Task Force on Forest Management Certification Programs

Chapter 7: CHALLENGES FACING INTERNATIONAL AND DOMESTIC STANDARDS PROGRAMS

The maturity and stability of each of the standards programs will likely affect its ultimate size and success in recognizing and improving forest management. For example, the Tree Farm Program is probably the oldest and most successful forestry recognition and certification program in the world, with nearly 68,000 Certified Tree Farms covering some 90 million acres of private land. Significant logistical and cost challenges are involved in maintaining ongoing certifications and administering a program of this scope. In fact, the Tree Farm Program has intentionally limited its growth, recognizing the high costs of administration. The Forest Stewardship Program is also limited by a combination of state and federal appropriations allocated to support the program each year. Relatively new standards programs like Green Tag, FSC, and SFI will likely confront similar cost and logistical challenges as they attract a larger number of landowners and forestry organizations.

An associated challenge is the sheer size of the US domestic market and the number of landowners and forestry organizations. The US has approximately 10 million nonindustrial, private forest owners, thousands of processing and manufacturing facilities, and it is the largest wood producing country in the world (462 million cubic meters of wood in 1991, compared with Sweden's production of 55.4 million cubic meters). The challenges of promoting good forest practices across all segments of the forest economy are enormous. This is particularly challenging because relatively few nonindustrial landowners in the United States utilize professional forestry expertise in the preparation, sale, and harvesting of wood from their forests.

With such limited participation in existing standards programs, attracting additional nonindustrial, private forest owners and industry to new programs presents a major challenge. In the example provided above, the 57-year-old Tree Farm Program has only been able to attract less than one percent of the total nonindustrial, private forest owners. This is despite the fact that the certifications, signs, and Tree Farmer Magazine are provided free to landowners. Other standards and certification programs, such as the Forest Stewardship Program, Green Tag, FSC, and ISO, which involve the preparation of comprehensive management plans, monitoring, and periodic inspection and reporting, will face real challenges in attracting such participation. This is particularly the case given the wide diversity in forest conditions and objectives of nonindustrial, private forest owners.

Participation in the AF&PA's Sustainable Forestry Initiative is a condition of membership in the association, and the companies involved are devoting substantial resources to supporting the 32 state implementation committees involved in logger and landowner education and training. Because AF&PA members represent approximately 77 percent of the industrial forestland in the US, industry personnel and financial resources for participating in additional standards programs will necessarily be limited and present challenges to other programs seeking to attract active and substantial industry support and participation.

In addition to the costs of implementing certain management objectives and participating in independent certification, some of the programs may involve significant changes in forest practices that could represent substantial costs. As the requirements of a standards program become more stringent and costly, the appeal to landowners will tend to decrease. These costs will need to be overridden by the perceived or actual benefits of participating in a standards program. Benefits include increased pride and professionalism, recognition by one's peers, positive consideration by regulatory agencies, government cost sharing to implement specific practices, opportunities to increase market share, and possible price premiums if consumers and customers are willing to pay more for wood produced in a manner consistent with the standard.

Consumer demand and willingness to pay for the costs of participating in the various standards programs are major uncertainties at this time. The US public and market have not been particularly attuned to rewarding participation in standards programs or "green" labels, unlike the European market, which has generally accepted the certification and labeling of a wide variety of consumer products. US standards programs have incorporated promotion, incentive, and coercion mechanisms to build public understanding and gain landowner and producer participation.

The AF&PA SFI is an industry code-of-practice program that requires participation as a condition of membership in the association. It promotes the SFI Objectives and Performance Measures with landowners and loggers through education and promotion programs at both the national and state levels. The ISO 14001 Standard also draws a distinct line between the organization and its suppliers and contractors and requires only that the organization promote the ISO 14001 to its suppliers. The FSC standard relies on independent, third-party certification and is being promoted by a Certified Forest Products "buyers group" that encourages producers to certify their forest management and label their products. The Forest Stewardship Program requires the landowner to agree to a government-approved management plan before cost sharing for forest practices can be obtained.

A distinct feature of FSC certification and labeling is that producers who wish to label their products must track the chain of custody of wood and demonstrate that it originated from a "well-managed source." This creates two challenges for US producers of wood and paper products. The first is the task of convincing nonindustrial private owners from whom they purchase wood to become certified to the FSC standard. And if product labeling is a motivating factor, a chain-of-custody tracking procedure is necessary to ensure that only wood originating from an FSC-certified forest is labeled. The FSC's percentage-based claims policy allows less than 100 percent of the wood to be certified while still allowing the product to be labeled.

A related challenge for private landowners and public land managers who bear the costs of implementing a standard, but do not market wood products, is the question of who pays the costs versus who receives the benefits. Landowners who are distrustful of loggers, wood buyers, and the forest products industry in general often question why they should bear the costs of implementing a standard if they do not receive any of the market benefits. This has been a particular challenge for the AF&PA SFI, where participating loggers believe that they are put at a cost disadvantage with their competitors. Likewise, landowners who are expected to pay the costs associated with FSC certification question why the manufacturers should receive the benefits of a "green" premium or market share advantage. Participation in the Forest Stewardship Program does not cost the landowner anything, but he or she is required to share the cost of implementing any desired forest practices.

The ISO 14001 Environmental Management System Standard is perceived by nonindustrial private landowners as having been designed by and for large corporations. The management system elements of the standard are viewed by many small and medium-sized businesses, as well as small landowners, as being overly burdensome and potentially discriminatory . Small-scale landowner organizations in Europe are exploring how cooperatives of landowners can group together to gain efficiencies of scale to achieve ISO 14001 certification. The accredited certifiers of the FSC (SmartWood and SCS in the US) are also exploring group certifications for landowners, as well as certifying consulting foresters to gain efficiencies of scale and reduce costs. A particular challenge in the US is the highly individual attitudes of landowners, their apparent reluctance to join cooperatives, and their reluctance to share decisionmaking about their private property.

Participation in certain forest standards programs has the potential to be used to gain a competitive advantage in the marketplace. As a result, forest standards face challenges in terms of dealing with forestland owners of many different sizes. Large landowners can spread additional costs across many acres, while small, nonindustrial landowners do not have the advantage of scale to help buffer their costs. In addition, landscape-scale management requirements could present difficulties for a small forestland owner.

While most of the standards have originated in the private sector and have been intended to be applied to private lands and organizations, some federal and state forest enterprises have sought participation in one or more of the standards programs. For example, the US Coast Guard and Corps of Engineers have pilot-tested the ISO 14001 E MS standard. [Pennsylvania (Forest Conservation Program, 1998) and Minnesota (Smart Wood, 1997)] State Forests have likewise pilot-tested the FSC standard on a portion of their state lands. Others have suggested that FSC certification may be one way to gain public and environmental group acceptance of the Forest Service timber sale program. Not only are there challenges related to who pays for the certification and who gets the benefit of the product label, but whether private sector standards should be applicable to public lands. Some believe these lands should be held to a higher standard than private lands. Other public land managers question the validity of outside standards when these lands are already managed under public law and policy. This challenge is exemplified in the moratorium on the FSC certification of federal forests until the issues of the appropriate performance standards and who benefits from certification and labeling are addressed.

The complexity of state, national, and international laws that affect forestry, the forestry profession, forest industry, and the forest and paper businesses presents an additional set of challenges and constraints. US antitrust laws and regulations preclude business competitors from conspiring to limit marketplace access. For example, the members of AF&PA are precluded from collectively agreeing to doing business only with loggers and landowners who conform to the SFI standard. Likewise, "buyers groups" in the US cannot conspire to do business only with certain suppliers or to agree to pay more for products grown according to one particular standard. These antitrust laws, or comparable restrictions, do not exist in some European and other countries.

US Federal Trade Commission guidelines require that any marketplace claim, or label, clearly communicate and not confuse the public about product attributes. Concerns exist in the environmental community that forestry organizations might not accurately communicate their ISO 14001 certification, particularly as it relates to "sustainable forestry." Other interested parties are concerned that the ecolabeling of forest and paper products may be misinterpreted by consumers as applying to the entire life cycle of the product. Thus, how conformity to the various standards is communicated to the public and consumers is a major challenge for US producers.

At the international level, the World Trade Organization rules address possible nontariff trade barriers related to how a product is produced. For example, the Austrian government pulled back national legislation that would have required tropical wood imports to conform to a standard, while not subjecting its own domestic wood products to the same standard. In the US, import restrictions based on whether tuna was caught using dolphin-safe methods was ruled by WTO to be in violation of its trade rules. It is likely that similar restrictions based on the "production and processing methods" used to produce timber (whether those methods lead to an ecolabel or not) would also be found to violate WTO rules. On the other hand, the WTO has endorsed the consensus ISO international standards as a way to promote free trade, without prescribing how a product is to be produced.

As US forestry standards continue to develop and evolve, concerns about and challenges to international trade and competitiveness will likely increase. For example, the US free enterprise and private land-tenure system has resulted in 10 million nonindustrial private landowners who own approximately 60 percent of the commercial forestland base. Conversely, the provincial governments in Canada own 95 percent of the commercial forests. If Canadian forest products experience a competitive advantage because of efficiencies of scale in tracking the chain of custody and labeling of wood products, then US products could be placed at a competitive disadvantage. Or if new biotechnologies, exotic tree species, or intensive forest practices are inconsistent with one or more of the standards, then some wood products may be disadvantaged in world markets. The result could be that some countries and forest companies could use such standards and programs to gain a market advantage, simply because of the land ownership patterns or the forest types they happen to have.

Another important challenge to forestry standards development is the traditional adversarial relationship between US environmental and private property advocates. The ISO 14001 Standard is perceived by environmental groups as being dominated by industry and lacking explicit performance requirements. Conversely, industry and private landowners are attracted to the ISO 14001 standard because it focuses on a quality management system and leaves the setting of performance requirements to the organization, in consultation with interested groups. Likewise, industry and landowner groups have been critical of the voluntary FSC process because of its prescriptive performance measures and its product labeling procedures. The Forest Stewardship Program is also voluntary, but as a government program, it is subject to suspicion and caution on the part of some private landowners.

Many in the environmental community have also questioned the public credibility of standards programs that are developed by industry or government organizations and that do not require an independent, third-party audit of field performance. The ISO EMS and SFI standards allow organizations the flexibility to self-declare or seek independent certification of conformity to the standard, depending upon customer preferences. The Forest Stewardship Program is implemented by the state forestry agencies with performance audits conducted by the USDA Forest Service. The questions of who sets the standard of performance, who verifies conformity to that standard, and whether the general public or product customers are the intended audience will continue to be challenges that confront the various international and domestic standards programs.

The issue of trust is also a major challenge in the US forestry context of confrontation and litigation over the management of forest resources. Some in the environmental community question whether tree cutting should be awarded an "environmentally friendly" label, while some in the forestry community question whether the same organizations that advocate "no harvesting" on the national forests can maintain a stable and predictable environmental certification and labeling program. These conflicts and differences over the appropriate management of forests, whether public or private, present significant challenges to the acceptance and mutual recognition of the various standards programs.

There is considerable debate about the objectives and benefits of forest standards and programs. Some take the position that forest standards and third-party certification are effective tools in communicating improved and responsible forest management to the public. Others emphasize that forest standards are but one tool, and perhaps a key tool, in improving on-the-ground forest management practices and/or the implementation of sustainable forestry practices worldwide. A third opinion is that there is a growing potential to use forest standards and product labeling as a marketing tool. Some argue that forest standards are important in providing some combination of all three benefits. However, there is a danger that if marketing forces begin to dominate, actual on-the-ground forest management improvements could lose importance.

Because of the divergent views of what constitutes "good forestry" and what standards program(s) will move the forestry community toward that goal, the consumers and customers are challenged by the number and variety of national and international standards programs. Some contend that one single domestic and international standard is necessary to avoid marketplace confusion, while others believe that multiple standards programs with the same general vision of improving forestry will be better at filling the various market and customer niches. A particular challenge is to gain a better understanding and recognition of the contribution that each of the standards can make in promoting and rewarding "good" forest management. Another challenge is to work to improve forestry standards and programs to ensure that they do not have unintended consequences and are not used to erect barriers to the trade of wood and paper products.