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Governance and Poverty Impacts of the Illegal Timber Trade in Central America

This project aims to catalyse institutional and policy change with regard to the illegal timber trade in Honduras and Nicaragua through the creation of an accessible information base on the nature, extent and dynamics of this illegal trade, and by building awareness, dialogue and 'coalitions for change' amongst political institutions, government agencies, donors and civil society.

The illegal timber trade costs governments a fortune in lost revenue, corrodes State mechanisms of formal governance at all levels and leads to increased violence, as income from illegal timber is invested in small arms. Actors have no option to operate illegally. As well as important economic costs, there are wider social losses due to poor governance.

ODI, together with Central American partners, have undertaken one of the first systematic analyses of the nature and dynamics of illegal logging in Honduras and Nicaragua, the legal, institutional and policy failures underlying the problem, as well as its social, economic and governance impacts.

In Honduras, 75-85% of hardwood timber production is clandestine. In Nicaragua, clandestine timber constitutes about half total production. The trade is frequently linked to criminal syndicates and feeds administrative corruption at national and local levels. In Honduras, it has resulted in the breakdown of small-scale producer groups and the 'capture' of the Social Forestry System by powerful intermediaries.

Yet loggers, industrialists, communities and individuals in the forest sectors of Honduras and Nicaragua face a number of constraints to legality. The legal and policy framework is sometimes confusing, inconsistent and difficult to comply with. This is compounded by limited state capacity to prevent, detect and enforce the law. Poor detection, the difficulty of prosecuting offences, corruption and lenient penalties for forest crime all create substantial incentives to operate illegally.

The results of the study can be found at:

These include:

  • micro-level case studies of clandestine and 'legalised' cutting for export and the domestic market;
  • thematic analyses of the economic costs of illegal logging; the legal, policy and institutional 'barriers to legality' acting on forest producers; and the regional flow in clandestine/unreported timber;
  • a review of emerging best practices for the prevention, detection and suppression of illegal logging (to inform national and regional plans for action).
Adrian Wells, Michael Richards