Tracking timber supply chains to improve transparency from forests to consumers
Forests: A renewable resource in need of better management
Trees play a critical role to the functioning of life: maintaining ecosystems, regulating carbon dioxide, and providing shelter and livelihoods to hundreds of millions of people around the world. The ultimate renewable resource, wood is strong, durable, and constantly replenished by nature. Whether used in construction, for furniture, as paper or burned for energy, wood is an essential part of daily life.
The potential of trees to provide this full range of services for humans and ecosystems relies on timber being harvested in a well-managed and sustainable fashion. Unfortunately, in most tropical and many temperate countries around the world, over 50% of timber is harvested illegally and in some cases nearly all logging is illegal – in contravention of laws meant to maintain the complex balance of nature and preserve resources for future forest product needs.
Widespread illegal logging destroys the functioning of these forests, producing short-term profits for local timber barons and their international trading partners, and flooding markets with artificially cheap wood products.
Scale and financing of the global timber industry
The FAO estimates that 1.837 billion m3 of logs meant for commercial production were cut around the world in 2014. Around 7% of this total, 134 million m3, were exported in log form. Sawn lumber represented a further 133 million m3 of exports, and plywood, veneer, and other panels totaled 83 million m3.
The combined value of the global forest products trade reached US $255 billion in 2014. That same year, US $140 billion of furniture was traded internationally. INTERPOL recently estimated that illegal logging generates at a minimum US $11 billion annually in criminal proceeds. As noted in a recent United Nations Environment Programme report, “much of the laundering of illegal timber is only possible due to large flows of funding from investors based in Asia, Europe, and the U.S., including investments through pension funds.”
China: The world’s largest importer of illegal timber
China has grown rapidly to become the world’s largest importer of wood products, followed by the United States (U.S.), the European Union (EU), and Japan. The U.S., EU, and Australia have passed laws in recent years to prohibit the importation of illegally sourced and traded wood products. Meanwhile, China’s enormous demand and lack of comparable legislation makes it the world’s largest importer of illegal timber. China’s role as a processor and exporter of finished products has recently been eclipsed by the strength of its domestic consumer market: less than a third of all timber and wood products produced in China are exported.
A closer look at products in the timber sector
Industrial roundwood: Logs used for any purpose other than energy. Divided into coniferous (softwoods) and deciduous (hardwoods). The world’s top five importers of roundwood are: China, Austria, Germany, Sweden, and India.
Sawnwood: Planks, beams, boards, etc. that are greater than 5 mm thick. Sawnwood is generally used directly in construction, or for the manufacturing of furniture, flooring, doors, window frames, and other finished products. The world’s largest importers of sawnwood are, in order: China, United States, Japan, United Kingdom, and Egypt.
Wood-based panels: Plywood (including blockboard) and veneer; particleboard (including Oriented Strand Board (OSB)), and fiberboard (including Medium Density Fiberboard (MDF)). Panels are similarly used directly in construction for walls, underlayment for flooring, as concrete molding, or used in the manufacture of furniture or other finished products. The world’s largest exporters of wood-based panels are: China, Canada, Malaysia, Germany, and Thailand.
Pulp and Paper: In 2014, global producers made 407 million tons of wood and fiber pulp and recovered paper, resulting in 400 million tons of paper and paperboard. China and the United States were the largest producers and consumers of paper and paperboard, and the U.S. and northern European countries were both the largest exporters and the largest importers of paper and paperboard.
In addition, there are two categories of wood products of particular importance to the global timber trade:
Wood furniture: Global furniture production reached US $480 billion in 2014, including $140 billion of exports. Furniture can be comprised either partially or entirely of wood, often with multiple species from around the world. A bed made in northern China, for instance, could be made with pine from Sweden, ash from the Russian Far East with a high risk of illegality, and MDF made from scrap wood by a producer in southern China. The large volume and value of the global furniture trade means that even a relatively small amount of illegal timber in a single product can have a strong negative impact in timber producing countries.
Precious woods: Precious woods include rosewoods, ebonies, and other species characterized as having particularly dense and colorful heartwood, rarity in forests, and extremely high value on global markets. Traditionally valued primarily by musical instruments makers, demand has skyrocketed over the past decade due to their popularity in construction of antique-style furniture for China’s newly wealthy. These rare species take decades or even centuries to grow to maturity. Global targeting of these species over the past decades has driven local populations to near-extinction across the tropics, from the Mekong to Madagascar, from West Africa to Central America.
Impacts and Results
On October 7th, 2015 Lumber Liquidators, the largest flooring retailer in the U.S., pleaded guilty to violations of the U.S. Lacey Act for smuggling timber illegally sourced in the Russian Far East, and agreed to pay more than $13 million in fines and penalties – the largest penalty ever levied for illegal timber imports under the Lacey Act
In 2012, Gibson Guitars signed a Criminal Enforcement Agreement to settle a prosecution under the US Lacey Act for illegal import of ebony wood for guitar fretboards. EIA evidence gathered in Madagascar showed that Gibson’s local supplier had no legal stocks of ebony, and harvesting of the species had been banned since 2006.