forest certification and the forest products industry b. bruce bare college of forest resources...

Forest Certification and the Forest

Products Industry

B. Bruce BareB. Bruce Bare

College of Forest ResourcesCollege of Forest Resources

University of Washington, SeattleUniversity of Washington, Seattle

November 13, 2000November 13, 2000

B. Bruce BareB. Bruce Bare

College of Forest ResourcesCollege of Forest Resources

University of Washington, SeattleUniversity of Washington, Seattle

November 13, 2000November 13, 2000

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OUTLINEOUTLINE

• What is forest certification?What is forest certification?

• General approaches?General approaches?

• Who sets the guidelines?Who sets the guidelines?

• Costs and benefits?Costs and benefits?

• Market place considerations?Market place considerations?

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IN GENERAL? IN GENERAL?

• A 1990’s initiative that encourages A 1990’s initiative that encourages landowners to practice landowners to practice sustainablesustainable forestryforestry and to give consumers and to give consumers assurance that assurance that forestforest productsproducts come from sustainable forests. come from sustainable forests. Includes both Includes both forestforest certificationcertification and and chain-of-custodychain-of-custody components. components.

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WHAT IS CERTIFICATION?WHAT IS CERTIFICATION?

• Process by which a forest owner Process by which a forest owner voluntarilyvoluntarily requests an inspection of a forest to requests an inspection of a forest to determine if pre-defined management determine if pre-defined management standards are being met.standards are being met.

• Process for Process for assessingassessing if a forest is managed if a forest is managed sustainably. sustainably.

• A way to A way to communicatecommunicate environmental environmental information about forests to consumers.information about forests to consumers.

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WHAT IS A SUSTAINABLY WHAT IS A SUSTAINABLY MANAGED FOREST?MANAGED FOREST?

• A forest managed to meet all existing A forest managed to meet all existing

regulations such that regulations such that environmentalenvironmental, ,

socialsocial and economicand economic factorsfactors are are

balanced to meet the needs of the balanced to meet the needs of the

present without compromising the present without compromising the

ability of future generations to meet ability of future generations to meet

their needs.their needs.

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WHAT IS A SUSTAINABLY WHAT IS A SUSTAINABLY MANAGED FOREST?MANAGED FOREST?

• A A land stewardship ethicland stewardship ethic that integrates that integrates reforestation, growing, and harvesting reforestation, growing, and harvesting trees for useful products while trees for useful products while conservingconserving soil, air, and water quality, soil, air, and water quality, wildlife and fish habitat and aesthetics, wildlife and fish habitat and aesthetics, and and protectingprotecting the resource from fire, the resource from fire, pests, and diseases.pests, and diseases.

• ProtectionProtection of lands of special of lands of special significance.significance.

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A SUSTAINABLY MANAGED A SUSTAINABLY MANAGED FOREST INCLUDESFOREST INCLUDES

• Consideration of key Consideration of key valuesvalues: : – biodiversitybiodiversity

– habitat protection and enhancementhabitat protection and enhancement

– riparian/wet land protectionriparian/wet land protection

– protection of productive capacity protection of productive capacity

– protection of endangered plants and animalsprotection of endangered plants and animals

– protection of cultural, spiritual, and historical protection of cultural, spiritual, and historical sitessites

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FOREST CERTIFICATION AND FOREST CERTIFICATION AND SUSTAINABLE FORESTRYSUSTAINABLE FORESTRY

• Forest certification Forest certification isn’tisn’t necessarynecessary to to

guarantee sustainability and it guarantee sustainability and it maymay notnot be be

sufficient.sufficient.

• Certification best viewed as: 1) important Certification best viewed as: 1) important

“policy“policy driver”driver” for improving forest for improving forest

management standards and practices 2) management standards and practices 2)

satisfying satisfying buyerbuyer groupsgroups and and consumersconsumers of of

forest products.forest products.

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TWO GENERAL APPROACHES?TWO GENERAL APPROACHES?

• Performance-basedPerformance-based

– Use Use criteria, performance measurescriteria, performance measures and and indicatorsindicators to monitor performance over to monitor performance over time (on-the -ground)time (on-the -ground)

• Management system-based (EMS)Management system-based (EMS)

– Generic Generic guidelinesguidelines and and standardsstandards (ISO (ISO 14001)14001)

– Forestry-specific (SFI, CSA)Forestry-specific (SFI, CSA)

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TWO GENERAL TWO GENERAL APPROACHESAPPROACHES

• Systems are evolving to be a Systems are evolving to be a mixturemixture of both approaches of both approaches

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WHO SETS THE GUIDELINES?

• GovernmentGovernment

– UNCSD (IPF, IFF, Helsinki and Montreal Processes, UNCSD (IPF, IFF, Helsinki and Montreal Processes, Santiago Declaration). Help establish criteria and Santiago Declaration). Help establish criteria and indicators.indicators.

• PrivatePrivate

– AF & PA (SFI , 1994), PEFC (Europe, 1999)AF & PA (SFI , 1994), PEFC (Europe, 1999)

– ATFS (1945), Green Tag (NFA, 1998)ATFS (1945), Green Tag (NFA, 1998)

• NGONGO

– FSC (1993)FSC (1993)

– ISO 14001 (1996), CSA (1995)ISO 14001 (1996), CSA (1995)

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WHO DOES THE WHO DOES THE CERTIFYING?CERTIFYING?

• First partyFirst party -- the land owner or firm -- the land owner or firm

• Second partySecond party -- an industry or -- an industry or associationassociation

• Third partyThird party -- an independent certifier -- an independent certifier– Rainforest Alliance (SmartWood, FSC)Rainforest Alliance (SmartWood, FSC)

– Scientific Certification Systems (FSC)Scientific Certification Systems (FSC)

– Voluntary Verification (SFI, PEFC)Voluntary Verification (SFI, PEFC)

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IS CERTIFICATION IS CERTIFICATION NECESSARY?NECESSARY?

• Many believe that sustainable forestry Many believe that sustainable forestry is is alreadyalready being practiced in the being practiced in the developed countries where about 75% developed countries where about 75% of the certified forests are now found.of the certified forests are now found.

• Demand being driven by large Demand being driven by large buyerbuyer groupsgroups who are being pressured to sell who are being pressured to sell certified products. Small owners may certified products. Small owners may be forced to comply -- be forced to comply -- non-voluntarynon-voluntary..

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IS CERTIFICATION IS CERTIFICATION NECESSARY?NECESSARY?

• In addition, in states such as In addition, in states such as Washington, tough Washington, tough forest practice forest practice regulationsregulations guide forestry guide forestry operations on state and private operations on state and private forest land.forest land.

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LOOK INTO TWO LOOK INTO TWO CERTIFICATION SYSTEMS?CERTIFICATION SYSTEMS?

• SFISFI Standard Standard– 152 member companies & licensees152 member companies & licensees

– 84% of paper products84% of paper products

– 50% of solid wood (in USA)50% of solid wood (in USA)

• FSCFSC Principles and Criteria Principles and Criteria– Presently most Presently most favoredfavored by buyer groups. by buyer groups.

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SFIS PRINCIPLES (1-5)SFIS PRINCIPLES (1-5)

• Practice Practice sustainablesustainable forestry forestry

• Engage in Engage in responsibleresponsible practices practices

• ProtectProtect forest health and productivity forest health and productivity

• Continually Continually improveimprove forest forest management practicesmanagement practices

• ProtectProtect special sites special sites

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FSC PRINCIPLES (1-5)FSC PRINCIPLES (1-5)

• ComplianceCompliance with laws and FSC principles with laws and FSC principles

• TenureTenure and and useuse rights and responsibilities rights and responsibilities

• IndigenousIndigenous people’s rights people’s rights

• Community Community relationsrelations and worker’s rights and worker’s rights

• BenefitsBenefits from the forest from the forest

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FSC PRINCIPLES (6-10)FSC PRINCIPLES (6-10)

• EnvironmentalEnvironmental impact impact

• Management Management planplan

• MonitoringMonitoring and and assessmentassessment

• Maintenance of Maintenance of high conservation high conservation valuevalue forests forests

• PlantationsPlantations

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SFIS OBJECTIVES (1-3)SFIS OBJECTIVES (1-3)

• Employ an array of Employ an array of scientifically, scientifically, environmentally, and economicallyenvironmentally, and economically sound practices in use of forests (4 sound practices in use of forests (4 PM)PM)

• Ensure long-term Ensure long-term forest productivityforest productivity (6 PM)(6 PM)

• Protect water qualityProtect water quality by use of by use of riparian protection measures (4 PM)riparian protection measures (4 PM)

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SFIS OBJECTIVES (4-7)SFIS OBJECTIVES (4-7)

• Manage Manage wildlife habitatwildlife habitat and conserve and conserve biodiversitybiodiversity (3 PM) (3 PM)

• Manage Manage visual impactvisual impact of harvest of harvest operations (4 PM)operations (4 PM)

• Manage lands of Manage lands of special significancespecial significance (1 (1 PM)PM)

• Promote Promote efficient useefficient use of resources (1 PM) of resources (1 PM)

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SFIS CORE INDICATORSSFIS CORE INDICATORS

• For each For each performance measureperformance measure a set of a set of core SFI indicatorscore SFI indicators must be satisfied to must be satisfied to gain certificationgain certification

• For example, under objective #5 For example, under objective #5 ((visualvisual impactsimpacts), one PM is to use green ), one PM is to use green up requirements to schedule clearcuts up requirements to schedule clearcuts on adjacent harvest units. A on adjacent harvest units. A core core indicatorindicator is to have a written green up is to have a written green up plan or policy.plan or policy.

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SFIS CORE INDICATORSSFIS CORE INDICATORS

• Under objective #2 (Under objective #2 (long termlong term productivityproductivity), one PM is to use forest ), one PM is to use forest chemicals prudently. A chemicals prudently. A core core indicatorindicator is to train all forest is to train all forest workers using chemicals and to use workers using chemicals and to use trained people as supervisors.trained people as supervisors.

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FSC PRINCIPLESFSC PRINCIPLES

• Under principle #5 (Under principle #5 (benefits from benefits from the forestthe forest), the rate of harvest shall ), the rate of harvest shall not exceed levels which can not be not exceed levels which can not be permanently sustained.permanently sustained.

• Under principle #6 (Under principle #6 (environmental environmental impactimpact), ecological functions and ), ecological functions and values shall be maintained intact, values shall be maintained intact, enhanced, or restored.enhanced, or restored.

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• Under principle #6 (Under principle #6 (environmental environmental impactimpact), forest conversion to plantations ), forest conversion to plantations shall not occur except in limited areas shall not occur except in limited areas but not in high conservation value but not in high conservation value forestsforests

• Under principle #9 (Under principle #9 (high conservation high conservation value forestsvalue forests), decisions shall always be ), decisions shall always be considered in the context of a considered in the context of a precautionary approach.precautionary approach.

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FSC DEFINITIONSFSC DEFINITIONS

• High conservation value forestHigh conservation value forest: : 1)possess globally, regionally, or 1)possess globally, regionally, or nationally significant species, or nationally significant species, or large landscapes contained within, large landscapes contained within, or containing, the management unit or containing, the management unit where viable populations of most if where viable populations of most if not all naturally occurring species not all naturally occurring species exist in natural patterns of exist in natural patterns of distribution and abundance.distribution and abundance.

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• High conservation value forestHigh conservation value forest: : 2)contain rare, threatened or 2)contain rare, threatened or endangered ecosystems, 3)provide endangered ecosystems, 3)provide basic services of nature in critical basic services of nature in critical situations (i.e. erosion control), or situations (i.e. erosion control), or 4)are fundamental to meeting basic 4)are fundamental to meeting basic needs of local communities.needs of local communities.

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• Precautionary approachPrecautionary approach: tool for : tool for implementing the principle of forest implementing the principle of forest stewardshipstewardship

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• Under principle #10 (Under principle #10 (plantationsplantations), ), should promote the restoration and should promote the restoration and conservation of natural forests. conservation of natural forests.

• Plantations in areas Plantations in areas convertedconverted from from natural forest after November 1994 natural forest after November 1994 shall not qualifyshall not qualify for certification. for certification.

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AREA CERTIFIEDAREA CERTIFIED

• FSCFSC

– 19.1 million ha world-wide19.1 million ha world-wide

– 2.5 million ha in USA (9.0 ha in Sweden)2.5 million ha in USA (9.0 ha in Sweden)

– .021 million ha in Canada.021 million ha in Canada

• SFISFI

– 27.9 million ha in No. Am. About 68% 27.9 million ha in No. Am. About 68% independently verified by third party (2001)independently verified by third party (2001)

– SFI licensees 5.7 million ha in No. Am. Both SFI licensees 5.7 million ha in No. Am. Both public and private. 1.3 million ha in USA.public and private. 1.3 million ha in USA.

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• ATFSATFS – 10.1 million ha in USA10.1 million ha in USA

• Green TagGreen Tag– 18,000 ha in USA (as of late 1999)18,000 ha in USA (as of late 1999)

• PEFCPEFC – 23.5 million ha in Europe (15 million ha in Finland)23.5 million ha in Europe (15 million ha in Finland)

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• ISO 14001ISO 14001 – 21 million ha in Canada21 million ha in Canada

• CSACSA– 3.0 million ha in Canada3.0 million ha in Canada

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HOW MUCH DOES IT COST?HOW MUCH DOES IT COST?

• CostsCosts of certification: of certification:– DirectDirect cost of initial forest assessment cost of initial forest assessment

plus required annual audit and re-plus required annual audit and re-assessment.assessment.

– IndirectIndirect cost of improved forest cost of improved forest management practices (i.e., reduced management practices (i.e., reduced harvest or increased expenditures).harvest or increased expenditures).

– Cost of Cost of chain-of-custodychain-of-custody audit audit

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• Economies of scale indicate that some Economies of scale indicate that some smallsmall land owners will be hit land owners will be hit harderharder (percentage-wise) than large owners.(percentage-wise) than large owners.

• AssessmentAssessment costs vary widely but costs vary widely but may not be high -- from a minimum of may not be high -- from a minimum of $.50 - $1.50/acre for $.50 - $1.50/acre for smallsmall properties properties to $.10 -.25/acre for to $.10 -.25/acre for largerlarger properties. properties.

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• One study shows:One study shows:– Increase in COGS due to Increase in COGS due to FSCFSC

certification was certification was <10%<10% for 84% of for 84% of survey respondents. For 50%, the survey respondents. For 50%, the increase was increase was < 3%< 3%. Average was . Average was 5-6%.5-6%.

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• Assume that initial assessment costs are Assume that initial assessment costs are $0.15/acre for a 2 million acre sustainable $0.15/acre for a 2 million acre sustainable forest property (i.e., $300,000) on a 50 forest property (i.e., $300,000) on a 50 year rotation, and a harvest volume of 35 year rotation, and a harvest volume of 35 MBF/acre is realized annually for five MBF/acre is realized annually for five years, then the cost/MBF/acre harvested years, then the cost/MBF/acre harvested is about is about $.04/MBF$.04/MBF. Ignores annual audit . Ignores annual audit cost and harvest reduction from surplus cost and harvest reduction from surplus inventory.inventory.

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HOW LARGE ARE THE HOW LARGE ARE THE BENEFITS?BENEFITS?

• The The objectivesobjectives of forest certification are of forest certification are to:to:– gain (keep) gain (keep) accessaccess to markets that desire to markets that desire

environmentally sensitive productsenvironmentally sensitive products

– promotepromote sustainable forest management sustainable forest management

• Producers Producers mightmight gain gain marketmarket shareshare and and might experience a might experience a priceprice premiumpremium for for certified wood products. certified wood products.

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• One study shows:One study shows:– For purchasers of certified wood For purchasers of certified wood

products the average price premium products the average price premium paid was paid was 6-7%6-7% with 35% paying less with 35% paying less than than 3%3% and 55% less than and 55% less than 5%5%. .

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• World-wideWorld-wide, less than , less than 1%1% of the annual of the annual harvest currently comes from certified harvest currently comes from certified forests. Expected to forests. Expected to increaseincrease in near- in near-term future as more lands are certified.term future as more lands are certified.

• In general, priceIn general, price premiumspremiums for for “green”“green” wood products are wood products are smallsmall or or non-existentnon-existent but market share is important in some but market share is important in some regions such as western Europe. regions such as western Europe.

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• However, price premiums probably However, price premiums probably do exist in do exist in nicheniche markets. markets.

• Demand is Demand is growinggrowing; presently is ; presently is being pushed by buyer groups and being pushed by buyer groups and not end-product consumers who are not end-product consumers who are generally unaware of the existence generally unaware of the existence of certified wood products.of certified wood products.

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• One way to examine the economics One way to examine the economics of forest certification is to compute of forest certification is to compute the the breakeven price increasebreakeven price increase premium to pay for the costs of premium to pay for the costs of certification.certification.

• See spreadsheet for illustration.See spreadsheet for illustration.

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MUTUAL RECOGNITIONMUTUAL RECOGNITION

• Agreements to help Agreements to help “clarify”“clarify” the market. the market.

• SFISFI and and ATFSATFS have agreed. have agreed.

• In June 2000, representatives from In June 2000, representatives from PEFC, SFI, PEFC, SFI, FSCFSC, and many other certification groups , and many other certification groups met in Brussels. Next meeting later this met in Brussels. Next meeting later this month.month.

• Does not mean that Does not mean that allall protocols will be protocols will be accepted.accepted.

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GLOBAL FOREST & TRADE GLOBAL FOREST & TRADE NETWORKNETWORK

• Promoted by the WWF to Promoted by the WWF to create create demanddemand and and increase productionincrease production of of certified productscertified products

• Expected to be over Expected to be over 1,0001,000 members members by end of 2001.by end of 2001.

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Global Forest & Trade NetworkREGION # MembersUSA & Canada 239UK 102GERMANY 58BELGIUM 41NETHERLANDS 41BRAZIL 38NORDIC 32AUSTRIA 25SWITZERLAND 20SPAIN 13OTHERS 25TOTAL 634

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• Most of these members promote the Most of these members promote the FSCFSC protocol at this time. protocol at this time.

• In the In the UKUK the WWF 95+ Group aims the WWF 95+ Group aims to have 75% of all to have 75% of all wood productswood products certified as FSC by 2005.certified as FSC by 2005.

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• Several home improvement retailers Several home improvement retailers in the USA have announced plans to in the USA have announced plans to phase out wood from phase out wood from “endangered “endangered forests.”forests.”– Home Depot, 84 Lumber, Lowes, Home Depot, 84 Lumber, Lowes,

Wickes, Anderson Corp.Wickes, Anderson Corp.

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CHAIN-OF-CUSTODYCHAIN-OF-CUSTODY

• FSCFSC presently has presently has 735735 chain-of-custody chain-of-custody agreements in 37 countries.agreements in 37 countries.

• PEFCPEFC has issued has issued oneone chain-of-custody. chain-of-custody.

• ISO has issued ISO has issued 232232 pulp, paper, and pulp, paper, and paper products certificates and paper products certificates and 109109 wood and wood products certificates for wood and wood products certificates for an EMS. an EMS. (NOT CHAIN-OF-CUSTODY)(NOT CHAIN-OF-CUSTODY)

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ECO-LABELSECO-LABELS

• Presently, Presently, FSCFSC and and PEFCPEFC have have developed developed “green”“green” eco-labels for eco-labels for forest products tracked through a forest products tracked through a chain-of-custodychain-of-custody agreement. agreement.

• SFISFI is working hard to develop a is working hard to develop a similar program.similar program.

• ISOISO does does notnot issue labels. issue labels.

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THE END: TOPICS THE END: TOPICS COVEREDCOVERED






forest certification and the forest products industry b. bruce bare college of forest resources...

Documents

forest certification

managed forest

forest products industry

general approaches

market place considerations

sustainable forests

protection of lands

useful products