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Global Forests and Landscapes in Transition

Global Forests and Landscapes in Transition. Forest Trends Global Forestry Forum December 3-7, 2006 Oaxaca, Mexico. Trends in the Global Forest Landscape. Industry in Transition.  Changing Demand, Supply and Structure. Markets in Transition.  Growing value of forest ecosystem services.

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Global Forests and Landscapes in Transition

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  1. Global Forests and Landscapes in Transition Forest Trends Global Forestry Forum December 3-7, 2006 Oaxaca, Mexico

  2. Trends in the Global Forest Landscape • Industry in Transition  Changing Demand, Supply and Structure • Markets in Transition Growing value of forest ecosystem services Greater accountability • Governance in Transition  Civil Society: New Owners, New Constituencies  Government: Federal Systems in Transition

  3. Regional variation in in forest area: Percent change by region from 1980 to 1995 Developed countries average North America Australia, Japan and NZ Developing Asia and Oceania Developing countries average Declining tropical forest cover Recovering temperate forest Net decline of 180 million ha worldwide from 1980 - 1995

  4. Size of the Sector • Forest products industry: ~3% of world trade • Value of international trade in wood products US$150 billion (2003) • Gross value of sales of paper and pulp alone US$900 billion (2000) • Up to 13-15% of national GDP (Gabon, Cameroon) • Even more regionally: US$4 billion exports in Sabah and Sarawak (30% of total gov’t revenues) • Expecting growth in demand, especially developing countries which grew 3.2% per year ’61 – ’97

  5. Industry in Transition: The ‘Wall of Wood’ - Growing Supply From Plantations Slide from Roger Sedjo, citing Sohngren et al. 2001

  6. Industry in Transition: Declining Commodity Prices The Economist industrial commodity-price index, in real* $ terms Since 1997, average return on capital in the forest product industry is 4.1% *Adjusted by US GDP deflator

  7. Industry in Transition: Industry Consolidation

  8. 50 45 40 Logs 35 Sawn wood Wood chips 30 Fiberboard 25 Plywood 20 Particleboard 15 Veneer Imports (m m4 RWE) Other 10 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 China as Major Market or Major Competitor China as a Major Market or Major Competitor • Chinese sawnwood imports increased 600% in 7 years • Imports of processed wood products decreased • 80% of all new investment in pulp & paper has been in China recently • Chinese productsmajor competitorin European & American markets (1000% increase in 7 years

  9. Markets in Transition - Ecosystems Services Revenue Services Certified Timber BotanicalsWastewood Utilization Trees Carbon Credits –Reforestation/AfforestationBiofuelsConservation Carbon Carbon Pharmaceuticals/Natural Medicine Personal Care/ Cosmetics Biodiversity Eco-tourism Protection Biodiversity Credits & Offsets Conservation Watershed Conservation &Restoration User FeesMitigationSalinity Credits

  10. C D M $ 5 .2 b i llio n 4 7 5 M t $ 1 0.90 / t C O E U E T S 2 e $24 . 4 b i llio n 1,1 0 0 M t $10 - 35 / t CO e 2 J I $ 1 41 m i l li on 1 6 Mt $ 8 . 7 0 / t CO e 2 The Range of Carbon Markets Kyoto Non-Kyoto Volun-tary Develop- ing

  11. 2006: The Various Carbon Markets

  12. The Voluntary Carbon Market - Project Types

  13. Carbon: The US • The US may be behind, but there is movement • CCX • RGGI • California • Oregon, Washington • Now the Southwest • Lots on voluntary markets • TerraPass, DriveNeutral, etc • Wal-Mart, PG&E, etc. • Once the US comes in, could see explosive growth • One day (soon) there will be a national market

  14. Water Markets • Much less developed • Two possible kinds: • Quality • Quantity • Quality likely to come in first • i.e. Nutrient trading • Science and application are easier

  15. The “Dead Zone” Problem

  16. Nutrient Trading • Not easily commoditized (not carbon) • But markets want to be global and this will happen on watershed scale so smaller size (watershed) • i.e there will be lots of little markets, not global like carbon • Could/should become a series of large markets: • Think Chesapeake, Gulf of Mexico • Will also see outside the US (e.g. NZ, China)

  17. Biodiversity • Is toughest nut to crack • Not easily commoditized • Is an “anti-commodity” • Besides, what do we mean by Biodiversity? • Ecosystems? • Species? • Genetic diversity? • All of the above?

  18. And Yet There is Movement… • Wetland Banking • Conservation Banking • Voluntary Biod. offsets • Gov’t payments for biodiversity • Such as Bush Tender, Eco-Tender in Australia • Program in Mexico

  19. Markets in Transition - Biodiversity Services  IP Southlands Property, SW Georgia “Woodpecker Credits” Est. worth $150,000 to $250,000 each  Mobile Sewer and Water Commission, Alabama “Gopher Tortoise Credits” $2,300 per acre  Allegheny Power, Canaan Valley, West Virginia: $16.6 million “bargain sale” tax credit  Total of 2.6 million acres in conservation easements in US

  20. What is Forest Certification? • Market-based instruments for differentiating sustainable managed forest productions (voluntary green label) • Consistent with ISO 14001 but goes further • Forest Stewardship Council (FSC) certification was initiated in 1992 after the Rio world environmental summit in lieu of an international forestry convention such as UNFCC (climate change), CBD (biodiversity), etc. • Multiple schemes evolved: SFI, PEFC, CSA, ATO, national in Indonesia, Brazil, Malaysia

  21. Growing number of certified forest operations 74 million hectare certified by April 2006 in 72 countries .

  22. Challenge: Illegal Logging • Illegal logging depresses world prices for timber products by 7- 16% (AF&PA) • Creates an unequal playing field for legal operators • Illegal logging createsreputational risk for forest industry andcountry as a whole

  23. Markets in Transition: Illegal Logging - Proof of Legality

  24. Governance in Transition From: • Strict, detailed regulatory approaches • Blanket national policies, complex regulations and management plans To: • Market-based incentives, results-based • More transparent, participatory and independent monitoring • Increasing role of civil society • Exposing corruption, claiming rights • Campaigns, consumer power

  25. Governance in Transition: Community Ownership • 80% of Mexico’s forests are owned by ejidos and indigenous communities (44 M hectares), 7,000 forest communities have commercial potential • Recognition of ancestral claims in the Amazon basin cover over 100 million hectares in the 8 countries • Indonesia passed laws in 2000 to recognize customary ownership – potentially affecting 40 million of hectares of forest area • Tanzania, Gambia, Cameroon, Uganda, and Zambia have followed with devolutionary and decentralizing policies

  26. Governance in Transition:A Doubling of Community Tenure in 15 Years: What Will Happen in the Next?

  27. Seminar Outline • Industry in Transition  Changing Demand, Supply and Structure • Markets in Transition Growing value of forest ecosystem services Greater accountability • Governance in Transition  Civil Society: New Owners, New Constituencies  Government: Federal Systems in Transition

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