Changes in the Global Forest Governance Architecture and Their Implications for Property Rights Reform Steven Lawry, Research Director, Forests & Governance World Bank Conference on Land and Poverty, March 25, 2015

Forest governance arrangements have changed considerably over the past years Dominant model based on state ownership of forests and active regulation of forest uses being challenged by a hybrid architecture, with the market, civil society and forest users designing and managing new kinds of arrangements. These arrangements, still evolving, raise important (and promising) questions about the role of forest (and tree) property rights in advancing sustainability and livelihoods objectives. Forest rights devolution to communities has been principal focus of property rights reforms over the past 20 years Additional, new kinds of property rights reform models may be indicated, adaptive to the structure and aims of new governance arrangements The Argument

Features of state models: State-ownership of forests (and often trees planted on farms) Forest use actively regulated for rule enforcement and permitting/licensing for timber extraction (often an important source of state revenue) Smallholder uses including use of NTFPs often fall into illegality, subject to punitive enforcement Rhetoric of conservation used to justify state ownership, though conservation (and equity and livelihoods) outcomes often poor State-centric systems remain dominant but under challenge

Reform of state arrangements (I) REDD+ Focus on mitigating the drivers of deforestation & reducing forest GHG emissions; REDD+ invests heavily in reform of state policies and institutions, including tenure institutions. State is seen as leading edge of reform Property rights reforms to incentivize conservation behaviors of forest users; livelihoods enhanced by income from carbon markets and benefit- sharing. Rights devolution elements not widely adopted or poorly implemented Generally speaking, failure to link benefit sharing to rights Key funders beginning to see opportunities to link REDD+ with consumer/market initiatives State-based and non-state governance reform initiatives

Considerable intellectual justification provided by common property resource management scholarship Significant arena of advocacy by indigenous communities and global indigenous rights organizations However, rights devolution has found few advocates within governments Policy discourse argues that environmental and social outcomes better where communities hold a greater share of rights in the bundle; research findings are ambivalent (Ojanen, et. al. 2015) A few countries have adopted new policies and legislation supportive of forest rights devolution, though where adopted implementation has often been weak (there are a few exceptions—Nepal, Vietnam) Reform of state arrangements (II) Forest rights devolution

The Rise of Non-State Actors (I) Certification Certification regimes represent an early and iconic example of non-state governance arrangements: Key feature is market rewards/access for commodities produced to sustainable environmental and social standards. Market is responding to consumer expectations informed by environmental movement and NGO activism Certification standards set by a diversity of nonprofit and industry bodies Scale of commodity production covered by certification is considerable and growing (All timber purchased by Home Depot is FSC certified; Nestle procures 12 commodities world- wide, all value chains certified; Consumer Goods Forum promotes high industry standards.) Increasingly legality of trade and production is linked to certification (FLEGT and VPA). This is pushing a number of small producers into illegality. Property rights issues: Participation in certification regimes not necessarily property rights reform dependent (Agrawal, et. al. 2008) but degree of tenure security important

Zero-Deforestation Pledges New York Declaration on Forests, signed by major commodity producer and consumer companies in September 2014, aims to halve the rate of deforestation by the end of 2020 and eliminate deforestation by Companies pledge zero-deforestation throughout value chains. Most large oil palm producer and consumer companies have signed the pledge. Producers of other companies responsible for forest conversion, such as beef, soy, sugar, and timber, are signing up. The Rise of Non-State Actors (II)

Large-scale production takes place on state concessions under long-term leases. GHG emission reduction, avoided deforestation and other effects could be considerable and merit evaluation. Impacts of pledge implementation on verification of ‘clean’ smallholder production may be negative due to high transaction costs of verification Considerable need to focus on designing and implementing pledges in ways that include smallholders in ‘clean’ value chains Safeguards that extend greater tenure security to facilitate investment in and by smallholders, stabilize production, increase productivity and secure legality could be leveraged by ESG investment conditions. Zero-Deforestation Property Rights Issues

Non-state arrangements are driven by combination of consumer-driven market signals and global environmental advocacy. These represent powerful forces capable of leveraging meaningful state action on tenure reform Investor assessments of environmental and social risk emerging as major source of leverage for higher ESG standards. Possible that efficacy of zero-deforestation arrangements in reducing deforestation greater than state regulation? (Giggs, et.al. 2015, on the Brazil soy moratorium). GHG reduction, avoided deforestation and other impacts should be compared across state and non-state models. State-centric reform initiatives such as REDD+ and rights devolution can usefully assess potential of market initiatives to reduce emissions through avoided deforestation and forest degradation. Summary reflections

Agrawal, Arun, Ashwini Chhatre, Rebecca Hardin. (2008).Changing Governance of the World’s Forests. Science. Volume 320, pp Gibbs, H.K., L. Rausch, J. Munger, I. Schelly, D. C. Morton, P. Noojipady, B. Soares-Filho, P. Barreto, L. Micol, and N.F. Walker. (2015). Brazil’s Soy Moratorium: Supply chain governance is needed to avoid deforestation. Science. Vol. 347 no pp Ojanen, Maria, Wen Zhou, Louis Durey, Daniel C. Miller, Baruani Mshale, Sue Helen Nieto, Esther Mwangi, Gillian Petrokofsky. (2015). Preliminary Findings from a Systematic Review on the Environmental Impacts of Different Property Rights Regimes in Forests, Fisheries and Rangelands. Paper presented at the World Bank Conference on Land and Poverty, 24 March, 2015, Washington, DC References