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1. Introduction

An unknown proportion of the world's timber is illegally felled, processed and traded. The problem is most pronounced in developing countries and countries with economies in transition, but it also occurs in developed parts of the world. In several countries, illegal logging is estimated to far exceed the authorized harvest levels and it continues to fuel networks of illegal loggers and traders. Revenues from illegal operations support armed conflicts in some countries and corruption in both the public and private sectors hamper the pace of change.

Illegal logging and associated trade are complex issues with far-reaching environmental, social and economic consequences. The lack of forest law compliance and enforcement often contributes to severe forest degradation and deforestation, including habitat and biodiversity loss, soil degradation and disturbance of forest ecosystem services. This in turn adversely affects rural populations and particularly the poorest forest-dependent communities.

Increased awareness of the magnitude and global implications of illegal activities in the forest sector have triggered various initiatives to control them in both industrialized and developing countries. Efforts are being made at the local, national and international levels by various stakeholders to address the issue. Several governments are in the process of rationalizing their legal and policy framework, building institutional capacity to foster better law compliance and gathering additional data on the extent and nature of illegal operations. Private initiatives such as forest certification, voluntary corporate codes of conduct, independent monitoring of forest operations and log tracking are also helping to fight forest crime.

However, no comprehensive assessment had yet been carried out of the rich experiences being acquired and the lessons learnt for similar undertakings in the future. This report intends to fill this gap. It presents, analyses and distils available knowledge in a set of best practices, which decision-makers may wish to apply to reduce illegal operations in the forest sector. Because governments own or control three-quarters of all global forest resources, or some 3 billion hectares (White and Martin, 2002), and regulate private and community-owned forest management, their responsibility in addressing illegal operations in the forest sector is crucial. This publication is therefore addressed primarily to decision-makers in the forest sector and more particularly to heads of national forest administrations, forest policy analysts, advisers and mid-level forest officials. It is expected to serve as basic material for training officials of interested countries.

This publication was produced by FAO and ITTO. Both organizations have long-running programmes to promote sustainable forest management, and both began specific work programmes on forest law enforcement early in this decade. The severity of the problem of illegal forest activities was identified in FAO's State of the World's Forests 2001 report. Since the fifteenth session of the Committee on Forestry in 2001, FAO has been responding to member countries' recommendations and carrying out various activities to support them in strengthening domestic forest law enforcement, including Costa Rica, Mozambique and Honduras. In 2002, FAO organized a high-level meeting with country experts, international organizations including ITTO and the World Bank, NGOs, specialists from the private sector and research institutions to examine the range of policy reforms that could potentially improve law compliance in the forest sector. ITTO has carried out several country studies, projects and missions designed to lead to improved forest law enforcement. It has also analysed discrepancies in reported trade statistics and the role that these can play in identifying instances of illegal trade. Based on the growing experiences of both organizations in this field, a decision to produce a joint FAO/ITTO report on best practices in forest law compliance was taken in 2004. A peer review group of 20 experts from governments, NGOs and the private sector provided guidance and feedback on a draft version of the publication.

This report is based on studies of the experiences of a number of countries in their efforts to reduce illegalities, as well as on a critical evaluation of experiences in other sectors and the available literature on this theme. It draws on country analyses in Bolivia, Cambodia, Cameroon, Ecuador, Honduras, Indonesia, Italy, Malaysia, Mozambique, Nicaragua and Peru. These countries have all tried, with different degrees of success, to implement practices to curb illegalities in the forest sector. This publication has also benefited from background studies on legal and economic aspects. It focuses on the causes of poor law compliance in the sector and the remedial measures that can be adopted to reduce the impact of these causes. It includes various complementary analyses related to the promotion of non-state initiatives, ways to access international support and understanding and managing the political economy of policy and legislative reform.

The main aims of the publication are to:

Because of the high level of focus on the subject of illegal logging and illegal timber trade and the rapid developments that accompany it, any document of this nature will need to be updated regularly. However, the main purpose of the case studies presented here is to provide an overview of the wide array of actions which have been undertaken at different points by different countries, regardless of whether these actions are ongoing or not. Although some of the actions may not have achieved the expected success for a variety of reasons, often related to political change, they covered useful options that could contribute to improving forest law compliance.

It should be noted that strategies to address illegal forest activities will have to take into consideration the complexity of these acts as well as their underlying causes. Conditions will vary significantly from country to country. Thus, it is not possible to design detailed policy, legal and institutional schemes of general application, or "magic bullets" that would inexorably lead to better law compliance. Accordingly, this book discusses strategic options rather than providing a detailed blueprint for government action. These will need to be adapted and tailored to the specific context of each country.

Chapter 2 describes the main illegal acts observed in the forest sector. It analyses their economic, social, institutional and cultural root causes, which must be addressed when developing a strategy to curb forest crime.

Chapter 3 focuses on the main consequences of illegal forest operations and outlines the main elements of a strategy for improving law compliance, examined in more detail in the rest of the paper.

Chapter 4 looks at ways to rationalize the policy and regulatory framework and provides examples of best practices to increase the clarity, transparency and consistency of forest-related legislation, minimize bureaucracy and streamline legal procedures and regulations. It also addresses the issues of forest tenure, cross-sectoral collaboration and judiciary independence.

Chapter 5 examines options for building institutional capacity for forest law compliance, through increased focus of the forest administration's actions and increased operational capacity for monitoring forest operations. Public-private partnerships are presented as a viable solution to assist governments in preventing, identifying and suppressing forest crime.

Chapter 6 is dedicated to the issue of identifying and estimating the scope and nature of illegal forest acts through better data collection and information systems.

Chapter 7 looks at the possible strategies governments may adopt to secure broad support for reforms to improve forest law compliance. It is of critical importance to realize that even the best designed initiatives to impose law and order may fail unless they adequately recognize and manage the influence of powerful stakeholders.

The different components of a strategy for better forest law compliance are intimately related and should be mutually supportive. They should not be viewed as discrete actions, each to be implemented in isolation, but rather as part of a holistic strategy to achieve sustainable forest management.

The ultimate purpose of the report is to provide public sector decision-makers with a broad framework for planning and implementing actions to improve legality in the forest sector. It is important to underline that the effectiveness of the proposed measures (and therefore the usefulness of this publication) depends on the political will of governments to improve forest law compliance. Even well-designed initiatives to promote forest law compliance will fail unless there is political commitment at the highest level to address corruption and lack of transparency. There is no easy fix for these fundamental socio-economic problems and the forestry sector may only be able to have a limited impact as the solutions may, to a great extent, lie in other sectors. Therefore, improved intersectoral collaboration and stakeholder involvement to address underlying socio-economic and cultural factors are also required. Forest law enforcement and governance should not be dealt with solely through national forest and development programmes, but in collaboration with other sectors, and to the extent possible, within existing mechanisms.

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