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Sometimes this is in a deliberate, planned way (so-called ‘timber laundering’), and sometimes because of the difficulty complying with all the legal requirements (above all the high formal and informal payments associated with many complex procedures). The following case and thematic studies analyse the dynamics of the illegal logging production chains; the legal, policy and institutional failures that are the fundamental causes of the problem; and the impacts on governance, the economy, civil society and the environment. Three micro-level case studies were carried out to document and analyse the illegal logging of hardwood forest in Honduras, in the Paulaya Valley (Colón), in the municipality of Dulce Nombre de Culmí (Olancho) and in the department of Atlántida on the North Coast. These sites were chosen to show a diversity of situations, including production for the domestic and export markets. The studies record the roles of the many illegal logging actors, including community leaders, cooperatives and small producer groups, loggers and merchants (including buyers for export companies), and government officials.
There are important barriers to legality in the forestry. These barriers include not only obstacles to legality (which make compliance with the legal system more difficult or impracticable), but also the inducements or stimuli to illegality. The most relevant obstacles concern (i) confusion and insecurity over land ownership (ii) failures of the legal system, such as those leading to the high transaction costs associated with tiresome legal and administrative procedures (for example, to obtain approval of management plans) (iii) institutional weaknesses (iv) lack of information (v) economic factors.
Important incentives to illegality include (i) the limited risk of punishment for forest crimes (low chance of discovery and ineffective legal penalties) (ii) the vulnerability to corruption of public institutions (iii) the local context in remote forest areas, characterised by low levels of governability and formation of close links between a range of different illegal activities.
Estimates of the loss of public revenue (forestry and income taxes), and the waste of foreign aid and public expenditure on forestry management, add up to 11-18 million dollars each year. This is approximately the annual budget for AFE-COHDEFOR ($16 million in 2003) or the combined budgets of the National Institute for Children and the Family ($6 million), the National Institute for Women ($0.5 million), the National Foundation for Childhood ($3.2 million), and the National Bank for Provision of Basic Products (BANASUPRO) ($5.1 million). Illegal logging erodes the livelihood assets of the poor. In remote rural areas, it contributes to an atmosphere of increasing illegality, in combination with other criminal activities like drug smuggling, cattle stealing, traffic in forest animals and arms, robberies, conflicts and violence, etc. It constitutes a disincentive for sustainable forestry management efforts, significantly diminishing its economic viability. It also contributes to the deterioration of natural resources, with the accompanying loss of environmental services.
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