Illegal forest cutting and timber sales, theft and smuggling of wood products are a serious problem for Ukraine. Ambiguous laws and a huge corruption problem just aggravate the situation. A real volume of today’s illegal cuttings is hundreds of times more than officially recorded volumes, which, according to the State Forest Resources Agency are 24.1 thous. m3. This is another evidence of ineffective regulation of the sector leading to the criminal misuse of this natural resource.
According to different sources, about 16-17% of the total country area (about 10.6 million hectares) are forests that is much lower than the average in Europe (35.4%). Therefore, unlike many European countries, the forest performs mostly ecological functions in Ukraine and the government policy should be aimed at increasing the forested area. By the way, this position was declared once again in the Coalition Agreement (among other things, this document provided for giving the power to make the state forest policy back to the Ministry of Ecology and Natural Resources) signed in the Verkhovna Rada of Ukraine. However, the Ministry of Agrarian Policy and Food is still responsible for making the forest policy and its goal is primarily to develop the production but not to protect the forest as an ecosystem.
The annual volume of forest restoration averaged 50 thousand hectares (for example, 60.4 thousand hectares of forests, which includes 2.5 thousand hectares of forest planting areas, were restored in 2015) over the past few years. However, it was not enough for the growth in its amount due to illegal cuttings. About 8,000 cases of illegal cuttings were recorded last year. Destroyed and damaged forest stands are 32.3 thous. m3. This is an extraordinary scale. These figures were almost doubled compared with 2014. According to the State Statistics Service, the damage from illegal forest cuttings was increased from 47.6 million hryvnas in 2014 to 114.2 million hryvnas in 2015. However, we should understand that this statistics includes mainly illegal cuttings made by the local population, so these data can’t be expected to be very accurate. As a rule, official figures are artificially low.
Forestry problems and their solutions
If you wish to understand the reasons of this, frankly speaking, ‘unhealthy’ situation in the sector, you need to look closely at the current practice of forest management and legal realities. There can be many weak points. The first of them is poor regulation.
In Ukraine, the penalty rates for ‘forest’ crimes are inadequate and have not been changed since the effective date of the Criminal Code, despite the increase in illegal timber in recent years. This is especially true for fines for illegal forest cuttings, which currently range from 850 to 1700 hryvnas. In addition, there are no effective mechanisms to prosecute the officials involved in illegal forestry activities. The preventive liability function is still not implemented.
However, improving the liability is just one aspect of the problem. An important legal instrument for preventing illegal cuttings is to strengthen the control over the timber trade and introduce a system of electronic timber inventory. Ukraine is planning to record all cuttings, including the illegal ones, for many years, but a required system, the implementation of which began in 2013, is still not functioning properly. This is despite the fact that the electronic timber inventory is a virtually only possible way to effectively monitor tree cuttings in forest enterprises and their further transportation – both within the country and abroad. The main problem to implement this system is the fact that it includes only some of forest users. Overcoming this problem will make it impossible to sell illegal timber, because special bar codes will contain all necessary information about timber: wood species, timber size classes, type and details of who and when cut it down. In such a way, any timber block without a bar code will be automatically considered as a result of illegal cuttings.
Thus, timber tagging will make it easier for the forest services and law enforcement officers to identify illegal wood materials. Ideally, it will be impossible to sell a tree without a bar code or related documents after this system is completely implemented.
A forest certification system will also complicate the stolen timber sale. The certificate will guarantee not only the ecological health of timber, but also confirm that the forest cutting was authorized. In addition, the certification will enable buyers and fiscal authorities to understand where the goods came from and who sold it. It should be mentioned that the certification system existing in Ukraine for more than 10 years can’t solve the fraud problems during forest cuttings – it is again because of its fragmentary nature. Today, the area of certified forests is 3.147 million hectares or about 30% of forests. Ideally, when the certification covers the total forest area of the country, it will be impossible to sell non-certified wood on external and domestic markets of Ukraine.
How to sell forest?
A stumbling point on the way to the legalization of this sector is also a system of timber buying and selling. Today many wood products are sold under direct contracts without competition that doesn’t allow to set a fair price for wood, provides opportunities to manipulate the timber volumes and stimulates its illegal selling. As a result, we get corruption schemes and unfair market competition along with a wrong view of the domestic wood market.
As you can see, the practice of timber selling that exists in Ukraine prevents the sector’s development and making the policy of conversing the forest as an ecological asset. The situation can and should be changed by introducing competitive tools of timber selling – auctions. Holding auctions for selling natural resources is a common experience and practice in Europe. For example, the main method of timber trade in the UK is electronic auctions, access to which can be obtained by everyone. In Lithuania, the wholesale of wood, which is 90% of the total volume, is also made only via auctions conducted on the electronic platform of the Directorate General of State Forests of Lithuania. A positive aspect of this mechanism is that the wood is sold in a completely transparent way and at market prices, so the state will benefit from this.
It seems that the government made the same conclusion. For example, the Cabinet of Ministers is seriously discussing the initiative to regulate the raw wood market by introducing its sales at market prices for several months. In particular, according to the proposal, auctions should be conducted in two stages:
We estimate that these well-targeted initiatives will certainly help reduce the amount of illegal cuttings, but this is still not enough to achieve sustainable positive results in the forestry sector.
The problem is that the current regulatory environment allows to ‘legalize’ illegal cuttings and avoid liability. The most popular ‘legalization’ tools is remaining ‘pseudosanitary cuttings’, which were almost 50% of all cuttings in recent years. Therefore, the moratorium of the Cabinet of Ministers on sanitary cuttings is absolutely justified until their proper regulation is established. This will help see real volumes and common factors of the wood market during the moratorium period.
Effective forestry regulation is possible with a systematic approach. We also need an adequate system of sanctions, effective mechanisms to ensure the unavoidability of punishment, a system of inventory and control over the timber trade, a certification system and a comprehensive approach to forest resources management, which is impossible apart from other natural resources. For example, if we correct weak points of liability mechanisms without changing the system of inventory and control over the timber trade, or if we improve its certification system without changing the approach to policy-making in the field of sustainable (integrated) use of natural resources, there will be no significant positive changes and right ideas can be discredited.
It is important to understand that the system of forest use rules should include the fragments, which are naturally combined with each other. Otherwise, we can’t ensure the rational use of forest resources.