Environ Syst Decis (2013) 33:295304

DOI 10.1007/s10669-013-9444-7

REVIEW

Socio-economic, environmental, and governance impacts

of illegal logging
Fernando Reboredo

Published online: 7 May 2013

Springer Science+Business Media New York 2013

Abstract This article examines the main impacts of the

illegal logging activities with emphasis on the most
important timber production regions. Although the discussion is focused on the environmental, socio-economic
and governance impacts, it must be stressed that the term
forest governance is the umbrella where the economy, the
environmental values, and welfare of forest-dependent
communities are sheltered. Considering the effects/impacts
of the illegal logging as a whole, we can summarize the
following negative key points: (1) Degradation of the most
valuable forest stands threatening biodiversity, including
rare and endangered species. (2) Increase in soil erosion
and landslides. Increase in CO2 release and climatic
changes. (3) Human rights abuses and disrespect of the
basic needs of local communities and their culture. (4)
Corruption, crime, coercion, and money laundering. (5)
Reduction of royalties, taxes, and other charges paid by
logging companies to the producer States. (6) Depreciation
of legal activities due to the unfair concurrence. Despite
multiple efforts, the results in the combat of illegal logging
are far from satisfactory. Increase the certification area in
parallel with an accurate control, devolve the state land to
the ancient local owners, increase the cooperation between
civil society and forest authorities, and finally strongly
improve forest governance, particularly anti-money laundering laws, are crucial aspects in the combat of illegal
logging. Furthermore, governments and businesses must
implement the triple bottom line concept in order to reach
sustainability.

F. Reboredo (&)
Departamento de Ciencias da Terra, CICEGe, Faculdade
de Ciencias e Tecnologia, Universidade Nova de Lisboa,
2829-516 Caparica, Portugal
e-mail: fhr@fct.unl.pt

Keywords Illegal logging
Environmental impacts

Governance impacts
Socio-economic impacts

1 Introduction
Deforestation has long been recognized as a negative
impact in the prosperity of a country, regardless of its
origin, that is, legal or illegal. Nevertheless, the excessive
logging that occurred in some epochs throughout the
worlds history was due to a growing human population
(fuel-wood needs and conversion of forest areas into pastures and cereal fields) and the flourishing of industrial
activities, in the case of Portugal, the metallurgy, sugar
refining, and particularly shipbuilding (Rego 2001; Reboredo and Pais 2012, 2013).
Illegal logging occurs all over the world but mainly in
Africa and Asia where sustainable forest management and
respective forest certification schemes are almost absent.
For example, the certified forest as a percentage of total
forest area is 1.4 and 1.1 %, in Asia and Africa, respectively, while Western European countries have 50.8 % and
North America 32.7 %(UNECE/FAO 2011). But even in
North America, EU-27 and Europe as a whole, illegal
logging occurs regardless of the observation of sustainable
forestry rules.
The main causes of illegal logging are poverty, weak
governance (Toyne et al. 2002; Bouriaud 2005) and the
absence of sustainable forest management, although these
reasons are not extensive to all the countries where illegal
logging occurs.
Illegal logging causes serious environmental problems
such as global deforestation leading to reductions in carbon
stocks, degradation of biodiversity, lowering water quality
and discouraging sustainable logging practices and forest

123

296

management (Moiseyev et al. 2010) thus undermining the

competitiveness of the legitimate forestry industry. It also
destroys the protective function of the forestsnatural
disasters, such as the massive landslides and flooding after
heavy monsoon rain, were observed in the Philippines
(Magallona 2004) or China (UNECE/FAO 2009).
The poorest populations in several countries live in and
around remote forested areas, and most of them depend to
some extent upon forests and non-wood forest products for
food, medicine, fibers. These populations are increasingly
being subjected to changes brought on by globalization,
economic growth, and demographic shifts. Thus, illegal
logging has a negative impact on the resources that forests
provide.
Forests are strongly influenced by governance and
dynamics in other sectors, such as infrastructure, demography, or landscape planning and by general macro-economic development. Current environmental governance
arrangements are inadequate and have led to continued
degradation of the environment (UNEP http://www.unep.
org/environmentalgovernance/).
In the AsiaPacific region, the involvement of criminal
groups or the military in illegal resource extraction often
goes hand in hand with violence, threats, or other forms of
coercion that create insecurity at an individual and community level (Elliott 2007).
A recent report by the World Bank claims that despite
the efforts to curb forest crimes, mainly focused on preventive actions, it has not halted the rapid disappearance of
the worlds old-growth trees. New ideas and strategies are
needed to preserve what is left of forests (Goncalves et al.
2012). Undoubtedly, proposals for action to combat illegal
logging will be on the agenda of several countries and
institutions in the next decades. The aim of the present
review is to discuss the main impacts of illegal logging and
how these impacts can be mitigated.

2 The main impacts

Generally, the main effects/impacts of the illegal logging
can be summarized as follows:
2.1 Socio-economic impacts
The destruction of forests in several world areas and the
lack of tenure rights to forest communities will put a tremendous pressure on indigenous populations forcing them
to migrate to more densely populated areas. In fact, highly
uncertain land tenure relations intensify conflicts between
wood industry concerns and local communities. In Indonesia, conflict timber incidents resulting in deaths, injuries,

123

Environ Syst Decis (2013) 33:295304

and destruction of property are almost daily events

(Thomson and Kanaan 2003). A survey of reports on
conflict timber published in six regional newspapers
between March 2002 and February 2003 turned up 845
accounts, which is equivalent to more than two incidents
per day. Also the indigenous people of the North, Siberia,
and Far East are no longer guaranteed the free use of lands
and forests, areas where the illegal harvest is a major threat
(Taiga Rescue Network 2005).
In China, the booming of the economy has placed a huge
pressure on wood demand both through massive imports
and increase in total area of plantations. The transfer of
responsibilities to local governance is not a guarantee of
continued funding for the stewardship of the new forests
where local corruption is widespread and under-regulated
corporations have been accused of usurping user rights,
failing to compensate farmers (Wang et al. 2007).
Nevertheless, some authors claim that illegal logging
creates well-paid jobs compared with conventional labor
and opportunities (Casson and Obidzinski 2002) such as
illegal logging in Central Kalimantan, Indonesia, although
in some cases very little of the profit from illegal logging
remains in the local community. According to Kishor and
Damania (2007), only 2.2 % of the total product value was
held locally by those who illegally logged the forests; the
rest went to brokers, buyers, manufacturers, and exporters.
In Southeast Asia, one cubic meter of illegal merbau at
point of import into China is worth $240 while local loggers
receive only $11 per cubic meter (Elliott 2007). Across
Siberia and the Russian Far East, Russian loggers are often
forced to work under extremely poor conditions with very
low salary. Logging brigade members and truck drivers may
earn less than one percent of the amount that the company
gets for each cubic meter logged when sold to China or Japan.
This amounts to 18 Rubles or 0.75 $US per logged cubic
meter (Taiga Rescue Network 2003) indicating the lack of
other job opportunities. Furthermore, the use of illegal paid
labor or illegal labor, the breaching of forest legislation, and
illegal accounting practices are the main problems of unreported wood in Russia (Gerasimov and Karjalainen 2006).
The International Organization for Migration estimates
that there are some 33,000 forced laborers in Peruvian
logging, a reality common to both legal and illegal logging.
Forced labor results from one of two processes. In the first,
middlemen pay a set sum of money to indigenous communities in exchange for mahogany. Later, the community
is informed that the price of mahogany has gone down,
leaving them in debt (Novak and Namihas 2009).
According to the U.S. Department of Labor (2010), timber
is produced with forced labor in Peru and Brazil, particularly valuable hardwoods such as mahogany, and in
Myanmar (Burma) bamboo and the hardwood teak.

Environ Syst Decis (2013) 33:295304

According to INTERPOL, between 50 and 90 % of

logging in key tropical countries of the Amazon basin,
Central Africa, and Southeast Asia is being carried out by
organized crime, leading to the increase of murder, violence, and atrocities against indigenous forest dwellers
(UNEP 2012). Most of the abuses against indigenous
people are driven by the poor governance. In that sense,
some of the social impacts of illegal logging overlap with
the governance impacts.
The World Bank (2006) has estimated that illegal logging causes losses of approximately US$15 billion every
year (the legal forest industry loses more than US$10 billion while governments lose about US$5 billion in revenues). In a recent report (UNEP/INTERPOL 2012), this
value has increased between twofold and 6.7-fold, that is,
the economic value of global illegal logging, including
processing, is now estimated to be worth between US$30
and 100 billion, or 1030 % of the global wood trade.
Illegal logging increases timber supply into the markets,
lowering the price of timber thus increasing the competitiveness of national industries (Tacconi et al. 2003), which
agrees with the results of American Forest & Paper
Association (2004)the global timber product prices
decreased by 716 % due to illegal logging activities.
Using a Global Forest Products Model, Li et al. (2008)
predicted how markets would change due to the gradual
elimination of illegal logging from 2007 to 2011. For
example, the annual production of sawn wood and industrial round wood in developing countries will be reduced
from 2007 to 2020, by 2 to 5 % and by 3 to 8 %, respectively, depending on the assumption on illegal logging
rates. In both cases, half of the decrease will be compensated by an increase in the production by developed
countries. As a result of global lower supply, the world
prices of sawn wood and industrial round wood would rise
by 0.5 to 1.3 % and by 1.5 to 3.5 %.
Li et al. (2008) also concluded that in general, production in all industries (from logging to pulp and paper)
decreased in developing countries while increasing in
developed countries but not to the same degree, thus
causing higher world prices indicating a full integration of
the markets.
Other timber market models evaluate the import of
illegally harvested timber (IHT) based on the inverse
coefficients (Dieter 2009). This model covers trade via
third party countries and bilateral trade and allows a calculation of the import and domestic use of IHT for each
country and the trade linkages between all countries
although as in any model the quality of the results depends
on the quality of data sources and estimates on the share of
IHT (Dieter, op. cit.). This concern is mainly related to the
discrepancies in official data within different state organisms and the assumption that the degree of illegal logging

297

is only based on what is reported although we agree that the

extent of any forestry illegality will always be difficult to
quantify.
The Indonesian Government estimates losses of
approximately $3.2 billion by year as a consequence of
illegal logging activities, while the NGO Telepak Indonesia
claims losses of about $5.3 billion per year due to the
overall deforestation from logging, slash-and-burn farming
techniques, and other factors responsible for the environmental degradation (Dow Jones Commodities Service
2006). This agrees with the estimates of Human Rights
Watch (2009) that the Indonesian government lost US$2
billion in 2006 due to illegal logging, corruption, and
mismanagement. This amount included forest taxes and
royalties not collected and losses from tax evasion by
exporters.
The direct annual fiscal loss due to the illegal logging
ranges between $7.9 and 12.4 M for Honduras and $2.2
and 4.0 M for Nicaragua, mainly from fees derived from
stumpage charges on production from national forest,
municipal revenues, and income taxes. These estimates are
conservative and probably underestimate the real costs
(Richards et al. 2003). Honduras loses up to $18 M per
year in lost stumpage fees and other forest-based revenues,
a value which is believed to be an underestimate (Environmental Investigation Agency 2005).
According to the State Forest Service (SFS) of Latvia,
losses due to illegal felling between 2000, 2001, 2002,
2003 and 2004 were estimated in 7.6, 8.5, 4.4, 3.2, and 2.4
million Euros, respectively, showing a continuous decrease
in the amount of illegal felling and consequent losses from
2001 onwards, which could be explained by better control
by both owners and SFS (PDF/WWF 2006). Russia loses
annually approximately US$1 billion due to illegal logging
with a corresponding volume of illegal felling around 11 %
of the total volume, according to the official data (Dmitriev
2006).
2.2 Environmental impacts
High levels of deforestation due to illegal logging were
detected, for example, in Central AmericaHonduras and
Nicaragua (Richards et al. 2003), South AmericaBrazil
(Lawson and MacFaul 2010), Southeast Asia (Rosander
2008), AfricaCongo Basin (Thomson and Kanaan 2003),
Central and Eastern Europe and former Communist countries such as Belarus, Ukraine, Moldova, and Russia (WWF
2008; Regional Environmental Center 2010).
If illegal logging practices occur at a large destructive
scale, it can lead to the conversion of forests to grassland
and to the depletion of plant and animal species. If illegal
logging occurs in protected areas, rare plants and animals
may become threatened (Sheikh 2008).

123

298

Forests play an essential role in the carbon cycle. Carbon from forestry projects accounted for 36 % of the voluntary carbon market in 2008 (approximately $254 M),
demonstrating the competitiveness of the sector in generating carbon credits and promoting, for example, ecosystem restoration such as a degraded riparian forest (ICFPA/
ACPWP 2010).
The industrial roundwood removed from global forests
annually contains approximately 420 million tons of carbon (FAO 2007) assuming densities for coniferous and
non-coniferous roundwood of 0.45 and 0.56 tonnes/cubic
meter, respectively, and a carbon content of 50 %. Much of
this carbon is returned to the atmosphere relatively quickly
although a significant fraction in industrial roundwood was
stored in products where it remains for long periods.
The extensive degradation of peatlands in Indonesia by
recurrent fires, deforestation (legal and illegal), and drainage causes the release of huge amounts of peat soil carbon
to the atmosphere, the groundwater level being the main
factor controlling the carbon dioxide emissions. Using field
inventory and remote sensing data, Jaenicke et al. (2010)
concluded that the rise of groundwater levels (once dams
have been constructed) within the 590 km2 area of drained
peat swamp forest could result in mitigated emissions of
1.41.6 Mt CO2 year, which is equivalent to 6 % of the
carbon dioxide emissions by civil aviation in the European
Union in 2006. Thus, restoring the peatland hydrology is
the only way to prevent peat oxidation and mitigate CO2
emissions.
In the summer of 1998, China suffered massive flooding
along the Yangtze, Songhua, and Pearl rivers. In the floods,
thousands of people died, 14 million were left homeless,
and total losses were estimated at $26 billion. Although the
direct cause was the heavy rainfall, the large deforestation
and consequent reduction of the control of water runoff
was indeed the trigger of such catastrophe (UNECE/FAO
2009). In the Philippines, landslides killed 1,800 people in
Quezon Province in 2004 and Philippine President identified illegal logging as one of the leading causes of the
disaster and directed police and army forces against illegal
loggers and their financiers (Magallona 2004).
The Convention on International Trade in Endangered
Species (CITES) has a huge list of species in danger.
Among the tree species under the CITES concerns are the
bigleaf mahogany (Swietenia macrophylla) in the Americas, afrormosia (Pericopsis elata) in Africa, and ramin
(Gonystylus spp.) in Southeast Asia. For example, in
Honduras, illegal logging is highly selective and the
valuable species mahogany and tropical cedar are at risk.
According to Del Gatto (2003), the annual extraction of
mahogany ranges between 30,000 and 50,000 m3, and it is
believed that this species is near extinction outside of
protected areas.

123

Environ Syst Decis (2013) 33:295304

Tanjung Puting National Park (located in the province of

Central KalimantanIndonesia) is recognized as a world
Biosphere Reserve by the United Nations and forms the
largest protected area of swamp forest in Southeast Asia. It
contains a number of commercial tree species including
meranti (Shorea spp.) and ramin (Gonystylus spp) and is
the home of the most famous inhabitantthe orangutan
(Pongo pygmaeus). EIA/Telapak investigators discovered
several illegalities in Tanjung Park which was confirmed
by the authorities who seized ramin loads and detected
ramin factories without license to operate in Central Kalimantan (Currey and Ruwindrijarto 1999). Its use in luxury products and increasing scarcity make ramin a valuable
timber on the international market with prices varying from
$600 per m3 for sawn ramin to $1,200 per m3 for molded
ramin. The top export markets for Indonesian ramin are
Taiwan, Japan, Singapore, Hong Kong, USA, Italy, and the
UK. Otherwise, according to the central government, timber is illegally harvested in 37 of the 41 national parks in
Indonesia (Pye-Smith 2007) despite their protected status.
Other endangered species include the Sumatran rhino
(Dicerorhinus sumatrensis), which have diminished to critically low numbers in Peninsular Malaysia and the state of
Sabah (less than 40 individuals are estimated to remain)
although there are several recent encouraging population
estimates for Asian elephants and Malayan tigers (Clements
et al. 2010). Long-term studies in order to assess and monitor
the conservation status of both species are urgently needed.
In the Philippines, the Northern Sierra Madre mountain
range contains what has been called the nations last great
forest with rare plants, majestic tree species, and two of
the most endangered large animals in the world, the Philippine eagle and the Philippine crocodile, due to the spread
of illegal logging activities (Severino 2009).
The lack of management practices in both legal and
illegal logging activities increases the risk of fire (Sheikh
2008), which can occur due to natural or accidental causes
or with criminal origin. The fires that spread through
Sumatra and Borneo in 1997 and 1998 were largely caused
by timber and plantations companies. Satellite monitoring
showed that four million hectares of land were damaged in
the province of East Kalimantan and allowed the identification of 176 firms accused of deliberately setting fires
(Currey and Ruwindrijarto 1999).
2.3 Governance impacts
Forest governance must take into account the fiscal system
of forestry, the role of communities living in forested areas,
and the equitable distribution of their revenues and finally
the crime prevention and/or suppression.
Illegal logging and timber smuggling is well recognized
as a transnational environmental crime in AsiaPacific

Environ Syst Decis (2013) 33:295304

since it is generally committed in more than one state

(Elliott 2007). Furthermore, the Indonesian Ministry of
Forestry has criticized Malaysia and China, for accepting
stolen timber, thus taking unfair advantages to wood
industries in these countries (Jakarta Post quoted by
Obidzinski et al. 2007).
The term conflict timber was introduced by the UN in
2001 and is related with the civil wars in Cambodia, which
began in the 1970s and expanded until the early 1990s, and
in the Congo area. Both were responsible for millions of
refugees and millions of deaths. The links between armed
groups and logging companies became evident during the
Khmer Rouge regimeforest cover in Cambodia
decreased from 75 % in the early 1970s to less than 35 %
in the mid-1990s (Thomson and Kanaan 2003) due to the
illegal, but officially sanctioned logging, by the Royal
Cambodian Army Forces and Khmer Rouge.
Other examples of conflict timber are spread to Burma,
Indonesia, Philippines, and Liberia. In Liberia, the former
President Charles Taylor used conflict commodities,
namely timber and diamonds, to finance his military
operations in Liberia and in the destabilization of Guinea,
Sierra Leone, and Ivory Coast.
In the Democratic Republic of Congo, more than 200
forest rangers have been killed over the last decade in the
Virunga National Park due to the charcoal trade which is
estimated at over US$28 M annually (UNEP 2012),
undermining the credibility of the state and seriously
threatening humans and the most emblematic animal in the
parkthe gorilla.
Conflict timber incidents almost always occur where
there exists (Thomson and Kanaan 2003):
(a) the complicit involvement of governmentmilitary,
security forces, the forest service; (b) little, if any, capacity
for financial oversight; (c) uncertain land/resource tenure;
(d) little hope for just recourse in the application of the
legal system.
In Asia, the routes of illegal timber generally ended in
major regional hubs such as Singapore, South Korea, and
China, where the timber is processed or relabeled as a legal
product (timber laundering) and exported to the USA and
Europe, for example (Elliott 2007), strongly decreasing by
this way the traceability of the wood. Moreover, only a
well-organized network of shipping companies and agents,
brokers and middlemen in target places may support this
type of transnational crime (Elliott op. cit.).
Concerning the financial transactions, their inadequate
control clearly encourages illegal timber activities. Funds
linked to the illegal logging industry in Indonesia move
through Malaysia, Hong Kong, and Singapore (Walters
2010) frustrating the efforts to prosecute illegal logging
offenders, unless Memoranda of understanding between
Indonesia and these countries was established. Also,

299

important international financial institutions take part in

financing timber extraction in Indonesia such as Credit
Suisse First Boston, ING Bank N.V., and Credit Lyonnais
of Singapore (Setiono and Husein 2005) leading to the
Basel Committee on Banking Supervision in support of the
Financial Action Task Force to recommend prudent
requirements to high-risk sectors such as the forestry sector
and the public sector in developing countries, where corruption is widespread (Setiono and Husein, op. cit.). The
Basel Committee should request bank supervisors to
monitor implementation of Know Your Customer (KYC)
principles, for forestry related transactions that are financed
by major international and local banks.
Corruption and illegal logging are twin brothers
generally. In Indonesia, one of the worlds most corrupt
countries, as shown by the Transparency International
rankTable 1 (Transparency International 2012), the
contours of corruption in the forestry sector are increasingly well known thanks to the investigations and reports
of environmental groups such as Indonesian Corruption
Watch, Telepak (an Indonesian environmental group that
conducts undercover timber trade investigations and monitors illegal logging trials) and the Center for International
Forestry Research (Human Rights Watch 2009).
Furthermore, the index of economic freedom underlines
the role of the economy in raising welfare, in this way also
decreasing poverty. Countries are graded and ranked on ten
measures that evaluate the rule of law (property rights and
freedom from corruption), the intrusiveness of government,
regulatory efficiency, and the openness of markets (Miller
et al. 2012). The score of each country lies between 0 and
100; the higher the score, the more liberal the economy.
The analysis of Table 1 shows that the worst values were
for Myanmar (Burma) and some countries of the Congo
Basin (Republic of Congo, Democratic Republic of
Congo), while some of the Baltic States and especially
Singapore exhibited the highest performances. As a whole,
the AsiaPacific region, South and Central America, and
the Middle East/North Africa presented similar values
ranging from 57.5 to 60.0, while Sub-Saharan Africa had
the lower value with 53.7. Europe and North America score
66.1 and 73.8, respectively.
Although this rank is not directly linked with the forest
sector we agree with Contreras-Hermosilla (2011) who
stated, there is no compelling reason to think that the
situation in the forest sector would be radically different
from that of the economy as a whole. Nevertheless, some
cautions must be taken into account when the analysis is
mainly focused in some EU countries. For example, the
Baltic StatesEstonia and Lithuania, which are ranked 16
and 23, respectively, are not a good example in terms of
forest-related abuses. Also Singapore, the second country
in the rank (87.5), is commonly referred to as the main hub

123

300

Environ Syst Decis (2013) 33:295304

Table 1 The index of economic freedom (IEF) and the corruption

perceptions index (CPI), in different producer and consumer timber
countries
IEF*

CPI**

Estonia

73.2

64

Lithuania
Latvia

71.5
65.2

54
49

Russia

50.5

28

France

63.2

71

Norway

68.8

85

Europe

Portugal

63.0

63

Poland

64.2

58

Asia
Malaysia

66.4

49

China

51.2

39

Thailand

64.9

37

Indonesia

56.4

32

Vietnam

51.3

31

Cambodia

57.6

22

Myanmar

38.7

15

Singapore
North America

87.5

87

Canada

79.9

84

United States

76.3

73

Brazil

57.9

43

Guatemala

60.9

33

Honduras

58.8

28

Nicaragua

57.9

29

Peru

68.7

38

Philippines

57.1

34

Ghana

60.7

45

Liberia

48.6

41

Gabon

56.4

35

Nigeria

56.3

27

Cameroon
Ivory Coast

51.8
54.3

26
29

Congo

43.8

26

Democratic Rep. of Congo

41.1

21

Latin America

Africa

Sources: Miller et al. (2012)*; Transparency International (2012)**

in Southeast Asia of timber laundering. Furthermore, the

rank of some EU countries deserves attention when compared with the rank of others where forestry regulation is
partially or completely ignored.
It is also claimed that excessive regulation is often
associated with a high degree of corruption and a heavy
underground economy (Miller et al. 2012), but it is worth
remembering that lack of regulation was the main factor

123

responsible for the beginning of the financial crisis in

20072008.
An Environmental Investigation Agency in Honduras
(Environmental Investigation Agency 2005) revealed a web
of corruption and illegalities involving politicians, the State
Forestry Administration, timber companies, sawmills, loggers, transporters, mayors, and police. In addition illegal
timber trade is also used to smuggle narcotics and to launder
drug money. Similar conclusions were derived from the
work of Pye-Smith (2007) when analyzing forestry crimes
and court convictions and forest-related abuses in Indonesia,
Ghana and Cameroon. The huge complexity of obscure
interests between the State, government officials and multiple stakeholders (Pye-Smith op. cit.) is the main obstacle to
tackle illegal activities. In the case of Indonesia, the regional
autonomy after the Suharto era, which gave district Governments greater control over the management of natural
resources, exacerbated forest loss.
The stronger the forest governance, the higher is the
probability of detecting forest abuses. The Brazilian government carried out 32 enforcement operations in 2003,
and 134 in 2007, the latter involving police, army, and
officers from the Environment Agency IBAMA. As a
consequence, the value of fines issued increased eightfold
over the period (Lawson and MacFaul 2010) although only
2.5 % of the fines were successfully collected.
In 2008, hackers working for illegal logging cartels in
the state of Para (Brazil) had access to transport and logging permits, allowing the theft of an estimated volume of
1.7 Mm3. Also in Brazil in 2009, a federal prosecutor
investigated a scam allegedly involving some 3,000 companies that eco-certified and exported illegal timber (UNEP
2012). These findings indicate that despite the awareness of
the preservation of the Amazonthe federal government
and some state governments in the Amazon region (Para,
Amazonas, Acre, and Amapa) are developing legal
frameworks for forest concessions and the Brazilian Senate
approved in February 2006 a legal framework, increased
enforcement against illegal operations will be necessary
(Barreto et al. 2006).
In 2005, the Environmental Investigation Agency
reported that approximately 300,000 m3 of merbau logs
(Intsia spp.) were being smuggled out of Papua New
Guinea and Indonesia, to China every month. Due to the
rapid action of an enforcement team, by the end of May
2005, over 400,000 m3 of illegal merbau logs had been
seized and 186 suspects named by the police (Environmental Investigation Agency 2008) enhancing the weak
governance and the key role of some Organizations in the
public denounce of illegalities, forcing the authorities to
act.
In the Philippines, the formation in August 2008 of the
Anti-illegal Logging Taskforce to tackle illegal logging in

Environ Syst Decis (2013) 33:295304

the Northern Sierra Madre Natural Park (NSMNP) confiscated in 18 months more than 4,000 m3 of illegal timber,
which included 1,212 m3 in 2008 plus 2,883 m3 in 2009.
Between 2003 and 2007, the volume of confiscated wood
reached only 1,083 m3.
The volume of illegal logging in NSMNP is estimated
between 20,000 and 35,000 m3 per year (representing a
minimum market value of $4.75 M), the maximum volume
being close to the allowable cut of the three logging concessions in Isabela province, where the NSMNP is located,
which is 37,794 m3 (van der Ploeg et al. 2011). These
findings indicate that illegal logging can be controlled and
minimized by enforcement teams if policies are adequate
and implemented and clearly show that the lack of notification of forestry crimes does not mean that they did not
occur (Reboredo 2013).
The discussion about the socio-economic, environmental,
and governance impacts clearly showed that sustainability
has not been the goal of governments and businesses. Thus,
the implementation of the so-called triple bottom line (TBL)
would be an important tool toward sustainability (Elkington
1997; UNEP 2009). Elkington argued that companies,
instead of focusing solely on its profits, must also consider
the companys degree of social responsibility and the companys environmental responsibility.
What is needed is to put into practice the TBL concept.
Profits are measured in different currencies but how can we
accurately evaluate the right price for endangered species
or entire indigenous populations or even a thousand hectares of deforested tropical rain forest? According to Slaper
and Hall (2011) there is no universal standard method for
calculating the TBL. Neither is there a universally accepted
standard for the measures that comprise each of the three
TBL categories, although states, regional and local governments, non-profit organizations (e.g., Ford Foundation)
and firms are adopting the TBL and analogous sustainability assessment frameworks.

3 Current and future perspectives

When measuring the average annual deforestation rate
from 1997 to 2000 within a 10 km wide strip of land
located along the inside and outside of a reserve perimeter
in the Brazilian Amazon, Nepstad et al. (2006) concluded
that the average density of fires was 3.79.4 times higher
along the outside of the reserve than along the inside, while
on average, deforestation was 1.7 to 20 times higher along
the outside than along the inside.
The impact of forest certification on forest conservation
can be achieved throughout the comparison of the deforestation rate and the occurrence of wildfires in certified and
non-certified concessions.

301

In Guatemala and particularly in the Maya Biosphere

Reserve (MBR) with over two million hectares, the average
annual deforestation rate between 2002 and 2007 was 20
times higher than the deforestation rate for the certified
concessions (Hughell and Butterfield 2008). Also, the
incidence of wildfires differs significantly. The area burnt
on FSC concessions dropped from 6.5 % in 1998 to 0.1 %
in 2007, while in MBR, they range between 7 and 20 %. In
this particular case, the implementation of forest certification can minimize deforestation, since the responsibilities
for preservation are transferred to those who take the
concessions and do not foresee a loss to their incomes. A
similar situation occurs in Reserves whose inhabitants try
to maintain their territories free of deforestation fires and
safeguard the intrinsic biodiversity (Adeney et al. 2009).
Moreover, those countries with high forest certification
rates and sustainable forest management (SFM) did not
exhibit illegal logging in general (WWF 2008; Lawson and
Macfaul 2010). Conversely, illegal logging is widespread
in countries without SFM and certification.
In non-certified concessions, greed may be the driver of
deforestation and over-felling was not balanced by an
adequate reforestation. But are the schemes themselves
capable of detecting fraudulent versions of their labels? As
stated by Brack (2010), There are already anecdotal stories of suspiciously high volumes of FSC-certified timber
being exported from China and this tendency is likely to
get worse. Furthermore, the establishment of industrial
plantations is often preceded by abusive deforestation and
land appropriation indicating that certification systems
must be carefully evaluated and controlled to avoid fraud.
Investments in forest sustainability are undermined by
illegal logging. Also the political capital spent on forest
protection is rapidly lost especially when the public
becomes aware that the state itself cannot control what
occurs in protected areas (Elias 2012). After depletion of
timber concessions, illegal loggers expand their activities
into protected areas as occurred in Kalimantan, Indonesia
(Curran et al. 2004). Both cases may discourage the common citizen who will not accept the weak or null role of the
state in the forest management and the protection of biodiversity. The devolution of tenure rights to local hands
such as occurred in Mexico (over 75 % of Mexicos forests
are controlled by local communities, a remarkable case
study of forest management) will boost the incentive to
manage forests properly, that is, in a sustainable way (The
Economist 2010).
In Russia, three independent public enquiries in 2005
involving more than 2000 people concluded that between
58 and 89 % of respondents think that serious problems
with governance and law enforcement in the forest sector
exist, while between 51 and 86 % stated that the authorities
are inefficient. Moreover, between 50 and 70 % are ready

123

302

to assist the authorities in combating crime in the forest

sector (Teplyakov and Grigoriev 2006). These findings
indicate the increasing awareness of public opinion and
highlight the importance of cooperation between civil
society and forest authorities.
Another important step to tackle illegal logging is
related with the finance system. For example, timber-based
industries in Indonesia are financed by both local and
international banks (Setiono and Husein 2005). Large-scale
forest exploitations would not be commercially feasible
without financial support since financial institutions are
required to fulfill anti-money laundering laws, that is, they
should know well their customers, as issued by the Basel
Core Principles, in order to protect institutions from being
used by criminals (Setiono and Husein, op. cit.).
Norways Council on Ethics concluded that the Malaysian company Samling Globals forest operations in the
rainforests of Sarawak and Guyana (Malaysia) contributes
to illegal logging and severe environmental damage; thus, a
recommendation to the Ministry of Finance to exclude this
company from the Government Pension Fund Global
investment portfolio was pointed out (Council on Ethics
2010). At the same time, Norway through its Pension Fund
has invested 13.7 billion dollars in more than 70 different
companies from industry sectors such as palm oil, oil and
gas, mining, logging and pulp industry, soy production and
hydroelectric energy, whose activities are responsible for
massive deforestation and forest degradation, while the
amount spent each year on rainforest protection amounts to
500 million dollars (RFN/FEN 2012).
These findings indicate that despite the high level of
political commitment in forest protection, foreign investments do not foresee ethical attitudes. For example, the
balance of sustainable forestry in the USA points to an
increasing restriction of domestic wood production in the
name of sustainability while going abroad to search the
necessary timber to fulfill national requirements (Shifley
2006). The main consequence is that the impacts of harvesting and consumption are transferred elsewhere.
It seems that the Norwegian investment portfolio
referred to above (Council on Ethics 2010; RFN/FEN
2012) was not based on a Multi Criteria Decision Analysis
(MCDA), commonly used in environmental studies (Linkov et al. 2011) and in the sustainable investment sector
(Byrne and Cotter 2012), since neither conflicting objectives were carefully analyzed, nor the opinions of several
stakeholders were taken into account, thus raising doubts
about the nature of the environmental protection efforts.
Moreover, the absence of shareholder views in the decision
making process is a major weakness (Gifford 2004) in
regard to pension funds.
Political commitments between the main consumer
partners, such as EU, USA, Japan, and China, and the main

123

Environ Syst Decis (2013) 33:295304

timber producing regions (Amazon basin, Congo Basin,

Southeast Asia, Russia) would be needed and both the EU
Timber Regulation and the US Lacey Act must be fully
implemented and monitored. In a recent report from
UNEP/INTERPOL (2012) about illegal logging, among the
six key recommendations, two of them must be outlined:
1.

2.

Classify geographic regions based on suspected degree

of illegality and restrict flows of timber and wood
products from such areas including shipping.
Encourage tax fraud investigations with a particular
focus on plantations and mills.

The latter recommendation is based on the assumption

that huge revenues to the producer states are lost, which
could well be applied in forest management or in the
improvement of local communities conditions. The first
one creates a database that will be used in the near future as
a red flag to those countries where illegal logging is persistent and out of control. Nevertheless, unilateral bans
have the strong opposition of World Trade Organization
plus a time-consuming dispute in international courts and
even the imposition of retaliatory tariffs with economic and
reputational costs.

4 Concluding remarks
Fighting forest crimes has become a goal of the International
community, although the complexity of this issue, with a
transnational network of interests including those of the
worlds most recognized banks, does not favor a rapid resolution. If financial institutions were more prudent in the
customers financial transactions, perhaps criminal forest
acts will be reduced. Moreover, collaboration with authorities in the follow-up of the huge profits will bring some light
about the nations where money laundering is common.
Whatever the extent of the debate in our opinion, the
discussion about how to tackle illegal logging will be
extended during this century without great achievements.
The legal framework of illegal logging-related problems is
frozen by the incapacity of the main producer and consumer states to reach a consensus toward the action.
To put the TLB concept into practice, we must improve
the welfare of the indigenous people with medical care,
schools, local jobs (social responsibility), while forestry
activities must take into account the deleterious impacts of
businesses in the environment (environmental responsibility) in order to achieve forestry sustainability.
People, planet, and profitthe three Psare not
antagonistic. Instead, they might combine and be the goal
of governments, enterprises, and non-profit Organizations.
Also, a combined action of main timber producing
countries in order to effectively ban illegal logging would

Environ Syst Decis (2013) 33:295304

lead to a reduction of the wood supply into the markets thus

increasing prices, particularly for tropical timber products
(in a similar manner, it is worth remembering the role of oil
producer countries in the regulation of the market). Even
the losses due to the global economic crisis would be
counterbalanced by the economic growth of BRIC countries. The increase in states revenues would feed the
above-mentioned welfare, would decrease corruption and
timber-related crimes, and would increase the surveillance
of the local populations against this type of illegality, a
precious help to forestry authorities in each country. These
proposals can be achieved only with a very strong will and
good governance.
Acknowledgments The author is deeply grateful to Dr. Alan Phillips (UK) for the accurate revision of the manuscript and encouragement and all the Reviewers for the useful suggestions and remarks.

References
Adeney JM, Christensen NL Jr, Pimm SL (2009) Reserves protect
against deforestation fires in the Amazon. PLoS One 4(4):e5014.
doi:10.1371/journal.pone.0005014
American Forest & Paper Association (2004) Illegal logging and
global wood markets: the competitive impacts on the U.S. wood
products industry. Seneca Creek Associates and Wood
Resources International, Poolesville (USA), 190 pp
Barreto P, Sousa Jr C, Nogueron R, Anderson A, Salomao R (2006)
Human pressure on the Brazilian Amazon forests. WRI Report/
Imazon, 84 pp
Bouriaud L (2005) Causes of illegal logging in Central and Eastern
Europe. Small-scale For Econ Manag Policy 4:269292
Brack D (2010) Controlling illegal logging: consumer-country
measures. Chatham House (The Royal Institute of International
Affairs), Briefing paper, London, 12 pp
Byrne N, Cotter J (2012) Sustainable investment: a tool for decision
makers. ACSBD Working paper no. 6, November, 18 pp
Casson A, Obidzinski K (2002) From new order to regional
autonomy. Shifting dynamics of illegal logging in Kalimantan, Indonesia. World Dev 30:21332151
Clements R, Rayan DM, Awa Zafir, Venkataraman A, Alfred R,
Payne J, Ambu L, Sharma DSK (2010) Trio under threat: can we
secure the future of rhinos, elephants and tigers in Malaysia?
Biodivers Conserv 19:11151136
Contreras-Hermosilla A (2011) People, governance and foreststhe
stumbling blocks in forest governance reform in Latin America.
Forests 2:168199
Council on Ethics (2010) Council on ethics. The government pension
fund global, to the ministry of finance, recommendation of 22
February 2010, 45 pp
Curran LM, Trigg SN, Mcdonald AK, Astiani D, Hardiono YM,
Siregar P, Caniago I, Kasischke E (2004) Lowland forest loss in
protected areas of Indonesian Borneo. Science 303:10001003
Currey D, Ruwindrijarto A (1999) The final cut. Illegal logging in
Indonesias orangutan parks, August, 19 pp
Del Gatto F (2003) The impacts of unregulated forestry production in
Honduras. Briefing paper. www.talailegalcentroamerica.org
Dieter M (2009) Analysis of trade in illegally harvested timber:
accounting for trade via third party countries. Forest Policy Econ
11:600607

303
Dmitriev D (2006) The Russian timber industry: past, present and
future. Russ For Rev 1:815
Dow Jones Commodities Service (2006) Illegal wood supplies 6770 %
of Indonesia industriesNGOs. Illegal logging INFO, September.
Available at: http://www.illegal-logging.info/item_single.php?it_
id=1694&it=news. Accessed Oct 2012
Elias P (2012) Logging and the law. How the U.S. Lacey act helps
reduce illegal logging in the tropics. Union of Concerned
Scientists, UCS Publications, April, 20 pp
Elkington J (1997) Cannibals with forks: the triple bottom line of 21st
century business. Capstone Publishing Ltd., Oxford
Elliott L (2007) Transnational environmental crime in the Asia
Pacific: an un(der)securitized security problem? Pac Rev
20:499522
Environmental Investigation Agency (2005) The illegal logging crisis
in Honduras. How US and EU imports of illegal Honduran wood
increase poverty, fuel corruption and devastate forest and
communities, 44 pp
Environmental Investigation Agency (2008) Buyer beware. An
investigation into merbau wood flooring sales in the UK, 8 pp
FAO (2007) FAOSTAT databaseforestry. Available at:
http://faostat.fao.org/site/626/default.aspx. Accessed July 2011
Gerasimov Y, Karjalainen T (2006) Development of wood procurement in Northwest Russia: round wood balance and unreported
flows. Eur J For Res 125:189199
Gifford J (2004) Measuring the social, environmental and ethical
performance of pension funds. J Aust Political Econ 53:139160
Goncalves MP, Panjer M, Greenberg TS, Magrath WB (2012) Justice
for forests. Improving criminal justice efforts to combat illegal
logging. The World Bank, Washington, DC, p 42
Hughell D, Butterfield R (2008) Impact of FSC certification on
deforestation and the incidence of wildfires in the Maya
Biosphere Reserve. Rainforest Alliance, 16 pp
Human Rights Watch (2009) Indonesia. Wild Money The human
rights consequences of illegal logging and corruption in Indonesias forestry sector, 75 pp
ICFPA/ACPWP (2010) International council of forest and paper
association/advisory committee on paper and wood products
working groups, background paper no. 1 on Sustainable Forest
Industries, 2728 May, Tokyo, Japan, 93 pp
Jaenicke J, Wosten H, Budiman A, Siegert F (2010) Planning
hydrological restoration of peatlands in Indonesia to mitigate
carbon dioxide emissions. Mitig Adapt Strateg Global Change
15:223239
Kishor N, Damania R (2007) Crime and justice in the Garden of
Eden: Improving governance and reducing corruption in the
forestry sector. In: Campos JE, Pradhan S (eds) The many faces
of corruption: tracking vulnerabilities at the sector level. The
World Bank, Washington, DC
Lawson S, Macfaul L (2010) Illegal logging and related trade.
Indicators of the global response. Chatham House (The Royal
Institute of International Affairs), London, July, 132 pp
Li R, Buongiorno J, Turner JA, Zhu S, Prestemon J (2008) Long-term
effects of eliminating illegal logging on the world forest
industries, trade, and inventory. Forest Policy Econ 10:480490
Linkov I, Welle P, Loney D, Tkachuk A, Canis L, Kim JB, Bridges T
(2011) Use of multicriteria decision analysis to support weight of
evidence evaluation. Risk Anal 31:12111225
Magallona MM (2004) The Philippines, 2004 top news on environment in Asia. Institute for global environmental strategies.
http://www.iges.or.jp/en/pub/pdf/asia2004/full_text.pdf
Miller T, Holmes KR, Feulner EJ (2012) Highlights of the 2012 index
of economic freedom. Promoting economic opportunity and
prosperity. The Heritage Foundation/The Wall Street Journal,
12 pp

123

304
Moiseyev A, Solberg B, Michie B, Kallio AMI (2010) Modelling the
impacts of policy measures to prevent import of illegal wood and
wood products. Forest Policy Econ 12:2430
Nepstad D, Schwartzman S, Bamberger B, Santilli M, Ray D,
Schlesinger P, Lefebvre P, Alencar A, Prinz E, Fiske G, Rolla A
(2006) Inhibition of Amazon deforestation and fire by parks and
indigenous lands. Conserv Biol 20:6573
Novak F, Namihas S (2009) La trata de personas con fines de
explotacion laboral: el caso de la mineria aurfera y la tala ilegal
de madera en Madre de Dios. Organizacion Internacional para
las Migraciones/Instituto de Estudios Internacionales de la
Pontificia Universidad Catolica del Peru, 127 pp
Obidzinski K, Andrianto A, Wijaya C (2007) Cross-border timber
trade in Indonesia: critical or overstated problem? Forest
governance lessons from Kalimantan. Int For Rev 9:526535
PDF/WWF (2006) Pasaules Dabas fonds & world wide fund. Illegal
logging in Latvia and export of forest products to the UK, 20 pp
Pye-Smith C (2007) Department for international development,
crime and persuasion: tackling illegal logging, improving
forest governance, 52 pp
Reboredo F (2013) The illegal wood in Europe: a review. Int For Rev
(in press)
Reboredo F, Pais J (2012) A construcao naval e a destruicao do
coberto florestal em Portugal. Do seculo XII ao seculo XX.
Ecologia (Revista online da Sociedade Portuguesa de Ecologia)
4:3142
Reboredo F, Pais J (2013) Evolution of forest cover in Portugal
from the XII to the end of the XX centuries. A review. J For Res
(in press)
Regional Environmental Center (2010) Illegal logging in SEE and EE
(Governance, Implementation and Enforcement). Illegal logging
activities in Bosnia and Herzegovina. A. Fact-finding study, 27
pp
Rego FC (2001) Florestas Publicas. Direccao Geral das Florestas/
Comissao Nacional Especializada de Fogos Florestais, Lisboa,
105 pp
RFN/FEN (2012) Rainforest foundation norway & friends of the earth
norway, beauty and the beast. Norways investments in rainforest protection and rainforest destruction, March, 17 pp
Richards M, Wells A, Del Gatto F, Contreras-Hermosilla A, Pommier
D (2003) Impacts of illegality and barriers to legality: a
diagnostic analysis of illegal logging in Honduras and Nicaragua. Int For Rev 5:282292
Rosander MN (2008) Illegal logging. Current issues and opportunities
for Sida/SENSA engagement in Southeast Asia. Swedish
International Development Cooperation Agency (Sida), Bangkok, Thailand, 60 pp
Setiono B, Husein Y (2005) Fighting forest crime and promoting
prudent banking for sustainable forest management. The anti
money laundering approach. CIFOR, Occasional paper no. 44,
Indonesia, 26 pp
Severino HG (2009) Overwhelming force to save the nations last
great forest. http://www.gmanetwork.com/news/story/167866/
news/specialreports/overwhelming-force-to-save-the-nation-slast-great-forest. Accessed on Sept 2012
Sheikh PA (2008) Illegal logging: background and issues. CRS
Report for Congress, 12 pp
Shifley SR (2006) Sustainable forestry in the balance. J For 104:
187195
Slaper TF, Hall TJ (2011) The triple bottom line: what is it and how
does it work? http://www.ibrc.indiana.edu/ibr/2011/spring/pdfs/
article2.pdf

123

Environ Syst Decis (2013) 33:295304

Tacconi L, Boscolo M, Brack D (2003) National and international
policies to control illegal forest activities. Report prepared for
the Ministry of Foreign Affairs of the Government of Japan.
CIFOR, Indonesia, 63 pp
Taiga Rescue Network (2003) Illegal logging in the Boreal, Factsheet,
6 pp
Taiga Rescue Network (2005) Our land, our life. Indigenous
peoplesland rights. Factsheet, 5 pp
Teplyakov V, Grigoriev A (2006) Forest governance and illegal logging:
Improving legislation and inter-agency and inter-stakeholder relations in Russia. A summary project report. Moscow, Russia, IUCN
Global temperate and boreal forest programme, 20 pp
The Economist (2010) A special report on forests. Keeping it in
community. Well-organized locals often make the best forest
managers, but they need help. September
The World Bank (2006) Strengthening forest law enforcement and
governanceaddressing a systematic constraint to sustainable
development. The World Bank, Washington, Report no. 36638
GLB. August, 77 pp
Thomson J, Kanaan R (2003) Final report submitted to the United
States agency for international development. Conflict timber:
Dimensions of the problem in Asia and Africa, vol I: synthesis
report, 33 pp
Toyne P, Obrian C, Nelson R (2002) The timber footprint of the G8
and China. Making the case for green procurement by government. Gland, Switzerland, WWF International, 40 pp
Transparency International (2012) Corruption perceptions index
2012, 5 pp. Available at: www.transparency.org/cpi2012/results.
Accessed March 2013
UNECE/FAO (2009) The importance of Chinas forest products
markets to the UNECE region. Geneva timber and forest
discussion paper 57, 28 pp
UNECE/FAO (2011) Forest products. Annual market review
20102011, Geneva timber and forest study paper 27, 157 pp
UNEP (2009) Towards triple impact. Toolbox for analysing sustainable ventures in developing countries. United Nations Environment Programme, Nairobi, Kenya, 68 pp
UNEP (2012) Organized crime trade worth over US$30 billion
responsible for up to 90 % of tropical deforestation. UNEP Press
Release, 27 September
UNEP, Environmental Governance, Factsheets, 8 pp. Available at:
http://www.unep.org/environmentalgovernance/. Accessed March
2013
UNEP/INTERPOL (2012) Green carbon, black trade: Illegal logging,
tax fraud and laundering in the worlds tropical forests. In:
Nellemann C (ed) A rapid response assessment. United Nations
Environment Programme & INTERPOL Environmental Crime
Programme, GRID-Arendal, 67 pp
US Department of Labors (2010) List of goods produced by child
labor or forced labor. Washington, December, 44 pp
Van der Ploeg J, Van Weerd M, Masipiquena AB, Persoon GA (2011)
Illegal logging in the Northern Sierra Madre Natural Park, the
Philippines. Conserv Soc 9:202215
Walters J (2010) Following the proceeds of illegal logging in
Indonesia. Trends & issues in crime and criminal justice, no.
391, March, 6 pp
Wang G, Innes JL, Lei J, Dai S, Wu SW (2007) Chinas forestry
reforms. Science 318:15561557
WWF (2008) Illegal wood for the European marketan analysis of
the EU import and export of illegal wood and related products.
WWF, Frankfurt, Germany, July, 43 pp