Tackling Illegal Logging and Associated Trade Lessons Learned for REDD Design and Implementation Indonesia Case Study May 28, 2009 AFP Dialogue

Illegal logging and associated trade timber harvest, transportation and trade in violation of a countrys law In the past decade has become the main issue in forest policy discourses and intervention World Bank: Illegal logging causes $10-15 billions lost revenues to government (around 8 x the money spent on sustainable management of forests) Strong relation between illegal logging and governance failure

World Bank (2006), source data from TI and Seneca Creek (2004)

Measures to tackle Illegal Logging Supply side measures: improving Law enforcement bilateral cooperation regional cooperation: FLEG, AFP, ASEAN

Demand side measures: Public Procurement policy: UK, Germany, Japan, New Zealand National legislation: EU FLEGT (2003), US Lacey Act Amendment (2008)

aimed to promote legal wood trade between EU and producing country through licensing system consultative process to develop standard legality and verification system that include independent monitoring Indonesia, Malaysia, Cameroon, Liberia, Ghana, Congo addressing circumvention and third country laundering through EU Due Diligence Regulation FLEGT-Voluntary Partnership Agreement

US Lacey Act Amendement 2008 Prohibit trade of illegally sourced plant and products require importers to submit declaration for covered plant and products establish penalties for violation of the Act, depending on the company/persons knowledge and intent affect how private sector operates Increase transparency in supply chain

Other International instruments: CITES Anti - Timber Trafficking UN Resolution

Deforestation and forest degradation account for 20% of GHG emission Reducing Emission from Deforestation and forest Degradation (REDD) has been proposed as a way to address this In general REDD is aimed to give economic incentives for countries to keep their forests standing. Mechanism to implement this is still on discussions Illegal Logging and REDD

One of the worst deforestation rate due to: illegal logging, forest fire, forest conversion Illegal logging controlled by timber barons, most still untouchable due to weak justice system unclear law and policy creates gray area, allowing illegal practices to continue Indonesia Case Study

Measures taken improving law enforcement: Presidential Instruction in 2004 developing timber legality standard and verification system include other instruments such as anti- corruption law and anti money laundering law in pursuing illegal logging case signing MoU with various countries: UK, China, US, and currently negotiating VPA with the EU

Effect Reduction in deforestation rate: 2.8 mil Ha --> 1 mil Ha (MoF, 2007) reduction of timber smuggling due to improved enforcement consultation process to develop timber legality verification standard and VPA resulted in all stakeholders agreement, open dialogue among stakeholders

all stake holder consultation and participation, especially local and indigenous communities; establishing clear national laws pertaining forestry and tenurial right; policy coherence not only in forest sector but other related sectors, and this also means coordination between related agencies, both vertically and horizontally; monitoring performance through a verification system; Reciprocal responsibility to ensure fairness among countries Lessons Learned

Strong political will is key

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