Can Money Grow on Trees?
Marguerite Pettit explores Papua New Guinea’s contentious logging industry and its impact on the nation’s statehood.
Papua New Guinea declared its sovereign independence from Australia in 1975, marking the nation’s first step towards self-determination. Its constitution enshrines the rights of all citizens to participate in the nation’s social and economic development and to benefit from the commercial revenues generated by the country’s natural resources. Theoretically, Papua New Guinea was freed from colonial rule in 1975. In practice, the Government has permitted foreign companies to exploit the nation’s natural resources, often leaving lasting detrimental consequences in their wake.
Papua New Guinea’s forestry industry is a case in point. The logging industry, dominated by Malaysian giant Rimbunan Hijau, stands accused of human rights violations, including the sexual abuse of workers, as well as unsustainable and illegal logging practices. The industry has been the subject of international concern for a number of years. Both Australian and local NGOs have documented the destructive nature of commercial logging and the World Bank has made industry reform a condition of development assistance. However, these measures have failed to ensure that Papua New Guinea’s constitutional aspirations for a sustainable industry become a reality.
Despite this dire situation, Papua New Guinea continues to advocate the inclusion of mechanisms in the post-Kyoto Protocol that would allow other nations and polluting companies to offset their carbon emissions by paying to conserve its forests.
Theoretically, this is a novel idea that has the potential to reduce tropical logging, assist governments in developing nations to grow their economies sustainably, and provide much-needed revenue to the communities responsible for safeguarding the forests. However, given the size of Papua New Guinea’s logging industry and the history of poor enforcement on behalf of the Government, any attempt to regulate the conservation of rainforests in line with international obligations will be fraught with problems.
Papua New Guinea’s ability to engage meaningfully in multilateral climate negotiations is undermined by its failure to control the destructive effects of its domestic logging industry.
Papua New Guinea’s ability to engage meaningfully in multilateral climate negotiations is undermined by its failure to control the destructive effects of its domestic logging industry.
Customary Land Owners: Rights, Obligations and Trespass
Approximately 97 per cent of land in Papua New Guinea is customarily owned, meaning that any land use agreement between the Government and a commercial entity must first be approved by the customary landowners. Customary landowners are required to register title to their land before a land use agreement can be entered into. Landowners with title can then enter into Forest Management Agreements (FMA) with the Government, which then leases the land to third parties for commercial use. Whilst the Forestry Act 1991 requires third parties seeking timber permits to consult with landowners, this requirement is regularly disregarded.
In its 2006 study of Papua New Guinea’s logging industry, Bulldozing Progress, the Australian Conservation Foundation (ACF) found that illiterate landowners were routinely encouraged to sign agreements that they were unable to understand. The ACF recorded testimonials from customary landowners who revealed that they had been asked to sign documents without understanding their content and without duplicate copies being made available to them. Often, poor customary landowners are promised schools, medical facilities and infrastructure in return for access to their timber. However, as the ACF documented, these promises rarely materialise.
The Malaysian-owned logging company Rimbunan Hijau (RH) has been operating in Papua New Guinea for nearly two decades. During this time, local and Australian NGOs have documented incidents of intimidation, abuse and illegal logging. Corruption is at the centre of its continued presence in Papua New Guinea; the country’s National Intelligence Organisation reported that payments had been made to politicians in exchange for increased access to forest resources and for the use of the police force in protecting company interests. Further, the ACF’s own investigations found that villagers had been physically assaulted by Papua New Guinea’s police force after complaining that the logging company had not fulfilled its contractual obligations to them as customary owners of the land.
Future Directions: Reform and Reward
Against this backdrop, Papua New Guinea has led the Coalition for Rainforest Nations in advocating the inclusion of ‘Reducing Emissions from Deforestation and Degradation’ (REDD) in the post-Kyoto Protocol. If mandated in Copenhagen, REDD will allow carbon credits to be created by conserving areas of forests that would otherwise have been logged without this protection.
Many rain-forested nations around the world are already preparing REDD projects in anticipation of its inclusion in the post-Kyoto Protocol. However, this mechanism requires considerable regulation, in ensuring that deforestation activities are not simply relocated to another area and that the forest communities in charge of conserving the area are compensated equitably.
Papua New Guinea must first demonstrate that it can regulate its own logging industry, before other nations pay it to conserve their forests.
The legitimacy of this mechanism is reliant on the proper enforcement of conservation. If deforestation simply moves to another area (a phenomenon termed ‘leakage’), the carbon credits cease to offset other emissions and will result in a continuation, if not increase, in overall emissions. REDD will require the monitoring of conservation areas, the enforcement of benefit-sharing frameworks for communities protecting forests, and the allocation of funds towards sustainable development goals. Failure to regulate conservation properly will also result in a distortion of the carbon market, with credits being bought and sold without having any effect on reducing carbon emissions.
Is Papua New Guinea Compatible?
It may be argued that the state of the forestry industry in Papua New Guinea warrants the pursuit of such measures for conservation. If government officials were secure in the knowledge that they could gain more revenue in the long run from conservation, would they continue to permit deforestation? Such arguments form the basis for the rationale behind REDD. However, Papua New Guinea must first demonstrate that it can regulate its own logging industry, before other nations pay it to conserve their forests.
In November 2008, certificates for one million tons worth of carbon credits from the Kamula Doso forests were issued to Nupan Trading Limited by the Office of Climate Change and Carbon Trade (now the Office of Climate Change and Environmental Sustainability). The absence of legislation enabling this prompted the then-Director of the Office, Dr Theo Yasause, to term the credits ‘sample credits’ when questioned about their legitimacy. He has since been suspended over the incident. Soon after, in April 2009, this same area was granted as a Special Agricultural Lease under the Lands Act 1996, giving logging rights to Tumu Timbers Limited, even though rights to the land had already been allocated to Nupan trading as carbon credits. An injunction has since been successfully granted over Kamula Duso by the National Court.
This kind of administrative mismanagement indicates that Papua New Guinea’s enforcement capacity is ill-prepared for the introduction of legal mechanisms allowing for the payment of ecosystem services. The allocation of one area of land for two distinct purposes jeopardises any confidence international investors have in the validity of the credits they are purchasing. It was for similar reasons that Australia’s Macquarie Group recently withdrew support for REDD projects in Papua New Guinea, citing concern for the integrity of their investment.
Dramatically reducing deforestation will be a key ingredient for stabilising greenhouse gas emissions. This can only occur if the parties to the United Nations Framework Convention on Climate Change (UNFCCC) agree to binding emissions cuts, and formulate policies for reducing deforestation that are not open to abuse from corruption at the enforcement level. Simply offering to pay developing nations with weak governing institutions to stop logging will exacerbate corruption and see negligible reductions in deforestation.
Papua New Guinea’s proposal to the world that developed nations should pay it and other rain-forested nations to conserve their forests is undermined by its apparent inability to manage sustainably its own forestry industry. The failure of the Government to protect its citizens against the interests of logging giants reinforces concerns over the willingness of the Government to ensure that revenue from REDD will reach the intended beneficiaries, that is, the customary landowners.
Regulating conservation will not be dissimilar to logging and will require comprehensive monitoring and enforcement, coupled with effective protection of the rights of customary owners: competencies that Papua New Guinea’s Government is yet to demonstrate adequately.
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