XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

Certification, Timber Trade and Market

Maharaj Muthoo1

Certification is a benchmark market instrument for assuring sustainable forest management and legality
of timber trade. It is being adopted fairly fast forward, already covering over 325 million hectares with
an estimated industrial roundwood supply of 430 million m3 . However, certification costs, know-how and
means remain largely beyond the current culture and capacity of tree farmers, woodland owners and
public forest custodians, especially in many developing countries. Institutional mechanisms and strategic
vision are warranted for drawing upon the certification opportunity through policies, programmes and
partnerships pertinent under different contextual considerations. That is required for sustaining forests,
trees and related resource assets, their valorization and benefit-sharing among producers and
consumers, small and medium enterprises, corporate entities, local communities and other stakeholders.
Also for taking advantage of the burgeoning timber trade and forest products market in the ongoing
urbanization and globalization processes, the current financial downturn notwithstanding.
Need exists for building a better understanding about the diverse aspects of forest certification, involving
planners, producers, managers and manufacturers of wood and non-wood forest products, eco-tourism
and environmental services. That is because certification can contribute towards improving timber trade
and market mechanisms and leveraging sustainable management of forests and related renewable
resources for payment of ecosystems services. Sustainable management calls for conjoint commitment by
all the stakeholders, including those concerned about attaining Millennium Development Goals,
combating climate change, and balancing social, economic and environmental dimensions of
development. Persistent poverty as a cause and consequence of deforestation and forest degradation in
the tropics is a management issue bedeviled by the lack of good governance, legality of timber trade and
deployment of credible certification systems. Despite the plethora of international environmental
agreements and commendable national policies, it remains a challenge to save and restore the earth’s
bio-diversity rich and climate-change mitigating tropical forests.
Environmental awareness and ethical consumerism buttress certification as a tool for communicating the
ecological and social performance of good forest management. Credible certification system standards,
criteria and indicators, and the chain-of-custody, ensure that forest products are derived from
responsibly managed forests through legitimate harvesting. This enables access to reputed retailers and
major markets, whereby the stewardship role and responsibility of forest owners and managers should
get recognized and rewarded. With these perspectives, the paper provides a background about the
modus-operandi and relevance of certification for sustainable forest management, markets and trade
worldwide.
Key words: Certification, Sustainable Management, Trade, Market

Environme nt & Developme nt

Much is being made of the sustainability limits of the earth’s resources . Often this is done without
considering the plight of poor people, whose livelihoods are intimately interlinked with forests and related
natural resource assets. In that context, sustainable trade and development, in -country and across borders,
are no less important than critical climate change and other environmental issues.

1
President, Roman Forum, Rome

1
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

There is space and scope for sustainable development, with win -win situations, through holistic
management of ecological, economic, social and cultural dimensions of forests and related resources. Good
governance, globally and locally, market mechanisms and corporate social responsibility could inspire
optimal solutions. Despite the laudable campaigns and advocacy for conservation and preservation per-se,
the share of tropical countries is hardly five percent of the world’s well managed certified forest area. Eco-
labelling as a market tool is constrained by the lack of level playing field and the risk of rigorous
certification becoming a non-tariff barrier rather than making it profitable for over a billion forest dependent
people subsisting on less than a dollar a day.
No wonder, thirteen million hectares of tropical forests are lost annually, creating considerable carbon
emissions and environmental degradation. It must be addressed to bring about harmony between humanity
and the environment. Besides local action and good governance, a global vision is required to compensate
communities and countries for their role as stewards of forest-based environmental assets and for
recognizing and rewarding their traditional knowledge, craftsmanship and skills in providing sustainably
harvested primary and secondary processed forest products. Otherwise, world congresses and summits shall
stay on as hot air balloons in converting the challenges of Rio Agenda 21, the Forest Principles and the
Millenniu m Development Goals into an action-oriented opportunity. Ethical trade could enable that through
market based forest certification and payment for environmental services.

Forest Certification and Timber Trade

For many years environmentalists have targeted their campaigns at politicians and the public. With Forest
Certification (FC), they have turned their focus on timber trade, markets and consumers. Certification is a
market tool for assurance of sustainable forest management (SFM). By linking market and trade to
sustainable management standards and practices , FC schemes have elaborated comprehensive standards,
which include technical, economic, environmental and social issues.
Certification is defined by the International Organization for Standardization (ISO) as a procedure for
written assurance that a product, process or service is in conformity with certain standards . FC initiatives
rely on consumers exercising purchasing choice in favour of products originating from sustainably managed
forests certified with due diligence. Such certification and eco-labeling are perceived as opportunities to
enhance the product positioning for a price premium, on one hand, and ensuring better forest management
practices, on the other hand.
About 150 countries worldwide are engaged in one or more international processes to develop national
level criteria and indicators for SFM. That is relatively easy compared to operationalizing FC. It requires a
combination of performance and process standards. Performance standards include ecological, economic
and social elements. Process standards define characteristics of the management of which the environmental
management system (EMS) forms a part. These standards are related to the ISO 9,000 and 14,000 series of
standards for quality and EMSs, respectively. However, unlike FC standards, ISO standards do not prescribe
the desired output of an operation but the desired quality of the process.
FC standards refer to the production process with standards concerned about the mode of production of
goods. WTO refers to them as processes and production methods (PPMs), which define the way in which
products are manufactured or processed, and how natural resources are extracted or harvested. FC standards
are non-product related per-se. FC strength is its incentive driven approach with predetermined standards
and independent auditing, with broader applications than those targeted at market community. A tentative
typology of certification and verification services applicable in the forestry se ctor could comprise the
market-oriented certification of forest management quality, the verification of specific forest management
requirements and of legal compliance, the certification of carbon sequestration and other environmental
services, and finally the certification of EMSs.
FC and the associated issue of labeling products is one of a number of market-based instruments to
improve forest management and conservation. The focus of FC schemes so far is mainly on wood products
as well as pulp and paper. The process starts with elaboration and validation of forest management standards
based on principles and criteria. An independent third party certification is accredited to inspect the forest
harvesting and management activities according to the set standards. A chain-of-custody (COC) system may
also be used to trace forest products through processing and distribution chain, and s pecific labels can be
authorized on certified forest products for sale.
Over 325 million hectares, mostly temperate and boreal forests, are already certified. Programme for the
Endorsement of Forest Certification (PEFC) system certification covers the largest area, followed by Forest
Stewardship Council (FSC), American Forest & Paper Association (SFI), American Tree Farm System, and

2
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

the Canadian Standard Association (CSA). ISO additional certification has the highest coverage, main ly in
Canada, but it is not of similar comprehensive character as the FC schemes. There are several national FC
initiatives in Europe and elsewhere, including Brazilian CERFLOR, Ch ilean CERTFOR, Indonesian LEI,
Gabonese PAFC and Malaysian MTCS. FSC was the front runner. Established in 1993, it was the sole
international accreditation organisation for several years, bringing together divergent interests and defining
SFM principles. Other schemes followed, initially at the national level, such as CSA and SFI. Co mpetition
for FSC came fro m the regional Pan-European Forest Certification scheme (PEFC) launched in 1999. The
success of PEFC with European industry interests and small forest owners led to its re-launch in 2003 as a
global programme. It involves over 210 million hectares and 35 national FC systems.
Vo lumes of certified forest products traded for domestic or international markets are increasing, but still
small vis-à-vis the vast untapped potential. Main demand for certified forest products emanat es from
Western Europe and the USA. There has been limited interest elsewhere, though the subject has started
gaining high-profile all over, partly because of advocacy by ENGOs and hurdles to uncertified product
trade. Market demand is largely from retailers - not final consumers. Also there is little sign of price
premiu m, except for a few high-value segments. Yet, certified forest products trade is expected to increase,
even though consumer demand and price premiums are uncertain.
Issues of immediate importance for FC include (i) the apparent conflict between different certification
schemes, while interest is growing about their comparability, (ii) encouraging Russia, Eastern European,
tropical forest and other developing countries towards SFM and using certification for combating illegal
logging and tracking trade in forest products, and (iii) the potential for carbon sink monitoring and reporting,
among other environmental services worthy of weighty compensation. More so after the Copenhagen
consensus on linkages between climate change, forest conservation, afforestation, deforestation, forest
degradation and related financing options.

Non-Wood Forest Products Trade, Ethical and Organic Certification

Non-wood forest products (NWFP), including bamboo, rattan, nuts, fruit, flowers, medicinal and aro matic
plants, wild animals and bush meat in many instances far exceed timber in importance for forest dependent
and other local communities , their mult iple use and trade. NWFP are important commodities, estimated
annual value of their world trade being of the order of US$ 11 billion. The general direction of trade is from
developing to developed countries, with about 60 percent imported by the USA, Europe and Japan. China is
the most prominent trader. Bolivia, Brazil, India, Indonesia, Malaysia and Thailand are among other major
world market suppliers. NWFP certification should provide market quality assurance and recognize and
reward local communities who safeguard these resources .
International trade of NWFP is of high value compared to local or national markets. Certification for
NWFP usage and trade can capture issues of agricultural certification schemes, such as fair trade and
organic certification. NWFP are multiple use products for forest dwellers, local households, artisan and
craftsmen, involving alternative livelihoods for millions engaged in extracting NWFP. They also provide
raw materials for large scale industrial processing, such as bamboo for plybo, paper and pulp industry.
The four main categories of NWFP certification can be forest management, social, organic and product
quality certification. Overlaps and potential synergies are required between different schemes. Social
certification systems foster fair trade, business partnerships and management supply chains, secure
commercial deals and provision of market information. Social criteria include tenure and customary rights,
fair returns and adequate benefits, safe working environment, economic viability, and ethical marketing.
Ethical trade ensures that workers’ human rights are implemented, as defined by ILO and the International
Federation for Alternative Trade (2002), including better trading conditions for excluded and disadvantaged
producers.
Product quality aims at production standards. The “Certificate of Origin” is used for quality control of
food products, certifying the source of the product, such as DOC (Do mination d’origine controllée) for
wines and cheeses. Increasingly high value edible NWFP, like morels and mushrooms , are certified through
DOC. Product quality certification mainly evaluates physical identity and chemical purity. International
standards relevant for the food industry are formulated and harmonised by Codex Alimentarius to protect
consumer health and to facilitate fair trading. Standards of Good Manufacturing Practices or Good
Laboratory Practices aim at ensuring processing to guarantee product quality.
Key requirements for certifying NWFP may be tenure rights, limited access to harvesting site, monitored
permitting system, promotion of niche markets, and the implementation of quality control measures. These
comprise FC opportunities for NWFP through commonalties among certification programmes. For example

3
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

recent assessment of palm heart production in Brazil, jointly carried out by forest management and organic
farming certification entities , showed that the two systems are complementary; no major contradiction was
identified.
Organic certification (OC) focuses on agricultural sustainability criteria, including the renunciation of
synthetic fertilizers and pesticides. Wild crafted and semi-domesticated NWFP can be considered as organic.
Many are commercialised accordingly. However, NWFP rarely result in large volumes for trade fro m single
forest areas comparable to agriculture crops, such as cocoa, coffee or tea. Low volume niche markets
demand for NWFP at a premiu m price is an incentive. International Federation of Organic Agriculture
Movements (IFOAM) standards include principles on the collection of non-cultivated material of plant
origin and honey. NWFP can be accommodated under the latest IFOAM Organic Standards item 2.4 that
wild harvested products are gathered at stable growing rates away from contamination and conventional
farming. Other pertinent standards include Florida Certified Organic Growers & Consumers Inc, Soil
Association, National Association for Sustainable Agriculture Australia, Forest Garden Initiative, and EU
Council Regulation 2092/91 on organic agricultural products.
OC systems need specifications and methodologies to make them fully relevant to forest gathered foods
and other NWFP. FC is an approach in combination with fair trade and OC schemes with due convergence
of standards and definitions for gathering and producing NWFP. That includes clarification about the
applicability of OC for NWFP, suitability and collaboration among different certification programmes,
costs, benefits and replicability. A comparative analysis indicates that FC schemes are quite close to dealing
with NWFP. OC could complement it, especially regarding forest food products, while major social and
environmental aspects of NWFP production and trade can be covered under FC schemes. Therefore, the
social certification and fair trade as well as product quality labeling and certificate of origin schemes are not
reviewed further in this paper, useful for synergies though they are and should not be ignored in developing
well targeted NWFP forest certification systems.

Timber Trade and Forest Certification in South

Degradation and destruction of forests in South can hardly be contained without FC and legality of timber
trade. But it is a challenge to adopt the costly, convoluted and time consuming certification processes in the
context of tropics. Just 4% of their natural forests are part of the certified area worldwide. If FC had worked,
or is made to work there, it would help curb ongoing deforestation. The rigor of certifying a forest must not
be given up, but certification systems at national and regional levels should take due account of the
contextual considerations in the complex tropical forests, especially in countries where investment resources
are limited or certification capacity has yet to be developed.
Environmental interest groups are pressuring consumers to boycott tropical hardwoods in the absence of
eco-labeling. FC originated as an alternative to bans and boycotts of illegal timber trade. But if trade
declines, the rain forests will have even less value to the producer nations and could be even more prone to
clearance. Proposals which limit trade, such as embargoes, are in conflict with the currency of the General
Agreement on Tariffs and Trade (GATT) about the liberalization of trade. The so-called “elitist”
certification systems are seen as a non-tariff barrier. Certification paradox as a gold standard instrument of
international FC systems must address the complex site-specificities and difficulties of tropical countries for
capturing emerging opportunities by removing barriers to market entry of wood and non -wood forest
products from South.
The global forest dialogue must not only investigate the place of developing countries in international
timber trade, but also scope and support for FC. Also their comparative advantage of competitive
competence and skilled labour, as demonstrated by China and Malaysia in their exports of diverse products
or of the technologically embedded fast grown quality eucalypt plantation pulp and paper from Brazil. This
recognition and role can contribute to poverty reduction through gainful employ ment and income
generation, to SFM by preventing the overexploitation and degradation of natural forests, and to ethical trade
by avoiding illegal logging and enabling transparency in trade. That is in the mutual interests of North and
South.

4
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

Tropical timber is a high-value product. Industrial roundwood, sawnwood and wood-based panels export
from developing countries is over US$12 billion. That is without accounting for fuelwood, pulp, paper and
paperboard. It considerably understates the total value of timber, also because much is traded within
countries. Despite so much wealth stored in developing country forests, current timber production and
processing systems do not generally favour sustained forestry, being mostly capital-, technology- and skill-
intensive, with economies of scale and specialized consumer market constraints.
Trees outside forests (ToF) and plantations are playing an increasing role in furnishing industrial timber.
Private sector could restore wasteland for producing raw materials sustainably. Constraint is lacklustre land
tenure and leasehold forestry. Likewise, people living in and around forests are excluded from access to
timber wealth, because they lack power while outsiders take advantage of poor governance. This has begun
to change, but power brokering still prevails.
Private sector has recently been invited to participate in an ITTO initiative on timber tracking systems for
promoting trade in tropical timber products from sustainably managed and legally harvested sources .
Enlightened national and international entities are coming to the conclusion that investment in certification
is a cost effective way of achieving the goals of combating unlawful logging, developing SFM standards,
and promoting confidence among various players . Tropical countries could draw upon ITTO’s Criteria and
Indicators (C&I) for SFM. But developing C&I is one thing, making them relevant to FC is another. They
have to be adapted to contextual consideration of diverse tropical forests and adjusted for delivering them on
the ground. It is necessary to make these readily accessible to all developing countries, with due attention to

5
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

the biodiversity rich tropical forests, including climate change adaptation and mitigation through reduced
deforestation and forest degradation in the South.
Several wood and paper products companies have decided to preferentially buy certified wood and wood
products, even though they may still use products from other sources to meet their demand. W hile many
developing and tropical countries are now making significant progress in improving forest management, the
lack of certification is beginning to act as a barrier for entry into higher-value markets, more so with new
procurement policies. There is urgent need to promote credible forest certification, for which Phased
Approach (PA) is as an option for full co mpliance to the certification standard in incremental steps. Limited
available resources are focused on one or two tasks instead of trying to address all at once. PA framework
sets milestones and targets, making it easier for forest managers and external parties to monitor and assess
progress toward meeting certification requirements and rewarding genuine SFM attempts, even by those
starting from a weak benchmark.
There is wide gap in the developing/tropical countries between the existing level of management across
the supply chain and what is required for credible certification. That includes limited capacity and scarcity of
resources required to deliver comprehensive certification standards . Also the process of implementing and
assessing the standard can be very lengthy, often taking several years and risking missed deadlines. PA as a
pragmatic tool can be divided into (i) implementation of standard and certification in individual forest
management units, and (ii) PA to certified timber products in procurement policies. Immediate
implementation of PA certification would avert loss of trade and market opportunity and support SFM.
Legality as a priority will ensure removal of hurdles for public procurement and conformity with countries
concerned about Forest Law Enforcement, Governance and Trade (FLEGT). Verification of legal
compliance would be a first step towards full certification through PA in the tropics before reaching the FC
gold standard.

Timber Trade, Procure ment and Verification

There is a widespread perception that illegal logging is a major cause of deforestation and degradation of
valuable ecosystems, conflict and corruption. The drive to legality assurance in international timber trade
has increased interest in the potential of FC schemes to serve as a means to both assess SFM and verify the
legality of forest production. Credible FC schemes demand proof of legality as a precondition for receiving a
certificate. Thus there could be convergence between FC and verification of legality assurance in timber
trade.
The global wood industry is of economic import. The annual turnover of wood products, including
plywood, panels, pulp and paper, exceeded US$200 billion, with developing countries accounting for over
17 percent of that trade. Three major world regions -North America, Europe, and Asia- dominate the market
in industrial wood products. North America accounts for about 40 percent of both production and
consumption. Consumption in Asia, especially China, is rising dramatically; the region is now a major
importer and significant exporter. Brazil is also a significant consumer and producer. Developing countries
are increasingly part of the global timber market. Production and export of their wood products, such as
plywood and veneers, have also grown two to threefold in the last 30 years. Individual traders have b een
joined by 63,000 mult inationals trying to procure goods and services globally and merchandise them
worldwide.
FC is becoming important issue within the wood products industry and also for new trends in wood
products markets. The end markets for certified timber and forest products, including processed wood
products, are concentrated in Europe and North America. Certification verifies that forests are well-managed
and ensures that wood and paper products come from responsibly managed forests. The need for specific
guidance on the legality issue is motivating analyses of the possibilities of implementing independent
verification systems of legal compliance.
Increasing population and more wealth mean that the world's demand for wood is growing at about 6%
yearly. Natural forests may not meet growing demand for wood and at the same time fulfil their protective
and conservation functions. Although the global plantation area is a small proportion of the world's total
forest area, about 40% of the raw material for industrial purposes now comes from ToF and plantations
rather than from natural forests. Certification has proven an effective instrument in certain types of forests,
chiefly planted forests and others with a high degree of standardisation and secure access and ownership
rights. This has been typically the case in the temperate regions of Western Europe and North America, and
to a varying extent in South Africa, and Central and South America. However, certification has proven less
applicable in other contexts, particularly the tropical regions of Africa and Asia where natural forests are

6
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

more co mplex in their structure. Their timber trade and forest governance are also often treated as
questionable. Attention therefore has lately turned to the verification of legality.
With evidence of growing convergence between certification and verification, certification is being
increasingly viewed as a potential surrogate for legality assurance, and several p roducer governments are
considering some private sector certification schemes as equivalent to verification of legality. Legality
assurance is a narrower concept than sustainability, focusing only on the compliance of logging and
transformation activities with international, national and local laws. That said, legality assurance still
represents a major challenge for timber trade, particularly in the developing countries .
Forest industry is likely to press for the narrowest interpretation, limited only to forest sector standards.
But campaigning NGOs are likely to press for much broader interpretations, bringing in issues of tenurial
rights and the interests of indigenous groups. The convergence between legality assurance and ce rtification
is likely to have implications both for certification bodies and certifiers. Certification and verification are
quite diverse instruments. Yet, the fact that all the major certification schemes demand adherence to national
and local laws as a precondition for certification implies that there is an overlap between certification and
verification of legality. If a forest area is certified, its wood production must be in compliance with all
relevant laws. It, therefore, makes sound financial and administrative sense, both for producer companies
and governments, to treat certification as a surrogate for legal verification.
Skeptics contend that certification is a tool of the commercial sector and not designed to serve either the
public interest or the regulatory requirements of nation states. Such schemes may provide a credible market -
based solution for forest operators to demonstrate their high standards of forest management to consumers of
wood products. Critics argue that certification should not substitute for the legitimate place of government.
There are instances of ENGOs having alleged that certification standards have been accepted as proof of
legality in situations when there is clear evidence of illegal production. High -profile controversies
surrounding the issue of forest certification are not new. What may be new, however, is the effect on
certification of the heightened interest in the issues of timber trade, legality and vigilance.
It is estimated that 12%-17% of internationally traded roundwood volume is of "suspicious”origin;
likewise 23%-30% of internationally traded hardwood lumber and plywood and 5%-10% of the value of
global wood products trade can be traced to "suspicious" material. Both producer and consumer countries
share the responsibility to tackle illegal logging and support countries in developing enabling ins titutional,
legal and policy frameworks for good governance. While the convergence of certification and legality
assurance may present a particular challenge, this movement may yet have something to offer to the wood
procurement policies, underlined by the new movement to verify legality and to improve the governance of
the forest sector.
The UK government has reviewed certification schemes to monitor compliance with its timber
procurement policies, conducted through the so called Central Point of Expertise on Timber (CPET). It
assesses certification schemes and other evidence against definitions of legality & sustainability, which
includes technical and environmental requirements. The results of the CPET 2008 review confirm that CSA,
FSC, PEFC and SFI certification schemes continue to deliver evidence of sustainability. MTCS was also
found to deliver legality and is in the process of introducing revised requirements.
The CPET results reaffirm the robustness of credible FC schemes. The revised UK procurement policy
sends strong signals to companies and consumers to buy credibly certified products. CPET reviews provide
a model examp le of responsible procurement and trade. Certification through approved schemes is required
for producers and manufacturers supplying timber and wood products for public sector projects since 2009.
The UK government and its departments will procure legal and sustainable timber or FLEGT -licensed
timber only. About 60% of timber imports into UK are already certified. Other governments are following
suit. FLEGT is the European Union's response to the global problems of illegal logging and international
trade in illegally-harvested timber. Co C certification is a mechanism for tracing certified material fro m the
forest to the final product. It provides certainty that the product or product line is linked to a certified forest
fulfilling requirements regarding sustainability and legality verification for suppliers of wood and wood
products.

Certification Challenges and Opportunities

Certification is new to forestry, but has been a well-established practice in most other industries. It is based
on three main pillars of (i) standards, (ii) independent certification bodies, and (iii) an accreditation
authority. The development of forest management standards has been complex and contentious.
Stakeholders have strong views and resist dilution of FC principles of their priority concerns. Certification

7
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

will not carry credibility unless supported by organizations trusted by the public; so it is vital to involve all
the stakeholders in the development and testing of standards.
The motives of diverse forest certification stakeholders are rarely reinforcing and require tradeoffs. Some
are even seen as mutually exclusive, say local community versus t rader versus consumer interests, those
incurring cost and those receiving benefits, big versus small operators, North versus South, and global
versus national and regional certification systems. The challenge is of unity in diversity.
For environmental movement, FC is a means to influence how forests are managed and biodiversity is
conserved. For social movements, it is an opportunity for benefit sharing and recognizing the role and
responsibilities of local communities. For industry and trade, it is an avenue for corporate responsibility,
ethical trade and market access. For buyers and consumers, it provides information on the impacts of
products they purchase. For forest owners and managers, it is a tool for gaining market advantage. For
governments, it is a soft policy instrument to promote SFM. Certification has to deal with these apparently
divergent values to create a win-win scenario.
Public understanding of the role of old-growth and high-conservation-value forests has been translated
into increased call for SFM and FC. It is not a limited vision of pure preservation, neither is it dominated by
the demands of profit and production, nor is it a purely populist concept of social security and reforms. All
that and more, FC is a mu lti-stakeholder transparent system designed to equitably balance the
environmental, social and economic needs of society as pillars of sustainable development and trade.
Certification in the South is often perceived as a non-tariff barrier. Forests there, especially tropical
rainforests, are bio-diverse and species-rich habitats that support not just timber trees but a wide range of
flora and fauna that rarely exists elsewhere. They are also homes , hearths and livelihoods of forest
dependent millions. If SFM is an objective, its imperatives have to be understood and accepted. That calls
for establishing an enabling environment for developing and delivering policies and programmes for
managing certified tropical forests. Easy said than done in the complex tropical contexts.
Mandatory, national and international rules, regulations and conventions set the legal framework for FC.
Forest inspections by independent third party accredited organizations assess compliance with a set of C&I,
including adherence to the legal framework. FC partnerships practice ensures that timber fro m certified
forests is not only legal but also sustainably produced according to the certifier’s criteria. If information on
certification follows the wood through CoC, consumers can have a positive influence on SFM by choosing
products which originate from well-managed forests.
Even in the absence of appropriate policies and commit ment fro m the top, certification makes use of the
concerns of other stakeholders in the supply chain to motivate SFM. Certification thereby is an indirect
roadway for SFM. However, certification cannot substitute an appropriate forest policy, a strong legislative
framework, and committed and capable forest managers. It can have an impact in the absence of these, but
responsible forest management will co me about more easily if these other mechanisms are in place. An issue
is the development of FC schemes seeking mutual recognition and endorsement of national initiatives.
Major certification entities as standard setters need to be satisfied that the corresponding certification
standards and auditing procedures are essentially equivalent and that any process of mutual recognition or
endorsement does not compromise the integrity of their schemes. Harmonization is required.
Bulk of producers certified so far are in the North. Those operating in the trade have to respond to the
demand of their customers increasingly seeking sustainability in the products that are retailed. Also because
companies in the forestry and timber businesses in North are bound by national commitments, commercial
opportunities offered by certification, the influence and power of alternative social groupings, especially
NGOs. Often the Southern countries do not have this combination of circumstances. Illegal logging is a
manifestation of deep rooted governance problem. Several countries have signed up to collaborative
programmes to combat the problem. One of the principle ways is to stem the flow of illegal timber into the
international timber trade through certification and secure CoC.
Certification schemes as reference points for customers and the traders, among others, need to maintain
consistency, credibility and transparency of standards and auditing. At the same time, certification should
have the capacity to be responsive to different scenarios and changing requirements. It could do so in several
ways, such as by engaging in dialogue with various national and international stakeholders, undertaking
research and pilot testing, providing technical assistance and building national capacities, and promoting
site-specific certification systems.
Certification and labeling requirements should be feasible, realistic and cost-effective. Certification will
lose its ability to promote changes if it settles at levels which are too demanding, elitist, and catering only for
the boutique end of the market. It will lose its credibility if it is too undemanding, business -as-usual,

8
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

certifying the lowest common denominator. Equally, certification and labeling will be an ineffective tool
unless it is based on the confidence and trust of all concerned. It is a hard job, but worthy of the investment,
even if one may start in a stepwise manner in the complex tropical forest arena. Labeling is about
communicating messages about good forest management and wood products processing. If the public does
not believe it, then the message is useless. Producers and retailers are not interested in labels and certificates
without public trusting them. Principled pragmatis m is the name of the game.
Producers, manufacturers and retailers now have an independent and trustworthy way of convincing
themselves, their clients and the public about the reliability of their products. More and more of them are
resorting to certification as a way of imp lementing policies of environmental and social responsibility,
improving their corporate images, and assuring themselves of a long -term sustainable supply of products.
More and more corporations are deciding that these assurances about well-managed forests and sustainable
forest products are not merely useful image-enhancement, but an essential part of business in a changing
world, a world with heightened concern about forests and ethical trade.
An example is chain-of-custody certified companies in China, mostly wood products manufacturers,
growing fast forward. Despite the financial crunch, furniture exports through Guangdong port in 2008
soared to US$ 8 billion. The two biggest export markets for certified wood products have been Europe and
the USA, accounting for 54.6% and 29.8% of exports respectively. The giant DIY chain stores are important
retail markets for these certified products. Furniture retailers, pulp and paper compan ies and public
procurement form a focused market for these products.
Although FC was initiated to confront deforestation of tropical forests, certified forests are unbalanced in
geographical locations, with 60% located in North America and 36% in Europe. The end markets for
certified forest products, including processed wood products, are also concentrated in Western Europe and
North America, because of the legality issue and price premiu m potential for environmentally friendly
products in these mature and value-added markets.
FC has a huge untapped potential in the tropics. National standards and schemes in Brazil, Chile, China,
Gabon, Guatemala, Ghana, Indonesia, Malaysia and Mexico are few examples; many involving plantations
rather than natural forests, such as in South Africa. There is a great gap between what is happening, and
what is required for certification in the tropics. Investment is warranted to bridge this gap and strengthen
national capacity and efforts in developing countries. So is the case of countries in transition, including those
of Eastern and Central Europe, Russia, Central Asia and Caucasia. Certification shall grant access to world-
wide markets for their forest products, enable foreign investment, and provide an avenue for SFM.
Developing countries with the largest areas of certified forests include Brazil, Bolivia, Mexico and
Guatemala, apart from Gabon, Indonesia, Malaysia, Panama, Vietnam and others, while China is moving
fast forward with its FC standards. There is also interest in Pan-African FC with sub-national-level set of
C&I and verifiers. At the same time, there is an upsurge in FSC and PEFC chain-of-custody globally, which
may eventually lead to greater demand for certified wood products. In this respect, there may be parallels
with the Kimberley Process for diamonds, where a few dominant industrial producers of kimberlite (deep
mine) diamonds stand to benefit from tighter controls over the more dispersed and less disciplined alluvial
(sedimentary) diamond producers and markets. The risk of the differences between opposing classes of
timber producers expressed in nationalistic terms may be an additional factor to contend with, making
credible certification an essential requirement for all those who want to join and stay on in business.
Certified companies have obtained an average 6.3% price premium for certified woo d products in
European markets, 5.1% price premiu m in the United States and 1.5% price premiu m in Canada. The profit
margin for certified wood products is highly dependent on the price premiu m that companies can obtain.
However, a model developed to study the subject suggests that as long as the price premium obtained for
certified wood products exceeds 11% relative to non-certified wood products, the profit margin for certified
wood products will exceed that of non-certified wood products. There is thus space for improvement and
scope for tapping opportunities for lucrative international timber trade and commerce, not only in Europe
and North America, but also elsewhere.
The costs and benefits of using certified wood products is a problem. The issue of profitability can be
viewed from several perspectives: the market share of certified wood products; the market growth rate; the
increased cost of certified wood; the small price premiu m for certified wood products; and the lower profit
margin for certified wood products relative to non-certified wood products. The profitability of certified
wood products will influence short-term and long-term marketing strategies of companies supplying
certified wood products linking with branding and marketing. All major certification programmes are now in
the process of attaching their labels to wood products, hoping for higher financial

9
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

return, green accounting and consumer credence to compensate certification costs .

Green building initiatives generate growth in timber trade by specifying certified wood products.
According to the IPCC, almost two thirds of the potential savings in greenhouse gas emissions by 2030
could be achieved in the building and forest sectors together. Green building is becoming part of corporate
responsibility programmes and government procurement policies in line with their energy efficiency targets.
Wood industry needs to reach out to architects, designers and decision makers to inform them about the
energy and carbon capture life-cycle of wood and the environmental and technical credentials of FC
standards.
Another challenge is how and if certification can address the cross-cutting issues of poverty among forest
dependent communities. Who compensates them and their countries for the additional costs of certification
and how do they remain motivated for concomitant environmental services flowing for global good from
SFM, which is a pre-requisite for certification. These challenges must be pondered over and addressed
through good global governance, fair trade and better understanding of the complexit ies of diverse forests.
Also their potential role for pro moting economic development and MDGs. FC should dovetail its systems
accordingly and inter-alia get involved in payment of ecosystems services (PES) to concerned countries and
communities. More so in the context of climate change mitigation and carbon sequestration, such as in the
case of Pearl River basin CDM forestry project in China.
FC must aim to translate external, traditionally non-marketed values of the environment services into
financial incentives for forest landowners and users. Services that can be covered by PES schemes are those
related to forest carbon, clean energy, watershed management and sustainable soil, biodiversity and eco-
tourism, aesthetics and landscape protection. Given the global interest in tackling climate change by using
financial incentives to reduce emissions from deforestation and degradation (REDD), now is a good time to
have a look at how PES schemes are progressing and adapting to new opportunities. That could be another
source of money on trees for and from FC and no less than the current value added in the formal forestry
sector and the real value of forest products exports of around US$450 billion and US$ 330 billion per year,
respectively.

Conclusion

Forest certification is an international high profile market-based mechanism for trade in

timber from sustainably managed and legally harvested forests. It calls for compliance
with sustainable forest management standards.

Certified area is increasing, but is still a small percentage of the world’s forests. The same applies to the
volumes of certified forest products traded. Certification as a tool to promote environmentally friendly,
economically viable and socially equitable use needs to be highlighted, both for wood and non-wood forest
products.
Many countries in the North have already achieved 100 percent of their forest area as being certified. But,
it is largely on the backburner in the South. Investment is required for averting environmental and social
risks, capacity-building and awareness-raising. Certification adds to the cost of forest management, and
product prices do not increase commensurably. Given its long term profitability prospects, strategic and
ethical considerations, forest owners, managers, manufacturers, timber traders and retailers can no longer
afford to remain as reticent players in the globalizing certification process.

National commitment to sustainable management of forests and related resources can be a key driver
alongside public procurement and business-to-business demand supported by corporate social responsibility
and sustainability initiatives. Policy planners, decision makers and business organizations need to adopt
management practices that min imize impact on the environment and promote trade in products derived from
legally logged and sustainably sourced raw material. Several countries have designed procurement policies
and more are likely to follow. Certification is thus becoming a prerequisite for market access with scope for
convergent certification under two systems, both for forest management and chain-of-custody. This in turn
could help obtain an assured price in the increasingly ethical and environmentally conscious markets.

Certification is stimulating moves towards sustainable forest management. Its focus has been on
establishing standards for forest managers and developing a critical mass of certifiable timber. In the future,

10
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

emphasis will need to be placed on strengthening national institutions, policies and legislation to reduce the
gap between current levels of forest management and certification requirements; lowering the certification
costs; improving market access and incentives for trade in certified forest products; increasing the
effectiveness of marketing among consumers ; delivering requisite rewards and recognition to certification
and sustainable forest management stewards and stakeholders; combating illicit felling and illegal trade;
promoting payment of ecosystems services and benefit-sharing between buyers and sellers; and upscaling
issues of REDD, carbon trading and climate change in forest certification.

Acknowledgements
Thanks are due to the three acknowledged certification and marketing experts who have peer reviewed the
draft and provided several references. Not all of them are cited below nor are they quoted in the text above,
despite being a rich repository of knowledge that has been drawn upon in the paper directly or indirectly, un -
amended or not. Wish to acknowledge the commit ment of them all to the common cause of appropriately
scanning, merging and analysing certification systems and trade policy perspectives.

References
Atyi, R. E. and M. Simu la. 2002. Forest Certification : pending challenges for tropical timber. ITTO
Tropical Forest Update, 12(3)
Atyi, R. E. 2004. Forest Certification in Gabon. Paper presented at the Symposium Forest Cert ification in
Developing and Transitioning Societies: Social, Economic, and Ecological Effects. Yale School of
Forestry and Environ mental Studies, New Haven, Connecticut, USA
Anderson, R. C. and E. N. Hansen. 2004. The Impact of Env iron mental Cert ification on Preferences for
Wood Furniture: a conjoint analysis approach. Forest Products Journal, 54(3), Pp 42-50
Anderson, R. C & E. N. Hansen. 2004. Determining consumer preferences for ecolabel forest products:
an experimental approach. Journal of Forestry 102:4, pp. 28–32(5).
ATO/ITTO. 2003. Princip les, Criteria and Indicators for the Sustainable Management of African Natural
Forests. ITTO Po licy Develop ment Series 14. A frican Timber Organization, Librev ille, Gabon, and
International Tropical Timber Organization, Yo kohama, Japan.
Barklund, A. and D. Teketay. 2004. Forest Cert ification: a potential tool to pro mote susta inable forest
management in Africa. KSLA, AAS, FAO, Ro me.
Bass, S., K. Thornber, M. Markopoulos, S. Roberts and M. Grieg -Gran. 2001. Certification’s impacts on
forests stakeholders and supply chains. Instruments for sustainable private sector forestry series.
International Institute for Environ ment and Develop ment, London
Bro wn, D. and N. Bird. 2007. Convergence between certificat ion and verification in the drive to legality
assurance: assessing the pros and cons. VERIFOR Briefing Paper No. 6. ODI, London
Buang, A. B. 2002. ITTO’s role in Cert ification. ITTO Tropical Forest Update, 12(3)
Burger, D., J.Hess and B. Lang (Eds.). 2005. Forest Cert ification: An innovative instrument in the service
of sustainable development. GTZ, Eschborn. 234pp Cabarle, B. et a l. 1996. Cert ification of Forest
Products: Issues and perspectives. Island Press. 271pp
Cashore, B. et al. 2004. Governing through markets: Fo rest certification and emergence of no -state
authority. Yale University Press. 352pp
Castaneda, F., C. Palmberg-Lerche and P. Vuo rinen. 2001. Criteria and Indicators for Sustainable Forest
Management: A Co mpendium. Forest Management working paper FM/5, FAO, Ro me
Chatterjee, S. et al. 2003. Relevance of Forest Cert ification in woodcarving Industry. WWF-India, Delh i
Dankers, C. 2002. Social and environmental certification in agriculture: Presentation. FAO, Ro me
Durst, P.B., et al. 2006. Challenges facing cert ification and eco-labelling of forest products in developing
countries. International Forestry Review 8 (2),193-200
Ebaa’a Atyi R, R. Nussbaum and M. Simula. 2003. Report on the potential role of phased approaches to
certification. ITTC, 33rd session, ITTO, Yo kohama. 25pp
Elliott, C. 2000. Forest Certificat ion: a policy perspective. CIFOR, Bogor, Indonesia. 310pp
FAO. 2006. Global Forest Resource Assessment 2005. Progress towards sustainable forest management.
Food and Agriculture Organization, Ro me
FAO. 2007. State of the World’s Forests, 2007. Food & Agricu lture Organization of the UN, Ro me
FAO/WHO. 1999. Codex A limentarius Co mmission Guidelines for the Production, Processing, Labelling
and Marketing of Organically Produced Foods. FAO, Ro me

11
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

Gu illen, A., S.A. Laird, P. Shanley, A.R. Pierce (Eds). 2003. Tapping the Green Market -Certificat ion and
Management of Non-Timber Forest Products. London
Ho me Depot. 2001. Social Responsibility Report. www.ho medepot.com/HDUS/ EN_US/
ISO/ IEC. 1996. Standardization and related activ ities - General vocabulary. Gu ide 2. Geneva
ITTO. 1998. The ITTO Criteria and Indicators for Sustainable management of Natural Tropical Fo rests.
International Tropical Timber Organization, Yo kohama, Japan.
ITTO. 2006. Status of Tropical Forest Management- 2005. International Tropical Timber Organizat ion,
Yo kohama, Japan
ITTO. 2006. Achiev ing the ITTO Ob jective 2000 and sustainable forest management in India.
Executive Su mmary of the report of the Diagnostic Mission. International Tropical Timber Council
ITTC Report (XLI)/7. ITTO, Yo kohama , Japan. 23pp
ITTO. 2008. Annual Review and Assessment of the World Timber Situation. International Tropical
Timber Organization, Yo kohama, Japan. 53pp
Maas, J. and M.A.F. Ros-Tonen. 2000. NTFP Certificat ion: Challenges for Research. ETFRN 32
Mallet, P. 2000. NTFP Cert ification: Challenges and Opportunities. FTP Newsletter No. 43
Mallet, P. and M. Karmann. 2000. Certification of NTFPs: An emerging field. ETFRN 32
Muthoo, M. 2001. Certification and Sustainable Forest Management. (In) Ch ipeta, M. E. and M. Joshi
(Eds.) Investing in Sustainable Forest Management. CIFOR, Bogor, Indonesia
Muthoo, M. 2002. Poverty, Environment and Multilateral Agreements. Proceedings of the Inter-
University Centre for Sustainable Develop ment, CIRPS, Ro me .
Muthoo, M. 2003. Global Env iron ment, Forest Harvesting and Sustainable Development. (In)
Proceedings of International Expert Meeting on the Develop ment and Implementation of National
Codes of Practice for Forest Harvesting. Forestry Agency of Japan, Tokyo
Muthoo, M. 2003. Research Needs and Future Strategies. (In) Herath, S., Z. Adeel and M. Muthoo (Eds)
Environmental Dimensions of Poverty. UN University, Tokyo
Muthoo, M. 2003. Leadership Interview on Certificat ion Policy Perspectives and Paradigms. Global
Cert ification Watch, Montreal, Canada.
Muthoo, M. 2004. Global Perspective of Sustainable Trade and Develop ment with special reference to
Cert ification and Bamboo Resource Management. (in) Proceedings of the 7th World Bamboo
Congress, WBO.
Muthoo, M. K. 2004. Out on a Limb . Tropical Forest Update, 14(1) 31-32
Muthoo, M. K. 2005. Out of the Woods. Down To Earth, 14 (1), 55
Muthoo, M. 2006. India in the Global Timber Market Place. Wood News, 15 (4) 18 -23
Muthoo, M. 2007. Foreword (in) Yadav, M, P.C. Kotwal & B. L. Menaria. Forest Certificat ion: A tool fo r
sustainable forest management. IIFM , Bhopal 121pp.
Muthoo, M. 2008. Forests, Food and Fuel. Proceedings of International Workshop on Renewable Energy
(Inaugural Address). Oreda, Bhubaneswar.
Muthoo, M. 2009. Forest Certificat ion and Wood Products Perspective. Proceedings of 4th International
Exh ib ition and Seminar on Plywood, Panel, Wood and Bamboo. Panelexpo, Federation of Plywood and
Panel Industry. 17-57.
Muthoo, M. 2009. Global Policy Perspective of Forests, Environ ment and Ecosystems (in ) proceedings of
the First Global Fo ru m of Ecological Economics in Forestry: Harmonious Future for Hu man Well-
being. IUFRO, Vienna & Nan jing Forestry Un iversity, China. 9-62.
Owari, T. and Hekki Justin et al. 2006. Strategies, functions and benefits of Forest Cert ification in Wood
Products Marketing. Forest Policy and Economics. 9 (4) 380-391
Paz Soldán, M . 2003. The impact of certification on the sustainable use of Brazil nuts (Bertholletia
excelsa) in Bolivia. FAO, Ro me
Pierce, A., S. Laird and R. Malleson. 2002. Annotated Collection of Gu idelines, Standards, and
Regulations for Trade in Non-Timber Forest Products (NTFPs) and Botanicals. Sustainable Botanicals
Project. Rainforest Alliance, New York
Pinto de Abreu J. A. and M. Simula. 2005. Setting the Scene: Overview and Imp lementation of Phased
Approaches. Presentation at the ITTO International Workshop on Phased Approaches to Certification.
Bern
Purbawiyatna A and M. Simu la. 2008. Developing forest certification: Towards increasing the
comparability and acceptance of forest certification systems. ITTO Technical Series No 29.
International Tropical Timber Organization, Yo kohama, Japan

12
XIII World Forestry Congress Buenos Aires, Argentina, 18 – 23 October 2009

Rametsteiner, E. and M. Simu la. 2003. Forest Certificat ion -an instrument to pro mote sustainable forest
management. Journal o f Environmental Management, 67 (1), Pp87 -98
Richards, M. 2004. Cert ification in Co mp lex Socio -Political Settings: Looking Forward to the Next
Decade. Forest Trends. Washington D. C. pp 33.
Sarre, A. and A. B. Buang. 2002. Certificat ion Scheming. ITTO Tropical Forest Update, 12(3)
Scherr, S. J., A. White and D. Kaimo witz. 2004. A new Agenda for Forest Conservation and Poverty
Reduction: Making Markets work for Lo w-Income Producers. Forest Trends, Washington
Segura, G. 2004. Forest Cert ification and Govern ments: the real and potential influence on regulatory
framework and forest policies. Forest Trends, Washington
Simu la, M ., Rametsteiner, E., Blasten, A., Green, T. and Pajari, B. (Eds). 2001. Forest Certificat ion:
Forging Novel Incentives for the Environ ment and Sustainable Forest Management , EFI Proceedings
No. 43, European Forest Institute. Joensuu, Fin land
Simu la, M . and R. Nussbaum. 2004. Forest Cert ification: A review of impacts and assessment. The Forest
Dialogue. Yale
UNECE. 2002. UNECE Markets for Cert ified Forest Products; Forest Products Annual Market Rev iew
2001-2002, United Nations Economic Co mmission for Europe, Geneva, Swit zerland
UNECE/ FAO. 2005. UNECE/FA O Po licy Foru m: Forest Certification –Do Govern ments have a role? 29
September 2005, UN, Palais des Nations, Geneva
UNECE/ FAO. 2008. Forest Products Annual Market Review 2007-2008. Timber and Forest Paper Study
Paper 23. Un ited Nations, Geneva, 153p.
Viana, V.M ., A.R. Pierce, and R.Z. Donovon. 1996. Cert ification of non-timber fo rest products. In:
Viana, V.M ., J. Ervin, R.Z.
Donovan, C. Elliott, and H. Gho lz (Eds). 1993. Cert ification of forest products – Issues and perspectives.
Washington
Wibowo, D. 2002. The Challenge of Gro wing Cert ification. ITTO Tropical Forest Update, 12(3)
Yadav, M. 2003. Research study on woodcraft and carving industry at Bas tar in Chattissgarh and Jodhpur
in Rajasthan. IIFM, Bhopal, Ind ia
Yadav, M, P. C. Kotwal, and B.L. Menaria. 2007. Forest Certification, a tool for sustainable forest
management. IIFM, Bhopal 122pp
Yuan Yuan & Ivan Eastin. 2007. Forest Certification and Its Influence on the Forest Products Industry in
China. CINTRAFOR
Walter, S., D. Cole, W. Kathe, P. Lovett and M. Paz Soldán. 2003. Impact of cert ification on the
sustainable use of NWFP: Lessons -learnt fro m three case studies. Proceedings of International
Conference on Rural Livelihoods, Forests and Biodiversity, Bonn, Germany
Walter, S., P.Vantomme, W. Killmann, and F. Ndeckere. 2003. Benefit-sharing Arrangements in the Field
of Non-Wood Forest Products - Status and Links to Certification. Paper presented at the Conference
Scientific Co mmittee of the IUFRO Conference, Rotorua, New Zealand
WWF International. 2006. Forest Certification Assessment Guide (FCA G): A framework for assessing
credible forest certification systems/schemes. WWF/World Bank Global Forest Alliance, WWF Gland
& World Bank, Washington DC FRAM EWORK FOR ASSESSING CREDIBLE FOREST
CERTIFIC

13