Illegal Logging Case Study
Illegal Logging Case Study
Illegal Logging Case Study
Introduction 3
Objectives 3
Illegal Logging and Associated Trades
Cause of the problem
Justice for Forests and Wildlife
Illegal Logging – Practices and Reinforcement 4
The ten ways they illegally Log
Illegal Logging Reinforcements
The Guitar Industry - is sustainability a competitive disadvantage? 9
Gibson Guitars
Taylor Guitars
Bottlenecks in the Black Wood Trade
Economic Analysis of Illegal Logging 12
Supply and Demand for Wood
Restricting the Supply
Strength of the system 16
Using the law to better combat crime
Timber verification systems 19
Integrating Science and Technology 20
Conclusion 28
Works Cited 29
1
YOU CAN’T WAKE A PERSON WHOSE PRETENDING TO SLEEP
WE LIVE ON A PLANET, THERE’S JUST ONE OF THEM
WE HAVE TO WAKE UP TO THE FACT THAT WE DON’T HAVE ANYMORE
THIS IS A FINITE PLANET
WE KNOW THE LIMITS OF THE RESOURCES THAT WE HAVE
WE MAY BE ABLE TO USE THEM DIFFERENTLY
WE MAY HAVE SOME INNOVATIVE NEW NEW IDEAS
BUT IN GENERAL THIS IS WHAT WE GOT
THERE’S NO MORE OF IT
THERE’S ONE CONCEPT THAT WE KNOW
POPULATION X CONSUMPTION = PLANET
AND RIGHT NOW
THEY ARE SIMPLY NOT EQUAL
WE ARE WORKING ON 1.3 PLANETS
SINCE 1990 WE HAVE CROSSED THE LINE
OF BEING INSUSTAINABLE IN RELATIONSHIP TO THE PLANET
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INTRODUCTION
OBJECTIVE
The purpose of this case study is to address the problem of illegal logging and its impacts
on our environment. In addition, our group wanted to increase awareness and knowledge of the
systematic structure of forest management and practices to improve system monitoring tools and
cooperation between countries. Through online research and outside sources, we wanted to
understand the design system processes of forest management to reduce illegal logging including
the general factors that were identified as contributing to illegal logging in forests around the
world. Economic analysis of the supply and demand for wood was conducted. Some of the
solutions presented include market based measures such as; countries acting responsibly, FLEGT,
(EVERGREEN). Every two seconds, across the world, an area of forest the size of a football
field is clear cut by illegal loggers. Why do they do this? Since demand for exotic woods are
greater than the supply, and with such limited resources, illegal logging has become a worldwide
epidemic. Poor communities are hit the hardest. That is 1/3 of the world’s people. These
individuals rely on wood for their livelihood. In countries such as Cambodia, government is
suppose to support the communities and logging is suppose to contribute taxes in order to build
schools and housing and stimulate their economy. When the communities see loggers come into
their land and start demolishing their forests, they feel that “if they cannot profit from the wood,
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then no one should.” This has caused a domino effect. Illegal Loggers cut down the trees, and
the people of the communities burn the timber so then no one profits from it.
Estimates suggest that the criminal activity of illegal logging generates approximately
US$10–15 billion annually in worldwide funds that are unregulated, untaxed, and often remain in
So far, domestic and international attempts to control forest crimes have focused on
preventative actions, but they have had little or no significant impact. While prevention is a
central part of enforcement efforts to fight illegal logging, it seems to have little influence on
reducing the disappearance of the world’s already scarce trees. Illegal logging obstructs social
(EVERGREEN). Illegally logged timber also undermines well regulated sustainable industries by
undercutting timber products that have legally been harvested (Department of Agriculture). New
ideas and strategies are needed to preserve what is left of forests. The producer countries studied
are generally poor at managing forest related information, although most are developing improved
systems. Producer countries must improve information management if they are to be able to
prevent, detect and suppress illegal logging effectively. Despite the fact that audits of the forest
administration are conducted in all countries, systems for watching profits due and received and
for investigating inconsistencies either does not exist or are poor in most countries (Department of
Agriculture). The data necessary to assess revenues and to see how they may have changed over
Political and economic networks often provide forceful drivers for small scale illegal
logging and timber trade (ForestTrends.org). Many of these networks bring together not only
influential players from the private sector but also government officials, including the very
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officials holding the responsibility to enforce logging bans, harvest regulations, and restrictions
Illegal Endangered
Deforestation
Logging Species
Illegal logging has a massive impact on the environment. When forests are destroyed by
illegal loggers it is demolishing the eco system, it is also destroying wildlife and releasing carbon
dioxide into the atmosphere. Many species of Plants are also being destroyed in addition to the
much wildlife that has vanished as a consequence of deforestation. In 2003, the deforestation rate
in some parts of the Amazon was the second highest ever recorded at 26,000 square kilometers
(FuturePolicy.ORG, 2014). The Orangutans was once a species with over 100 thousand, and it
has recently become one of the most endangered species in the world today because of illegal
logging.
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According to Orangutan.org, they have lost well over 80% of their habitat in the last 20 years, and
an estimated one-third of the wild population died during the fires of 1997-98.
Research has released figures to state that over 1.6 billion people are dependent on the
forests for their livelihood (Clancy). Illegal logging is advancing at very alarming rates. If it
continues at current rate of destruction, 96 percent of the remaining forests will be gone by 2022.
The problem of illegal logging stems from weak governing laws over the timber trade and
corruption. In Cambodia and Brazil alone, corruption has had a devastating consequence. Not
only are the countries people being put to labor as slaves, they are doing so on their own property.
In Europe various groups and organizations have been set up to try and investigate and stop
to stop illegal logging. The problem must first be addressed by the current administration.
Governments around the world must stop accepting the import of these illegally logged
timbers. Most of the money made on illegal logging is spent on weapons, drugs, gangs and
organized crime. When there is no demand for illegally logged timber then the supply will soon
seize.
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ILLEGAL LOGGING PRACTICES AND ENFORCEMENT
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ILLEGAL LOGGING ENFORCEMENTS
Illegal Logging is defined as logged harvested in breach of laws in place (no matter which
The international trade in illegally logged timber is a major problem for the legal timber
producing countries, not only in the developed countries but in the third world
countries. Enforcement of the ban on illegally logged timber supply will be reliant upon the
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willingness of the country of harvest or where the harvesting takes place. Major consumer
countries have or are putting in place measure to prevent trade and illegally logged timber
products. The United States put a prohibition on illegally logged timber imports through the
legacy act amendment in 2008 (FuturePolicy.ORG, 2014). The European union are implementing
their timber products. Indonesia has introduced a timber legality verification system known as
SVLK(Greenpeace). These approaches together are driving a new policy for combating illegal
logging. Australia is now introducing Legislature to also prohibit the importation of illegally
logged timber through the illegal logging prohibition act. Due diligence will apply to importers
of timber products and processes of logs including the risk of sourcing illegal timber and
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GIBSON GUITARS
In 2010 and 2011, Gibson Guitars premises in Nashville were raided by the fish and
wildlife service (FWS) where agents seized ebony and rosewood that was imported from
Madagascar (Clancy). The FWS found evidence that an employee had told Gibson two years
previously that its Madagascan imports might be illegal, but that the company had nevertheless
ordered further stocks. The ebony was mainly in the form of strips that would be fashioned into
fret boards for guitars, mandolins and banjos (BBC.com). They had accused Gibson of violating
the Lacey Act of 2008 by not asking their supplier where the wood came from and if it was
logged legally .Other purchasers of wood and wood products said without strict enforcement of
the law; their efforts to take a sustainable approach to wood sourcing put them at a competitive
disadvantage (Clancy).
Don Finkell, CEO of the St. Louis-based company stated that his business Anderson
Hardwood Floors took action about five years ago that have helped make it easier to comply by
discontinuing the use of scarce woods from South America, Africa and Asia. It maintains a
relationship with the Forest Stewardship Council (FSC) certification to guide purchases of
anything sensitive. Fickell stated that those efforts could cost him. "So far, there has not been a
verified product with a price point that will support a successful marketing campaign," "This
shows you the extent of illegal logging that still exists. The businesses that comply are going to
have a hard time competing with the ones that profit from breaking the law. It is essential that the
Lacey Act is evenly enforced, "so that the playing field is leveled for honest manufacturers and
their employees.”
TAYLOR GUITARS
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Users of wood tend to slowly become environmentalists (Taylor). If we completely ruin
our environment it almost doesn’t matter if guitars exist or not. Almost every one of Bob
Taylor’s guitars has African ebony on it. His company Taylor Guitars makes 500 guitars each
day. For centuries music makers like Taylor have used ebony, a tropical hardwood for its beauty
sound and durability. Taylor wants the highest quality wood for their guitars but laws for
importing wood like ebony have changed. Us law now requires companies to abide by forest
laws in other countries. Taylor Guitars wants to make sure he has access to legal wood so he
bought into an ebony mill in South Africa. For Taylor the mill is a long term investment.
Legal operations require the payment of relatively high taxes on logging operations
(SystemDynamics.org,
bribes to appropriate
illegal timber are currently considerably cheaper than legally produced logs
(SystemDynamics.org, 2014).
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Illegal timber, coming from various companies and limited sources, has to be combined
and channeled by road or river to a limited number of destinations locally or for export, which in
turn creates a bottleneck in the illegal trade. Buyers require the specifics on the species, quality
and source of the timber in order to process it in the most effective way. However, illegal timber
transportation is completely
supplies have to be
distribution or processing.
no risk to take the illegal timber, often mixed with legal, away from the crime scene to buyers and
processors. To control the bottlenecks by transportation taxes, the amount of taxes applied will be
dependent upon the “rate of deforestation and criminal activity in the region” would raise the cost
of illegal timber to the same cost as legal timber. This would hopefully increase the costs for
those processing illegal wood and could have an impact on how investors in the stock market
view them.
With enough enforcement, restrictions can reduce illegal logging to levels that the
population considers best, by trimming the supply curve to level S2(P) as the graph shows below,
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these results in higher prices and lower supply (abtassociates, 2006). A key observation here is
that the domestic price for timber P2 exceeds the logging industry cost C2 of supplying W2, and
loggers and traffickers will secure excessive profits equal to the dash marked area in the curve
(which is W2[P2-C2]). The logging industry will favor this result, because essentially the state
S1(P)
S2(P)
P2
C2
D(P)
W2 W1
W=Wood
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SUPPLY AND DEMAND FOR WOOD
S1(P)
P=Price
S1(P)+SC
P1
D(P)
W2 W1 WM
W=Wood
The picture above shows the supply and demand curve on the same graph. The vertical
axis is the price, and the horizontal axis is the amount of wood conducted. S1(P) is the supply
curve that would exist at a point in time if loggers were unrestrained from logging. D(P) is the
sum of domestic and international demand at the same point in time. W1is the resulting amount of
wood transacted in domestic and international exchange at price P1. The intersection of supply
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RESTRICTING THE SUPPLY WOOD BY TAX EQUIVALENTS
P=PRICE
S1(D)+T
T;TAX
P2 S1(P)
C2
D(P)
W2 W1 W=WOOD
The taxes and tax equivalents provide a tool to transfer all or some of the profits from the
loggers to the state (SystemDynamics.org, 2014). In theory, the state could rely exclusively on
taxes. The state charges a unit tax (T) for wood, with the outcome that loggers will freely curb
their supply to W(This assumes that the state puts the tax at a level that covers social costs.)
However, the two policies limit and tax equivalents would probably be used to protect vulnerable
In order to allow for easier monitoring of illegal logging and the response, producer
country governments must collect more reliable data and make all important data public. The
existing indicators are poor at capturing some forms of illegal activity; a more complete and
accurate picture of illegal logging might involve field inspections and analysis of satellite
imagery for sample areas (Clancy). For such independent analysis to be possible, transparency
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STRENGTH OF THE SYSTEM
The strength of the system would be the combined actions of restraining total flows,
reducing profits from unlawful trade, increasing support to native enforcement, up observance
and reducing the attractiveness of finance in firms concerned in unlawful work and trade of
unlawful origin wood. It’d conjointly make sustainably procured logs enticing, whereas not
raising the value on property logs to make a competitive disadvantage on the domestic and
international market. Global Forest Watch (GFW) is a dynamic online forest observation and alert
system that empowers people all over to visibly manage forests. For the first time, international
Forest Watch unites satellite technology, open data, and crowd sourcing to ensure access to timely
and reliable information regarding forests. GFW gives the public a way to report irregularities
they observe.
country the timber was harvested) (ForestTrends.org). Enforcement of the prohibition of illegally
logged timber products will be dependent upon the authority by the country of harvest or where
the harvesting takes place. Illegal logging obstructs social development by driving local
communities of the benefits of using their resource. Illegally logged timber also undermines well
regulated sustainable industries by undercutting timber products that have legally been harvested.
Major consumer countries have or are putting in place measure to prevent trade and illegally
logged timber products (ForestTrends.org). The United States put a prohibition on illegally
logged timber imports through the legacy act amendment in 2008. The European union are
implementing their timber regulations which prohibit illegally logged timber from being placed
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on the market and require due diligence to be carried out on timber products. The EU timber
regulations commenced on March 3rd 2012. A number of other countries are also developing
timber legality verification schemes to combat illegal logging and meet the import requirements
of consumer countries and also to demonstrate the legal origins of their timber products
Indonesia has introduced a timber legality verification system known as SVLK. These
complementary approaches are driving a new international policy framework for combating
illegal logging and associated trade. Australia is now introducing Legislature to also prohibit the
importation of illegally logged timber through the illegal logging prohibition act. Due diligence
will apply to importers of regulated timber products and domestic processes of raw logs the risk
of sourcing illegal timber and putting it onto the market (FuturePolicy.ORG, 2014). Due
1. Know the Laws In the recent years, nations have passed laws that restrict the exchange of
wrongfully sourced wood. The U.S. altered the Lacey Act in 2008 to include plants and plant
items, for example, timber and paper to the old law that bans trafficking of unlawful timber. The
European Union immediately stuck to this same pattern with its Timber Regulation in 2010,
which went live in March 2013, while Australia passed its Illegal Logging Prohibition Act in
2011. These three countries account for half of the total value of global forest product
imports. Any company operating in and importing forest products into these countries needs to
adopt measures to comply with these laws. IKEA, for example, responded by requiring its
suppliers to annually report origin, volume and species of wood as well as undergo audits through
2. Know the Species Aside from country specific regulations, companies should also be aware of
timber species listed under the Convention on International Trade in Endangered Species of Wild
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Fauna and Flora (CITES). Depending on which appendix the species in question is listed under,
trade of the species may be completely banned or require a CITES permit (ForestTrends.org).
Additionally, some countries have harvest or export bans on certain types or certain forms of
harvested timber round wood, sawn wood and finished products. However, it is important for
companies to judge which timber type they are using and where they are purchasing from. Taylor
Guitars, for instance, has shifted away from rare species like Brazilian rosewood, African ebony
Thus, companies need to understand illegality laws and definitions not just in the countries they
operate in, but in the countries where they are purchasing forest products from. Often, the best
way to do this is by informing suppliers that assurance of legality is now a factor in buyers’
business decisions, just as price and reliability of supply are (FuturePolicy.ORG, 2014).
countries are perceived as either low or high risk when it comes to legality, based on factors such
as local levels of corruption, law enforcement procedures and extent of illegal logging
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(EVERGREEN). While it is still possible to source from “high-risk” countries legally and
responsibly, companies need to do their research, find reliable suppliers and develop procedures
that ensure their supply chains remain legal. Among others, one available tool that helps buyers
with this research is the Risk Information Tool (EVERGREEN), which provides details on
4. Know Your Available Resources A wide range of tools and systems are now available to help
companies comply with emerging legality requirements. Many companies are turning to forest
certification schemes, such FLEGT or The Forest Law Enforcement, Governance and Trade.
These standards require companies to trace wood to its origin to ensure that it was responsibly
and legally harvested. By ensuring that their supply chains only support legally harvested woods,
companies can both protect themselves and the world’s diverse forest ecosystems.
To better combat illegal logging technology must get involved. Today criminals have found
so many sneaky ways to do things that the law must make sure you they are on the cutting edge
when it comes to technology. This involves spending large sums of cash to make sure there are
innovations in the technology used to combat logging. Science plays a big role when it comes to
preventing illegal logging and has given multiple innovations that make a huge difference in the
1. Hand-held wood identification device and wood Identification database- The major
problem is that custom at the border cannot identify the difference between the illegal and
legal wood. They are unable to verify customs declarations of wood products and wood.
Scientist is currently in the process of developing hand held wood identification devices
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that inspectors can use to determine whether the wood matches the declarations. This
device will put them at the forefront of technical innovation. The devices can identify the
species, genus and geographic origin of the wood. The images will be compared to
2. DNA Testing Innovations- Scientist are mapping the genetic variation of species that will
allow them to tell the geographic origin of logs and wood. They will be able to tell which
exact park a tree came from. This will also be able to help detect counterfeit country of
3. The US Forest service and donors are making efforts to partner with other countries in an
effort to complete genetic mapping in places around the world. Through constant
scientific innovation they are working on timber tracking, enhancing data management
and field identification manuals. They are also working conducting field training for
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CONCLUSION
The problem of illegal logging and its impacts on our environment has been interesting
but very hard to measure. By countries promoting future transparency it will be easier to derive
data. To reduce the already devastating effects, Forest Management and a tighter supply chain
are key to a successful fight against illegal logging and we as consumers can do our part and
change the way we consume before what we value is gone. From applying simple economics to
the supply and demand for timber, possible solutions can be applied such as taxes and
prohibitions on importing and exporting. Timber can further be monitored and tracked by
apparent from our research that as a society and as individuals, we are only beginning to tackle
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WORKS CITED
Department of Agriculture, F. a. Austrailias Illegal Logging Prohibition Bill. Department of Agriculture, Fisheries
and Forests.
SystemDynamics.org. (2014, June 01). Retrieved from Illegal Logging Timber Trade.
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