1. Value chain governance and national forest conservation policies: Scope and limitations Jan Börner 1,2, and Sven Wunder 2 1 Center for Development Research, University of Bonn 2 Center for International Forestry Research (CIFOR) jborner@uni-bonn.de, s.wunder@cgiar.org Foto: Neil Palmer

2. Good and bad news on forests Fig. 3 Annual forest loss totals for Brazil and Indonesia from 2000 to 2012.The forest loss annual increment is the slope of the estimated trend line of change in annual forest loss. M C Hansen et al. 2013

3. New drivers, new solutions? Deforestation is on the rise in most tropical forest countries Drivers of tropical deforestation are becoming increasingly global (e.g. Wheeler et al. 2013) Proliferation of value chain governance initiatives M. Lenzen et al. (2012)

4. What brought deforestation down in Brazil (Amazon)? Investments in monitoring technology Forest governance reform in 2004 Reliance predominantly on command-and- control Arima et al. 2014

5. Did value chain governance work? Yes, before the Soy Moratorium, 30% of soy expansion occurred through forest conversion. Afterwards most expansion occurred on cleared land (e.g. old pastures), only 1% through deforestation. No, because a 10% expansion of soy on old pastures was associated with a 40% increase in deforestation, mainly for cattle, at agricultural frontiers in the Amazon. Soy Moratorium Gibbs et al. 2015 Arima et al. 2011

6. Why should we worry that iLUC threatens zero deforestation commitments? Ag. rent $/ha Forest area100% 0%

7. Why should we worry that iLUC threatens zero deforestation commitments? Ag. rent $/ha Forest area100% 0% Infrastructure expansion Commodity price increases Technological change (if producers are price takers)

8. Why should we worry that iLUC threatens zero deforestation commitments? Ag. rent $/ha Forest area100% 0% Soy Cattle Soy dominated landscape Pasture dominated landscape

9. Why should we worry that iLUC threatens zero deforestation commitments? Ag. rent $/ha Forest area100% 0% Soy Cattle Soy Moratorium controls only one commodity Expansion cost (land price) for cattle farms decreases at the frontier Capitalization of cattle producers through land market?

10. Why should we worry that iLUC threatens zero deforestation commitments? Ag. rent $/ha Forest area100% 0% Soy Cattle Soy Moratorium controls only one commodity Expansion costs (land price) for cattle farms decreases at the frontier Controlling soy, but not cattle producers increases access to profitable land for the latter

11. Why should we worry that iLUC threatens zero deforestation commitments? Ag. rent $/ha Forest area100% 0% Soy Cattle Soy Moratorium + National forest law enforcement Enforcement (access) cost

12. Field-based law enforcement in the Brazilian Amazon Börner et al. 2015 Börner, Wunder et al. 2015 Field inspections along with confiscation and embargos statistically significant deterrent Costs of enforcement increase with remoteness and poor property rights definition Probability of enforcement varies in space

13. Why should we worry that iLUC threatens zero deforestation commitments? Ag. rent $/ha Forest area100% 0% Soy Cattle Soy Moratorium + National forest law enforcement Enforcement (access) cost

14. Why should we worry that iLUC threatens zero deforestation commitments? Ag. rent $/ha Forest area100% 0% Soy Cattle Soy Moratorium + National forest law enforcement Enforcement (access) cost Rebound effect of value chain- based initiative (iLUC) depends on investment in national forest law enforcement

15. Summary Proliferation of value chain governance initiatives (e.g., zero deforestation commitments) for bio-based commodities Evidence confirms direct conservation effects, but also points to large indirect rebound effects through iLUC Few theoretical frameworks explain iLUC at agricultural frontiers and causality is hard to establish empirically Contextual factors that increase risk of iLUC-induced deforestation: – abundance of forest land at agricultural frontiers (Amazon) – competing internationally traded commodities with varying degrees of productivity and value chain governance (soy vs. beef) – Weak forest law and/or forest law enforcement (SE Asia, Africa) – “Legal” access to forest land

16. Implications Value-chain governance can complement, but not substitute national forest law & enforcement Lessons for targeting national forest law enforcement in the presence of value chain governance initiatives and vice versa Multi rather than single value chain governance? Role to play for international forest conservation mechanisms, such as REDD+