Theme 5:

Impacts of trade and investment on forests and people

Bogor, March 2013

Understanding the processes and impacts

of forest-related trade and investment

Improving responses and policy options to

mitigate the negative impacts and enhance

the positive impacts of trade and investment

Two research sub-themes

Main goal

Theme 5 of CRP6 (ex-Component 5) aims to

catalyze shifts in trade and investment trends

taking place in forested landscapes, targeted at

reducing their negative impacts and enhancing

their positive effects on forests and people to

advance sustainable and inclusive development

Rationale There is a growing influence

of T&I on forest resources use, landscape change and people’s livelihoods

Main trends are linked to:

• Shifts in commodity flows; • Growing convergence of food, feed,

energy and financial markets; • Expanding role of transnational

capitals in producer countries and emerging-market multinationals

Impacts are mediated by multiple policy, market and institutional conditions that operate at different scales

A simplified framework

Local actors and

conditions (socio-

economic, institutional

and ecological)

National and sub-

national policies and

legal frameworks

Impacts on

forests and

people and

trade-offs

Responses in

consumer

countries

Corporate

strategies

and business

models

Socio-

ecological

interactions

linked to T&I

Responses in

producer

countries

Transition pathways

Global T&I

flows and

patterns

Multi-

stakeholder

processes

Im

pa

cts

an

d r

esp

on

se

s

Global

Local

Drivers Impacts Responses

Timber

Oil palm

Soybean

Minerals

Others

Subject areas

The role of emerging economies in

land and forest resources use

Large-scale land acquisition and

investments and their impacts

Implications on forests from food

systems and biofuels development

Domestic and international timber

trade and legality compliance

Forest crime, corruption and

integrated law enforcement

Impacts from Chinese trade

and investments in Africa

Large-scale land

acquisition for food, fiber,

and energy In Indonesia

Building enabling legal

frameworks for sustainable

land use and low carbon

investment

Integrating the domestic timber

sector in the formal economy in

the context of FLEGT-VPAs

Anti-corruption and anti-

money-laundering

frameworks associated

with the forestry sector

Research highlight 1 China – Africa: Value chains, households, environmental impact

Chinese involvement in

timber extends into all forest

regions, and further to the

middle of the continent

Chinese actors are heavily

engaged in mineral

extraction, with potentially

large indirect effects

Little evidence that Chinese

interests are important in

large-scale land acquisition

Different patterns of Chinese involvement in Congo

Basin Region Timber

Country Number of

active

Concessions

(2010)

Area (ha) Share of national

concession forest

Observations

Gabon (2010) 121 2,7 m 25% High-level gov’t arrangements with

Chinese logging companies

Cameroon

(2009)

5 0.5 m 10% One Hong kong-based group

DRC (2010) 0 0 0 Small scale permits/domestic

market trade

Research highlight 2 Chainsaw milling in Central Africa

Domestic timber markets contribute with €60M

(excluding DRC) to the national economies

Contribution (in some cases) higher and

(always) redistribute better than industrial

Networks of corruption “fight” formalization and

affects income distribution from timber

Distribution of chainsaw milling

costs by production factor

Source: Cerutti and Lescuyer 2011;

Lescuyer et al. 2010, Lescuyer et al. 2011,

Cerutti et al. Forthcoming.

Research highlight 3 Implications of biofuel-induced

land-use changes

Direct and/or indirect land-use changes from cultivation

of feedstocks can cause emissions due to carbon

losses from biomass and soil

Among the different case studies, the largest carbon

debts are related to oil palm (certainly in peat land).

Repayment times are the longest for oil palm due to

peat land conversion and for Jatropha due to low

yields and consequently low CO2 repayment rates

Carbon debt and

related repayment time

due to direct (dLUC)

and indirect land-use

change (iLUC)

Note: the graph represents the low iLUC scenario

Source: Achten and Verchot (2011). Ecology and Society

The corporate strategies rather than the “ethnic origin” of

investments explain the differential practices and outcomes

“Business models” adopted by companies are crucial to

understand the differentiated local socio-economic impacts

The disparate outcomes of large-scale investments tend to

depend on local state-society-agribusiness configurations

Options for smallholders largely depend on the access and

performance of broader market and financial networks

Better governance requires concerted efforts by governments of

producer and consumer countries, financial sector and investors

Some findings and observations

Emerging new narratives of development

- green economies, but business as usual

will persist unless incentive systems and

power structures [+ others] are modified

While large-scale investments often lead

to negative environmental impacts, they

can contribute towards sustainable land

use and low carbon development

Interesting policy innovations are being

put in place in forest-rich producer and

consumer countries, but impacts on

forests and people are still uncertain

Emerging issues on pathways