Examination of Witnesses (Questions 100-119)
MR DUNCAN
BRACK AND
MS ALISON
HOARE
16 DECEMBER 2008
Q100 Martin Horwood: You made the
point very strongly that there are millions of people at the moment
who are living from forests for whom some kind of alternative
employment or economic benefit would have to be found. The previous
witness suggested that the pure market mechanism that in a sense
bypasses all these governance issues and feeds money directly
to those with an interest in the forest is the best way of doing
that. Can you imagine that that efficient operation of markets
at international level will feed down to individual land use decisions
by people who are marginal farmers or involved in land use in
different ways?
Mr Brack: In theory you could
as long as you have sorted out all the problems I outlined in
my previous answer, as long as forest law is clear and consistent
and fairly applied, as long as land ownership tenure rights are
clear, which in many countries they are not, and as long as there
is redress to a fair system of dispute resolution and legal mechanisms
for enforcing rights and so on. In theory I think it could happen,
but again the practical problems in most countries are very, very
substantial.
Q101 Mark Lazarowicz: Given what
you have just said, how far should the financial laws which would
come about from various avoided deforestation mechanisms be directed,
not just at land use and their management, but at encouraging
political will to come about in the countries concerned, and how
much is that essential to any programme?
Ms Hoare: At the moment that is
the area that has to be focussed on. Until those fundamental questions
are addressed I do not think any type of market mechanism could
work.
Q102 Mark Lazarowicz: Do you agree
that the international negotiations have seriously begun to address
how that process could be encouraged?
Ms Hoare: I think that in the
international negotiations they have rushed ahead and there has
been too much emphasis on looking at the market mechanisms and
how they could be set up without looking at those other issues
that need to be set in place beforehand.
Mr Brack: I think there is a recognition
that governance is a problem but not that it is a really major
problem, I think you got that from the previous witnesses and
the Eliash Review; it is something to be addressed but it is just
another thing to be tackled. I think in most countries you cannot
really put any kind of functioning REDD mechanism in place, apart
from a few pilot projects in protected areas, without a pretty
thorough overhaul of forestry governance. Again that is a lesson
that could be learned from the FLEGT system and the way it has
started to be implemented. I think it is essential that in the
next year up to Copenhagen the people negotiating REDD pay attention
to the lessons from the FLEGT system.
Q103 Mark Lazarowicz: Is there any
danger that the push towards a carbon market-based system could
undermine some of the work that has already been done in addressing
governance issues and forest management issues? If so, could you
give us some examples?
Ms Hoare: There is possibly a
risk of that. Certainly with discussion of the markets and particularly
with an emphasis on the potential high financial gains that in
theory tropical forest countries could achieve from such markets
there has been a shift in focus to that and away from looking
at governance questions. It has been suggested—just returning
to the question of FLEGT—that it has been a factor in the
reduction in political momentum in negotiating FLEGT agreements
because governments have shifted their focus to discussions about
REDD and climate change.
Q104 Mr Caton: Eliash went for a
national baseline approach to minimise the risk of leakage but,
as you have pointed out, this would require significant governance
changes to work. Is there a danger that this would lead to a number
of developing countries being unable to participate in an avoided
deforestation mechanism and therefore massive increases in deforestation
carrying on in those countries?
Ms Hoare: I think there is a danger
of that, yes. If you look at the case of the Clean Development
Mechanism, I think it is something like 70% of CDM projects have
been established in China and I think there may be one project
in Africa. So this is a clear indication that the market goes
where it is easiest to implement projects and to operate and the
same will be true in any REDD mechanism. In relation to setting
up a national system, clearly the African countries in particular
are furthest behind and would need to make the most progress if
any national system could be put in place. So there is a severe
risk that they would be excluded from any such system.
Q105 Mr Caton: You have told us that
a project-based system would require less governance changes.
Was Eliash wrong to reject that?
Ms Hoare: The fundamental problem
with a project-based approach is the question of leakage, which
is a severe concern. In the long term you cannot have just a pure
project-based approach, it will not be effective in reducing global
emissions. As we heard previously, with a growing world population,
an increasing demand for resources and commodities and so forth
pressure on forests is only going to increase, so that decreases
the chances of a project-based approach working. I think a project-based
approach could be effective for a short period of time and can
be a means of building capacity, and then scaling up from that
to a national approach is the only way it would work.
Q106 Mr Caton: Would a sort of hybrid
system where you had both national and project level crediting
running at the same time work or would that just have exactly
the same problems with leakage?
Ms Hoare: This is not an area
I have looked at in detail. I know there are various different
proposals for a hybrid approach and indeed for national and project-based
approaches. The risk with a hybrid approach is that you get the
worst of both worlds. If it is more towards a project-based approach
you still have the question of leakage. Some proposals are that
you have national level accounting plus projects which I think
would still be so complicated that certain countries would be
excluded.
Q107 Mr Caton: It is a balance of
risk, is it not? If the hybrid approach could bring in countries
that would otherwise be excluded early on then you have averted
the risk that you acknowledged in my first question, but you have
taken on the risk of leakage, I take your point.
Ms Hoare: Yes indeed.
Q108 Dr Turner: How do you think
carbon markets are going to affect indigenous people? Do you think
standards could be developed to ensure that indigenous people
are protected?
Ms Hoare: It will depend on what
kind of system is in place and it will depend on the particular
country as well, but I think as things stand at the moment there
is a high risk that they will be negatively affected. It is difficult
at international level to set in place adequate safeguards to
address indigenous peoples' concerns. Within most countries, as
has already been highlighted, indigenous peoples do not have secure
land rights or rights to forest resources and they also tend to
be marginalised within society. So there are real concerns as
to whether they would be able to participate effectively in consultations
in defining a strategy of how to reduce deforestation.
Mr Brack: I think there is another
lesson from the FLEGT system there. In the countries which are
negotiating partnership agreements you have had mostly a fairly
broad stakeholder engagement within the country to varying levels
of success. That kind of mechanism can be a route to involving
indigenous peoples in decisions over national forestry governance,
but I think you would need to see that kind of system developing
if their rights can be protected under any REDD system.
Q109 Dr Turner: There is clearly
a special difficulty with some indigenous peoples who are practically
back at the Stone Age in terms of cultural development and do
not participate in any monetary system or any political system.
How do you account for their needs?
Ms Hoare: It is very difficult.
That is a real problem that remains to be addressed. It basically
highlights the fact that if you are tackling deforestation then
it is not just about money and the economic value of forests,
you also need to look at other aspects.
Mr Brack: It does raise a slightly
broader question about what kind of REDD projects will be put
in place because you can guarantee absorbing carbon or not releasing
carbon without necessarily worrying about protecting indigenous
peoples' rights or biodiversity or habitats and so on, so there
is the possibility of maybe trying to introduce different levels
of REDD standards. I think we suggested a "gold standard"
REDD credit which has co-benefits like protecting biodiversity
and indigenous peoples' rights, since they will not automatically
be protected just by reducing deforestation. There are so many
ways of managing forests.
Q110 Dr Turner: It is probably fair
to say that there can be a conflict between forest preservation
for carbon and land use by indigenous people.
Mr Brack: Yes, that is quite right.
Q111 Dr Turner: Do you think that
the UNFCCC negotiations adequately take the forest people's needs
into account?
Ms Hoare: I think there has been
growing awareness of the need to address these issues. It is starting
to be, certainly, yes. There does remain the problem of what mechanism
can be used to ensure that those concerns are taken into account.
There are concerns from national governments about infringement
on their sovereignty as to the decisions they make within country
regarding their own forests and their own people and so forth.
That is a very difficult balance to make.
Q112 Dr Turner: It sounds like an
unresolved situation at the moment.
Ms Hoare: It is, yes.
Q113 Martin Horwood: Are there any
particularly good examples either from the FLEGT process and potentially
also from those countries which have ratified things like ILO169
of good practice in terms of involvement and recognising the rights
of tribal peoples that you can think of and any particular problem
countries?
Mr Brack: I do not know offhand.
It is not an area I have particularly focussed on, but we could
perhaps get back to you. Most of the examples that are cited are
bad examples, but I am sure there must be a good one somewhere!
Q114 Mark Lazarowicz: You have mentioned
the FLEGT plan a few times and I get the impression you are fairly
positive towards it. Given it was formally agreed more than five
years ago now, how far do you really think it can be said to have
made steps in terms of improving governance and also stopping
the import of illegal timber into Europe?
Mr Brack: Fairly limited steps
so far, which underlines how difficult the governance issue is
to address and I think that reinforces the comments we made earlier
about the slow progress with tackling governance and the possibility
of that slowing down the REDD negotiations. There is an issue
about incentives which I will come back to. You need to bear in
mind that there has only been one voluntary partnership agreement
agreed so far with Ghana and that was this year; hopefully there
will be another two or three quite soon. The optimistic sign is
that in the countries that have been negotiating partnership agreements
they have all set up this kind of stakeholder engagement system
that I talked about earlier. In countries like Ghana that has
given NGOs a voice in discussions about forestry governance that
they have not had before and in Malaysia the same kind of thing,
and the European Commission has been reasonably firm about insisting
that there is the opportunity for participation from civil society.
So that is opening up routes to discussions that were not there
before. Capacity building is beginning to make a difference. There
has been a process of reaching a consistent definition of what
you mean by legality in Indonesia and in Cameroon. All of the
countries that are intending to agree such agreements are deciding
to license their timber exports regardless of destination. One
of the problems with FLEGT is that it was restricted to timber
trade between the EU and the partner company, but all of them
for practical reasons are going to license all their exports,
which makes it much easier to see the FLEGT licensing system developing
worldwide, which is a desirable end point. In general I think
it has added to the awareness of the problem of illegal and unsustainable
logging and contributed to things like the fairly rapid growth
of certification. Having said that, these are all early signs,
there is no functioning licensing system in place yet, there will
not be for another year or two until Ghana and the other countries
put the practical issues in place. I think there is a problem
with incentives. It is not terribly clear why countries should
want to join partnership agreements. There is capacity building
assistance available which is valuable, but in countries like
Malaysia, where they do not have major problems in forestry governance,
the incentives for them to join the system are quite limited.
You are getting quite mixed messages coming from EU countries
where the EU is encouraging the developing country to sign partnership
agreements, but many procurement policies of EU member state governments
do not accept FLEGT licensed timber or will not accept FLEGT licensed
timber as allowable. That is a mixed message. I think we could
be better at providing incentives for countries to join partnership
agreements.
Q115 Mark Lazarowicz: Is there any
possibility of a FLEGT-type arrangement leading towards a global-type
of licensing scheme for product sustainability as well as lawfulness
in timber?
Mr Brack: People are beginning
to talk about the possibility of the system going global. It is
very, very early days yet, but the change of administration in
the US hopefully will relax some of their nervousness about joining
international systems. Japan has indicated some interest in placing
requirements for FLEGT licensed timber for their imports. They
import a lot from Indonesia and Malaysia which are potential partnership
countries. So there are optimistic signs, but any international
system like that will take a while to develop. I think people
should not be too concerned about the fact that FLEGT will promote
legality rather than sustainability. In many forest countries
if the laws are enforced properly you will get pretty close to
sustainable forestry anyway. Most of their laws are written with
the aim of sustainable forestry. I think to put a requirement
within the FLEGT system for sustainability rather than legality
now would be premature; I think it would just slow down the adoption
of partnership agreements and the implementation of the system
and will seem to developing countries like the EU just changing
the rules yet again and putting another barrier in the way. That
is a fairly widely held perception. I think it would be better
seen as a very big step on the road towards sustainability. I
do not think we should be too concerned about building sustainability
in.
Q116 Mark Lazarowicz: The Commission
is currently looking at developing proposals to require "due
diligence" to be applied regarding timber exports. I understand
you have been directly involved in assessing those proposals.
How far do you think those will make a difference? You will be
aware that some people have suggested introducing legislation
along the lines of the US Lacey Act as opposed to the current
Commission proposals. How do you assess the proposals?
Mr Brack: The principle of the
due diligence regulation is already very important. It puts in
place some of the incentives I was talking about before for developing
countries to sign partnership agreements because if it works there
will be a universal requirement effectively for proof of legality
at least for all imports entering the EU. Having said that, with
the state the draft regulation on due diligence is in at the moment
I think it is fairly clear that the system will not work, although
it is a very early draft and it is quite possible that a lot of
the loopholes and the defects and the lack of clarity about many
issues will be sorted out in the negotiation process about it.
It is quite unclear at the moment by several things what it means,
definitions, products and operators, how you can reasonably ensure
legality. They talk about timber operators being able to use monitoring
organisations like certification schemes or timber federations,
but in reality none of the schemes or the federations at the moment
could operate as a monitoring organisation under the terms of
the regulation. There are quite a lot of potential loopholes including
timber coming in for energy products. All of those things could
be sorted out given the political will within the EU, but I think
there is a major design flaw—and it is quite difficult to
see how it can it be sorted out—in that implementation and
enforcement is largely left to the member states rather than the
Commission. In the accompanying documentation to the regulation
the Commission admits that there is a problem in some of the EU
member states with illegal logging already and they cite Bulgaria
and Estonia as examples. They are admitting that Bulgaria and
Estonia and maybe other countries are already unable to guarantee
that legal timber from their own production enters the market,
so it is really not clear how they can simultaneously guarantee
that imports from high risk countries will also not be illegal.
The regulation leaves the enforcement and the inspection of the
timber operators and the monitoring organisations to member states.
So you could have a number of EU member states developing as very
vulnerable entry points and people wanting to ship illegal timber
into the Community could just use those entry points. Unlike something
like the Lacey Act, there is no subsequent check on the legality
of timber anywhere in the EU. Under the due diligence regulation,
once timber has entered the EU at the first point of entry into
the market there is no subsequent check. It is difficult to see
how the regulations as currently drafted could really deal with
that; it has too many loopholes.
Q117 Martin Horwood: Do you imagine
a certification scheme working all the way down the supply chain
for all paper products? Would that be your ideal?
Mr Brack: That is what certification
schemes do at the moment anyway.
Q118 Martin Horwood: Do you see them
implementing a Lacey-style Act to get over your problems you have
just been talking about?
Mr Brack: The thing about the
Lacey Act is it allows the authorities to take action against
people who are handling illegal timber wherever they find them.
So even if, as in our example, Bulgaria has lax implementation
and illegal timber enters there, if it is then shipped into the
UK and the authorities have reasonable suspicions to think that
the products are illegal, they can take action against it. In
the UK under the due diligence regulation it cannot do that. It
is only the first point of entry into the EU that is subject to
any requirements.
Q119 Mr Caton: This Committee last
looked at the procurement of sustainable timber back in 2005.
What is your perception of progress since that time?
Mr Brack: There has certainly
been some progress but perhaps a bit limited. On the good side,
you are seeing a pretty steady increase in the volume of certified
timber on the UK market and the anecdotal evidence from timber
importers and retailers would suggest that it is the requirements
for certified timber from government procurement policy that has
had the main impact on that. The figures are not terribly good,
but the evidence suggests that about 50% of imports, perhaps higher,
into the UK are now certified under one of the main certification
schemes and that compares to 8% of total global forests certified
so that is much higher. There is no question that awareness of
the requirements for legal and sustainable timber is higher amongst
government agencies, but on the more negative side, CPET has carried
out a study on the construction sector, which is the area of timber
use that is most relevant to government procurement, and they
found that implementation of the requirements was quite variable.
A number of agencies were implementing their own policies which
were not like the government policy at all, they were more strict
and just requiring certified timber, not sustainable or legal.
Very few of them were monitoring the implementation of the policy
systematically. It was difficult to collect data. We think we
are seeing some impact from the procurement policy, but it is
clearly not being implemented as well as perhaps it could be.
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