illegal supplies distort timber prices or if the future of forest resources cannot be assured by protecting against encroachment and theft.
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