Competition Among Certification Standards Helps Consumers and the Environment

With the recent certification of four of Asia Pulp & Paper’s mills by Indonesia’s SVLK certification system, there is increasing attention on that system and the role it will play in ensuring Indonesian forestry meets environmental standards.The system was created in 2009 in part to satisfy laws against illegal timber harvesting in the EU and United States.

We will examine the system and its implementation at a later date, but for now, two things stand out about these new certifications under SVLK.

First, the system demonstrates the incentives of large forestry companies to engage in responsible forestry. One role certification systems play is to reduce the amount of illegal logging in countries where laws and enforcement can be uneven. By requiring clear chain of custody evidence, buyers can have some assurance they are purchasing legally harvested wood.

Forestry companies, however, also want to reduce illegal logging. Illegal logs tend to increase supply and are sold at lower prices, undercutting the market share of producers that act legally. Where laws and enforcement are lax, certification systems can fill the vacuum. This was one of the original justifications for creating certification systems — provide incentives to be good stewards where local laws and politics don’t.

Used in this way, certification systems are not only good for the environment, they are good for the bottom line.

Many on the left see the fight as being between timber producers and the environment. Done correctly, however, certification systems harmonize the incentives of forestry companies with efforts to stop illegal harvesting.

Second, the creation of SVLK demonstrates the benefit of having multiple certification systems. Some supporters of FSC have tried to make that system the sole arbiter of good forestry. This effort even led to a claim of anti-competitive practices by FSC a few years back. This isn’t surprising. Just as a company would seek to obtain monopoly power, so too do advocates of their favored certification system.

Competition among systems, however, keeps everyone honest and pushes them to improve their brand by increasing the benefits of being certified under that system, scientifically and economically. If competing certification systems want to increase their market share, they will need to focus on serving potential participants rather than simply using lobbying and politics to force participation.

Ultimately the goal of forest certification is to encourage responsible forestry and provide consumers an opportunity to put their wealth where their values are. Increasing the number of certification systems can serve those purposes by harnessing the incentives of forestry companies to oppose competitors that operate illegally.  Ultimately, the environment and consumers benefit when competition forces competing certification systems to continually improve.

What Federal Fire Policy Can Learn From Forest Certification

One of our consistent themes is that forest certification systems cannot ignore the economic well-being of foresters and communities if they are to successfully promote sustainable forestry. The same forces are at work in the United States with regard to forest fire policy.

A recent forum in the New York Times offered a range of opinions about how to address the increase in intense forest fire in federal forests. Much of the discussion was about the cost of those fires and how to find funding to prevent and fight massive wildland fire. A couple important issues must be noted.

First, humans are part of the landscape. There is a desire by some to return the forest to a “natural” pattern of fire, one that played a role in these ecosystems for thousands of years. This is not a thoughtful approach. Humans are, and will continue to be, a part of the landscape.

Development near forests means we have to protect those communities and that we have whittled down some of the available habitat for wildlife. The latter means we have a smaller margin of error when preserving the range of habitat types across an ecosystem. I worked on a forest fire in the North Cascades where a spotted owl nest was destroyed by a lightning-caused fire. Should we have let it burn, killing a threatened species, simply because the fire started naturally?

Prior to civilization, forest ecosystems could handle habitat destruction in a way they can’t now. Glibly calling fire “natural” and pretending humans can be removed from equation isn’t an approach that makes any sense for humans or wildlife.

Second, there is a reason the debate over forest fire centers around federal lands: funding. Forests that generate revenue, like private or state trust lands, have the funding available to do the thinning and other treatments that are necessary. Thinning can do some of the work that fire used to do by removing small trees and allowing larger trees to grow and become healthy and fire-resistant. Now that we (properly) fight fires, some other activity must play that role. The federal government, however, doesn’t have the money to undertake those activities.

There is a great deal of discussion of the funding issues in the New York Times forum. One of the authors has suggestions for how to budget. Another writes “Money matters, but…” The basic issue, however, is that without revenue generation on federal lands, there will never be the funding available to prevent forest ecosystems from becoming unnaturally fire-prone — overstocked with many small trees all competing for water, light and nutrients.

Rather than allow some responsible forestry, some advocates want us to “rethink development patterns” and use social “planning” that would allow massive fires to burn while limiting the risk to communities. This does not, however, address the impact of those fires on forest ecosystems. Over a century, perhaps, allowing massive fires to burn could return the forest to a more natural state, but the cost in the interim would be massive. This is obvious that fire is being used as a political tool to promote a particular view of social planning.

In the end, there are two ways to return federal forests to a more healthy, natural state. We can let them burn, hoping the cost to communities and ecosystems will be worth it decades from now. The alternative is to create a sustainable funding source for forest restoration by generating revenue from those forests with some harvesting. It is the approach that works on private and state trust lands across the country.

It is certainly true that federal forests are often more remote and are a more difficult place to fight fires. Hamstringing ourselves by limiting the available funding becomes all the more foolish in that circumstance.

There is a notion that separating forestry from issues of “money” will be good for forests. Where we see such an approach attempted, however, it often fails because it ignores the reality that humans have an impact on forests. Certification systems were created to recognize that reality, offering a financial benefit for sound forest management. Federal forest fire policy could learn something from that approach. If we don’t provide a financial benefit to those who manage forests responsibly by reducing the risk of fire, we will continue to lament enormous fires and the inability to find funding to fight and prevent them.

How Can Certification Move Beyond a Niche Market – Guilt or Business?

A recent study from the London School of Economics and Political Science on “The Roles and Limits of Certification” says a great deal about the challenges faced by certification systems if they want to expand. The report notes that certification systems already have a share of the market, and the authors note “By the end of 2011, 7 percent of wild landings of fish for human consumption, 9 percent of the world’s productive forests, and 17 percent
of coffee produced globally were certified.” Moving beyond that, however, is the challenge.

Rather than achieving certification to improve profitability or market share, the study says the main reason certification programs have expanded is that early adopters have signed on despite the lack of business benefit. “Certification systems have expanded most rapidly when market-leading firms choose them as a means to incorporate improved practices into a supply chain,” write the authors, saying “certification systems set a ‘gold standard’ with incentives for those who take steps in that direction.” So, a few firms use certification to establish their position at the top of a particular market.

Certification, however, doesn’t lead to market success — it follows it. Well-established companies are willing to expend resources on certification because they believe in the cause. One of the authors, Dr. Kira Matus, told one news outlet that “One of the interesting things we found is that businesses who decide to certify their products for the most part don’t do it because they expect to secure a price premium in the market, but rather because they see certification as good overall business practice. Our findings indicate that certification is not necessarily about tapping consumers willing to pay a bit more and it may not actually result in a direct increase in profits in the short term.” The phrase “good overall business practice” can be read to indicate that participation in certification systems has more to do with the personal feelings of company managers than good business.

How successful can a certification system be when it relies primarily on warm feelings and guilt to the detriment of sound business practices? Not very. This is undoubtedly one reason forest certification systems have not spread beyond their current level.

Those advocating the expansion of forest certification have focused on two approaches.

First are those looking to impose certification using political means by regulating buying practices and other such rules. This recalls the saying “A man convinced against his will is of the same opinion, still.” Companies required to meet regulations and bend to political pressure will work to find ways around the rules, undermining the effectiveness of those rules. This was one of the main findings of Nobel Prize winner Elinor Ostrom, who argued institutions that impose rules are less effective at promoting responsible resource use than voluntary systems.

The alternative is to harmonize good business with the goals of the certification system. This allows the system to reach those who may not be true believers for the cause. It is the only system that can effectively reach one group the study says hasn’t been impacted by certification systems thus far — “certification has not demonstrated consistent capacity to affect the ‘bottom of the market’.” An economic incentive can bring these businesses on board. By way of contrast, those organizations are the most likely to find ways to game — regulatory attempts to impose rules on them.

As long as certification systems rely on pressure and guilt rather than sound economic benefit, it is unlikely they will effectively expand their reach, and the environmental and social benefits they hope to provide.

What Are You Buying When You Purchase FSC-certified Wood?

Writing on the Woodworking Network site, the owner of Re-View, a manufacturer of custom wood window replicas for historic landmarks across the country, expresses concern about whether FSC-certified wood lives up to its environmental promises.

The author, Brooks Gentleman, expresses concern that although FSC adds additional costs, it does not provide assurance that FSC-labeled wood actually generates the environmental benefits being promised. He writes:

The FSC certification process also burdens the system with unnecessary costs. Not only does the FSC certify forest managers and owners, but they have a chain of custody (COC) certification for manufacturers and subcontractors who utilize certified wood. This means that small furniture manufacturers, casework companies, and millwork shops need to go through the cost and bureaucracy associated with securing and maintaining a certification. Since there is little to no policing of the certified parties to confirm they are practicing the proper utilization of certified woods, the certification amounts to little more than a right to use the FSC logo in marketing materials.

These are themes we have examined in the past. When people receive certified wood, what do they really receive? What are they paying for? These questions will linger and if certification systems, like FSC, want to expand their reach, they will have to address them effectively.

You can read the entire piece on FSC and green construction here.

Does Forestry in Developing Countries Create Deforestation? New Study Says No.

One of the arguments used by advocates of forest certification systems is that certification prevents deforestation and a range of impacts, including climate impacts, associated with deforestation. A new study, however, argues that active forestry is not a cause either of deforestation or, by extension, climate impacts.

The study by Winrock International used NASA satellites to estimate the loss of forest cover and the impact that loss had on carbon emissions. The headline finding is that carbon emissions due to deforestation is “approximately one third of previously published estimates and represents just 10 percent of the total global anthropogenic carbon emissions over the time period analyzed.” The study was published in the peer-reviewed journal Science.

In a discussion with Nancy Harris, one of the authors, I asked what role ongoing, active forestry had in these carbon emissions. In the release announcing the study, the authors argue that reducing forest-related emissions involves promoting “forest livelihoods.” Harris confirmed that active forestry was not a contributor to deforestation, saying the problem was “outright clearing” associated with other activities. Harvests that are re-planted, however, are not a significant contributor to climate impact.

The study calculated the amount of land impacted by examining forestland that had moved from greater than 25 percent forest cover in 2000 to less than 25 percent cover by 2005. Harris noted the analysis may have picked up some timber harvests that had not yet re-grown. She and her co-authors are currently updating their research to cover the period from 2006 to 2010. This new study, which they hope to release in December, will provide further insight into the pace of deforestation and should also give more information about the role active forestry plays in the forests of developing countries.

There may be other reasons to purchase timber certified by a science-based system. This study, however, demonstrates that forest certification systems designed to reduce timber harvests in developing countries are unlikely to have a measurable impact on carbon emissions.

Can Consumers Know What They are Getting with FSC? The Problem of Audits.

Travis Snapp received a call from one of his overseas clients that he says typifies some of the problems with the Forest Stewardship Council’s auditing process in developing countries. His client told him the auditors “show up to do these audits for FSC certification and they have no idea what to do.”

In an environment where the political and legal structure are uncertain, FSC and other certification systems offer the opportunity to be sure that forests, regardless of the local laws, are harvested in a consistent and responsible way. That, however, is only true if the auditing process is done in a consist and responsible way. As Snapp argues, that isn’t the case.

Snapp, whose company Benchmark International, consults with foresters across the globe, expresses frustration that FSC pressures purchasers, supplies and politicians to follow the standard, but they aren’t as attentive to the actual implementation of those standards on the ground. He says the experience with the FSC auditors who didn’t know what to do is not a one-off experience. He says “it is not typical, but not infrequent.”

He places the blame for these errors at the feet of FSC. The problem, he argues, is “the way they have written and implemented their standard.” One particular issue is that ultimately FSC isn’t accountable for errors. He cites the example of Asia Plywood. When it was discovered that some of the wood coming from an FSC-certified supplier was illegally harvested, FSC washed their hands, leaving Asia Plywood to take the heat and financial cost. When an environmental group found the errors, Snapp noted “FSC doesn’t take the black eye, nor did the auditor — Asia Plywood and its customers did.”

As a result, there is growing nervousness that FSC won’t stand behind its label. What good is the label if, after passing an audit, that label can be revoked at any time without support from FSC? Snapp says there has to be a mechanism so FSC and its certifiers can be held accountable for what they certify.

Of course, this is not just a business issue — it is an environmental issue. The goal of certification systems is to ensure good forestry where it might not otherwise occur. If audits are done poorly, they don’t achieve the basic goal of maintaining good standards. If FSC is serious about using the value of the FSC label and what it stands for to encourage foresters to meet those standards, it needs to ensure the label means something for the auditors on the ground as well.


The Forestry Tradeoffs of The Lacey Act and Forest Certification

I spoke today to the Western Wood Preservers Institute conference about the tradeoffs of environmental choices. Perhaps my favorite example is the “green” condominium in Seattle which highlights the fact that it saved 1,609 trees “By using steel and concrete construction.” Of course, the net environmental impact is almost certainly negative by using a non-renewable, energy-intensive resource instead of renewable wood.

Another speaker at the conference offered a good example of the tradeoffs involved in forestry policy. Earlier this year we published an interview with the CEO of Gibson Guitar Henry Juszkiewicz about their challenges with the Lacey Act.. With their ebony wood confiscated, Gibson looked for ways to replace that wood. The speaker, representing a company that provides heat-treated wood, noted that Gibson came to them for wood that could replace the ebony they previously used.

So, the question is, does it use fewer resources to ship ebony from India or to use heat-treated wood to make guitars? I can’t say I have the answer, but it is clear that a tradeoff exists. The goal of the Lacey Act is to prevent illegal harvesting of ebony and other precious wood species. In the Gibson Guitar case, however, they were cited not for illegal harvesting, but questions related to the processing of the wood in India.

As a result, Gibson replaced the India ebony with heat-treated wood that has the potential of being more energy intensive.

Frankly, the difference between the two woods may be quite small, but these are the questions that are rarely considered when enforcing environmental regulations. Just as the condominium in Seattle ignored the tradeoffs of using more concrete and steel, arbitrary enforcement of the Lacey Act (or certification schemes for that matter) could lead to greater environmental impact. When considering the Lacey Act or certification standards, such tradeoffs cannot be ignored if we truly care about the environment.