WORKING GROUP NO. 4 - "EXTRA-SECTORAL INFLUENCES AND THE ENVIRONMENT"

1. Theme 1: Extra-sectoral influences

1.1 Key questions

a) Which extra-sectoral influences affect trade in forest products and services?

b) How do these influences affect SFM? What are positive and negative impacts?

c) What is the direct impact of key extra-sectoral influences on international trade in forest products (e.g. prices, quality, type of products, flows)?

1.2 Documentation of issues discussed (based on key questions a) and b))

Positive impacts	Influences	Negative impacts
AGRICULTURE
	Support to agriculture • Credit • Research • Foot & mouth control	Increased agriculture profitability leased to reduced SFM competitiveness
	Agricultural reform	Land distribution Laws (Agrarian reform)
	Land tenure, colonization, "frontier issues
	Agricultural commodities policy, increasing commodity crops for foreign exchange gains	reduce forest land through conversion
Reduction of agricultural and expansion of forest land	Agricultural subsidies in the North (US + EU) and effects on Soya bean prices	Expansion of agricultural lands (e.g. Brazil)
		Social-environmental dumping
Decreased commercial agriculture and increased forest cover in the South	Agricultural policies in the North	Expand commercial agriculture and reduced forest cover in the North
Increased forest cover	Trade leads to macroeconomic growth and development
Agricultural intensification and increased forest cover	The sum of general subsidies and tax policies etc generally favour capital over labour	Shift labour to the frontier and decreases forest cover
	Protection of natural resources for food security
	Agricultural EU subsidies for planting trees

Positive impacts	Influences	Negative impacts
FINANCE AND INVESTMENT
	Fiscal policies • balance of payment	Greater exploitation of forest resources
Increase support for trade in forest products to generate funds	International finance	Limited international finance support to SFM
World Bank new policies	Finance policies (Banking)
TECHNOLOGY
Higher growth rate/yield	R&D on GMO (tree spp.)	Reluctance of consumer to buy
Integrated models of SFM - Forest industry and environmental services	New technologies and global economic scale	Limitation to access of new technologies for small producers
DEMAND IN FOREST PRODUCTS
	Consumer demand for certified products
Increase in demand = more trade potential	Sectors using forest products e.g. housing, newsprints, etc	Increase in demand may put pressure on sustainability of existing forest resources
Less pressure on forests	Sectors producing substitutes to forest products (e.g. steel, plastics)	Potential for more energy consumption and GHG emissions
• greater concentration of consumers, higher purchasing power movement of forest products manufacturers closer to markets - greater efficiency	Urbanization policies, movement of rural populations to urban areas (increase service provision)	Reduce forest land due to conversion of forests
Consumer is educated and choose in better way	Communications on conservation of nature and consume	Effect prices and demand
	INTERNATIONAL TRADE AGREEMENTS
	POLITICAL INSTABILITY
	PROPERTY RIGHTS UNCERTAINTY	Reduced investment in SFM
	LEGAL ISSUES: EASING PROCEDURES FOR SFM VS OBTAINING TIMBER AS RESULTS OF DEFORESTATION
POVERTY ALLEVIATION POLICIES
Investment in capacitation and asociation	Social policy to solve problems of poverty	Less funds for direct conservation / protected areas
	Increasing value of forests vs increasing conflict on forest resources
INFRASTRUCTURE
Potential to improve timber processing (add value)	New infrastructure (road, energy)	Increased agriculture profitability, decreased SFM competitiveness
Higher potential for investment in forest sector	Infrastructure (roads, ports)	Less funds available for SFM
	ENERGY
	Use of wood for energy - firewood

Note: Statements in ITALIC have been included by the moderator based on group discussions, other statement have been formulated by group members.

1.3 Promising initiatives identified during discussion (related to agriculture)

• Shape public policies

• Zoning of national forests

• Increase value of land/forest/timber and parallel measures (e.g. property rights, community forestry)

• Long term planning

• Good balance of productive/protective forests

• Property rights

• Emerging markets?

• Certification

1.4 Other comments

• Does forest matter?

• Forest not good competitor

1.5 Identification of issues related to key question c)

a) Agriculture

• Increase of timber supply (short term)

• Reduction of price (short term)

• Better infrastructure

• New market chain

• Agriculture subsidies for planting trees (North)

• Decrease of timber supply (long term)

• Higher local demand (?)

b) Infrastructure

• Reduced costs of production

• Shift of production centers

• Shift of products traded

• Better trade opportunities (transport)

• Increased opportunities for improved quality (infrastructure + public services, "industrial zones")

c) Technology

• C1) Biotechnology

¬ Good quality (hybrids)

¬ Improved yields

¬ Reduced prices

¬ Improved competitiveness

¬ New market chain

• C2) Industrial Technology

¬ Consolidation of certain sectors (e.g. veneers, plywood)

d) Finance and Investment

• Less opportunities for trade in tropical countries

• Better opportunities for selected sectors (e.g. pulp and paper)

e) Demand in forest products

• Consumer sensitivity translated into the market chain

2. Theme 2: Environmental forest services

2.1 Key questions

a) Which environmental forest services can contribute to SFM through international trade?

b) How does/could trade in these services affect SFM?

2.2 Documentation of issues discussed (based on key questions)

Positive impacts	Influences	Negative impacts
Inputs for conservation and management	RECREATION/TOURISM	If not well managed may destroy forests
		Negative cultural impact
Forest cover maintained for water production	WATERSHED PROTECTION	Reduce areas for wood production
Reforestation of highlands	Water - its importance over wood production
Promotion of secondary forests, agroforestry systems, plantations	Carbon sequestration	reduce forest land through conversion
Reduction of agricultural and expansion of forest land	Replace "sequestration" with "storage" (natural forests)	Expansion of agricultural lands (e.g. Brazil)
GEF projects	BIODIVERSITY	Might paralyze investment in SFM
	Market for conservation
• income sharing to local communities • sharing/documentation of indigenous knowledge	Genetic resources
	Private investors buying forests
• income • indigenous knowledge documentation	HEALTH SERVICE
• employment and income generation - , local guides, lodging, equipment • fees • sustainability	HUNTING (controlled game hunting) • income + foreign exchange gain	Environmental groups objection
	FISHERIES supported by forest ecosystems (floodplains, mangroves, etc.)

Examples for watershed protection:

• Malaysia selling water to Singapore

• Electricity (e.g. Honduras - El Salvador, Venezuela-Mexico, Lao-Thailand)