Conservation Tools and Forest Certification

1. Conservation Tools and Forest Certification B. Bruce Bare College of Forest Resources University of Washington, Seattle November 9, 2000

2. OUTLINE • What is certification? • General approaches? • Who sets the guidelines? • Costs and benefits? • Relationship to other conservation tools?

3. OUTLINE • What is certification? • General approaches? • Who sets the guidelines? • Costs and benefits? • Relationship to other conservation tools?

4. IN GENERAL? • A 1990’s initiative that encourages landowners to practice sustainableforestry and to give consumers assurance that forestproducts come from sustainable forests. Includes both forestcertification and chain-of-custody components.

5. WHAT IS CERTIFICATION? • Process by which a forest owner voluntarilyrequests an inspection of a forest to determine if pre-defined management standards are being met. • Process for assessing if a forest is managed sustainably. • A way to communicate environmental information about forests to consumers.

6. WHAT IS A SUSTAINABLY MANAGED FOREST? • A forest managed to meet all existing regulations such that environmental, socialand economicfactors are balanced to meet the needs of the present without compromising the ability of future generations to meet their needs.

7. WHAT IS A SUSTAINABLY MANAGED FOREST? • A land stewardship ethic that integrates reforestation, growing, and harvesting trees for useful products while conserving soil, air, and water quality, wildlife and fish habitat and aesthetics, and protecting the resource from fire, pests, and diseases. • Protection of lands of special significance.

8. A SUSTAINABLY MANAGED FOREST INCLUDES • Consideration of key values: • biodiversity • habitat protection and enhancement • riparian/wet land protection • protection of productive capacity • protection of endangered plants and animals • protection of cultural, spiritual, and historical sites

9. FOREST CERTIFICATION AND SUSTAINABLE FORESTRY • Forest certification isn’tnecessary to guarantee sustainability and it maynot be sufficient. • Certification best viewed as: 1) important “policydriver” for improving forest management standards and practices 2) satisfying buyergroups and consumers of forest products.

10. OUTLINE • What is certification? • General approaches? • Who sets the guidelines? • Costs and benefits? • Relationship to other conservation tools?

11. TWO GENERAL APPROACHES? • Performance-based • Use criteria, performance measures and indicators to monitor performance over time (on-the -ground) • Management system-based (EMS) • Generic guidelines and standards (ISO 14001) • Forestry-specific (SFI, CSA)

12. TWO GENERAL APPROACHES • Systems are evolving to be a mixture of both approaches

13. OUTLINE • What is certification? • General approaches? • Who sets the guidelines? • Costs and benefits? • Relationship to other conservation tools?

14. WHO SETS THE GUIDELINES? • Government • UNCSD (IPF, IFF, Helsinki and Montreal Processes, Santiago Declaration). Help establish criteria and indicators. • Private • AF & PA (SFI , 1994), PEFC (Europe, 1999) • ATFS (1945), Green Tag (NFA, 1998) • NGO • FSC (1993) • ISO 14001 (1996), CSA (1995)

15. WHO DOES THE CERTIFYING? • First party -- the land owner or firm • Second party -- an industry or association • Third party -- an independent certifier • Rainforest Alliance (SmartWood, FSC) • Scientific Certification Systems (FSC) • Voluntary Verification (SFI, PEFC)

16. IS CERTIFICATION NECESSARY? • Many believe that sustainable forestry is already being practiced in the developed countries where about 75% of the certified forests are now found. • Demand being driven by large buyergroups who are being pressured to sell certified products. Small owners may be forced to comply -- non-voluntary.

17. IS CERTIFICATION NECESSARY? • In addition, in states such as Washington, tough forest practice regulations guide forestry operations on state and private forest land.

18. QUESTIONS? • Should Washington State forest lands be certified? • If so, which certification system to use? • Must consider the relationship between the possible certification systems and the goals, objectives, and requirements that guide state forest land management.

19. LOOK INTO TWO CERTIFICATION SYSTEMS? • SFI Standard • FSC Principles and Criteria

20. SFIS PRINCIPLES (1-5) • Practice sustainable forestry • Engage in responsible practices • Protect forest health and productivity • Continually improve forest management practices • Protect special sites

21. FSC PRINCIPLES (1-5) • Compliance with laws and FSC principles • Tenure and use rights and responsibilities • Indigenous people’s rights • Community relations and worker’s rights • Benefits from the forest

22. FSC PRINCIPLES (6-10) • Environmental impact • Management plan • Monitoring and assessment • Maintenance of high conservation value forests • Plantations

23. SFIS OBJECTIVES (1-3) • Employ an array of scientifically, environmentally, and economically sound practices in use of forests (4 PM) • Ensure long-term forest productivity (6 PM) • Protect water quality by use of riparian protection measures (4 PM)

24. SFIS OBJECTIVES (4-7) • Manage wildlife habitat and conserve biodiversity (3 PM) • Manage visual impact of harvest operations (4 PM) • Manage lands of special significance (1 PM) • Promote efficient use of resources (1 PM)

25. SFIS CORE INDICATORS • For each performance measure a set of core SFI indicators must be satisfied to gain certification • For example, under objective #5 (visualimpacts), one PM is to use green up requirements to schedule clearcuts on adjacent harvest units. A core indicator is to have a written green up plan or policy.

26. SFIS CORE INDICATORS • Under objective #2 (long termproductivity), one PM is to use forest chemicals prudently. A core indicator is to train all forest workers using chemicals and to use trained people as supervisors.

27. FSC PRINCIPLES • Under principle #5 (benefits from the forest), the rate of harvest shall not exceed levels which can not be permanently sustained. • Under principle #6 (environmental impact), ecological functions and values shall be maintained intact, enhanced, or restored.

28. FSC PRINCIPLES • Under principle #6 (environmental impact), forest conversion to plantations shall not occur except in limited areas but not in high conservation value forests • Under principle #9 (high conservation value forests), decisions shall always be considered in the context of a precautionary approach.

29. FSC DEFINITIONS • High conservation value forest: 1)possess globally, regionally, or nationally significant species, or large landscapes contained within, or containing, the management unit where viable populations of most if not all naturally occurring species exist in natural patterns of distribution and abundance.

30. FSC DEFINITIONS • High conservation value forest: 2)contain rare, threatened or endangered ecosystems, 3)provide basic services of nature in critical situations (i.e. erosion control), or 4)are fundamental to meeting basic needs of local communities.

31. FSC DEFINITIONS • Precautionary approach: tool for implementing the principle of forest stewardship

32. FSC PRINCIPLES • Under principle #10 (plantations), should promote the restoration and conservation of natural forests. • Plantations in areas converted from natural forest after November 1994 normally shall not qualify for certification.

33. AREA CERTIFIED • FSC • 19.1 million ha world-wide • 2.5 million ha in USA (9.0 ha in Sweden) • .021 million ha in Canada • SFI • 27.9 million ha in No. Am. About 68% independently verified by third party (2001) • SFI licensees 5.7 million ha in No. Am. Both public and private. 1.3 million ha in USA.

34. AREA CERTIFIED • ATFS • 10.1 million ha in USA • Green Tag • 18,000 ha in USA (as of late 1999) • PEFC • 23.5 million ha in Europe (15 million ha in Finland)

35. AREA CERTIFIED • ISO 14001 • 21 million ha in Canada

36. OUTLINE • What is certification? • General approaches? • Who sets the guidelines? • Costs and benefits? • Relationship to other conservation tools?

37. HOW MUCH DOES IT COST? • Costs of certification: • Direct cost of initial forest assessment plus required annual audit and re-assessment. • Indirect cost of improved forest management practices (i.e., reduced harvest or increased expenditures). • Cost of chain-of-custody audit

38. HOW MUCH DOES IT COST? • Economies of scale indicate that some small land owners will be hit harder (percentage-wise) than large owners. • Assessment costs vary widely but may not be high -- from a minimum of $.50 - $1.50/acre for small properties to $.10 -.25/acre for larger properties.

39. HOW MUCH DOES IT COST? • One study shows: • Increase in COGS due to FSC certification was <10% for 84% of survey respondents. For 50%, the increase was < 3%. Average was 5-6%.

40. HOW MUCH DOES IT COST? • Assume that initial assessment costs are $0.15/acre for a 2 million acre sustainable forest property (i.e., $300,000) on a 50 year rotation, and a harvest volume of 35 MBF/acre is realized annually for five years, then the cost/MBF/acre harvested is about $.04/MBF. Ignores annual audit cost and harvest reduction from surplus inventory.

41. HOW LARGE ARE THE BENEFITS? • The objectives of forest certification are to: • gain (keep) access to markets that desire environmentally sensitive products • promote sustainable forest management • Producers might gain marketshare and might experience a pricepremium for certified wood products.

42. HOW LARGE ARE THE BENEFITS? • One study shows: • For purchasers of certified wood products the average price premium paid was 6-7% with 35% paying less than 3% and 55% less than 5%.

43. HOW LARGE ARE THE BENEFITS? • World-wide, less than 1% of the annual harvest currently comes from certified forests. Expected to increase in near-term future as more lands are certified. • In general, pricepremiums for “green” wood products are small or non-existent but market share is important in some regions such as western Europe.

44. HOW LARGE ARE THE BENEFITS? • However, price premiums probably do exist in niche markets. • Demand is growing; presently is being pushed by buyer groups and not end-product consumers who are generally unaware of the existence of certified wood products.

45. HOW LARGE ARE THE BENEFITS? • One way to examine the economics of forest certification is to compute the breakeven price increase premium to pay for the costs of certification. • See spreadsheet for illustration.

46. OUTLINE • What is certification? • General approaches? • Who sets the guidelines? • Costs and benefits? • Relationship to other conservation tools?

47. RELATIONSHIP TO OTHER CONSERVATION TOOLS? • Certification, forest land trusts (conservation easements), HCP’s, and cost-sharing are voluntary programs. • Easements and HCP’s generally involve a long time commitment by landowner (50+ years or permanent). Certification and cost-sharing are shorter (5+ years) and more easily cancelled.

48. RELATIONSHIP TO OTHER CONSERVATION TOOLS? • Conservation easements have estate and income tax benefits whereas certification has potential for market share and price premiums. • Conservation easements are legal covenants on the land, certification is a temporary renewable agreement.

49. RELATIONSHIP TO OTHER CONSERVATION TOOLS? • Buyer groups gain assurance conveyed by certification. • HCP’s provide incidental take permit not offered by other conservation measures.

50. RELATIONSHIP TO OTHER CONSERVATION TOOLS? • Can combine certification with a working easement, HCP or cost-share program. • One advantage of combining certification and a working easement is that asset reduction incurred to achieve certification might be viewed as a charitable deduction (or a lower tax liability when passed as an inheritance) if placed under an easement.