0472-C1

Impacts of Globalisation on Forestry: Considerations on a Complex Topic

Hans-Friedrich Essmann and Giorgio Andrian^[1]

Abstract

This paper investigates the main impacts of the globalisation process on forestry. Forestry is still traditionally orientated on local, regional and, at most, national levels; most of its activities are still strongly related to the frameworks set up by national legislations. At the same time, however, the economic aspects of timber markets and the wood processing industry have already been affected by the globalisation process. To maintain its future sound development, forestry has to reconsider its role in this process.

Assumptions about the effects of globalisation on forestry are discussed with reference to likely consequences. The main guidelines for a proper development of the forestry sector in the new international scenarios are presented in the concluding section.

1. Introduction

At the beginning of the 1990s, a broad public debate over globalisation^[2] was initiated in Germany, as well in other developed countries. Within this time frame, globalisation processes have firstly been seen as coincident with and strongly characterized by the expansion of multinational companies, as a quasi-imperialistic conquest and domination of new markets by capitalistic societies, particularly by the highly developed industrial nations.

This development was very critically observed and for the most part negatively judged by outside observers in Germany, as was the case in other countries. Globalisation was considered a trap that presented a danger for the people inside, as well as outside, of the societies, even endangering the existence of the societies themselves (Reimann, 2002).

In the meantime, the discussion has changed considerably. Globalisation is no longer only seen as a negative process but also understood as providing a opportunities for improved development. Moreover, it is noticed that the phenomenon is not restricted to the economy but is including and penetrating all spheres of life. It fosters the development of a new worldwide view. It has become evident that occurrences in one part of the world can massively affect people in distant places, whether they are military conflicts, environmental catastrophes, economic and financial crises or issues related to population growth (just to mention a few). Rash judgements are gradually being replaced by scientific analyses, which are based on objective criteria. The time has come to accurately portray the true effects of globalisation and to fairly guide its future development.

"In this so-called era of rapid change, it may be difficult to distinguish between changes that are superficial and those that are fundamental" as recently Nair wrote about changing forestry scenarios; nevertheless, it is important to identify which will possibly be the driving forces - within the main global trends - in modifying the existing situation in forestry and which will be the challenges that forests will face in the new socio-economic scenarios.

2. Main economic aspects of the Globalisation

The process of globalisation is accelerating to include more and more aspects of economic activities. In fact, it appears as though no possibilities exist to evade this trend in the long term. The pressure to adjust leaves no room for alternatives. Economic activity is increasingly taking less consideration for national boundaries. Multinational corporations (MNCs)^[3] already appear at times to ignore national borders and the rules that are valid therein. In these instances, Weber (2002) refers to the privatisation of politics, which simply states that national politics is being overtaken by the politics of larger, globally-acting enterprises and associations.

The main characteristics of economic globalisation are:

- accelerated commercial flows of goods and services;

- financial flows, the extent of which in the meantime is larger than that of the exchange of goods, and

- a growing number of international or transnational direct investments in new businesses, which as a rule are the daughter companies of the investing enterprises.

In the public consciousness, it is the transnational direct investments that are generally equated with economic globalisation but also with the negative concomitants that were previously associated with the term globalism. Whereas between 1975 and 1985, direct investments had roughly the same value as production or export in the industrial countries, today their value has doubled (Dicken, 1998). In the meantime, not only are the largest companies (TNCs, MNCs, MNEs) taking part in these ventures but so are the middle-sized enterprises.

Within this scenario, the overall role of the public funding is going to decline parallel to the reduction of the impact of the national States.

On the other side, globalisation trends are offering unique opportunities to local small-scale business to have a large (virtually global) potential market. The role of the global tools - Internet is the symbol of them - is providing opportunities to a larger number (virtually, anyone who's able to interface with the system) of consumers to act directly on the global markets, both as individuals and as parts of larger networks.

The expansion of the role of the TNCs, MNCs and NMEs is 'balanced' by the growing role that the individual initiatives can play in the globalised socio-economic scenario. In fact, the expected overall standardisation of the mass consumes - as predicted by many analysts at the beginning of the 1990s - is not yet occurring, mostly due to the growing chances for the consumers to have access to a larger sphere of goods and services.

While in the sphere of the production of goods and services, a strengthened decentralization is to be observed, financial transactions are increasingly carried out from global centres, which gained influence as national financial markets in the developed countries could no longer reinvest accumulated capital within the borders of their own countries.

3. Impacts on Forests and Forestry

Forests and forestry are affected in various ways by economic globalisation. This is especially true with regards to the production and trade of forest products, property regimes, the application of the principle of sustainable forestry management, and, not least of all, also with regards to the environmental policy concerns affecting forests, such as climate protection and the conservation of biodiversity.

Once one has observed the tendency towards the further liberalization of world trade, as is massively supported by the WTO, it becomes increasingly apparent that the reduction of duties affecting traded forest products, the liberalization of agricultural production, and the facilitation of transnational direct investments and services make the conservation of forests and ensuring the sustainable use of their resources all the more difficult. There is no question that the increases in direct investments and trade through transnational acting enterprises have caused and continue to cause severe damages to forests, especially in the tropics and subtropics, but also increasingly in the boreal forests of Russia. In all cases in which there was a lack or complete absence of suitable conditions for sustainable development, the harvesting of wood was carried out without any great consideration for the forest and the environment. The damages often extended far into the adjacent woodlands. As a result of logging roads, hunters, farmers and others had easy access to the forest and further exploited its resources (Weber, 2002).

The trade of wood, cellulose and paper accounts for an estimated 100 billion USD a year. In fact, of all the raw materials traded on the world market, wood stands in third place. The MNCs control 80 - 90% of this trade (Weber, 2002), a market position that leaves little room for competition or the effective control of policy, e.g. forest policy.

Furthermore, it is important to notice that the engagement of large TNCs in the forestry sector has increased over the past several years. A number of mergers, i.e. acquisitions, in this economic sector have allowed newly formed enterprises to increase their influence on production and trade enormously. All the while, such companies are becoming more and more independent from national and international policy^[4]. In order to remain competitive and reduce production costs, they have acquired new concessions and have established production facilities in countries where wages are smaller, state subsidies convenient, and environmental laws relatively lax. In fact, most direct investments in the forestry sector between 1996 and 1998, at least 4.5 billion USD, were made in low-wage countries with extensively forested areas (Weber, 2001).

The economic globalisation of the forestry sector, which can only be touched upon in this paper, has especially severe consequences on forestry in those nation-States with significant woodlands where forestry is of importance. One of the relevant impacts has been the movement of sawmills, manufacturers of cellulose and paper, and the wood-processing industry away from sites where these historically played an integral role. Following the criteria of rationalization and competitive advantage, local and regional economic cycles are being interrupted, and, especially on a regional level, economic relations are being dissolved and in many segments markets suspended. What generally is described as a wood-chain is tearing apart in favour of a global alignment of markets based on supply and demand. This can plunge entire regions with adapted structures in the forestry sector into economic crises. Looking at supply and demand for wood and wood products, Sedjo predicts that by the year 2050 most industrial wood will come from a small area of plantation forests, while natural forests will remain as sources of environmental and other non-wood service. Surely, a continue innovation in wood processing technologies will be needed to maintain wood competitive with other materials (Sales, 2001).

The rapid spread of technical innovation, propelled by economic globalisation, has a notable impact on forestry and its important product, the raw material wood. Wood substitutes, like MDF or OSB, have allowed the demand for high quality wood to sink. But, in principle, sustainable forestry aims to balance economic, ecological, and social needs. If the economic foundation is endangered, the consequences for forestry on the whole can be far-reaching. The question of whether or not such a development is advantageous or disadvantageous for forests does not allow itself to be answered in general form, because the answer depends in great deal on the economic, social, and cultural importance that forests have for a country's society.

Finally, economic globalisation in general has effects on the natural environment and, especially with regard to the forestry sector, specifically on the forest. This was already indicated in reference to forest destruction caused through exploitative wood use. Agenda 21^[5] requires all signatory states to sustainably care for their forests. The certification of forest management adopted on a voluntary basis should help this goal to be reached, so that forests can continue to provide economic, ecological, and social benefits for future generations. National and international policy must be used to influence forest users so that they are subject to the rules of sustainability. The concentration of the forestry sector into a few big globally-acting enterprises obviously makes this a difficult task. The chances for success increase, however, each time nation states join together and form international agreements based on the principle of sustainable development.

4. Concluding remarks

The effects of economic globalisation on forests and forestry are ambivalent; one may see its drawbacks but also its positive aspects. Indeed, globalisation is not only a negative process, as described by critics when using the term globalism. Ultimately, the valuation of forests functions and their importance for forestry is a subjective process. Assessments are based on principles and perceived goals as to how the forest should be used and as to what forestry has to offer. Clearly, predominant societal attitudes to forests and forestry, including the level of esteem that these entities are given, may differ greatly among countries, even within the same State.

International policy, including some forms of global governance, may provide the only effective means for ensuring that globalisation proceeds sustainably. This would require the activation of all social forces to support international policies, including the broad participation of civil-society in decision-making processes; in particular, the large and also globally-acting NGOs would play an important role in bringing about these desired results, within a scenario of possible public-private-partnership (Weber, 2002). In addition to the international platform, national policy is also necessary to ensure that globalisation does not have effects on forests and forestry that stand contrary to societal objectives within a country.

The future of forestry and forest within further globalised scenarios will be depending more (and more) on the exogenous factors, external to the traditional sector - mostly political, economic and social - which are complex and difficult to predict.

The traditional sectoral-oriented forecasting techniques can no longer capture the radical system-wide changes affecting forestry, as well as all the other sectors of the socio-economic overall picture: "many international efforts to bring about changes in forestry had little impact, while most changes were unintentional and not necessarily the outcome of the planned efforts" (Nair, 2001).

The overall impact of the globalisation phenomena, which result in the easy movement of capital, technology, goods and services across national boundaries are difficult to assess and complex to predict: "the set of criteria previously used for measuring comparative advantages for investment in forestry (e.g. nearness to markets and raw material supply, quality and quantity of raw material) is expanding to include very different criteria (e.g. need to reduce pollution, degree of openness of economies, barriers to trade) (Nair, 2001).

Three new roles of forestry - as identified by Di Castri (2001) - are seen as particularly important in the modern societies:

- as a "new vision of rehabilitation, restoration, redesign, architecture and diversification of landscapes, which will no longer of interest for agriculture or industrial development. The comparative advantage of rural areas over the urban ones will improve, due to the larger use of the technological access of long-distance working facilities; consequently, the human impact on the natural and natural-like ecosystems will continue";

- the growing impact of the rural and eco-tourism is going to grow, affecting the traditional forest areas, which will improve the flux of investment in the landscape management and ecology;

- the maintaining of the vital ecosystem services, those that ensure the proper functioning of the bio-geochemical functions (carbon sink and climate change included); the perpetual dynamics of biodiversity is one the key-factors which will make forestry still functional. In monetary terms, the value of global ecosystem services (e.g. the cost of cleaning natural surface water and ground water, ensuring natural biological control of invasive species and plagues, keeping natural spaces for recreation and leisure and maintain soil structure and fertility) represent nearly double the combined annual gross national product for all countries in the world (Costanza et al., 1997).

Ultimately, will forestry and forest benefit from the expanding globalising trends? Most likely it will depend very much on the capacity of generating flexibility within itself.

If it is true that - paraphrasing George Santayama - a profession that does not learn from its past is condemned to repeat it; it is also true that the traditionally sector-oriented structure of forestry may result its limit into a rapidly globalised scenario.

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