Rainforest Rescue

Can sustainable logging succeed? A group experiment in Indonesia could show Big Timber the way

The Indonesian village of Long Pai lies a grueling three-hour drive on rutted dirt roads from the provincial capital of Tanjung Redeb, a river town in Borneo that is little changed from a century ago when it served as the backdrop for Joseph Conrad's Lord Jim. Agus Heryanto, a local representative of the Nature Conservancy, a Virginia-based environmental group, has made the bone-rattling trip to convince villagers that they should embrace a plan to log the lush forests nearby. By the dim light of a single bulb, Agus tells village elders gathered in a stilt house about a trust fund supported by logging revenues that will pay for new roads, medical clinics, and electric generators for the villagers. And in the future, says Agus, the logging will be done in a careful, environmentally responsible way.

The villagers listen to the pitch, but remain suspicious. Three years earlier, residents of the region drove out the company that wants to do the logging -- Sumalindo Lestari Jaya -- after disputes over payments and improper cutting of valuable trees. "What if Sumalindo causes trouble? Who decides on the punishment?" schoolteacher Simon Padan asks as pigs and chickens forage for food beneath the house. Agus explains that the transparency of the trust will protect against wrongdoing. After two hours and scores of clove cigarettes, the Long Pai elders agree to send five representatives to a more formal meeting four days later. At that meeting they elect a council to manage the trust fund, and, by yearend, hope to have a formal contract.

There seems to be a disconnect here. Indonesia is known for the rampant destruction of its rainforest. And now one of the country's most powerful logging companies allies itself with a Western environmental group to make nice with impoverished villagers? That's right. What happened in that stilt hut is another sign of globalization, this time an intricate dance involving Western consumers, multinational companies, environmental activists, native forest dwellers, and local conglomerates. The goal is to combine the profit motive with the need to arrest the shocking degradation of the forest. The effort is admittedly a long shot. But some action is desperately needed, and it's starting in Borneo.

The Sumalindo deal was indirectly driven by the vigorous campaigning of environmental groups. These have put pressure on big Western retailers such as Home Depot, Ikea, and Kinko's to stop buying wood, pulp, and paper from companies that don't follow sustainable practices. The retailers are now leery of infuriating shoppers by supporting the rape of the forests. So they're teaming up with activists to ensure that they get only "good" lumber. The goal: Use the power of the market to do what government has for years been unable to accomplish -- save at least some of Indonesia's threatened natural resources. "We can give logging companies an incentive to manage the forest," says Nigel Sizer, director of the Asia-Pacific Forests program at the Nature Conservancy. In some areas, it's starting to work. Sumalindo, afraid of losing access to lucrative markets in the U.S. and Europe, is beginning to clean up the way it cuts timber.


The initiative still has a long way to go. Sumalindo, with $100 million in sales, represents just a small part of Indonesia's total timber exports. And the company, which is working with the Nature Conservancy in two of its three old-growth timber concessions, is among just a handful of enterprises taking even modest steps toward low-impact logging. Nonetheless, if the Indonesian effort is successful, it could serve as a template to save forests across Southeast Asia as well as the vast timberlands of the Amazon basin and Siberia.

The movement to sustainable logging doesn't have much time. Many of the island's great stands of trees have been felled, as Indonesian loggers continue to decimate an area half the size of Switzerland every year. Without dramatic change, environmentalists warn, Borneo's wild orangutans, sun bears, and clouded leopards could be wiped out over the next 10 to 20 years, and countless other rare tropical species that thrive in one of the planet's richest ecosystems could be destroyed. So, too, could a tropical forest that soaks up greenhouse gases and slows the rate of global warming. With the forest gone, thousands of Indonesian loggers will be jobless, and the environment so scarred that it may be nearly impossible to revive it for other commercial uses. "The destruction of forests is incredible," says Wahjudi Wardojo, the highest-ranking civil servant at the Forestry Ministry. "We have to stop it."

Sumalindo's outreach in Long Pai is just one part of a broader effort by the company. In another project set to begin before yearend, the Nature Conservancy has teamed up with Home Depot and a British government aid agency to track lumber from the stump to the store. Under the system, which will be implemented in one of Sumalindo's forest concessions, logs and boards will be tagged with bar codes that allow buyers to determine whether their wood was harvested in a sustainable manner. "People were asking what we were doing not to add to the deforestation of the world," says Ron Jarvis, vice-president of lumber merchandising at Home Depot. "We didn't have the answer."

The idea is to promote legal lumber rather than fight illegal lumber. The Nature Conservancy wants to create a market for "good" timber -- wood that is cut in sustainable ways and with the consent of local people. A more modest tracking project in Papua New Guinea and the Solomon Islands saw timber tax collections on exports jump. "This system is going to shake things up," says Grahame Applegate, a consultant for URS Forestry, an environmental and forestry engineering company involved in the tracking project.


Where Home Depot and the Nature Conservancy are offering carrots, more radical environmentalists are wielding a stick. Rainforest Action Network and Greenpeace International contend that the forests would be better served if consumers simply stop buying Indonesian timber products. They think the scale of illegal Indonesian logging is so vast, government corruption so widespread, and the practices at even the legal concessions so destructive that reforms like those proposed by the Nature Conservancy have no chance. Michael Brune, executive director of San Francisco-based Rainforest Action, says his group favors a "sledgehammer approach," and for the past two years has pushed for a complete boycott of Indonesian timber products. Though the group in principle supports efforts to document the origin of wood and initially pressed Home Depot to track its lumber, it regards old-growth logging in Indonesia as unsustainable and unacceptable. "This is not a time for small fixes to establish small toeholds of good production," Brune says.


Such calls are having an effect. Despite Home Depot's participation in the Nature Conservancy program, for instance, the retailer has cut its purchases of lumber from Indonesia by more than three-quarters since 2000. In early 2002, the American Forest & Paper Assn., a trade group representing wood producers in the U.S., said its members would no longer buy illegal wood products -- and has singled out Indonesia as a special concern. And furniture retailer Ikea requires that all of its tropical hardwoods be cut in areas that have won approval from the Forest Stewardship Council, a German group that issues certificates of approval to companies that follow sustainable practices. Ikea cut off purchases of Indonesian teak in October, 2001, after battles erupted between local villagers and a government-owned supplier in Java over ownership of the trees. "We had no alternative," says Ikea forestry coordinator Pär Stenmark. "We regret that it happened, but it shows that the Forest Stewardship Council certification system is working."

A boycott is just the outcome Sumalindo is trying to avoid. Company officials fear that if they don't clean up their logging practices they could lose access to the U.S. and Europe, which account for more than one-third of Sumalindo's exports. And the corporate damage from being blacklisted by environmentalists could go far beyond Sumalindo itself. The company is owned by one of Indonesia's largest wood empires, the family-controlled Hasko Group, which has annual sales of more than $300 million. A boycott of Sumalindo could easily spread to the entire group.

Sumalindo certainly shows signs of wanting to change. If its deal with the Long Pai villagers goes through, people from the village and four others nearby will help monitor the company's logging practices. In exchange, the company will pay the 1,000 villagers about $1.80 for every cubic meter of wood cut in their area -- which would work out to about $35,000 for this year's harvest. "It's time that the Indonesian logging industry take the initiative to use the forests in a sustainable way," says Amir Sunarko, president-director of Sumalindo Lestari Jaya.

Sumalindo is also moving to adopt better logging practices in other parts of its operations. In a timber concession 200 kilometers south of Long Pai, it has worked with German and U.S. experts to minimize damage to the forest and is in the process of getting certification from the Forest Stewardship Council. In a business with thin margins and volatile profits, this can be expensive. The three-week evaluation for certification costs some $50,000. Noncash costs may ultimately prove much higher: Sumalindo had to agree not to cut some 86,000 hectares -- nearly a third of one of its concessions -- after ecologists identified the areas as especially valuable. The company is likely to face similar constraints in other areas.

In the logging site now getting certification, Sumalindo uses a variety of measures to lessen the impact. These include a $500,000 aerial tram that lifts logs out of steep valleys rather than pulling them through the forest -- which can cause erosion. But most of the techniques are more low-tech. Nature Conservancy experts teach loggers how to fell a tree so that it ends up closer to a road, minimizing damage to the forest floor by reducing dragging. They also counsel against slashing through the forest's thick underbrush with a bulldozer to reach the tallest trees.

The difference between Sumalindo's methods and those of other companies -- especially those that are government-owned -- is stark. Just beyond the borders of Sumalindo land in one of Borneo's most important watersheds lies a concession owned by the government logging company, PT Inhutani. Much of the acreage has already been cut. Gulleys full of eroded tropical soil abut the road. And in part because of the more intensive logging, wildfires raged across huge swaths of the land five years ago. The company declined to comment.

Even worse are the poachers. These illegal loggers cut with impunity, often working in plain sight along main roads. They can take down a 100-year-old tree in less than 10 minutes. On the banks of the Segah River, which runs through the area, some 300 logs waiting for shipment lacked any identifying marks -- a telltale sign of illicit cutting. Most of this wood is smuggled across the border to Malaysia, where it can be imported with a small bribe, according to Indonesian officials and environmental groups. Indonesia would like to see Malaysia make more of an effort to determine the source of the lumber in its mills and stamp out illegal practices. A senior Malaysian official says his country takes smuggling "very seriously," and notes that Malaysia has banned imports of some wood from Indonesia. Much, though, still gets through. "Illegal logging is our responsibility," says the Indonesian forestry ministry's Wahjudi. "But without support from other countries, it's useless."

The smuggling hits Indonesia in another way: The country loses an estimated $500 million to $1 billion in tax revenues annually. Because legal Indonesian loggers pay taxes and pass along the costs, timber mills in the country have to pay $300-$330 per cubic meter for legal wood. By contrast, Chinese mills -- which buy much of the Indonesian wood smuggled into Malaysia -- shell out only $230 per cubic meter, even after adding shipping and smuggling costs, Indonesian industry and government officials say. "The market can send some signals, but unless countries like China come on board, you can't expect much," says Noriyuki Kobayashi, who recently retired after nearly 40 years working in the Southeast Asian logging industry for Japan's Sumitomo Forestry.


The partnership between business and nongovernmental organizations is a high-risk enterprise. Even though Indonesia cut its logging permits in half last year, illegal logging continues. And even most legal logging in Indonesia isn't done sustainably. If contracts such as the proposed pact between Sumalindo and Long Pai become the norm, villagers will have a bottom-line incentive to see that all logs that are cut are accounted for. The new tracking system should ensure that the timber can be traced. And the hands-on involvement of experts from the Nature Conservancy could help improve practices.

But if other companies -- and countries -- don't sign on, the whole effort is doomed. And it remains to be seen whether consumers in the West care where their wood comes from and would be willing to pay even a slight premium for the knowledge that they're not destroying old-growth rain forests. If it doesn't succeed, another corner of the earth's forests will be gone forever. "We are struggling," says Wahjudi. "Our time is very limited." Desperate times call for creative solutions, and Indonesia's experiment in allowing environmentalists to cooperate with -- and police -- Big Timber seems the best hope.

By Mark L. Clifford in Long Pai, Indonesia, with Hiroko Tashiro in Tokyo and Anand Natarajan in Atlanta

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