1. 1 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 1 19TH ROUND TABLE ON SUSTAINABLE DEVELOPMENT OECD The Economics of Illegal Logging and Associated Trade Paris, 8/9 January 2007

2. 2 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 2 OECD Round Table on Sustainable Development Ministerial level, multi-stakeholder, informal dialogue forum –Achieving a shared understanding –Alternative to formal negotiating structures –Catalyst for action on global issues Objectives for meeting on illegal logging –Analyse progress made to date –Discuss ideas for practical action (‘no regrets’) –Engage ministers and representatives with different backgrounds and portfolios www.oecd.org/sd-roundtable see ‘meeting papers’ www.oecd.org/sd-roundtable

3. 3 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 3 Analysis Increased cost of compliance on the supply side –Licensing and certification No discriminating market on the demand side –Trade displacement No shared long term objective –Make UNFCCC, BDC and MDG goals operational for forest

4. 4 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 4 Unit Cost of Certification (in $) Per haPer M 3 IMPACEL, Brazil (plantations)8.750.04 CIKEL, Brazil (Natural Forest)7.252.55 DRT, Indonesia (Natural Forest)31.7210.06 KPKKT Malaysia (Natural Forest)2.760.67 PITC, Malaysia (Natural Forest)25.534.60

5. 5 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 5 Number of hectares under different certification standards Source: Cashore et al, 2006

6. 6 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 6 Area certified under each system as a % of total regional forest cover Source: Cashore et al, 2006

7. 7 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 7 Analysis Increased cost of compliance on the supply side –Licensing and certification No discriminating market on the demand side –Trade displacement No shared long term objective –Make UNFCCC, BDC and MDG goals operational for forest

8. 8 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 8 Major ‘high risk’ trade flows

9. 9 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 9 Analysis Increased cost of compliance on the supply side –Licensing and certification No discriminating market on the demand side –Trade displacement No shared long term objective –Make UNFCCC, BDC and MDG goals operational for forest

10. 10 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 10 FLEGT ‘No regret”? (1) FLEGT ineffective –Geographical coverage limited, –and not likely to be expanded…. –Referring to FLEGT as ‘second best’ is ambiguous but holds promise –financial assistance –Market pressure by creating awareness –Learning experience for multilateral trade agreement

11. 11 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 11 ’No regrets’ (2) Positive incentives climate change regime –High potential, high risk –How to allocate benefits? Closing information gaps for sound policy –Impact of illegal logging on the forest –Interaction with deforestation –Trade flows –Cost of certification and effect on market prices –Cost of certification and competitiveness –Long term projections for demand and supply of wood products

12. 12 25-26 January 2007Chatham House, Illegal Logging Update and Stakeholder Consultation 12 ‘No regrets’ (3) Improving information flows and cooperation between agencies and companies –engaging custom offices –engaging ministry of finance Using modern technologies to increase transparency and governance –Satellite images –Web based tools –Log tracking technologies