Introduction

1. Progress and Options for Forest Certification in Complex Governance and Socio-Political SettingsMichael RichardsConsultant to Forest Trends

2. Introduction • Objectives: • assess progress & impacts (original rationale); • review evolving and innovative approaches; • inform future options for certification • Methodology: literature review, key informant discussions and 7 ‘mini case studies’ • “Complex settings”: major forest governance problems - focus here on 4 main regions

3. Impacts • Main impact on FMUs operating slightly below ‘gold standard’: less impact on ‘across the board’ management standards - size of ‘standards gap’ is major disincentive for most FMUs • Positive impacts:- • increased company and supply-chain transparency; • forest planning, inventory, monitoring benefits; • more participatory forest policy process; • social benefits in industrial forest concession areas; • non-market benefits for community forestry; • complements legal and institutional reform, e.g., Bolivia • domestic market interest in some mid-income countries. • But also difficulties, especially equity problems: e.g., encroachment of customary rights in S-E Asia; high costs and limited market benefits for CFEs

4. Modified/evolving approaches • ‘Stepwise’ approach allows bite-size improvements, incentives: tackles ‘standards gap’ problem • Modular Implementation and Verification (MIV) system • IKEA, Home Depot, etc. have own stepwise systems • But concerns: proliferation/confusion; will ‘transition timber’ lower standards? • Group certification and FSC SLIMF initiative • National producer groups set up by WWF GFTN • Tropical Forest Trust - links retailers and producers • Keurhout scheme: endorsed certificates Malaysia, Africa • Environmentally responsible investment: Equator Principles, Forest Investment Forum

5. The difficult economics of certification - and SFM • Small or absent premium and high costs (including opportunity costs of SFM = foregone windfall profits) • SFM implies shift to multiple species, products and services - but markets for environmental services (PES), LKS and (certified) NTFPs poorly developed NB Premium should compensate environmental services of SFM • Consequences: certification and SFM are likely to be donor-led and subsidised until markets developed and opportunity costs reduced by improved forest governance

6. Conclusions and dilemmas • Too much expected too soon: SFM is very difficult due to a range of market, policy and governance failures - certification does not significantly effect the underlying economic problems • Since it is not market-driven (in tropics), certification is often imposed in inappropriate governance conditions, and isolated from policy/governance efforts • Better progress in countries with improving governance and national FSC processes • Dilemmas:

8. Priorities and recommendations • Balance certification efforts and establishing policy and governance pre-conditions: • regulatory reforms and control of illegal logging can reduce ‘standards gap’ and increase incentives • promote more equitable forest legislation, and clear property and tenure rights • develop local stakeholder capacity to participate • Balance between fast and slow track: certification could follow mandatory legal compliance, but special attention needed to equity issues like customary tenure • Integrate certification into broader governance approach, e.g., use it to create regulatory incentives (Bolivia) but compulsory certification is problematic

9. Priorities/recommendations (cont.) • Develop markets for PES, LKS and NTFPs • Encourage national buyer groups, consumer education • Encourage socially responsible policies in corporate and financial sector (due diligence, sustainable investment principles) • Rationalise certification to make it doable, e.g., Sumatra - 240 indicators • More flexible and possibly non-market process for community forestry (CIFOR C&I as an example)