Governance and Institutions

Governance

Definition of governance: The World Bank governance and anticorruption strategy defines governance as “Governance refers to the manner in which public officials and institutions acquire and exercise the authority to shape public policy and provide public goods and services; and “Corruption is one outcome of poor governance, involving the abuse of public office for private gain.”

Importance of good governance for sustainable forest development:¹

Poor governance is a major impediment to achieving development outcomes in the forest sector. It results in losses of income, employment, government revenues, and local and global environmental services. In the specific context of REDD, for example, it is widely agreed that without good governance and promotion of legality in the forest sector, REDD schemes have little opportunity to be successful. Although usually it is relatively easy to recognize that the forest sector in a country is failing to deliver all its potential benefits, the lack of an appropriate analytical framework makes it much harder to identify the major shortcomings and to propose a fitting response. The economic and sector work (ESW) “Roots for good forest outcomes: An analytical framework for Governance Reforms” carried out by the World Bank in 2009 was the first step in creating a reformer’s tool to diagnose forest governance weaknesses and pinpoint appropriate reforms.

Improving governance is now being seen as a top priority, and there is a healthy trend among many countries that produce and consume timber and forest products to seek cooperative solutions. At the same time, country-level efforts have also been stepped up. Despite these positive trends, much more needs to be done, as improving forest governance is a tough and time-consuming task.

Gaps in knowledge

There continues to be significant gaps in our knowledge that constrain our readiness to identify and plan reforms – these are:

• First, governance is a broad term, embracing a varied set of actors and factors with complex interrelations. Understanding of these complexities and reforms needed are not adequate;
• Second, there have been few attempts to merge the academic efforts with the field experience to accelerate learning and development of practical approaches. This has created what the ESW calls a problem of the “missing middle.” This is demonstrated by the lack of any notion of a big-picture approach covering crucial aspects of forest governance; and
• Third, governance reforms create losers and gainers. The former block reform efforts, whereas the latter would be supportive. For obvious reasons, politicians are unwilling to take “hard” decisions, and the political will required to initiate and sustain reforms is conspicuously lacking. Thus, there is a need to better understand the political economy of reform processes, underpinned by stakeholder analysis.

Review of literature – five basic building blocks of governance

The ESW reviewed the literature and existing indicators which were analyzed from the perspective of the forest sector. The report consolidated the available information into the following five basic categories or building blocks, which capture all dimensions of forest governance, including the sector-specific and cross-sectoral aspects. Profor ² carried out an assessment of the use of ICTs in forest governance and some examples of these applications are also indicated in each of these building blocks:

1. Transparency, accountability, and public participation the components are:
   1. Transparency in the forest sector
   2. Decentralization, devolution, and public participation in Forest management
   3. Accountability of forest officials to stakeholder
   4. Accountability within the forest agencies
Sample ICT applications:
• e-government services and open government applications
• advocacy campaigns through text messaging and Internet social networking sites
• community radio
• crowd sourcing—mapping for the people, by the people
• collaborative and participatory mapping.
2. Stability of forest institutions and conflict management: the components are:
   1. General stability of forest institutions
   2. Management of conflict over forest resources
3. Quality of forest administration: the components are:
1. Willingness to address forest sector issues
2. Capacity and effectiveness of forest agencies
3. Corruption control within the forest sector
4. Forest monitoring and evaluation (M&E)
Sample ICT applications:
• On-line staff training
• online staff training
• real-time fire alerts
• forest cover and carbon stock assessment with remote sensing
• wildlife tracking
4. Coherence of forest legislation and rule of law: The components are:
   1. Quality of domestic forest legislation
   2. Quality of forest law enforcement
   3. Quality of forest adjudication
   4. Property rights recognized/honored/enforced
Sample ICT applications:
• prevention (crime mapping, corruption hotlines)
• detection (timber tracking, chain of custody systems, checkpoints, satellite images, GPS surveillance;
• red flag detection
• suppression (crime databases, case management systems)
5. Economic efficiency, equity, and incentives The components are:
   1. Maintenance of ecosystem integrity: sustainable forest use
   2. Incentives for sustainable use and penalties for violations
   3. Forest products pricing
   4. Commercial timber trade and forest businesses
   5. Equitable allocation of forest benefits
   6. Market institutions
   7. Forest revenues and expenditures
   Sample ICT applications:
   • online timber sales
   • logistics
   • REDD+ payment management

A tool to diagnose the strengths and weaknesses in forest governance has been developed by PROFOR (Program on Forests). The tool consists of a set of indicators and a protocol for scoring the indicators. The indicators are in the form of multiple-choice questions about various aspects of forest governance. The tool examines forest sector governance broadly, serving as a self-assessment to identify areas deserving improvement. The tool draws on a broad, internationally developed framework for assessing forest governance.The tool has two parts: a primary set of indicators and a protocol for adapting and scoring the indicators. The indicator set consists of a large number of multiple-choice questions about the state of governance. Users of the tool need to form a team with some expertise in forest policy and stakeholder outreach, identify key forest stakeholders and their concerns, prepare a background report on forest governance, customize the indicators to fit the local situation, convene a stakeholder workshop to score the indicators and identify priorities, and validate and disseminate the results.

The rapid advances in affordable ICT tools and applications have made possible the availability of close to real time data, information and knowledge needed to design programs for each of the above building blocks for improving forest governance.

Following are some examples of the latest developments in the use of ICT tools and applications to address some of the major issues in forest governance, which builds on the work carried out by PROFOR in 2012 (Forest Governance 2.0 A Primer on ICTs and Governance):

Issue addressed: Illegal logging due to poor governance – Indonesia

About half of Indonesia’s land area is covered by forests, with over 90 million hectares of forests. The annual rate of deforestation for the period 2010-15 was 0.7% (FAO, 2015). Indonesia is one of the world's largest exporters of tropical timber, exporting a wide variety of products, including plywood, furniture, pulp and paper. Its main export markets are China, the EU, Japan and Korea (EFI). Several analyses conducted over the past decade, including at least one official analysis produced by the Ministry of Forestry, have concluded that the Indonesian Government’s own forestry statistics substantially under-state the actual volumes of timber harvested, potentially by tens of millions of cubic meters per year (Luttrell et al. 2011, Harwell 2009, Manurung et al. 2007). The World Bank has also recently estimated that illegal logging in Indonesia generates state losses of US$ 4.0 billion per annum, while the Government collects only US$ 300 million annually from forest license holders (Sri Mulyani 2015).

Source: http://acch.kpk.go.id/documents/10180/445776/Preventing+State+Losses+in+Indonesia's+Forestry+Sector+-+KPK+Research+Report.pdf/4d7695a4-de4e-4bcb-8f4b-c645238c000e

Solution: Voluntary Partnership agreement with EU and issuance of FLEGT licenses for timber products

In September 2013, Indonesia became the first country in Asia to sign a voluntary partnership agreement (VPA) with the EU – a bilateral trade agreement that aims to improve forest governance and ensure all timber and timber products exported from Indonesia to the EU are legally sourced.

From 15 November 2016 Indonesia will be able to issue FLEGT licenses to verified legal timber products it exports to the EU, becoming the first country in the world to produce FLEGT licensed timber. Licenses will be issued under the country’s timber legality assurance system, the SVLK, which covers all commercial timber and timber products produced, processed and purchased in the country. FLEGT licensed timber will automatically meet EU Timber Regulations and so will not need to be subject to due diligence checks. The SVLK also applies to timber-based exports to other countries, which are accompanied by V-Legal Documents. To build on the important steps, the country has taken steps to establish a national legality assurance system, implementation and enforcement of the law will need to continue to be strengthened. The EU-Indonesia Joint Implementation Committee will oversee the continual improvement of SVLK as well as progress with the other commitments set out in the VPA.

Solution : Cutting edge technology applications for traceability in timber supply chains

Following are some examples of technologies which target the tracking of timber as it moves through the supply chain to guarantee authenticity of the timber’s origin, including:

• Stardust is a dust-like material that can be sprayed onto wood and detected only with a hand-held device. Stardust has the potential to be applied to timber and pulp and paper products as a cheaper alternative to barcodes, radio-frequency identification (RFID) and other tracking technologies. Greenwood, an organization that connects buyers with producers of high-quality wood products from sustainably harvested trees, is now pilot testing Stardust’s application to some of their wood supplies.
• TreeTAG is an emerging smartphone-based supply chain traceability system developed by Earth Observation Systems that tracks the location of logs transported from the forest to the mill. It requires all authorized personnel—from those cutting trees to those processing logs—to report activities and volumes, raising alerts when there is suspicious activity. Only trees previously authorized for logging can enter the system. Earth Observation Systems is currently working with Sociedad Civil Custodios de la Selva (CUSTOSEL), a sustainable mahogany producer, to pilot test the system on wood used by Bedell Guitars. Several government agencies are also developing systems for supply chain traceability. The Forestry Commission of Ghana is piloting Ghana Wood Tracking System (GWTS), developed by Ata Marie, a data platform that centralizes all formerly paper-based documentation, and allows users like auditors to upload information from their phones and computers.
• SEINEF (Sistema Electrónico de Información de Empresas Forestales – Forest Enterprises Electronic Information System): The Guatemalan Forest Service is developing a web platform that requires actors along the supply chain to enter volume and authorization information. The system allows government officials and law enforcement officers to follow the flow of timber products from the forest to buyers, and identify discrepancies in volumes, species and products reported. The Brazilian Forest Service also uses a traceability and information management system that not only tracks trees as they are logged and sawn into timber, but also uses remote sensing data to monitor forest management

Solution : Cutting edge technology applications focusing on aggregating, analyzing, visualizing and verifying supply chain information:

• Global Traceability Systems’ Radix Tree is a platform that enables buyers to collect information from suppliers to establish a chain-of-custody. Radix Tree also performs legality risk assessments based on information provided, a required step for compliance with the European Union Timber Regulation (EUTR). Furthermore, it also helps users manage their inventory of products and shipments provide secure encryption and private data storage and import data from multiple formats. Some of its users include Unilever and Bureau Veritas, a leading global certification body.
• BVRio’s Responsible Timber Exchange uses big data to assess whether potential sellers are complying with U.S. and European legal wood requirements. The database not only draws information from official documentation, such as logging permits and sawmill operating licenses, but also legal records of forest owners, loggers and even forest engineers involved in a shipment to assess the risk of illegality. With this information, the exchange allows buyers to evaluate sellers based on the traceability of their timber and compliance with specific legal, environmental, social and labor criteria. A similar system is under development in Brazil, led by the nonprofit Imaflora.

Source for the above content is from: http://www.wri.org/blog/2016/05/5-technologies-help-thwart-illegal-logging-tracing-woods-origin