Tatiana Brown
EKHK31
August 2013
Policy and Regulation Effects on the Timber Market:
A Case Study of Ghana
Based on the timber export sector of Ghana, and in particular, export to the
European Union.
Lund University
Department of Economic History
Examiner: Prof. Benny Carlson
Supervisor: Erik Green
1
Table of Contents
1. Introduction
1.1 Objective
1.2 Previous Research
1.3 Theory
1.4 Hypothesis
2. Method
2.1 Approach
2.2 Data
2.3 Variables
2.4 Classification
3. Historical Background of Ghana
3.1 Post-Independence
3.2 1980, the Economic Recovery Program and the World Bank Timber
Rehabilitation
3.3 1990
4. Regulation and Policy changes and their effects on the export of
timber
3.1 Regulation and Policy Change by Ghana
3.3.1 Forest Policy
3.3.2 Bans
3.3.3 Ghana Investment Code 1985
3.3.4 TIDD
3.3.5 ERP years
5. Regulation and Policy changes (EU/ECC)
5.1 Regulation and Policy Changes by the EU
5.1.1 The International Tropical Timber Agreement 1983
5.1.2 The International Tropical Timber Council
2
5.1.3 Eco Labeling
5.1.4 The UK Timber Procurement Policy
5.1.5 The FSC
5.1.6 The ERP revisited
5.1.7 FLEGT and VAP’s
6. Empirical Findings
6.1 African Timber Production and Export
6.1.1 Export and Value
6.1.2 Exports of Timber from Africa to Europe
6.2 The Impact and Effects of Regulation and Policy by EU on the Production and
Export of Timber.
6.3 The Increase of Exports after Ghanaian Regulation and Policy Changes
7. Analytical Discussion
8. Bibliography
8.1 Literature and Articles
8.2 Other Literature
3
1. Introduction
1.1 Objective
This study analyzes the economic effects of environmental regulation. More specifically I will
analyze the economic impact of environmental regulations of the European Community on
Ghana’s timber export sector. As with many developing countries, Ghana relies heavily on the
extraction of its natural resources, such as minerals, forests, and agricultural land to meet its
economic growth and other social development objectives.1
Tropical forests are rapidly disappearing as tropical countries develop the value-added sectors
of their forest industries.2 Recently, the study of economics has been swayed to take into
consideration environmental factors, as well as the growing impact of the European Union
Market. Deforestation is the main cause for environmental debate today. The problems and
impacts surrounding illegal logging and the export thereof have amplified, causing an increase
in regulation from the importing countries. The pressures of environmental sustainability
come from both the importing countries as well as the EU itself. These pressures are having
great effects on the timber production companies, with the majority situated in economically
unstable and export-dependent countries. For over 40 years, Ghana as well as other African
countries have exported their timber primarily to European countries, resulting in a good
source of income for the Ghanaian economy. The European Community and the European
Union have implemented regulations and policies for the sustainability of forests, controlling
the types and amount of timber exported and in turn the price of timber.
Since 1981, the annual rate of deforestation in Ghana has been two percent per year or 750
hectares each year.3 Since 1994, the export quantity of roundwood and industrial tropical
roundwood has decreased dramatically. Why has Ghana’s timber export declined since 1990?
In order to answer this question, this thesis will use empirical evidence that suggests European
regulation implementation affects the quantity of timber exported to Europe.
To understand the effects, one must analyze the historical data up until 2012 and see where
patterns and trends have occurred in line with changes of regulations. I have used Ghana as a
case study to show more specific data and as an example of how Europe can mildly control
David M Nanang, Analysis of export demand for Ghana’s timber products, 2008.
C Denis Ingram, Historical Price Trends of non-coniferous Tropical Logs and sawnwood Imported to the
United States, Europe and Japan.1993
3
Anonymous, TED case studies, Ghana Forest Loss.1997.
1
2
4
timber export from developing countries. Ghana is also a good example of a developing
country not reliable on oil export and, more importantly, reliable on timber export.
Furthermore, in 2009 Ghana was the first African country to sign a voluntary partnership
agreement (FLEGT) with the EU to export only legally harvested timber to Europe. With this
as an example of timber regulation with Africa, I decided to focus on Ghana and analyze its
exporting history with Europe.
The European member states during 1970 to 2012 have been chosen in this thesis since they
are one of the biggest importers of timber in the world, particularly from African developing
countries. Ghana is a perfect example of a primarily export-based economic community. It
has also been the largest exporter of timber and tropical hardwood to Europe, until recent
years.
Furthermore Ghana is a country in Africa which shows reliable data in relation to oil export,
which could affect both the data collected as well as the economy in itself. Despite oil being
discovered in 1970’s, it was insignificant to the economy up until 2009.
1.2 Previous Research:
I have looked at Ghana as a whole, involving political, social and economic circumstances
pre-independence and post-independence. This is to give my research and understanding of
Ghana a broader scale and not just to focus on the export sector.
1.3 Theory
According to Stigler, the Theory of Economic Regulation states that a regulator faces special
interest pressure from producers and electoral pressure from consumers.
4
Furthermore, he
suggests that there are two ways to help a producer; via a direct subsidy or via protectionism.
Regulators favor a protectionist method of limited entry to the market. Therefore protective
regulations like tariffs, licensing, fees and other economic instruments are used. He also
suggests that within this theory, regulators receive the gains, despite the producers assuming it
is to their advantage. This is contrary to my thesis.
The purpose of discussing this theory is to show the different perspectives on regulation. In
this case, regulation is causing a negative impact on the economy of Ghana and reducing its
4
Stigler. 1971. The theory of economic regulation. Bell Journal of Economics and Management Science 2
(spring): 3-21.
5
export of timber. I will show that EU regulation is reducing the amount of timber export from
Ghana and through this regulation protectionism on the timber market occurs.
Strategic theories of protection argue that countries strategically alter trade flows in order to
gain some kind of market advantage. Magee, Brock and Young (1989) suggest a hypothesis
that protection is targeted towards disadvantaged groups.5 In general, an increase in a
country’s terms of trade causes the equilibrium of protection to rise and the export subsidy to
fall.6 It has been claimed, for example, that trade between two countries with different levels
of environmental regulations will lead to the low regulation country specializing in pollution
intensive production.7
The effects of regulations and the impact of regulators can have a negative impact on
economies and markets, especially when considering environmental policies. The intention of
an environmental policy or regulation is to ensure the sustainability of a resource, not
encourage more production of the resource. The Austrian School of thought has supported the
idea that regulations are problematic and that regulations will have unintended consequences.8
Regulations, as I suggest in this thesis, are restricting the export of timber out of Ghana.
Cordato even writes in notion of using Austrian theory in environmental economics.9
In my thesis I will also use economic theory to show how the demand of a commodity reacts
to its price. According to economic theory, if the price or value of a commodity increases the
demand for the commodity will decrease.
1.4 Hypothesis
For this thesis I will attempt to show that the export of timber is affected by the regulations
and policies by Europe through empirical evidence, using economic theory as my foundation
for research, and tying links with the Austrian school of thought. When the regulations and
policies are implemented the data will show an increase in the price of timber and a decrease
in the amount exported. The regulations and policy changes are therefore variables. The value
of production and export of timber are the initial factors.
5
Magee, Stephen P, William A. Brock, and Leslie Young, (1989), Black Hole Tariffs and Endogenous Policy
Theory (Cambridge University Press)
6
Magee, Stephen P, William A. Brock, and Leslie Young, (1989), Black Hole Tariffs and Endogenous Policy
Theory (Cambridge University Press) pp.157.
7
Baumol and Oates 1988, The theory of environmental policy
8
Roy Cordato, 2004, Toward an Austrian theory of environmental economics, The Quarterly Journal of Austrian
Economics (3-16)
9
Roy Cordato, 2004, Toward an Austrian theory of environmental economics, The Quarterly Journal of Austrian
Economics (3-16)
6
The Ghanaian economy is dependent on its timber export sector. This analysis will therefore
show the production, price and export of timber before European regulations were
implemented, showing low timber prices, and large export quantities. Then the analysis will
show the production, price and export of timber after European regulations were
implemented, showing higher timber prices and smaller export quantities.
Regulations implemented by the Ghanaian governments and Forestry Departments described
in this analysis will show how, on the other hand, local government regulations have
increased timber export quantities, reduced the prices of timber and in turn encouraged
economic growth.
2. Method
2.1 Approach
The approach in this thesis is to firstly understand the timber market in Africa and thereon the
timber market of Ghana, together with an overview of the Ghanaian economy from postindependence to today. Thereafter I have focused on the regulations and policies implemented
by firstly the Ghanaian government, and secondly by the European Community. With this
analysis of the regulations covered I attempt to show the patterns of timber export after the
regulations or policies have been implemented or changed, with the use of diagrams taken
from databases, literature analysis and an interview from a large timber company in Ghana.
To gain an understanding of the economic patterns and of timber export to Europe and to
show the decrease in timber export from Ghana I have used three different ways of collecting
information.
2.2 Data
Within my empirical findings, my primary quantitative data is collected from statistical
databases such as World Bank and FAOSTAT Forestry, the Forestry Commission of Ghana,
as well as the European Commission for facts on regulations and policies on timber import.
Reliable articles and literature have allowed me to attain historical data since it is difficult to
find within databases, especially in terms of demand for wood products, where little to none
has been documented. Quantitative data has been displayed in diagrams to show patterns of
timber value and timber export. This method of approach has also been useful by allowing me
to specify different species of timber. Using economic theory to interpret my empirical
7
findings I can show how the price of timber correlates to the export of timber. The period of
1961 to 2012 has been selected for the understanding of timber export as a whole; however
the period of 1990 to 2012 has been selected when discussing the effects of EU regulations
and policy changes since the majority of changes occurred during this time, as well as the
period of 1980 to 2012 when discussing the effects of Ghanaian regulations and policy
changes. Furthermore it allows the reader to be capable of analyzing the difference between
timber value and export before and after these changes.
Secondary data has been carefully selected from literature, the majority of which is qualitative
data in consistency with policy and regulation implementation, as well as showing their
effects.
After showing the collection of data and empirical findings, I will show that my hypothesis is
satisfied through my analytical discussion.
2.3 Variables
The changing factors in this thesis are the regulations implemented. I have used those by the
Ghanaian government and those by the EU to show the contrary effects of regulations
implemented.
There are several variables which could have had an effect on the result but have been ignored
in this thesis: 1) the global competitive market, with several other countries producing much
larger quantities of timber for export, for example China, 2) Employment within the timber
sector in Ghana, which could have an effect on the timber output and hence export.
Furthermore employment within timber firms could be dependent on outside factors such as
wages set by locals, private owners or the government or geographical location of timber
firms throughout the period 1970 to today. This is covered in more advanced research, for
example by Owusu 2001. The employment of expatriate staff, however, is mentioned later
under The effects of the ERP. 3) Consumption of wood products within the EU. There is very
little research on how the consumption of wood products is linked to deforestation, even less
so when there are so many other factors involved in the consumption. In 2008, the European
Commission tried to address this lack of information.10 The Environment Council, the
European Parliament and the Economic and Social Committee have since then urged support
for a study in the relationship between consumption and deforestation. Lastly 4) technological
10
European Commission Document, Second strategic review of better regulation in the European Union, 2008.
8
change or shift in consumer patterns. The rising use of replacement products such as plastic,
have changed the way the consumer buys wood products.
2.4 Classification
The European Economic Community will be called as such in this analysis between the
period of 1980 and 1990. Any discussion on the European Community thereafter will be
referred to as the European Union. This is due to the constant changing number of European
member states throughout the period of 1960 to 1990, and thereafter. The countries which
were included in the ECC during this time have been the six founding nations (Belgium,
France, Italy, Luxembourg, the Netherlands and Western Germany), 1960’s joining members
(Denmark, Ireland and the United Kingdom), 1970’s joining members (Greece) and the
joining members of the 1980’s (Portugal, Spain and Turkey).
All African countries used in the first part of the study apply apart from Algeria, Libya,
Egypt, Nigeria, Gabon, Congo and Angola. These countries have had oil as their largest
export income between 1970 and now, and are omitted since agricultural produce are not their
largest source of export income in comparison to countries such as Ghana.
In this report it is critical to determine the types of wood to be used in the analysis. About
90% of Ghana’s exported timber products are sawnwood, veneer and plywood. These will be
referred to as tropical timber products. Tropical timber is defined in the International Tropical
Timber Agreement (1994) as non-coniferous tropical wood for industrial uses, which grows
or is produced in the countries situated between the Tropic of Cancer and the Tropic of
Capricorn. The term covers logs, sawnwood, veneer sheets and plywood. Plywood which
includes in some measure conifer trees of tropical origin shall also be covered by the
definition.11 Tropical plywood is often a mix of tropical woods and is much more attractive
for consumers since it is denser and more weather resistant than indigenous wood or the
structure of wood from moderate climates. Roundwood is compiled of sawlogs and veneer
logs and in this analysis I have used roundwood as the subject for data when applying
sawnwood and veneer sheets. However, I have applied sawnwood and veneer sheets
separately in a few diagrams to show more specific export and value data. Within the EU,
supplies of wood-based raw materials of adequate quality can be imported at competitive
11
FAOstat, Forest Products Definitions.
9
prices and the EU is a net importer of these products - the two main types of such imports
comprise roundwood as well as pulpwood.12
3. Historical Background of Ghana
3.1 Post - Independence
Ghana has for many years been a promising African country, however since becoming an
independent country from being a British colony in 1957 Ghana experienced many difficulties
in trying to maintain its economic growth. Cocoa production, its main export and largest
export earner in the mid 1960’s, collapsed due to high foreign debt and competitive markets,
similarly to timber production.
An important pillar of the timber industry in Ghana was the start of the TIDD (Timber
Industry Development Division), which originates from a variety of attempts during the
1960’s to manage Ghana’s timber resource. These ideals cumulated in the establishment of
the Ghana Timber Marketing Board (GTMB) in 1963 to regulate the export of timber and
wood products.13
This accumulating foreign debt decreased log production with a decline of 66% between 1970
and 1981.14 At the same time, the government invested heavily in infrastructure in the
industrial sector in order to allow Ghana to reach a stage of industrialization. By 1971 there
was an attempt to devalue the Ghanaian Cedi currency, however this did not occur until 1983,
and so the Cedi remained high.
3.2 1980, the Economic Recovery Program (ERP) and the World Bank Timber
Rehabilitation
In 1980 Ghana’s GDP was at US$ 25.956 billion compared to its current US$ 40.71 billion
(2012).15 In 1985, GDP fell dramatically to US$ 8.046 billion.16 Exports fell from US$ 130
million in 1973 to US$ 15 million in 1983. This fall continued to 1986. In 1984 the World
Bank announced that it would institute an ERP. This was largely aimed at benefitting the
12
13
European Commission, Agriculture and Rural Devlopment, Forestry Measures 06-01-2010. Ec.europa.eu
Forestry Commission of Ghana – TIDD. www.fcghana.org/TIDD
14
Federal Research Division of the Library of Congress.. The Country Studies Series, Published 1988-1999.
15
Trading Economics, Ghana
World Bank.org GDP Ghana
16
10
export sector, boost the economy and furthermore reduce foreign debt in the long term.
Thereafter, Ghana showed steady growth. Export volumes of goods only (% change) for
Ghana in 1980 were -14.8%.17 Not only did the World Bank encourage stability but also
encouraged reforms to enable steadier trade through reduced import duties and taxes on
trades. The reforms also allowed farmers to keep a larger amount of their foreign exchange
earnings that previously in an attempt to encourage saw mills and exporters to keep supply
unchanged. In 1989, the Export Development and Investment Fund established. The World
Bank also enabled a timber rehabilitation credit to Ghana for US$ 24 million to ensure that
the exports of timber kept at a steady pace, after seeing the importance of the timber export
sector for Ghana. After this, log production rose 65% between 1984 and 1987. Export
revenues increased shockingly 665% between 1983 and 1988. All looked promising for
Ghana after the World Bank initiated the ERP. However, shortly after this, by 1988, Ghana
saw decreasing export revenue, decreasing log production, and a turn of events politically.
The ERP would ensure that production and export would increase, with heavy investments in
machinery and the industrial sector, however the rise of this foreign debt in turn would later
decrease the timber production and export. Not only did the policies attached to the ERP
increase the external debts, but also increase inflation rates. Since the ERP projects were
foreign investments, the Ghanaian government repeatedly devalued the country’s currency to
raise producer prices for exports and to encourage production, but devaluation also led to
price rises on all other goods as well.18 Export volumes of goods only (% change) for Ghana
in 1985 were 35.107% in comparison to 22.495% in 1990.19. The export value of timber,
along with this decreasing export revenue, plummeted the years prior to the ERP and steadily
rose in the years after (see diagram 2).
3.3 The 1990’s
Trade continued primarily to the European Community, with Germany taking 19% of all
Ghanaian exports.20 Since the initiation of the Forest Resource Management Project, part of
the ERP, started in 1988, Ghana too, wanted to start controlling and managing log production.
In 1989 the government banned 18 species of timber for log exports. This tough decision
17
http://www.economywatch.com/economic-statistics/Ghana/Export_Volume_Goods_Percent_Change/
18
http://www.mongabay.com/reference/country_studies/ghana/ECONOMY.html
World Bank.org Export Volumes Ghana
20
Federal Research Division of the Library of Congress. The Country Studies Series. Published 1988-1999
19
11
encouraged sustainable and environmentally friendly timber exporting. Furthermore, shortly
after this ban, the government also imposed high duties on other species.
Despite Ghana’s complex land tenure it is important to note here that Ghana does not have a
monopoly on forest species, however are able to adopt bans or laws on species no matter to
whom the land belongs to.21 Tenant farmers are however allowed to harvest trees for their
own use, but not for commercial purposes.22 Therefore the government was able to impose
these policies for the benefit of forest sustainability, and not for economic purposes, as a
monopoly would otherwise have done. The land owners, tenant farmers and the government
often resolve disputes over forest and land-use.
By 1991, wood products rose to 20% of export earnings accounting for 6.9% of volume
exports.23 Despite this vast increase in export earnings, the actual sales of logs decreased to
23% of export earnings in 1990, compared to 55% mid 1980’s.24 However, the price of timber
had increased.25 This pattern of high price for timber and low sales reflects the one of many
clear regulatory changes supporting the hypothesis. In 1995, there was a complete ban on
unprocessed log exports, which was one of the most affecting changes on the timber export
sector. The export value of roundwood for Ghana was 0 between 1995 and 2003.26
Although the 1990’s provided more economic stability from the timber export market,
unfortunately there was a gradual decline all in all. In the 1980’s the ambition was achieve a
fast effect and boost the economy through changes in reforms and in policies for export. Some
critics have suggested that the government put pressure on the timber companies, and took
advantage of the rising price of those species not banned, in order to gain profit and put
capital back into the Ghanaian economy.
Illegal timber logging also became a growing problem during the 1990’s, whether it were to
the growing concern of consumers, or of governments. Illegal logging has contributed to the
reduction in the forest covers of Ghana, undermining the resource base of the timber industry,
loss of revenue to land owners and government, as well as the degradation of the
21
www.growingforestpartnerships.org/sites/gfp.iiedlist.org/files/docs/ghana/ghana_land_tenure-gfp_project.pdf,
(Lavigne-Delville, 1998).
22
http://www.fao.org/docrep/003/ab567e/AB567E01.htm
23
24
25
26
Federal Research Division of the Library of Congress. The Country Studies Series. Published 1988-1999
Federal Research Division of the Library of Congress. The Country Studies Series. Published 1988-1999
Federal Research Division of the Library of Congress. The Country Studies Series. Published 1988-1999
FAOstat – forestry, 2013.
12
environment.27 For this reason, the EU and Ghana would later try to reduce illegal logging
through different policies and regulations, such as FLEGT VAP, in accordance with Ghana’s
Forest Policy 1994.
4. Regulations and Policies on Timber Logging and its Export (Ghana)
4.1 Regulation and Policy Changes in Ghana
The analysis of regulations implemented by the Ghanaian government is to show that it has
not caused a negative impact on the timber export, instead that is benefitted the timber export
sector. This will furthermore support my hypothesis that it was European regulation that
decreased timber export.
To some extent there was a preference to collaborate with African countries on Europe’s
behalf. Europe (Germany, Netherlands and the UK) had experienced a vast increase of
imported timber during the period of the Economic Recovery Program (ERP). As previously
mentioned, Germany was one of Ghana’s largest importers. The declining timber production
during the late 1970’s and early 1980’s was hardly the result of a deliberate policy to reduce
timber harvest, rather it was a result of a general economic decline in Ghana.28 The export of
Ghana was doing so well by the end of the 1980’s that in 1991 Ghana was able to make loan
repayments. Strapped for cash, one of the fastest ways to earn foreign exchange was to sell
timber at an unprecedented rate on the world market.29
To look further into the issued raised, I have looked at several regulations implemented by the
Ghanaian government, and an analysis on the effects on the timber market follows the
regulation or policy description.
4.1.1 Forest Policy
In the history of the Ghanaian timber sector, there have been two policies which called for
control and management. The first being the Forest Policy 1946, approved in 1948, and the
second being the Forest Policy 1994. Not only does the almost 50-decade gap between the
two suggest little change in the government mind-set, but it also means that the 1994 Forest
Policy was to make a large impact on the timber sector, or rather that there were no obstacles
27
www.fcghana.org, Background to VPA
Analysis of export demand for Ghana’s timber products: A multivariate co-integration approach
DavidM.Nanang, Journal of Forest Economics, accepted 2009, p19.
29
Ted Case Studies, Ghana Forest Loss, , http://www1.american.edu/ted/ghana.html
28
13
for exploitation before regulations were introduced. The policies imply a focus on
management in timber production and not for sustainability, emphasized by the 1948 policy
stating that Ghana required a sustained supply of timber for the industry, which resulted in a
serious reduction of forest in the land area. This is emphasized by the Minister of Forestry of
Ghana who stated that it became obvious that most of the provisions in the old policy could
not adequately deal with the totality of the emerging issues.30 It is clear that the Ghanaians
had taken advantage of its timber industry and used it to the point where change was
necessary. The Forest Policy of 1994 addressed the urgency of sustainable forest
management. The impacts of the first policy ultimately contributed to the increasing growth in
numbers of the timber industries in the 1970’s.31
4.1.2 Bans
In 1979, 14 timber species were banned from export in log form. 32 The Ghanaian government
sought to manage the deforestation and control the demand of timber from importing
countries. The list was increased to 18 in 1989.33 Later the government placed high duties on
other species in order to increase their value as export products.
4.1.3 Ghana Investment Code of 1985
This Act intended to encourage foreign investors who were looking to exploit Ghana’s natural
resources, whilst Ghana was experiencing economic growth and international credibility. It
also included a 25% reduction on export taxes for lumber and value added products. 34 For
this, the firms were given incentive packages under the investment code to encourage exports
– the more a firm exported, the greater the benefits it enjoyed. This too was another way the
government encouraged export of timber during the 1980’s in order to increase domestic
capital accumulation.
4.1.4 Timber Industry Development Division (TIDD)
30
DR KWABENA ADJEI, Minister of Lands and Forestry, Forest Policy 1994, www.fcghana.org
31
Birikorang, G. 2001. Ghana Wood industry Study and Log Export Ban Study, Forestry
Commission, Accra, Ghana
32
Richards, M., 1995. The role of demand side incentives in fine grained protection: a case study of Ghana’s
tropical high forest. Forest Ecology and Management 78, 225–241.
33
Analysis of export demand for Ghana’s timber products: A multivariate co-integration approach
DavidM.Nanang, Journal of Forest Economics, accepted 2009, p 50.
34
Amanor, K. S. (1999). Global Restructuring and Land Rights in Ghana. Nordiska Afrikainstitutet, Uppsala.
14
In 1985 the Ghana Timber Marketing Board, as it was known then, went through changes
according to the government’s dedication to the ERP and its macro-economic policies. It was
divided into two separate parts, the Timber Export Development Board (TEDB) and the
Forest Products Inspection Bureau (FPIB). As the names would suggest, the TEDB focused
on the exporting sector of timber and export promotion, whereas the FPIB was responsible for
verifications, inspections, approvals of timber and wood, and furthermore responsible for the
issuance of export permits. This too encouraged the export of timber to expand, as well as to
be properly managed.
4.1.5 The ERP Years
In 1983 the first devaluation on the cedi occurred and the value of the cedi was at c8.83 to US
dollar 1.00, in contrast to c2.75 to US dollar 1.00 between 1980 and 1982. This made Ghana’s
wood exports volatile and cheaper for the competitive international market. This meant that
the capital received by timber firms was very small since it was in local currency. The firms
then had to return debt obligations to commercial banks meaning that the firms received little
real income and had to increase their output through export. The Forestry Commission
ordered the firms to repay their loans within 12 months, and only few could accomplish this.
Of the 59 borrowers, only 9 (15.3 per cent) had repaid on schedule.35 Although employment is
not included as a variable in this analysis, it is important to mention the change in staff
employed at timber firms. Following the ERP, the number of expatriate professionals had
doubled from 6% to 12% of total employed staff.36
5. Regulations and Policies on Timber Logging and its Import (EEC/EU)
5.1 Regulations and Policies
For a long time European markets have been the largest importers of African timber. Markets
in Germany, Great Britain, Spain, Italy, France – and to a lesser extent Portugal – have
dominated the trade.37 The direction of European import has been suggested to coincide with
the relationship of old colonies of Africa. The markets of the Southern EU appear to have
35
Forestry Commission 1988:6
Owusu 2001
37
Anonymous, GlobalTimber.org.uk
36
15
been depressed in 1993 - just prior to a 50% devaluation of the predominant local currency of
the region's producer countries - but otherwise their imports have been fairly stable.38
The purpose of putting regulations and policies in relation to timber export from Ghana, as
well as from other African timber markets, is to show that the EEC/EU regulations were
affecting the price and in turn the quantity of timber being exported. Using economic theory I
can show that the price and value of timber products from Africa have increased, and
therefore the quantity of exports to Europe has decreased by exogenous factors like regulation
and policy. During the late 1990’s and 2000’s, when the effects of the EU regulations and
policies took place, the value of timber increased and in turn the quantity of timber imported
decreased. The price of timber is therefore an essential factor in this analysis and is shown
later in the results of timber price fluctuations preceding regulation and policy changes.
5.1.1 The International Tropical Timber Agreement 1983
This came into force in 1985. The Agreement aims to encourage increased and further
processing of tropical timber in producing member countries with a view to promoting theory
industrialization and thereby increasing their export earnings to encourage members to
support and develop industrial tropical timber reforestation and forest management activities
and to improve marketing and distribution of tropical timber exports of producing members.
In hindsight one can see that the income from the timber market was important for Ghana, as
well as it was as important to keep the export sector afloat. Following this is an interesting
point of how Ghana, as well as other African timber exporting countries, wanted to honestly
protect the logging of timber and ensure that the timber export would be sustainable as well as
keeping with European standards - which they would do by signing this Agreement – by
encouraging the development of national policies aimed at sustainable utilization and
conservation of tropical forests and their genetic resources, and at maintaining the ecological
balance in the regions concerned.39
5.1.2 The International Tropical Timber Council
It is defined within the Agreement that the council consists of all members of the Tropical
Timber Organization, members being the producing parties and the consuming parties. The
Intergovernmental Organizations are defined by the Agreement as including the European
38
Anonymous, GlobalTimber.org.uk
39
http://sedac.ciesin.org/entri/texts/tropical.timber.1983.html
16
Economic Community and any other intergovernmental organization having responsibilities
in respect if the negotiation, conclusion and application of international agreements, in
particular commodity agreements.40 Ghana is included as one of the producing members, and
Belgium, Denmark, France, Germany, Greece, Ireland, ITALY, Netherlands and the United
Kingdom (grouped as the EEC) are included as consuming countries. To show that the EU
was dominating role in the Agreement, the EEC had 27.7% of the votes, the second largest
number of votes allocated after Japan, which had 33%. The EEC was ranked a large
contributor to the decision which entails a sense of authority over the agreement.41
5.1.3 Eco-Labelling
In 1991, the European Union implemented a voluntary eco-labelling program in order to
ensure that products imported into the EU came from sustainable management certified firms.
This affected production in Ghana such as markets in cocoa, mango, tuna, as well as timber.
5.1.4 UK (United Kingdom) Timber Procurement Policy
In 1996 a voluntary guidance was issued in the UK to advise government departments to
purchase timber and timber products from sustainable and legal sources.42 However, the
guidance did not have a large impact on the timber market, but it is nevertheless an important
policy to mention since the majority of implementations from the EU came from the UK at
the start of the 1990’s. This was the first of several policies, with others to follow thereafter;
most of the policies implemented during the 1990’s were introduced by single member states,
not by the EU or European Commission. The responsibility of this task lies with the supplier
of timber, implying that, in this case, the Ghanaian timber firms would be responsible for
selling sustainable wood products.
5.15 FSC (Forest Stewardship Council)
The FSC is a global forestry certification system which was set up in 1992 with a purpose to
promote environmentally appropriate, socially beneficial and economically viable
management of the world’s forests.43 However, it makes note that the main purpose of this
40
http://sedac.ciesin.org/entri/texts/tropical.timber.1983.html
Statistical Data and Specific Indicators (for the monitoring of the International Tropical Timber Trade)
42
National policy documents, taken from Public Procurement Policies for Forest Products and Their Impacts,
FAO, 2006.
43
FSC Forest Stewardship Council-vision and mission. Fsc.org – obtained 2013-01-15
41
17
system is to promote legally harvested timber and sustainability, leaving the responsibility of
economically viable management to the timber exporting governments, tied to this system.
5.1.6 ERP Revisited
The importance of the ERP did not only have a positive effect on the Ghanaian economy, but
also effected how the timber firms functioned. In 1983 the Government of Ghana held a
conference with donors from Ghana’s largest timber importing countries, the majority of
which were European member states. There they decided to encourage the use of timber for
infrastructure in Ghana.44
According to MLF (1996), efforts to improve the industry through the World Bank sponsored
Economic Recovery Program may have enhanced the gross production of timber, but these
efforts strengthened an already high demand on the forest resource.
45
In another opinion,
‘The recovery program did not cater for developing and expanding the forest resource base’.46
5.1.7 FLEGT and VAP’s
The Forest Law Enforcement, Government and Trade (FLEGT) was the first EU action plan
to exclude illegal timber on the market. As previously mentioned illegal timber was a
significant problem for the importing markets. It was introduced in 2005, and Ghana signed
the Agreement in 2009. The Agreement refers to the 1992 Non-legally Binding Authoritative
Statement of Principles for a Global Consensus on the management, conservation and
sustainable development of all types of forests, as well as the 1994 Forest and Wildlife Policy
of Ghana which aims at conservation and sustainable development of the nation’s forest and
wildlife resources.47 It establishes a set of procedures and requirements aiming at verifying
and attesting, by means of FLEGT licenses, that timber products shipped to the Community
were legally produced.48 The Agreement puts pressure on the Ghanaian government through
the designation of certifications and licensing of timber. Furthermore the responsibility of
verifying legally produced timber is designated to Ghana to implement a system for
verification.
44
Owusu J.H. Journal of Modern African Studies. (Journal of Modern African Studies, 2001, 39(1):72)
45
http://etd.lsu.edu/docs/available/etd-11072009-093300/unrestricted/Baffoe_thesis.pdf
Interview, General Manager Samartex Timber Company Ltd. See Bibliography.
47
European Community, Ghana, 2009, Voluntary Partnership Agreement between the European Community and
the Republic of Ghana on forest law enforcement, governance and trade in timber products into the Community
48
European Community, Ghana, 2009, Voluntary Partnership Agreement between the European Community and
the Republic of Ghana on forest law enforcement, governance and trade in timber products into the Community
46
18
5.1.8 Other Restraints on the timber market in Ghana
The European market was generally depressed by the end of the 1980’s as a result of
recession, and buyers continued to hold large quantities of tropical wood without being able to
sell, which resulted in a slow movement of trade.49 Even the rise of western and international
anti-deforestation groups, such as Greenpeace, began to have an effect on the timber market,
decreasing the demand for timber. Furthermore, an increasing use for materials other than
wood decreased the timber market. Substitutes from plastics and aluminum, alongside a high
cost of production of timber, meant that Ghana experienced a decline of exports to the EC.50
6. Empirical Findings
6.1 African timber production and export
6.1.1 Export and Value
Between 1961 and 1970, Africa remained the second largest exporter of industrial roundwood
as 10.53% of export in the world came from Africa.51 By analyzing the graph below (FAOstat
2013), one can see the export quantity (m3) of roundwood from three African countries,
chosen to show the differences between the African countries and in comparison to Ghana,
Guinea, Ghana and Central African Republic. There has been a dramatic decline in export of
roundwood since 1961, with a short period of increase between 1985 and 1995 in Ghana.
Diagram 1: A Graph to Show the Amount of Roundwood (m3) Exported from Guinea, Ghana
and Central African Republic Between 1961 and 2012
49
Owusu J.H. Journal of Modern African Studies. (Journal of Modern African Studies, 2001, 39(1):76)
50
Interview with the General Manager of Samartex Timber, Ghana. (August 2013)
FAOstat 2013
51
19
The Export Value (1000 $US) of roundwood from the same countries shows a constant low
value since 1961 to a slow rise in the 2000’s, with only an exception of a short period of
increase in 1994 in Ghana. (FAOstat 2013)
Diagram 2: A Graph to Show the Export Value (1000 $US) of Roundwood from Guinea
Ghana and Central African Republic Between 1961 and 2012
The value of timber has increased in recent years, which in turn implies that the export
quantity decreases, all according to economic theory which suggests a negative correlation
between the demand for a good and its price. High timber prices would reduce the quantities
that would be exported from Ghana and may encourage processing in importing countries.52
The next graph shows a large group of African countries and their export quantity (m3) of
roundwood between 1961 and 2012. (FAOstat 2013)
Diagram 3: A Graph to Show Export Quantity (m3) of Roundwood from Several African
Countries Between 1961 and 2012
Diagram 4: A Graph to Show the Export Value (1000 US dollars) of Roundwood from
Several African Countries Between 1961 to 2012 (FAOstat 2013)
Analysis of export demand for Ghana’s timber products: A multivariate co-integration approach
DavidM.Nanang, Journal of Forest Economics, accepted 2009.
52
20
6.1.2 Exports of Timber from Africa to Europe
The volume of logs and plywood consumed by Europe has been decreasing since 1998.
Meanwhile, the European consumption of sawn timber is fluctuant but not declining, because
it is mainly based on some specific technical requirements which only some tropical species
can fulfill.53 But for the last decade the volume and the share of African exports to Europe is
progressively decreasing, while they have diverted their sales towards Asia. Tropical logs as a
percentage of total non-coniferous log imports into Europe declined about 50% from 1970 to
1990, indicating possible substitution opportunities for non-tropical hardwoods from other
suppliers.54 The most striking examples are the Republic of Congo, where exports of logs,
sawn timber, plywood, in roundwood equivalent to Europe have fallen from more than 80%
to less than a surprising 15% in recent years.55 From 1970 to 1990, Europe’s overall increase
in real prices for tropical log imports (22 percent) was accompanied by a substantial decrease
(56 percent) in quantity of imports.56
In recent years, between 1990 and 2009, there has been a general decline in logs export to the
European Union (diagram 5). Between 2005 and 2009, there is a sharp reduction in the
quantity of logs export to the EU from Africa. China has grown dramatically an importer of
logs. African countries have exported primarily to Europe and it is suggested that this is
because of the relationship with Europe (old colonies of Great Britain) and comparatively low
transportation costs. The fact was that the expatriate firms had more capital at their disposal
for land purchases than local investors. This opened the way for the intrusion of large-scale
53
In 1A short analysis on the stricter European regulations on tropical hardwood imports and their side effects
First version : March 2007 By Roda, Jean-Marc1, Arets, Eric J.M.M2; Lim, Hin Fui3990,
54
Historical Price Trends of Nonconiferous Tropical Logs and Sawnwood Imported to the United States,
Europe, and Japan - C. Denise Ingram.
55
In 1A short analysis on the stricter European regulations on tropical hardwood imports and their side effects
First version : March 2007 By Roda, Jean-Marc1, Arets, Eric J.M.M2; Lim, Hin Fui3990,
56
Historical Price Trends of Nonconiferous Tropical Logs and Sawnwood Imported to the United States,
Europe, and Japan - C. Denise Ingram
21
expatriate concessionaire companies into for example southwestern Ghana. 57 Ghana is
recognized as part of West Africa in this diagram since they joined the Economic Community
of Western African States (ECOWAS) in 1975, whereas the others in the diagram are separate
from this.
Diagram 5 - West Africa and the Congo Basin - exports of logs* to China, the EU and
elsewhere between 1990 and 2009 (excluding plantation logs)
* excludes timber (including teak) which derived from plantations.
In diagram 6, one can see an upward trend since 1990; however by looking at Ghana more
specifically, there is a downward trend since 2005. Despite Ghana being the third largest
exporter of quantity of timber in Africa, there is a slight reduction in later years. On the other
hand, Ghana is the largest exporter of quantity of timber to the rest of the world, with a vast
increase since 1992.
57
SystemTropical Forests and West African Enterprise: The Early History of the Ghana Timber TradeAuthor(s):
Raymond E. DumettSource: African Economic History, No. 29 (2001), pp. 79-116( P.114)
22
Diagram 6 - West Africa and the Congo Basin - exports of timber* other than logs to China,
the EU and elsewhere between 1990 and 2009.
* excludes timber (including teak) which derived from plantations.
This shows where regulations have taken an effect on timber export in recent years. The
global market for timber import has become more competitive which can be seen by big
markets such as China. In 2005 the EU adopted a regulation scheme that allowed timber to be
imported to EU only from countries that had signed FLEGT (Forest Law Enforcement,
Governance and Trade) Voluntary Partnership Agreements (VPA’s). The agreement states
that bodies or persons designated by the exporting country are to monitor the legality of
timber exported. In the case of Ghana, which signed agreements in 2006, this automatically
put pressure on the government to ensure that the monitoring is carried out and meets the
requirements of the Agreement. Cameroon and Republic of Congo both signed in 2010
respectively, Liberia and Central African Republic in 2011.
6.2 The Impact and Effects of Regulation and Policy by the EU on the Production and
Export of Timber
The International Tropical Timber Agreement of 1983 most certainly encouraged further
processing of timber as seen in the diagram below, where production of roundwood between
1980 and 1983 increased, and after 1983 production remained high and steady.
23
Diagram 7: A Graph to Show the Production of Roundwood (m3) in Ghana Between 1980
and 1988
Prior to 1980, the amount of roundwood produced had remained at approximately 10 million
m3 each year since 1970. By 1983 the amount produced reached 13,262,000 m3, and
remained by that amount until 1989.58 Of roundwood produced, only 7000m3 were exported
in 1984 compared to 318600m3 in 1987. Export value remained low at approximately 5,000
US dollars between 1980 and 1986. In 1987 value increased to 39,505 US dollars (FAOstat).
In 1990, the export quantity of roundwood had decreased again to a low amount of 141285
(m3) in comparison to its peak of 1987.59 Although the quantity of tropical sawnwood imports
to Europe increased, tropical lumber as a percentage of total imports of timber decreased from
44 percent in 1970 to 33 percent in 1990. In other words, while Europe’s import market for
non-coniferous sawnwood expanded, the role of tropical sawnwood declined as real prices
increased by 47 percent.60
The implementation of the EU eco-labelling program showed vast declines in imports, since
the consumer considered the cost of timber from certified firms as too expensive. However, it
is argued by the developing countries that this cost was placed by the importing firms and not
the exporting firms.
In line with the UK Timber Procurement Policy, the UK had a low and steady quantity of
import of roundwood since 1991 and in 1993, at 25,000 m3 and in 1994, a large increase
occurred reaching 848,000 m3 by the end of 1996.61 Despite this increase in imports, all
58
FAO stat – forestry database, 2013.
FAOstat – forestry. 2013
60
Historical Price Trends of Nonconiferous Tropical Logs and Sawnwood Imported to the United States,
Europe, and Japan - C. Denise Ingram.
61
FAOstat – forestry. 2013
59
24
imports from developing countries declined to US dollars 96.3 billion in 1991 and even more
so to US dollars 91.8 billion in 1993.62
The effect of the ERP boosting infrastructure, the majority of members being from the EEC,
ensured that timber would be easier to export especially with two new built ports. This in turn
affected the return of investments. The firms and owners of firms would prefer to have tax
returns and foreign exchange retention quotas, based on the volume of export, under the
investment code.63
The FLEGT VAP with Ghana heavily affected the timber sector and its exports with Europe.
Table 1 shows the export quantity of veneer sheets (m3) from Ghana to the United Kingdom
between 2000 and 2010.
Diagram 8:
A Graph to Show Export Quantity (m3) of Veneer
Sheets from Ghana to the United Kingdom
between 2000 and 2010
3000
2500
2000
1500
1000
500
0
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Export Quantity
(m3)
Source: FAOstat- forestry 2013.
Another example to show the effect of the FLEGT VAP is the decline of exports of
sawnwood to the UK between 2000 and 2010.
FAOstat – forestry. 2013
Owusu J.H. 2001, Determinants of export-oriented industrial output in Ghana:the case of formal wood
processing in the era of economic recovery. The Journal of Modern African Studies 39(1),51–80.
62
63
25
Diagram 9:
A Graph to Show the Export Quantity of
Sawnwood (m3) from Ghana to the United
Kingdom between 2000 and 2010
15000
10000
Export Quantity
(m3)
5000
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Source: FAOstat- forestry 2013.
Furthermore, findings show that a shift in trade direction was occurring, in that the decreasing
amount of timber exported to Europe was rather being exported to China. 2010 shows a vast
increase in export to China for Tropical Industrial Hardwood.
Diagram 10:
A Graph to Show the Export Quantity of Industrial
Tropical Roundwood (m3) from Ghana to China
between 2000 and 2010
20000
15000
10000
Export Quantity
(m3)
5000
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Source: FAOstat – forestry 2013.
In 2005, a rise in exports of veneer sheets to China occurred; indicating the effects of FLEGT
VAP’s introduced in the same year.
26
Diagram 11:
A Graph to Show the Export Quantity of Veneer
Sheets (m3) from Ghana to China between 2000
and 2010
12000
10000
8000
6000
Export Quantity
(m3)
4000
2000
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Source: FAOstat – forestry 2013.
Even sawnwood was being preferred to China, with a steady increase between 2003 and 2008,
and again from 2009 to 2010.
Diagram 12:
A Graph to Show the Export Quantity (m3) of
Sawnwood from Ghana to China between 2000
and 2010
10000
8000
6000
Export Quantity
(m3)
4000
2000
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
Source: FAOstat – forestry 2013.
This seems to show that the Ghanaian government was trying to keep exports at constant
levels with the EU, but that the price of timber increased too much after the implementation of
FLEGT, leading the consumers of timber in Europe to decrease their demand. This also
27
proves that Ghana cannot control their chain of supply. The demand for timber, as economic
theory suggests, is negatively correlated with the price of timber. Exports of timber increased
their market with China as the diagrams suggest.
6.3 The Increase of Exports after Ghanaian Regulation and Policy Changes
Diagram 13: A Graph to Show Export Quantity of Roundwood (m3) of Ghana between 1970
and 2000
Source: FAOstat - forestry 2013
There have been consequences of all these changes on the export value and export quantity of
timber from Ghana, the latter being shown in the above diagram. Firstly one can compare
export value pre-1994 Forest Policy approval with a decreasing or stagnant quantity up until
1993 when a dramatic increase, probably due to EEC countries exploiting the low value and
low cedi, and thereafter a sharp fall in exports. The ban on 18 species of wood products in
1989, as well as the difficulty of the Ghanaian economy shows an average export quantity
increase of roundwood of 90,000 m3 each year between 1989 and 1994.
Ultimately, Ghana had taken advantage of its forest land area, exploited it to ensure stable
revenues from the timber sector, which can be seen from statistics of timber value showing
little change up until the 1980’s. The consequence of the second Forest Policy 1994 and
Ghana’s expansion of forest reserves show a great decline in the export sales of logs and
timber, as well as increase in the value and price of timber.
28
The log export ban created inefficiency in the wood processing industry and led to low
domestic price of logs which is an indicator of the increasing protection for domestic
processors.64
As mentioned, Ghana sought to acquire large investments from foreign countries, often those
who imported Ghana’s wood products. The majority of these were members of the EEC. The
weakening Ghanaian cedi, as well as the decreased value of timber, meant that investors were
happy to put capital into timber firms. For example, from 1983 through 1991, a minimum of
81% of the volume of processed wood exported was sent to EEC countries annually.65
The benefit of having an increase in expatriate staff is a small but interesting point on how
firms kept a good business relationship with European buyers. The use of foreign experts also
helped to establish good reputations for companies internationally.66 Even more so, business
connections could be made and benefit both the Ghanaian timber firms as well as the
importing firms. The importing countries and more specifically firms were more likely to
make business with same-nationality staff in the timber firms to approve of the trade and
export.
Although the Ghanaian government made every effort to encourage their timber export, as
well as regulating the types of timber, the incentives have not been outlined. The decrease in
log sales during the 1970’s was due to the economic instability of the country, which
importing countries were most likely experiencing too, knowing that the developing countries
were at unease and not of credibility. On the other hand, the process of the ERP put Ghana on
track to ensure economic growth once again. It is assumed by historians and economists alike
that after this rehabilitation the timber export sector would return again to its rate of the
1970’s. This lasted until the beginning of the 1990’s. The sector was shifting. The demand for
timber had increased with the majority exported to Europe; however the prices for timber
increased dramatically at the same time as the global demands for timber began to shift. The
once expatriate firms and good links with Africa were beginning to dissolve. The effect of
global hot-topics, such as environmental sustainability, impacted Ghanaian timber production.
The Ghanaian government contributed to the sector in several positive ways and hoped the
export would rebound.
64
http://etd.lsu.edu/docs/available/etd-11072009-093300/unrestricted/Baffoe_thesis.pdf
Owusu J.H. Journal of Modern African Studies. (Journal of Modern African Studies, 2001, 39(1):65)
66
Owusu J.H. Journal of Modern African Studies. (Journal of Modern African Studies, 2001, 39(1):69)
65
29
7. Analytical Discussion
Ghana has experienced a timber export sector decline.
“The cost of production as well as the effects of over-regulation and bureaucracy by the EU
has placed pressure on countries such as Ghana,67 heavily reliable on timber export income,
and these are two of the main reasons for the decline of timber exports. The Forestry
Commission of Ghana also agrees that the EU had placed pressure of Ghana – “The main
reason for Ghana to join the EU FLEGT was the need for Ghana to maintain its share in the
EU timber market.”68 However, “the high cost and hence uncompetitive pricing” have
contributed to this decline,69 as outside determining factors. According to the Austrian School
regulation or policy changes will always have negative effects on either the producer or
consumer, and therefore one must question the necessity of its implement. In some cases
regulations can have counter-effects, and new regulations must replace the old.
“Ghana’s trade regulations have not had negative effects on the timber export.”70 This
supports my data showing Ghanaian regulation and policy changes on the timber market. The
attempts to introduce regulation through species-bans, forest policy and the formation of
TIDD, have only encouraged Ghanaian timber industries to manage production and
businesses correctly and to consider production in sustainable amounts.
It is also clear from this thesis that there is a scarcity of data and research into the demand of
timber or wood products. Without this, it is difficult to judge whether a regulation can benefit
trade and what its long-term effects may be. Economic theory in this thesis reflects the
patterns of price and export. When theory implies that economic regulation benefits trade,
examples I have taken up argue these theories, such as FLEGT VAP’s, the UK Timber
Procurement Policy and the FSC, which show that after their enforcement, Ghana’s export to
Europe has decreased. Examples to show that Ghana has increased its timber export from the
introduction of regulations and policy changes are the Forest Policy of 1994, timber species
bans and the Ghana Investment Code of 1985.
My empirical findings have shown that a decrease in timber export occurred, and is related to
the intrusion of European regulations and policies. I used the Ghanaian government
67
Interview, General Manager of Smarartex timber & Plywood Ltd. August 2013.
Fcghana.org – EU FLEGT initiative
69
Interview, General Manager of Smarartex timber & Plywood Ltd. August 2013.
70
Interview, General Manager of Smarartex timber & Plywood Ltd. August 2013.
68
30
regulations to show a comparison that European regulations have had a negative effect on
timber export, rather that positive. The main difference between these regulations and their
effect is that regulations with the objective to provide environmental sustainability and
common interest in protecting the nature of the forests (EU regulations) cannot provide
encouragement for timber export. Those with an objective to maintaining timber export
growth as well as effective management have encouraged timber export growth but have not
maintained sustainability (Ghanaian regulations). This implies that regulations can benefit the
environment at a price (reduced export), or harm the environment (increased export).
“Over-regulation and bureaucracy are problems which face the timber industries today in
LED-countries”.71 Environmental policies, such as FLEGT, have at least filled their purpose,
to ensure sustainable deforestation, as well as reducing illegal logging. The negative effects
are shown in my empirical findings, they have increased the value of timber and thereby
reduced exports, meaning that Ghana will have to look elsewhere in order to maintain
economic growth from the timber market. Furthermore, they have pushed their exports
elsewhere. This may also have a contradictory effect, in that illegal logging will continue to
other markets. Other regulations, such as the 1983 International Tropical Timber Agreement,
did not have environmental sustainability as their interest. It was more an approach of how to
increase production and export.
This thesis is partly limited by the lack of research in the negative economic effects of
environmental regulation since the long-term effects are yet to be seen. Looking into the
future, this topic of environmental economics will become increasingly important and
questions like ‘How will developing countries shift their markets?’ and ‘How can we maintain
economic growth as well as environmental sustainability?’ will dominate the research.
71
Interview, General Manager of Smarartex timber & Plywood Ltd. August 2013.
31
8
Bibliography
8.1 Literature and Articles
Amanor, K. S. (1999). “Global Restructuring and Land Rights in Ghana.” Nordiska
Afrikainstitutet, Uppsala. Research Report no. 108, pp. 1-161.
Baumol and Oates. (1988) The Theory of Environmental Policy. Cambridge, UK. Cambridge
University Press.
Birikorang , G., R. Okai, K. Asenso-Okyere, S. Afrane, and G. Robinson (2001) Ghana Wood
industry Study and Log Export Ban Study. Forestry Commission report to the Ministry of
Lands and Forestry. Forestry Comission, Accra Ghana
Cordato R., (2004) “Toward an Austrian theory of environmental economics”. The Quarterly
Journal of Austrian Economics Volume 7, No. 1, pp. 3-16.
Dumett Raymond E. (2001) “System Tropical Forests and West African Enterprise: The Early
History of the Ghana Timber Trade.” African Economic History, No. 29, pp. 79-116.
Ingram C. Denis. (1993) Historical Price Trends of Non-coniferous Tropical Logs and
Sawnwood Imported to the United States, Europe and Japan. U.S. Dept. of Agriculture,
Forest Service, Forest Products Laboratory.
Magee, Stephen P, William A. Brock, and Leslie Young. (1989) Black Hole Tariffs and
Endogenous Policy Theory. Cambridge, UK. Cambridge University Press.
Nanang David M. (2010) “Analysis of export demand for Ghana’s timber products: A
multivariate co-integration approach.” Journal of Forest Economics. vol. 16, issue 1, pp. 4761.
Owusu J.H. (2001) “Determinants of export-oriented industrial output in Ghana: the case of
formal wood processing in the era of economic recovery.” Journal of Modern African Studies.
Volume 39, issue 1, pp. 51-80.
Richards, M. (1995) “The role of demand side incentives in fine grained protection: a case
study of Ghana’s tropical high forest.” Forest Ecology and Management 78, pp. 225–241.
Roda, Jean-Marc1, Arets, Eric J.M.M2; Lim, Hin Fui. (March 2007) “A short analysis on the
stricter European regulations on tropical hardwood imports and their side effects.” Working
Paper, 1st version, pp. 1-11.
32
Stigler, George J. (1971) “The theory of economic regulation.” Bell Journal of Economics
and Management Science 2, volume 2, no. 1, pp. 3-21.
8.2 Other Literature
The European Commission homepage - Ec.europa.eu
FAOstat-Forestry, homepage – www.faostat3.fao.org
World Bank homepage – www.worldbank.org
The Forestry Commission of Ghana, homepage – www.ghanatimber.org
GlobalTimber.org.uk
National policy documents, taken from Public Procurement Policies for Forest Products and
Their Impacts, FAO, 2006.
Federal Research Division of the Library of Congress. The Country Studies Series Published
1988-1999.
Interview: General Manager at Samartex Timber & Plywood Company Limited, established
in 1995. Hitherto, the company was known as African Timber & Plywood Company (AT&P)
which had been in existence since 1947 under the UAC group of companies. Samartex
Timber & Plywood Company Limited took over AT&P at a time when it was saddled with a
myriad of problems including mismanagement and a disastrous fire outbreak, which had left
the company’s facilities in chaos. Today, Samartex is one of the largest private sawnmills in
Ghana and exports are regulated through FLEGT. (samartex.com.gh)
33