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World Bank: Weak Forest Governance Costs Us$15 Billion A Year

News Release No:2007/86/SDN



In Singapore: Kristyn Schrader +65-81241033

In DC: Laura Ivers  +1-202-473-2396



SINGAPORE, September 16, 2006—The World Bank estimates the annual global market value of losses from illegal cutting of forests at over US$10 billion, and annual loses in government revenues of about US$5 billion. Widespread failure of forest governance – characterized by illegal logging, associated illegal trade, and corruption – undermines any nation’s attempt to achieve sustainable economic growth, social balance, and environmental protection, according to the report Strengthening Forest Law Enforcement and Governance - Addressing a Systemic Constraint to Sustainable Development, released today by the World Bank during its Annual Meetings held in Singapore.


According to Katherine Sierra, Vice President for Sustainable Development, World Bank, “With more than 90 percent of the 1.2 billion people living in extreme poverty dependent on forests for some part of their livelihoods, good forest sector governance is integral to the Bank’s mission of poverty reduction, and a key component of the Bank’s fight against corruption.”


In recent years, illegal logging has shifted from an almost taboo subject discussed only indirectly and in vague terms, to now being part of an open dialogue on sustainable forest management. Efforts to curtail forest sector crime have increased dramatically, most notably through high-level ministerial regional Forest Law Enforcement and Governance (FLEG) processes in East Asia (2001), Africa (2003), and Europe and North Asia (2005).


These initiatives brought together both producer and consumer nations, private sector, and civil society, and yielded commitments in the form of Ministerial Declarations. However, increased transparency and dialogue on the topic is not enough.


The World Bank report takes stock of action to date on FLEG, and charts a course for how to move beyond dialogue, to negotiation and piloting to effectively expand and implement commitments made and yield concrete and visible impacts.


According to the report, the drivers of illegal logging must be addressed both within and outside the forest sector.  Linking to law enforcement capacity and expertise in other sectors can also help to strengthen the fight against forest sector corruption. For example, anti-money-laundering and asset forfeiture laws should be integrated into the fight against forest crime and related corruption.


The report emphasizes that both failures of law and enforcement of laws and regulations must be addressed to improve forest sector governance and ensure that forest-dependent poor are not unfairly punished.


According to World Bank Forests Advisor, Gerhard Dieterle, “Illegal logging can be ‘need-based’ for subsistence, or ‘greed-based’ for profit. Unfortunately, forest crimes often go with out punishment and, in the few instances where there are prosecutions, the poor are often targeted. Forest laws must be reformed to recognize the needs of the forest-dependent poor. Otherwise, their enforcement is the worst form of violation of equity and justice.”




The report addresses the full range of illegal behavior in the forest sector from timber theft, to evasion of taxes and fees, to non-compliance with labor or environmental laws. The report includes estimates of illegal logging rates in 17 forest important countries. Approximately two-thirds of those countries have a rate of at least 50 percent, with the problem much more pervasive as 90 percent in some countries (see table 2.1 below from the report).


Table 2.1. Indicative Estimates of Illegal Logging Selected Countries

(2000 - 2004)

Country Percent of total production

Bolivia   80

Brazil    20-47

Cambodia          90

Cameroon         50

Colombia           42

Ecuador            70

Gabon   70

Ghana   60

Indonesia          70-80

Laos     45

Malaysia           Up to 35

Myanmar           50

Papua New Guinea        70

Peru     80

Russia  10 - 15 (northwest); 50 (far east)

Thailand            40

Vietnam            20 - 40

Sources: Savcor Indufor Oy (2004); FAO (2005); European Forest Institute (2005).


Moreover, the report confirms that while credible penalties, effective enforcement, and fair and just legal systems are essential ingredients to the control of forest crime, the world’s problems of forest law enforcement will not be solved only by jails, courts, and arrests. Dramatically improved resource management, effective rural development services, and poverty reduction will be needed to generate sustainable solutions.




The complete report and additional information on FLEG is available at:


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