Environmental issue and timber industry

Economic global forecast due to environmental. Global objectives, principles and priorities of timber industry. Regional historical, economic, political and cultural aspects of timber industry. Economic affect of issue on regional industry to date.

15.06.2012
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Table of Contents

CHAPTER I. Characteristic features of environmental issue and timber industry

1.1 Global history and organization of environmental issues

1.2 Global Financial Effects

1.3 Global SWOT

1.4 Global PEST (Political, Economic, Social, Technological)

1.5 Economic global forecast due to environmental

CHAPTER II General provisions of timber industry

2.1 Global history and development of timber industry

2.2 Global objectives, principles and priorities of timber industry

2.3 Regional historical, economic, political and cultural aspects of timber industry: PEST in relation to Russia

CHAPTER III Critical Analysis of the Timber Industry

3.1 Economic affect of issue on regional industry to date

3.2 Challenges the industry faces regionally due to environmental

3.3 Suggestions for present responses

3.4 Suggestions for future responses

CONCLUSION

BIBLIOGRAPHY

Environmental issue and timber industry

The life of each and every person largely depends on the environment - a complex of biotic, climatic, and edaphic factors that act upon an organism and determine its form and survival, and morphs itself in the process . Any change in the environment influences the life of people on the Earth. Such changes may occur as a consequence of people's activity (e.g. deforestation, burning fossil fuels) and may lead to various environmental problems.

Environmental issues include climate change, environmental degradation, environmental health, genetic engineering, intensive farming, land degradation, soil, land use, nanotechnology, nuclear issues, overpopulation, ozone depletion, pollution (water pollution, air pollution), resource depletion, consumerism, fishing, logging, mining, toxins, and waste.

The focus of this work will be on the characteristic features of environmental issues paired with the timber industry.

CHAPTER I Characteristic features of environmental issue and timber industry

1.1 Global history and organization of environmental issues

Various geological, astronomical, and climatological events and events in human history influenced environment people live in. Only recently people started to pay attention to the protection of the environment: it led to social movement for improvement of the health of the environment, which is called environmentalism. This section covers brief history of environmentalism, which is connected with the history of mankind (prehistory, pre-industrial and industrial eras) and main geological and climatic events.

During the prehistory era 300 million years ago there occurred the Carboniferous Rainforest Collapse during which tropical rainforests, which once covered 14 % of the earth's surface, were devastated due to climate change.

Before the beginning of civilization some societies began to use fire as the main tool for clearing land for crops and for taming animals. According to estimations, it happened in the Mesolithic period and Neolithic . Forests were cut down not only by stone but by hard rock axes, which increased deforestation.

This led to the extinction of many plant and animal species and to decreased transpiration and the formation of upland peat bogs.

Pre-industrial history.

At the pre-industrial era people started to use nature extensively for their own purposes.

A vivid example that demonstrates what it can cause is the situation on the Easter Islands.

When Europeans came to island in 1722 they did not see a single tree over ten feet in height. The reason was simple: Islanders cut all the wood on the Island, because they used it for making ropes, statues, and canoes. Around 1400 Easter Island palm became extinct due to over-harvesting and proliferation of rats that ate all its seeds . Soon it caused heavy soil erosion, aggravated by agriculture, over-exploitation and deforestation . Deforestation is a permanent removal of forest cover and withdrawal of land from forest use, whether deliberately or circumstantially .

After disappearance of wood, Islanders could no longer build canoes, to ship out or to harvest crop. That is why consumption of birds increased, but soon it led to their extinction, as well as of other habitants of the forests.

All in all, this caused lower quality of life for Islanders, because there was no food, no fuel and no material.

Other regions that suffered from deforestation at that time were ancient Greece, Western Europe and Asia Minor.

The introduction of farming in the various regions of ancient Greece caused soil erosion and alluviation . The same happened during the last centuries BC along the southern coasts of Asia Minor, in coastal Syria and Western Europe. In Asia Minor cities were built near forest that provided wood for construction or shipbuilding. But without proper replanting forests disappeared causing city abandonment.

Deforestation in Western Europe was caused by human over-population in 1100 to 1500 AD. Feudals recruited farmers that settled in some agricultural areas where forests were cleared. Besides that 15th century was the time of exploration and colonization: shipbuilding needed much wood. England was deforested in such a way in 18th century that the economy largely depended on untapped forests of New England.

Industrial era

With the emergence of steamboats in the 19th century, deforestation only increased. Forests were cut on the banks of the Mississippi River in the USA. As a result, there were constant floods in Kaskaskia, Cahokia and St. Philippe, Illinois .

Wood was largely cut in different places in the world in order to create agricultural land. It resulted in disappearance of forests. For example, 90 % of West Africa's coastal rainforests have disappeared since 1900 , Madagascar has lost 90% of its eastern rainforests , 88 % of rainforests in South Asia have been lost , two-thirds of lowland tropical forests in Central America were turned into pasture in 1950 . Other regions that suffered from deforestation were Haiti, the Philippines, Myanmar, China, Sri Lanka, India, Liberia, the Cote d'Ivoire, Guinea, Bangladesh, Mexico, Indonesia, Thailand, Malaysia, Laos, Nigeria, the Democratic Republic of the Congo, Ghana .

Brazil and Indonesia account for approximately 50 % of net deforestation . Still 66% of Brazil's territory is covered with forests.

Amazon forests are the only remaining territory with rainforests. That is why one of the main environmental problems of Brazil is deforestation in the Amazon . Now it covers approximately 4 million square kilometers .

Forests began to disappear because of the activities of ranchers; especially farmers' slash and burn techniques. Degradation also caused the gradual thinning of forests and deforestation .

Desertification, which means that the soils and vegetation of drylands are severely degraded, is another important problem in Brazil.

There remained old problems with soil erosion, sedimentation and siltation in the areas where agriculture was intense. Besides that irrigation system in savannas affected the water table.

Industrial era brought new issues, such as pollution with pesticides and effluents.

Good news is that government of Brazil pays great attention to the environmental issues. It is proved by the fact that in the 1988 the Chamber of Deputies established Commission for Defense of the Consumer, the Environment, and Minorities. Besides that the Brazilian Institute for the Environment and Renewable Natural Resources was established. Both institutions formed together the federal environment secretariat and the federal agencies specializing in forestry, rubber, and fisheries.

Nongovernmental organizations also play important role in protection of the environment. Besides international environmental NGOs, such as World Wildlife Fund (WWF), there are local influential groups - SOS Atlantic Forest, the Amazon Working Group.

Another country with great environmental issues is People's Republic of China.

The level of forest coverage in China is now 20% of landmass . According to the United Nations Environment Programme (UNEP), 12 % of China's land is closed forest, i.e., virgin, old growth forest or naturally regrown woods (more than 111 million hectares) .

But China faces major problems, such as desertification: it is expanding at a rate of more than 67 km? every year in the west of the country . Besides that, 36% of China's closed forests suffer from population growth. In 2011, Conservation International listed the forests of southwest Sichuan as one of the world's ten most threatened forest regions .

However, China is one of a few countries in the world that have been rapidly increasing their forest cover. It is managing to reduce air and water pollution , according to the estimations of the World Bank.

The country does everything possible to preserve forests. For example, government requires that every citizen between the ages of 11 and 60 should plant three to five trees per year or do the equivalent amount of work in other forest services. Another project concerns Gobi desert: new trees are planted in order to stop its expansion. Although the project is not that successful: lots of trees die off after planting (up to 75 %) .

Other environmental problems of China include greenhouse gases: in 2008, China contributed 22% of global emissions . By this parameter it leaves the United States of America behind.

It is also one of the biggest emitters of sulfur oxides, chlorofluorocarbons - substances that deplete the ozone layer. This results in numerous consequences: one of them is global warming, another - sea level rise and glacier retreat, drought, flood and growing amplitude .

In the beginning of the 19th century it was found that there is a connection between deforestation and climate change. But there was no definite point of view of how emissions of greenhouse gases influence on change of climate.

In the 1980s during the Intergovernmental Panel on Climate Change (IPCC), the body established by United Nations Environment Program (UNEP) and the World Meteorological Organization (WMO), it was decided that human activity was leading to warming the climate. Global warming is rising average temperature of Earth's atmosphere and oceans and its projected continuation . It is caused by increasing concentrations of greenhouse gases produced by deforestation and burning fossil fuels, which is made by people. It causes sea levels to rise and the amount and pattern of precipitation to change; also it can lead to expansion of subtropical deserts . Its effects in the Arctic include retreat of glaciers, permafrost and sea ice. It also may lead to extreme weather events including heatwaves, droughts and heavy rainfall events, species extinctions and changes in crop yields.

The main activity of the IPCC is to publish reports on topics relevant to the implementation of the United Nations Framework Convention on Climate Change (UNFCCC), an international treaty whose main objective is to stabilize greenhouse gas concentrations in the atmosphere . They adopted a range of policies designed to reduce greenhouse gas emissions. Implementation of the UNFCCC led eventually to the Kyoto Protocol of 11th December 1997. The main aim of Kyoto Protocol was to fight with global warming. As of September 2011, 191 states had signed and ratified the protocol . But later, in the end of 2011 Canada withdrew from the Kyoto Protocol. And now many countries collided with difficulties to meet the Kyoto commitments and reach their Kyoto targets. The Kyoto protocol expires in 2012 but Russia, Japan and Canada told the G8 they would not join a second round of carbon cuts under the Kyoto Protocol at United Nations.

There were four decades in tracking the CO2 emissions: global growth rate of 28 % in 1970-1979, low growth of 13 % in 1979-1990 and growth of 15 % in 1990-2003, increased growth rate of 25 % during the end of the Kyoto Protocol period.

Large-scale deforestation especially in industrial era resulted in establishment of several bodies that aim at reducing negative influence on environment. One of them is UN-REDD (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries). This financial program helps prepare for an eventual direct compensation scheme for forest conservation.

1.2 Global Financial Effects

Countries that signed and ratified The Kyoto Protocol were to stabilize the greenhouse gas emission (GHGs) in the atmosphere.

Barker assessed the literature on cost estimates for the Kyoto Protocol. Due to non-US participation in the Kyoto treaty, costs estimates were found to be much lower than those estimated in the previous IPCC Third Assessment Report .

Nowadays activities that help to reduce greenhouse gas emissions and to increase the capacity of carbon sinks to absorb GHGs from the atmosphere include some geoengineering techniques, such as (according to Working Group III in IPCC's Fourth Assessment Report): capturing and sequestering CO2, ocean fertilization, techniques for reducing the amount of sunlight absorbed by the Earth's atmospheric system . One of the main means to reduce direct fossil fuel CO2 emissions that is used it the road transport sector is substitution with biofuels and electric vehicles. Also increased use of renewable energy, enhanced energy efficiency, usage of cleaner, less polluting technologies, carbons capture and storage (a process that traps CO2 produced by factories and gas or coal power stations and then stores it) helps to stabilize emission .

Almost all of these technologies are costly. That is why major international organizations (i.e. United Nations and the World Bank) have begun to develop various programs and funds in order to sponsor this activity.

The Members of the Kyoto Protocol, which was called The Adaptation Fund, established a special Fund . According to it developed countries had to pay billions of dollars in order to supply technology for studies and projects that are connected with climate.

United Nations and the World Bank started programs aimed at curbing deforestation.

Reduced deforestation and degradation is the forest mitigation option with the largest and most immediate carbon stock impact in the short term per ha and per year globally because large carbon stocks (about 350-900 tCO2\ha) are not emitted when deforestation is prevented . This report on the role of the forestry sector in mitigating climate change made by the IPCC in 2007 led to Reducing Emissions from Deforestation and Forest Degradation (REDD) programs. According to it developing countries are to limit deforestation. In this purpose direct monetary or other incentives are used to encourage it.

There exist voluntary market based on REDD credits: countries that successfully reduce emissions from deforestation below reference rates are rewarded . One of them is Brazil's Amazon Fund, launched in August 2008.

Its main objective is to support sustainable development and conservation in the Amazon region. The fund consists of contributions from developed countries. One of its investors is Norway, which is to invest $1 billion by 2015. Payment is contingent upon a demonstrated reduction in deforestation .

Other international organizations and developed countries have invested big sums of money into Brazilian environmental projects. For example, project of 1992 included sanitation, urban pollution control, and other urban environmental projects. It was worth $6.8 million, part of which was provided by the Brazilian government, another part - by other countries.

Other environmental projects that received international support include: the National Environmental Plan ($117 million was given by the World Bank), The National Environmental Fund (Inter-American Development Bank spent $20 million on environmental activities of NGOs), The Pilot Program for the Conservation of the Brazilian Rain Forests (G-7 countries and the European Community allocated $258 million for projects in the Amazon and Atlantic Forest regions), The Global Environment Facility.

To help fight with environmental problems and to pledge money for these activities, REDD is funded by increasing development assistance, barter transactions such as debt cancellation, taxing carbon-intensive activities, and private sponsorship .

One of them is The BioCarbon Fund that is managed by World Bank and transfers finance for projects that conserve GHGs in forests, agro-ecosystems, and other ecosystems. It consisted of two tranches: one of them opened in May 2004, another - in 2007 . The first one raised $54 million.

Another Forest program - The Forest Carbon Partnership Facility - was launched in December 2007 at the Bali. It is aimed to help developing countries to reduce emissions from deforestation and degradation. The FCPF has two separate mechanisms with the objectives of a) building capacity for REDD in developing countries, and b) testing a program or performance-based incentive payments in some pilot countries - on a relatively small scale - to set the stage for a much larger system of incentives and financing flows in the future, which would presumably be funded by the market rather than the facility .

The Global Initiative on Forests and Climate supports forestry projects in selected developing countries (particularly but not exclusively in the Southeast Asia and Pacific regions). This fund focuses on reducing deforestation, encouraging reforestation, promoting sustainable forest use, and developing monitoring and forest assessment technology .

Successful examples when industrialized countries help developing countries include China: USA granted $498 billion economic stimulus package to China in November 2008. This money is spent on enhancement of sewage and rubbish treatment facilities and prevention of water pollution, pollution control projects, acceleration of green belt and natural forest planting programs, increase of energy conservation initiatives .

China invested $34.6 billion in renewable energy technologies in 2009 . It produces more wind turbines and solar panels each year than any other country .

Besides that, Chinese government invests money into protection of vegetation, farm subsidies and conversion of farms to forests. During the period between 1998 and 2001 Chinese government spent on it more than 40 billion yuan . It resulted in conversion of 7.7 million hectares of farmland into forest in 1999-2002 .

1.3 Global SWOT

This section covers assessment of the factors that influence environment, either positive (strengths), negative (weaknesses) or factors that can become opportunities and threats of the present-time situation.

STRENGTHS

* The global rate of deforestation has recently been slowing, according to the report made by the United Nations Food and Agriculture Organization (FAO) .

* The forest is a renewable resource.

* Countries began programs aiming at reforestation, forest conservation and turning of farms into forests. There appeared lots of non-government organizations NGOs who aim at decreasing deforestation, such as SOS Atlantic Forest, the Social-Environmental Institute, the Pro-Nature Foundation, and the Amazon Working Group. There exist international NGOs: World Wildlife Fund (WWF), Conservation International (CI), and Nature Conservancy. Thanks to such initiative, for example, the forest coverage in China was 12% two decades ago and now is 16.55% .

* There are some positive consequences of clear-cutting, such as the growth of special tree species, creating animal habitat and less soil frost. For example, poplar (aspen), willow and black cherry grow in special conditions: high light intensity, which is greater in clear-cut areas. Besides that in some type of climate (boreal) depth of snow is more in a clear-cut area. This results in less soil frost, which in combination with higher levels of direct sunlight results in snowmelt occurring earlier in the spring . WEAKNESSES

* Total forest area is decreasing (at about 13 million hectares per year), according to the report by the United Nations Food and Agriculture Organization (FAO) in 2005 . About half of the Earth's tropical forests (between 7.5 million and 8 million km2) of the original (15 million to 16 million km2), which is the `green lungs'. of the Earth have now been destroyed .

* The forest takes a long time to grow back and when it does, it is thinner.

* Illegal logging and clear-cutting result in rapid runoff. Besides that no timber products are available for a long time after clear-cutting. Developed and developing countries largely depend on the forest products industry. Besides that many countries converse forest area into agricultural area, thus resulting in short-term income and loss of biological productivity.

* Intensive farming leads to land degradation and soil erosion.

* Diminished recreation, hunting, and fishing opportunities because of deforestation.

OPPORTUNITIES

* Countries began to implement climate policies, both nationally and on state level, to mitigate greenhouse gas emissions.

* Shift to less carbon-intensive and fossil fuels (from coal to gas). energy efficiency saving technology. The European Commission has stressed the importance of energy efficiency improvement : replacement of fossil fuel with renewable energy types (biomass, wind, solar, hydro) and nuclear power. The annual growth in total renewable energy supply accelerated after 2003 from a few per cent to an average of 6 % .

THREATS

* CO2 emission. Forests remove carbon from the atmosphere through photosynthesis, which converts atmospheric CO2 to organic matter. Deforestation is putting carbon right back into the atmosphere thus creating global warming and climate change.

* Climate change - global warming, sea level rise, ocean acidification.

* Soil distortion may lead to desertification. Besides that - siltation and sedimentation of streams and rivers, and pollution with pesticides.

* Disappearance of biodiversity due to deforestation.

* Loss of culture (indigenous peoples subsistence living in the rainforest). When forests disappear, indigenous people can die, because they are dependent of forest which is the source of shelter, building material, food and closing for them. According to the statistics, in developing countries almost three billion people rely on wood for heating and cooking . Another effects is social conflicts and struggles over land and natural resources.

1.4 Global PEST (Political, Economic, Social, Technological)

Political, economic, social and technological development affects projections of future greenhouse gas (GHG) emissions and deforestation prognosis. In this section we examine different aspects of the external environment that largely influence natural environment (especially forests).

Political environment refers to actions made by the government that affect environment in general. It includes degree of political stability, political climate, tax policies, environmental laws and regulations, infrastructure, trade restrictions, development policies.

Economic environment may include economic growth rate, rate of inflation, the currency exchange rate, interest rate.

Social environment refers to the social and cultural aspects that may either positively or negatively influence current environment situation. It includes demographic aspects: age, employment and income statistics, population growth rate, religious beliefs, education and career trends, general attitude (conservative or liberal).

Technological environment refers to the technical aspects of the environment and includes the level of automation, rate of technological progress, technical facilities, research and development R &D activities, and infrastructure.

Political factors

* Degree of political stability. Member countries of EU share the same environmental policy. And EU continues to enlarge.

* Policy climate (corruption, mismanagement). Illegal logging happens due to weak governance institutions and corruption (e.g. in Asia). Corruption prevents implementation of REDD projects in some countries. Sometimes because of poorly defined property rights and land tenure issues forests can be in open access and are overexploited. Corruption can also lead to further encourage deforestation due to establishing of property rights.

* Environmental laws and regulations. Good environmental policy includes laws regarding forests, water, and wildlife, specialized environmental agencies (like in Brazil at the federal level), establishment of national parks and reserves. Still public environment policies may be advanced, but their implementation may be poor.

* Formal policies (economic development, credits). Policies encourage deforestation through agricultural incentives and timber subsidies . Commercialization of timber and other forest products also drives deforestation.

* Development policies. Policies influence deforestation through transportation and infrastructure development, urban expansion. For example, since the end of 2008, China made investments in transport infrastructure and rebuilding Sichuan communities which suffered from earthquake in 2008. And already in 2010, CO2 emissions jumped by 10 % to 9.0 billion tones. Another example is extensive transportation project Trans-Amazon Highway in 1970. It meant that huge areas of forest were to be removed for commercial purposes. Further, policies that expand road infrastructure provide access for loggers, farmers, and homesteaders to the previously inaccessible forest interior .

* Trade restrictions. Imposing a ban on import of illegal wood (e.g. in EU countries).

Economic factors

* Economic growth rate (overseas and national). Usually economic growth is associated with heavy effects on environment. For example, when China joined the World Trade Organization (WTO) in 2001 and was export-orientated, the global annual CO2 growth rate was accelerating (since 2002) . Industrialization of a country also leads to growth of CO2 emissions: since 2003, CO2 emissions in India have increased by 60 %. In 2010 there was 5.8 % increase in global CO2 emissions and absolute maximum of 33.0 billion ton .

At the same time economic crisis has quite ambiguous consequences. From one point of view, it worsens environmental degradation (like in Brazil in 1980s) because it leads to overexploitation of natural resources, stimulates settlement in fragile lands and weakens environmental protection. But from another point of view, lower level of economic activity reduces pressure on the environment.

3 % of global CO2 emissions is accounted for international air and sea transport. Increase of, for example, exporting industries, may lead to growing emissions due to international transport. It happened in China after in. Although road transport is a less important source of CO2 globally a recent study of the net climate impacts of emissions from economic sector rather than by individual chemical species finds on-road transportation to be the greatest net contributor to climate change now and in the near term .

* Rate of inflation and gross domestic product. Increased gross domestic product may have both positive and negative effect on deforestation.

* Unemployment. Poverty and lack of employment may lead to subsistence or commercial agriculture. For these purposes people clear forest and start permanent or shifting cultivation, cattle ranching (large-scale, smallholder). This is the reason for deforestation. Rising prices for soy, palm oil, and beef make it increasingly cost-effective for developing countries to clear their forests and convert them into agricultural land. Increased prices and expansion of agricultural markets increase deforestation pressure . It results in the increase of GHG emissions.

* Consumption. Electricity consumption that largely effects environment is primarily in the production of chemicals, iron and steel, non-ferrous metals and machinery, - according to the studies of CO2 emissions . Power generation and road transport play a major role in the continuing growth of global CO2 emissions. Development of both sectors in the developing countries have led to increase in emissions of CO2. Industrialized countries saw much lower growth in electricity consumption early 90s due to the economic decline. Electricity consumption was relatively stable in these countries and the USA in the late 90s and early 2000s, due to the global recession. Developing countries increase manufacturing which is more fuel-intensive, than service sector, which is more common for industrialized countries.

Social factors

* Age. Natural increment (fertility, mortality), population density, population distribution, life cycle features - these are common causes for deforestation, because territories are cleared for cemeteries.

* Employment and income statistics. One of the reasons for the environment pollution is migration flow. When people move to other territories, they start to build new territories, there appear new settlements.

Besides that people who can not find their place in the city and find the job, move to the forest frontier. It leads to agricultural utilization of land and deforestation. Agricultural expansion is a leading cause of tropical deforestation around the world and was a cause in 96 % of the 152 cases of deforestation, - it was found by Geist and Lambin .

* Population growth rate. According to the statistics, in the developing countries population is growing faster . With the growth of population, new homes, communities, and expansions of cities are needed. It results in deforestation. For example, about 90% of the deforestation has occurred within 100 km of roads in most parts of the Amazon . Increase of population may lead to an increased space heating. Besides that, if there is growth in population it means that there will be large increase in production of goods.

* General attitude. Unconcern about reason of environment problems.

Technological factors

* Degree of technological progress and research. If new technologies that increase intensification and profitability in agriculture are used, waste is doubled. Besides that it increases the expansion of agricultural instead of forested land.

* Development activities and new materials. The effects of new materials may be numerous. From one point of view, they may lead to resulting intense emissions of greenhouse gases. For example, more and more houses are built out of cement - it leads to decrease in CO2 emissions. From another point of view, they may help to reduce negative effects of environment.

* Usage of new energy resources, such as wind and solar power capacity increases power generation, production and lessens its negative influence on the environment. Together nuclear and renewable energy sources have led to a decline in overall share of fossil fuels from 88 % in 1990 to about 86% . And fossil fuel combustion accounts for about 90 % of total global CO2 emissions .

1.5 Economic global forecast due to environmental

No doubt, the global society will face new threats and challenges linked directly with the pollution of environment. Governments of different countries and international environmental organizations will increase spending on saving environment.

One of the major current environmental issues is deforestation which leads to CO2 emissions, climate change and other negative consequences. As a result of fight with deforestation, sustainable development, sustained income for local communities, water-shed protection, biodiversity conservation, protection of fisheries, reduction of runoff, siltation, and flooding can be obtained.

REDD, World Band and other organizations make efforts to save forest, ranging from discrete forest conservation projects to provincial-level REDD commitments that involve a portfolio of sustainable forest management, forest conservation, and other activities.

One of these projects is the Ulu Masen project (area in Indonesia). Its aim is to generate climate, biodiversity, and sustainable development benefits. According to the estimations, The Ulu Masen project is to reduce emissions by 100 million tons over 30 years .

As for the financial investment, REDD activities of reducing deforestation is a low-cost means to achieve emissions reductions . Annually payments can reach billions of dollars.

Industrialized countries still pay for these actions, but they require results to be monitored to ensure that effective measures are identified.

For these purposes Center for Global Development's FORMA (Forest Monitoring for Action) initiative and the Group on Earth Observations Forest Carbon Tracking Portal were designed. FORMA facilitates forest conservation by identifying where and when forest is cut out. So that at any time spread of forest cutting and illegal logging can be stopped. Industrialized countries can see whether current situation meets the agreed REDD targets. It happens on a monthly basis . New technology - publicly available satellite data from NASA and other public and academic institutions - is used.

Methodological guidance for forest monitoring was also emphasized at COP-15 . The environmental organization Avoided Deforestation Partners leads the campaign for development of REDD through funding from the U.S. government .

This kind of technology and methodologies can be used to monitor deforestation at global, national and subnational scales. Initial costs for national forest inventories and monitoring infrastructure (building and launching satellites) are high. Usually, infrastructure costs are absorbed by governments (and taxpayers) and marginal costs of production are low; thus, once these systems are in place, monitoring deforestation is satisfactorily cost-efficient. Currently, the US, Europe, Canada, Japan, China, Brazil, Korea, Russia, Thailand and India have satellites that monitor changes in forest cover and land use . Private companies have different cost recovery and pricing schemes. Although remote sensing data from private companies are more expensive, it is conceivable that a company could negotiate a monitoring regime, with a consortium of nations contributing to the infrastructure cost.

Cost-effectiveness of such kind of methodology remains disputable.

All in all, the cost-effectiveness of REDD monitoring relies on the accuracy of data and the following factors:

* The manner in which forest categorizes and carbon densities are defined, which affects the required resolution of remote sensing imagery, and thus the cost of monitoring;

* Whether distinctions among forest categories can be monitored using remote sensing, and

* Whether changes in carbon stocks can be calculated using a combination of remote sensing and carbon stock information.

Forest degradation can be identified only with very high resolution imagery; thus, measurement of degradation is more costly and requires more visual image analysis than measurement of deforestation. If degradation is measured by other forest attributes, such as carbon stocks or ecological function, it will be less readily observable through remote sensing and will require ground-truthing or other measures.

The European Commission's Joint Research Centre notes that most remote sensing data are freely accessible on the Internet at a resolution of 20 to 30 m . Until now, much of the low-resolution data have been cheap because national governments have absorbed the cost of building and launching satellites, and the marginal cost of producing and processing images is low. High-resolution images are more expensive because of the technology needed for transmission, processing, and interpretation. Although the future cost of low-resolution imagery is uncertain, it appears that funds from carbon market or some other source will be necessary to incorporate high-resolution imagery into a forest monitoring program.

But it should be mentioned, that financial resources are limited and direct investment in the environment are insufficient.

There is an imbalance between international environmental governance and other international trade and finance programs.

At the UN Framework Convention on Climate Change (UNFCCC) Conference of the Parties-15 (COP-15) in Copenhagen in December 2009, it has been decided that developed countries will invest $30 billion for the period 2010-2012 in the sphere of forest protection .

In large-scale REDD activities and national programs, reducing deforestation will require investments in new governance institutions and forestry management systems, just as reducing fossil fuel emissions require capital investments in new technologies and information distribution .

It generally takes money to pay for the equipment and labor necessary to clear forests.

REDD-generated credits offer many cheap credits. If realized, this could reduce the cost of mitigation of CO2. However, it could also reduce incentives to invest in clean-energy technologies, and thus delay the transformation to a low-carbon economy .

As for the numbers in regards with the situation in Brazil, compensation to the loggers and economic incentive needs large financial resources. The World Wide Fund for Nature (WWF) has estimated that a total of approximately $547.2 million would be required from international sources to compensate the forest developers and establish a highly organized framework to fully implement forest governance and monitoring , and the foundation of new protected forest areas in the Amazon for future sustainability . Brazil needs to develop economically and pay off international debt obligations. That is why Amazon rainforest requires big funding.

The first chapter of this report covered characteristic features of environmental issue and timber industry.

First, major stages of environmentalism, global history and organization of environmental issues were disclosed in the first sector. We concluded, that it was not until the beginning of 19th century during the industrial era when people started to influence environment strongly. Deforestation and emission of greenhouse gases resulted in climate change: rise of sea level, expansion of subtropical deserts, retreat of glaciers, permafrost and sea ice, extreme weather events, species extinctions and changes in crop yields.

But we found out that to reduce emission of greenhouse gases costly technology and start of various programs and funds are used. Information about these programs and overall global financial effects of environmental issues was given in the second section.

Then, in the third sector we assessed different factors that influence environment. We found out that strengths include slowing rate of deforestation in recent years; forest is a renewable resource; appearance of various programs aiming at reforestation and positive affects of clear-cutting. Weaknesses are as follows: total forest area is decreasing, the forest takes a long time to grow back, illegal logging and clear-cutting result in rapid runoff and no products are available after clear-cutting, intensive farming leads to land degradation and soil erosion, diminished recreation facilities because of deforestation. Main threat is CO2 emissions leading to climate change, soil distortion, siltation and sedimentation and desertification, disappearance of biodiversity and loss of indigenous culture. But still there remain opportunities - climate policies and shift to less carbon-intensive and fossil fuels.

However, political, economic, social and technological factors still largely affect projections of greenhouse gas (GHG) emissions.

Monitoring deforestation at global, national and subnational level and costly technologies are economic global forecast due to environmental.

CHAPTER II General provisions of timber industry

Timber industry has always played a great role in human's life. In this chapter we will focus on general provisions of timber industry. At first, we shall pay attention to global history in connection with timber industry. Then we will proceed to global objectives, principles and priorities of timber industry. And then we will cover covers historical, economic, political and cultural aspects of timber industry in relation to Russia.

2.1 Global history and development of timber industry

Since ancient times wood was used for fuel purposes. In the 5th century monks grew a plantation of Stone pine on the Adriatic coast. It was done with the purpose of getting fuel and food.

It was not until 7th century, when Visigoths established formal forestry practices, when they encountered with the problem of wood shortage .

Start of timber industry in Europe is due to members of the nobility who established rights and rules in this sphere and they allowed peasants to gather firewood and building timber, graze animals.

Systematic management of forests began in the 16th century in both the German states and Japan, when the forest was divided into specific sections.

By the late seventeenth century the British imported Baltic and North American timber. The United England was short in timber and milled wood was among the very first exports from the new American nation. Thus, timber industry was one of the original American businesses. But the Baltic countries had benefits, like superior sawmills, and often lower transport prices than distant overland travel.

Later the practice of tree plantations began. In the British Isles it was promoted by John Evelyn. In France it was introduced by the order of the king Loius XIV: oak forest at Troncais was planted in order to be used in 19th century for the French Navy .

The development of the timber industry in 19th century in the USA was connected with the expansion of American nation: people needed houses, work, energy and heat.

After 1825 year schools of forestry in Germany and France, then in the United States, Europe and British India were established.

As the capacity of logging companies grew and conservation concerns increased in most Western nations in the 20th century there appeared forestry laws and binding regulations.

In 20th century new centers appeared on the map of timber industry. Developing countries became the main source of wood in the world leading to deforestation and other ecological problems. For example, the Siberian forest in the USSR has been logged since the 1950s as part of Soviet efforts to industrialize Siberia . But when perestroika began, there appeared foreign construction, new logging companies started operating in the USSR.

However, developed countries started introducing a new practice of timber and paper recycling, a new certification system as a response to deforestation, and a strong body of research has appeared - it manages forest ecosystems and genetic improvement of tree species and varieties. As a consequence of recycling, wood consumption in 1990s did not rise (as opposed to 1960s-1990s) .

Nowadays timber industry is developing in different directions and the geography of top companies largely depends on the abundance of wood resources and technology.

For example, top producers of fuelwood are in India (274 334 000 cubic meters), China (190 947 000 cubic meters), Indonezia (157 023 008 cubic meters), Brazil (114 052 000 cubic meters), Nigeria (89 096 000 cubic meters), USA (70 160 000 cubic meters), Ethiopia (47 665 000 cubic meters), and Congo Dem.Rep. (45 910 000 cubic meters), Russia (39 910 000 cubic meters), Philippines (39 046 000 cubic meters) .

Although top plywood producers (1998) are in the USA (15 732 000 cubic meters), Indonesia (7 015 000 cubic meters), China (4 978 000 cubic meters), Malaysia (3 904 000 cubic meters), Japan (3 267 000 cubic meters), Canada (1 750 000 cubic meters), Brazil (1 500 000 cubic meters), Russia (1 094 000 cubic meters), Finland (992 000 cubic meters), Korea, Rep. (641 000 cubic meters).

76 % of paper and paperboard is produced in the USA (75 812 000 metric tons), China (32 333 000 metric tons), Japan (29 886 000 metric tons), Canada (21 207 000 metric tons), Germany (16 311 000 metric tons), Finland (12 703 000 metric tons), Sweden (9 879 000 metric tons), France (9 143 000 metric tons), Italy (8 246 000 metric tons), Korea, Rep. (7 749 000 metric tons).

There exist several leaders in timber industry, so-called tycoons. Most of them started with logging operations, but later these companies proceeded with export sales, shipping and timber manufacturing, trading. They are listed on Initial Public Offerings in order to draw investment in downstream timber processing, to acquire timber processing and to expand abroad.

Now let us look at the top timber companies in the world. They go by the revenue top down.

International Paper Company is the largest pulp and paper company in the world, according to the estimates The PPI Top 100 . It produces plastic lids and paper cups, food service packaging, printer and copier paper, envelopes, consumer packaging for cosmetics, corrugated packaging and shipping containers, home entertainment and other retail markets.

Revenue - $25.179 billion (2010). Net income - $644 million. Total assets - $25.368 billion. Total equity - $7.084 billion .

Stora Enso Oyj is a based company and in 2002 it was the fifth largest pulp and paper manufacturer (by revenue). In 2005 the company was the world's largest pulp and paper manufacturer (by production capacity) .

Revenue - 10.30 billion (2010). Operating income - 1.027 billion. Profit - 766.0 million. Total assets - 13.04 billion. Total equity - 6.255 billion .

According to the PPI Top 100 UPM-Kymmene Corporation was third. It is a Finnish pulp, paper and timber manufacturer. It was founded in 1996. It consists of three business groups: energy and pulp, paper, and engineered materials. It has got production plants in 16 countries. Its production includes pulp; paper, plywood, sawn timber, labels and composites, bioenergy, biofuels for transport, biochemicals and nano products. The company is the world's leading producer of graphic papers and second-largest producer of self-adhesive label materials .

Its revenue in 2010 was 8.924 billion. Operating income - 755 million. Profit - 561 million. Total assets - 13.81 billion. Total equity - 7.109 billion .

Oji Paper Company, Ltd. is a Japanese-based company that manufactures paper products. It is the 6th-largest paper manufacturing company in the world by revenue (1,318.4 billion JPY in 2007) .

Its production includes paper for printing, writing, and packaging, containers made from paper products, chemicals used in the production of paper and paper packaging equipment.

Another largest timber company is Weyerhaeuser. This American company was founded in 1990. It is the world's largest private sector owner of softwood timberland.

Number of employees - 20,000 employees in 13 countries.

Revenue - $16.9 billion. Net income - $ 0.79 billion .

Company works in the following segments:

- timberlands - growing and harvesting trees in renewable cycles (Weyerhaeuser is the second largest owner of United States timberland);

- wood products - manufacturing and distribution of building materials for homes and other structures ;

- pulp and paper;

- real estate - builds homes and develops land.

Norske Skog is a Norwegian pulp and paper company based in Oslo, Norway and established in 1962. The corporation is the world's largest producer of newspaper (Newsprint) and magazine paper, with 18 mills around the world.

Revenue - NOK 18.99 billion (2010). Operating income - NOK 2.379 billion. Profit - NOK 2.462 billion. Total assets - NOK 29.30 billion. Total equity - NOK 10.18 billion .

There are other largest companies in terms of revenue.

Universal Forest Products is the leading supplier to its five business segments: retail/building materials (national home centers, regional chains, independent lumber dealers), industrial (specialized packaging and material handling products); commercial construction and concrete forming, manufactured housing; residential construction.

Revenue - $1.9 billion (2010). Net income - $17.4 million .

Plum Creek Timber is one of the largest American private landowners. Company purchases lands as timberland. Its main activities are sale and management of timberlands, and the sale of nonstrategic timberlands; production of softwood lumbers products.

It was founded in 1989.

Revenue - $1.61 billion (2008). Operating income - $344 million. Net income - $233 million.

Rayonier is also one of the largest companies in the USA. It is the fifth largest private land owner in the United States with over 2,200,000 acres (8,900 km2) and in New Zealand with 250,000 acres (1,000 km2) of land. Company's three main segments of market are: timber, real estate and performance fibers.

Largest listed pulp, paper & timber companies in China are Shandong Chenming (625 $mm - market cap), Shandong Huatai (326 $mm - market cap), Fujian Qingshan Paper (169 $mm - market cap), Jilin Forest (154 $mm - market cap), Henan Ying-A (144 $mm - market cap), Shandong Bohui (141 $mm - market cap), Minfeng Special Paper (135 $mm - market cap), Yueyang Paper (134 $mm - market cap), Zhejang Kan Specialty Materials (125 $mm - market cap), Fujian Nanzhi (110 $mm - market cap), Shanying Paper (109 $mm - market cap), Mudanjiang Heng Feng Paper (94 $mm - market cap), Hong Kong: Lee&Man Manufacturers (1056 $mm - market cap) .

Other countries invest in Chinese ventures. These are Stora Enso, International Paper, Oji Paper, UPM Kymmene Corp. Foreign companies transfer their business to Chinese market because of more competitive prices and greater flexibility with timber export requirements and quality.

China is a major importer of timber production: after 1998 there appeared hundreds of private Chinese companies involved in the trade. Mostly they deal with Russia.

There are a number of major Russian exporters. Flora, based in Khabarovskiy Kray, is a large trading company that trades on behalf of more than 20 logging companies in Khabarovskiy Kray.


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