Plantations, poverty and power: Section 1

By Chris Lang. Published by World Rainforest Movement, December 2008

Plantations do not plant themselves. Nor do pulp mills build themselves

In May 2005, at a meeting in Vancouver, Mario Higino Leonel, the Executive Director of BRACELPA (the Brazilian Pulp and Paper Association) gave a presentation titled “Forest Plantations in Brazil”. He told his audience that plantations are a “Vector for Sustainable Development”. He illustrated the point with a Venn diagram of three overlapping circles, labelled “Environmental”, “Social” and “Economic”. In the small overlapping area in the centre are the letters “SFM”: sustainable forest management.[2]

Leonel talked about the importance of a Code of Best Practices for Planted Forests. He talked about how the area of plantations has increased in Brazil. The vast majority of Brazil’s plantations were established between 1965 and 1987, during which period the area increased from 500,000 hectares to 6 million hectares. He explained how the growth rates of plantations (about 60 per cent of which are eucalyptus plantations) increased from about 15 cubic metres per hectare in 1970 to over 60 cubic metres per hectare by 2000. He explained that plantations contributed US$17.5 billion worth of trade in 2004 and that they provided 1.5 million direct jobs. And he explained how plantations restore degraded land, conserve the soil, use land not fit for traditional agriculture, protect biodiversity and watersheds, sequester CO2 and relieve pressure on what he described as “natural forests”.

The most interesting aspect of Leonel’s presentation is what he decided not to talk about. Leonel did not point out the difference between forests and industrial tree plantations. Forests are diverse ecosystems which provide a range of goods for people and animals. Industrial tree plantations are monocultures which provide one product: fibre for the pulp and paper industry or charcoal for the steel industry, for example.

The failure to differentiate forests from plantations is the starting point of industry propaganda for industrial tree plantations. By describing their monocultures as reforestation, the industry can fool ignorant audiences in the North that it is doing something good. But the only similarity between a forest and a plantation is that both contain trees.

Leonel did not mention that industrial tree plantations in Brazil are increasingly the target of protests by the land rights movement, farmers and Indigenous Peoples. While the figures describing the contribution of industrial tree plantations to the Brazilian economy look impressive, these figures do not reveal what has been lost: the livelihoods of thousands of people who lived on the land before it was converted to industrial tree plantations. Invisible in Leonel’s presentation are the thousands of people who were left with no option other than to move to the favelas surrounding Brazil’s major cities.

Leonel gives figures for the number of people employed in plantations, but he does not describe how dangerous and poorly paid that work is. In fact, plantation operations are heavily mechanised and therefore employ few people. In recent years, many of the jobs on plantations have been contracted out meaning that workers often lose the few benefits they had. A 2001 report for the UN International Labour Organisation notes that in Chile almost all timber harvesting is carried out by contractors. A 1998 survey of forest workers in Chile found that when their jobs were contracted out two-thirds of workers saw a reduction in pay and benefits and half lost out on pensions.[3]

In South Africa, Mondi provides only 0.7 jobs for each 100 hectares of land that it owns. But this employment total includes jobs in Mondi’s offices and mills. In the rural areas, the employment situation is even worse.[4] Figures from the Agricultural Census in Uruguay indicate that plantations generate fewer jobs even than extensive cattle-ranching. These few plantation jobs are often very badly paid. World Rainforest Movement has documented the “near-slavery” conditions for workers in plantations in Uruguay.[5]

Leonel does not mention that jobs in plantations are extremely dangerous. “The worst safety and health situation is usually found in forestry,” states ILO’s 2001 report. “Forestry work is also beset by serious health problems. Few workers reach normal retirement age. The safety and health situation is most problematic among contractors.”[6]

In South Africa, wages of manual workers employed by contractors are between US$50-75 a month compared to US$75-100 or more for those employed by companies. Company workers are entitled to pensions and medical benefits. Outsourced workers receive neither.[7]

Plantations are often established several years before the associated pulp mill starts up, which means that rural people are forced to move away from the area to look for work. When the pulp mill starts up the few jobs go mainly to people from outside the local area.

Leonel’s list of the supposed environmental benefits of plantations is typical of the lies used by plantation proponents to justify their destructive industry.[8] Plantations do not restore degraded land. Instead plantation companies seek the best land with rich soils where their trees will grow fastest. The plantation industry (and its hired consultants) may well describe the land that they want to take over as “degraded” or “not fit for traditional agriculture”, but to local people the land is the basis of their livelihoods.

Plantations do not conserve soil. They suck out nutrients and water. Research in Argentina has shown that they can increase salinisation by bringing salts to the surface of the soil.[9] That monoculture eucalyptus plantations established on grasslands have an impact on water supply is firmly established, in both scientific reports and even pro-plantation reports. A 1999 report by the Australian Bureau of Agricultural and Resource Economics and consulting firm Jaakko Pöyry states that:

“In seasonally dry environments, trees and other land uses compete for water. Some eucalypt plantations which have been established on natural grasslands in Uruguay and South Africa have been found to affect the availability of local water by lowering watertables. Creeks and wells have dried up, requiring local people to travel further to obtain water. Further, insecticide and fertilisers used in plantation management can affect the quality of local water supplies and aquatic fauna.”[

]

The vast areas of industrial tree plantations established in Brazil are monocultures – the very opposite of biological diversity. E.O. Wilson, a biologist at Harvard University, describes the effects of plantations on biological diversity as the equivalent of “building a line of Wal-Marts”.[11]

The industrial tree plantations which feed the pulp and paper industry do not sequester carbon dioxide. The fibre is used to make paper, a hugely energy intensive process to manufacture a product which is often thrown away. The majority of the world’s paper ends up in landfill dumps where it rots and produces methane, a gas which is 21 times as potent a greenhouse gas as carbon dioxide. The largest single source of greenhouse gases from the Canadian forestry industry is methane emissions from rotting paper and other forest products in landfills. In 2005 such emissions accounted for about 46 per cent of the industry’s greenhouse gas emissions.[12]

Plantations do not relieve pressure on native forests. The pulp and paper industry prefers fibre produced from fast growing eucalyptus plantations. As Leonel points out in his presentation, no pulp and paper is produced from native forests in Brazil. But if plantations were really relieving the pressure on native forests, the rate of deforestation should be decreasing as the area of plantations is increasing. This is not happening in Brazil, which has both large areas of plantations and high rates of deforestation. “To date, however, plantations have had no discernible global impact on reducing deforestation,” notes an article by two World Bank staff, Jürgen Blaser and Jim Douglas.[13] Many of the causes of deforestation – such as road-building, conversion to soya bean or oil palm plantations, or the flooding of forest for large-scale hydropower dams – have nothing to do with supplies of timber. Timber from native forests is often in any case destined for a different market to that from fast-growing industrial tree plantations – for furniture or construction, for example.

And Leonel’s presentation makes no mention of the fact that pulp mills are one of the most polluting of industrial processes. All over the world, local communities have protested about the pollution caused by pulp mills. Health risks include cancer, lung diseases, reproductive and hormone problems, heart disease, immune system damage and skin diseases.

Before Celulosa Arauco y Constitución (CELCO) built the Valdivia pulp mill the Cruces River wetlands were home to about 6,000 black necked swans. Pollution from the mill killed hundreds of black necked swans. The company denies that it is responsible, but the evidence is against the company. “They should have never built the plant there in first place,” a World Bank consultant said at an industry conference in Brazil in May 2006.[14]

In September 2007, the Chilean State Defence Council (CDE) filed a US$3.9 million lawsuit against CELCO for the company’s pollution of another river, after 20,000 cubic metres of untreated industrial waste was released from CELCO’s Licancel pulp mill. The waste water polluted the Matauito River, where it resulted in the death of thousands of fish.[15]

Pollution from Asia Pulp and Paper’s Indah Kiat pulp mill in Sumatra has killed the fish in the Siak River, destroying the livelihood of people living along the river. A few years ago, German film-maker Inge Altemeier travelled with Trabani Rab, a medical professor who has been monitoring the impacts of Indah Kiat’s mill on villagers’ health for several years. In two days of visiting villages on the Siak River, he diagnosed more than 500 cases of serious skin diseases.[16]

It is not only in the South that pulp mills are polluting. In 2005, World Rainforest Movement’s international coordinator, Ricardo Carrere, visited Finland to find out for himself just how clean pulp production in Finland actually is. While the pulp industry is not as polluting as it once was, neither it is by any means pollution-free. In 2003, 7,500 cubic metres of black liquor leaked from UPM’s Kaukas pulp mill into Lake Saimaa. Within a few days the black liquor had spread far into the lake. Half of the fish biomass in the lake was wiped out in a three-kilometre radius area from the pulp mill.[17]

Leonel’s presentation is just one example of the propaganda produced by the pulp and paper industry to justify its expansion in the global South. To explain why the industry is so keen on expanding in the South, we need to look at some of the processes and actors involved in promoting industrial tree plantations.

Building the political framework

In many countries in the global South, the first step towards building the political framework for a massive expansion of the pulp and paper sector was a national forestry plan. Many of these were written as part of the Tropical Forestry Action Plan which was established in the mid-1980s, as the world became increasingly concerned about the fate of the tropical forests. Set up by the World Bank, the United Nations Food and Agriculture Organisation (FAO), the UN Development Programme (UNDP) and World Resources Institute the TFAP proved to be a bonanza for forestry consultants, but did little or nothing to prevent the destruction of the forests. On the contrary, it helped accelerate forest destruction.

The TFAP for Cameroon, for example, aimed to turn the country into Africa’s biggest timber exporter, with plans for 600 kilometres of roads to open up 14 million hectares of forest in south-eastern Cameroon. The TFAP ignored indigenous people rights and made no mention of any socio-economic issues.[18]

TFAP was top-down and had a bias towards investment in commercial forestry. TFAP ignored the root causes of deforestation, such as large scale industrial development plans for dams, roads, mines, oil exploration and plantations. In fact, in many countries TFAP recommended expanding the area of industrial tree plantations and building new pulp mills.

The TFAP received a barrage of criticism from concerned observers, including the World Rainforest Movement.[19] Partly as a result of the criticism, the TFAP wasted away and TFAP reports gathered dust on the shelves of forestry departments around the global South.

But the TFAP was not a failure for the many consulting firms that took part in the process. They were given a valuable insight into how the forestry departments and governments of countries in the South worked. Once established, consulting firms did what they are best at doing: recommending projects on which they can win further contracts. While there may or may not be a memo from head office demanding that the staff of consulting firms “go out and find pulp mills to build”, a consultant working for a company that employs a team of highly paid pulp mill engineers who recommends establishing industrial tree plantations in, say, Uruguay, will bring in further contracts for the company and will progress rapidly up the career ladder. Even though the consultant may be fully aware of the problems caused by the pulp industry’s tree plantations, the mitigating measures that he or she proposes will require a series of further studies to make sure that they are properly carried out. More benefits to the consulting firm, in other words. Whether these mitigating measures are actually undertaken (or even whether they could be undertaken, given the political and social complexities of the area in which the plantations and pulp project is planned) is beside the point. The consulting firm has suggested a series of mitigating measures, and company staff can always argue that if only the mitigating measures had been implemented according to plan then the project would have benefited local people.

Once the pulp mill has been built a new series of opportunities opens up for consultants to monitor the pulp mill and to discover new, previously not thought of, problems – with, of course, new recommendations for more studies to resolve these problems.

The largest and most notorious of these consulting firms is Finland-based Pöyry. Section 3 looks in more detail at Pöyry’s activities in promoting the expansion of the pulp industry in the global South.

The pulp industry’s move to the South

“Were it not for labour unions at home, we would be moving all of our production capacity to countries like Brazil,” a Stora Enso official told the Financial Times in 2005.[20] Since 1996, 73 per cent of global growth in global pulp production capacity has taken place in Brazil, Chile and Indonesia. Between 1996 and 2003, pulp capacity in North America reduced by 1.6 per cent, while in Latin America capacity increased by 27.2 per cent and in Asia by 76.4 per cent (in Indonesia, capacity increased by a staggering 118.7 per cent over this period).[21]

There are several factors that are driving the expansion of the pulp and paper industry in the global South. A key factor is that it is cheaper to produce pulp in the South than in the North. It costs US$120 a tonne to produce pulp at Veracel’s new pulp mill in Brazil, compared to US$320 in North America and US$400 in Scandinavia.[22]

Every year, PricewaterhouseCoopers produces a report on the pulp and paper industry. The reports do not comment on the social impacts of the industry, but they do provide an insight into the motivations of the industry and the reasons for the move to the South. Not surprisingly, it has nothing to do with the development of countries in the South. It has to do with the requirements of global finance to invest in new projects and the requirements of corporations to make a profit:

“With the suboptimal returns realised by traditional regions (North America, Western Europe and Japan) for several years, investment dollars have been reallocated to the higher return regions of the emerging markets. This impacts both capital allocation decisions by producers, as well as equity investment decisions by portfolio managers.”[23]

Finland’s economy is heavily dependent on the pulp and paper sector. During the late 1980s, an economic recession in Finland led to heavy losses, cost cutting and lay-offs in the forestry industry. “[T]he deterioration of the Finnish economy is a cause for great concern. It is obvious that if our labour costs continue to go up faster than in those countries we compete against, our competitiveness will deteriorate,” Casimir Ehrnrooth, then-chief executive of Finnish company Kymmene told the Financial Times in 1989. Ehrnrooth’s solution was “going global”, expanding the company’s operations in the South.[24] In the mid-1990s, Kymmene merged with Repola Ltd and its subsidiary United Paper Mills to form UPM-Kymmene. The company subsequently expanded its operations to China and Uruguay (through its subsidiary, Botnia).[25] UPM-Kymmene’s Changsu paper mill in China is supplied with pulp from APRIL in Indonesia[26] and the Botnia pulp mill in Uruguay.

Another reason for the move to the South is that energy is often cheaper there. Pulp production is extremely energy intensive. In Finland, for example, the importance of cheap energy to the pulp and paper industry is indicated by the fact that UPM-Kymmene and Stora Enso own shares in Pohjolan Voima, Finland’s second biggest energy company. Pohjolan Voima is a major shareholder and founder of Teollisuuden Voima which is building the 1,600 MW Olkiluoto 3 nuclear plant.[27]

“Energy is the biggest single issue affecting the competitiveness of European industry today, including the paper industry”, notes Frits Beurskens, chairman of the Confederation of European Paper Industries (CEPI).[28] While the amount of energy needed to produce one tonne of pulp has declined in most countries in the North, the costs of energy have increased.[29] Although increases in the price of oil lead to increases in transportation costs, the transport costs of exporting pulp from, say, Uruguay to China is small compared to the costs of energy for pulp production.

The major costs involved in pulp and paper production, apart from energy, are capital, fibre and labour. Trees grow faster in the South than in the North. Companies today can choose where they want to establish their plantations based on the growth rates of trees. The faster that trees grow in any particular country, the cheaper the fibre produced from the plantation. Decades of research and development into fast growing trees in plantations means that companies in Brazil are at the forefront of research into selecting species and managing industrial tree plantations.[30]

Meanwhile in many countries in the North, it is becoming increasingly unacceptable to continue logging on the scale that the timber and pulp industries would prefer. In Canada, for example, many accessible forest areas have been logged. Environmental protests and increased regulation has made it more difficult for the industry to continue destructive clearcutting (although clearcutting has not been eliminated). In Finland, the industry faces protests against the logging of old-growth forests in northern Lapland. Greenpeace has documented timber logged from old-growth forests arriving at Stora Enso’s Veitsiluoto paper mill.[31] In March 2007, Greenpeace protested at the Botnia pulp mill and the Stora Enso paper mill at Kemi in northern Finland, demanding a stop to the destruction of ancient forests in Lapland.[32]

Campaigners in Tasmania and Japan succeeded in persuading Japanese importers of wood chips from Tasmania not to use wood chips from old-growth forests. As a result, exports of wood chips from Tasmania to Japan have dropped in recent years. However, the decrease in exports from Tasmania is matched by an increase in exports to Japan of wood chips from industrial tree plantations in South Africa. The pulp and paper industry’s global demand for cheap wood fibre has shifted the destruction from Tasmania’s old-growth forests to South Africa’s grasslands.

Government regulation of pollution from pulp mills is often less stringent in the South. Standards in countries in the North are “essentially the same”, according to International Paper’s Thomas Jorling, who has spent almost 30 years working in the paper industry. “There are differences, however, in some of the developing countries where they don’t have regulations yet for some types of substances that Westernized countries do,” he said in a 2004 interview, with Paper Watch.[33]

An important difference, for example, is the length of time it can take to get government permission to build a massive new pulp mill. “Permits can be achieved in a much more rapid time outside the U.S.,” says Jorling. “The average time now for a major capital permit in the U.S. is three years, whereas in Europe it’s probably six months and in Brazil it’s a couple of weeks. In those countries, you don’t tie up capital waiting for permits.”[34]

Subsidies and dictatorships

“Land is cheap in both Brazil and Chile, generous government subsidies encourage reforestation (sic), and trees grow faster there than almost anywhere else in the world,” explained an article in the Financial Times in 1992.[35] In several countries, these “generous government subsidies” were implemented under military dictatorships or extremely repressive regimes. In addition to financial subsidies, the use of force by governments to remove local people from their land is a subsidy little discussed by the industry itself, for obvious reasons.

In Thailand, a massive expansion of industrial tree plantations was planned in the late 1980s, by an alliance of the pulp and paper industry, the Royal Forestry Department and the army. The Green Isaan Project started in 1987, which included plans for the army to solve the drought problems in north-east Thailand by building dams and “regreening” by planting eucalyptus trees. The British company Biwater carried out the feasibility study and co-wrote the Master Plan for the project. The project also received support from the British government.[36] A second project started in 1990, the Land Distribution Programme for the Poor Living in Degraded National Forest Reserves in North-east Thailand, known by the Thai initials, Khor Jor Kor. Despite the project’s benign-sounding name the project was carried out by the military’s Internal Security Operations Command and aimed to evict five million villagers from National Reserve Forests and planting 1.37 million hectares of industrial tree plantations.[37]

In his book, “Khor Jor Kor, Forest Politics in Thailand”, Oliver Pye notes that, “The Khor Jor Kor Project represented a pinnacle of state-directed authoritarian forestry. It was closely connected with the return to military dictatorship in Thailand.”[38] The plan was defeated by large scale rural protests and when a broad-based movement resulted in the end of the military junta in May 1992, the scheme was dropped.[39]

South Africa’s plantation boom took place during the apartheid regime, under which black people lost all their rights, including rights to land. The South African pulp and paper company Mondi was formed in 1967, during the apartheid regime. The company expanded its plantations rapidly during the 1980s, buying up hundreds of farms to become one of South Africa’s largest land-owners. According to Mondi 48 per cent of its land is currently under land claims.[40]

The Finnish consulting firm, Jaakko Pöyry, it seems, had no qualms about working for Mondi during the brutal apartheid regime. Mondi’s Richards Bay pulp mill was commissioned in 1984,[41] at the height of the company’s apartheid-backed land grab. Pöyry won a series of contracts from Mondi on its Richards Bay mill going back to the start of the project.

The expansion of the area of industrial tree plantations in Chile took place under Pinochet’s brutal neo-liberal dictatorship. Under the Chilean Decree Law 701, the Chilean government reimbursed companies most of their development and management costs for establishing industrial tree plantations.[42]

The area of Brazil’s plantations expanded as the result of a generous series of tax breaks for companies which established plantations. The subsidies ran from 1967 to the early 1980s,[43] implemented under Brazil’s military dictatorship.

Uruguay’s plantations also expanded in part during a military dictatorship, with the foundations for the country’s plantations boom being laid in 1951, when a joint FAO and World Bank mission made a series of recommendations for the country’s forestry sector, which, taken togetherwith those of a later FAO mission, formed the basis for forestry laws adopted in 1968 and 1987.[44]

When a company has covered thousands of hectares of land with tree monocultures, the next step is often to build a pulp mill. More government subsidies are available, such as Free Trade Zone status for the mill (thus avoiding the need to pay taxes or duties on imported machinery to build the mill). Other subsidies might include the building of roads or ports to transport fibre to the mill and to export the pulp. International treaties can also be a form of government subsidy – covering topics such as insurance and even public demonstrations against the plant.

For example, before construction of Botnia’s pulp mill in Uruguay, the Government of Uruguay and the Government of Finland signed an agreement “regarding the promotion and protection of investment”. This was in effect an agreement assuring Botnia of the Uruguayan Government’s constant support. The agreement even forces the government to pay compensation to Botnia for any losses, caused by, among other things, riots.[45] In 2006, the Uruguayan government sent police and the army to keep protesters away from the pulp mill building site, as a result of massive organised opposition in neighbouring Argentina, bringing back memories of the dictatorship for activists in Uruguay.[46]

In Indonesia the rapid expansion of the pulp industry during the 1990s was preceded by a series of studies funded by, among others, the World Bank and the Asian Development Bank. Subsidies and tax concessions, implemented under the Soeharto dictatorship, encouraged the establishment of hundreds of thousands of hectares of industrial tree plantations. The result has been massive deforestation. Much of this was fraudulent: companies took the subsidies, logged the forest and did not establish plantations.[47] Today, more than two decades after the pulp industry’s expansion in Sumatra was planned, there are not enough plantations to provide raw material to the pulp mills, which remain dependent on timber from Sumatra’s rapidly-shrinking rainforests.[48]

While production of pulp is moving South, much of the advice that governments, companies and financiers rely on comes from northern-based consulting firms. Much of the financing for pulp and paper mills comes from the North. The machinery and equipment for pulp and paper machines is manufactured in the North. The manufacture and export of pulp and paper machinery is often backed by export credit and guarantee agencies.

The expansion in the South is as much a factor of structural problems within the pulp industry, and the North’s “need” to expand its industry and gain access to raw materials as it is a question of economics. Certainly, it has nothing to do with “development”.

The pulp sector in Europe

The pulp and paper sector in the North may not be expanding as fast as in Latin America or south-east Asia but the North still plays a large role in the industry. According to PricewaterhouseCoopers, more than three-quarters of the 100 biggest companies in the forestry, packaging and paper sector, are from North America, Europe and Japan. 27 have their headquarters in the US, 11 are from Canada, 26 are from Europe and 12 are from Japan.[49]

Between 1991 and 2006, the number of pulp and paper companies in Europe decreased from 1028 to 801. The number of people employed decreased from 390,600 to 259,100. However, the total capacity of the pulp industry in Europe increased from 38.7 million tonnes in 1991 to 46.8 million tonnes in 2006. Just over one-quarter of world pulp production takes place in Europe. North America produces 42 per cent, Asia 21 per cent, Latin America 8 per cent and the rest of the world 3 per cent.[50]

Global pulp consumption approximately reflects the production figures: Europe consumes 29 per cent, North America 36 per cent, Asia 28 per cent, Latin America 5 per cent and the rest of the world 2 per cent.

In 2006, European countries imported 7.6 million tonnes of pulp while they exported 2.2 million tonnes. The trends are interesting. Imports from North America to European countries fell from 4.6 million tonnes in 2001 to 3.4 million tonnes in 2006. Imports from Latin America to European countries increased from 2.0 million tonnes in 2001 to 3.1 million tonnes in 2006.

Well over half of pulp production in Europe is in Sweden and Finland (28.1 per cent and 30 per cent respectively). For comparison, Germany’s pulp production (the next biggest country) is only 6.8 per cent of the total.

China – driving the boom in the South?

China’s booming economy has long been described as the driving force for the pulp and paper industry’s expansion in the South. “Paper makers’ confidence in the future rests mainly on the assumption that fast-growing demand in newly-industrialising countries, especially China and south-east Asia, will more than make up for slackening consumption in the developed world,” wrote the Financial Times back in 1994. “Consumption in China is currently only about 20 kg a person every year, about 5 per cent of the level in North America.”[51]

China’s paper consumption is increasing rapidly, up from 23.95 kilogrammes per capita in 1994 to 44.66 kilogrammes per capita in 2005. While this is still only 15 per cent of the per capita consumption in the US, China’s total paper production is catching up with that of the US. In 2005 China produced 53 million tonnes of paper, compared to 81 million tonnes in the US. Currently paper production in China is doubling every ten years. If the expansion continues at this rate, by the end of this decade China will produce more paper than the US.[52]

Certainly, China’s economy is growing fast. But much of the paper produced in China is packaging for consumer goods which are manufactured cheaply in China and exported to North America, Europe and Japan. A large part of the driving force is the North’s over-consumption – not just of paper products but packaging for flat screen plasma TVs, fridges, cheap jeans, iPods, washing machines, laptops and computers.

Over-consumption and under-consumption

Paper consumption is massively skewed worldwide. One issue of the New York Times newspaper covers an area of more than 50 square metres if it is laid out on the ground. Meanwhile schoolchildren in Zambia have no choice other than to take notes in the sand, because they have neither pencils to write with nor paper to write on.[53]

Globally, the average per capita paper consumption is 54.48 kilogrammes per year. Per capita consumption of paper and board in high income countries (227.82 kilogrammes per year) is about 55 times as high as that in low income countries (4.11 kilogrammes per year). In Brazil, in 2005, per capita consumption of paper and board was 39.49 kilogrammes. In Germany, the figure was 231.65 kilogrammes.[54]

The amount of waste paper produced each year is staggering. Every year in the US, 100 billion pieces of junk mail are posted.[55] In the UK, the newsprint industry produces 13 billion newspapers and magazines. To do so, in 2002, it imported 1.65 million tonnes of paper, double the amount of domestic paper (or recycled paper) which went into newspapers.[56]

Meanwhile, paper companies are constantly looking for new uses for paper, precisely to increase consumption of paper (and, of course, to increase their profits). Just some of these new uses include cardboard bicycles (which need new frames, forks and wheels every six months); cardboard furniture, cardboard houses and paper clothing.[57]

“Papers are essential vehicles for our culture, lifestyles, and industries,” Nobuaki Shoichiro Suzuki, Oji Paper’s president, wrote on the company’s website. “Therefore, we believe that it is our mission to satisfy the growing paper demand in many possible ways.”[58] During the mid-1990s, Swedish company SCA measured its managers’ performance by how many new products they had launched.[59]

Tissue paper provides a good example of how the industry promotes demand for its products. “Manufacturers argue that retailers mainly want non-recycled products because this is what consumers are asking for”, notes WWF.[60] In 2005, I took part in a meeting with Procter and Gamble in Germany. Shortly before the meeting, Brazil’s Aracruz, which was then supplying pulp for P&G’s Tempo brand paper tissues, had violently evicted Tupinikim and Guarani indigenous peoples from villages on traditional land that they had reclaimed from Aracruz’s plantations. During the five-hour-long meeting we discussed land rights, Indigenous Peoples’ rights, the impact of industrial tree plantations on water, soil and local livelihoods and the ethics of importing pulp from a company such as Aracruz. But the only time the P&G staff really became animated was when we suggested that P&G could use recycled fibre to make its tissue. This was out of the question, according to P&G. “Our customers need soft tissue paper,” was the response. Millions of dollars of P&G research has revealed that the softest, fluffiest tissue paper can be manufactured from eucalyptus pulp, with layers of tissue paper manufactured from softwood pulp to provide strength.

Tissue paper companies have huge budgets for advertising, aimed precisely at convincing consumers how soft their products are and how super softness is an essential quality for tissue paper. Yet much of the tissue paper that people use day-to-day is recycled. In hotels, schools and offices, most toilet paper is made from recycled paper.[61]

Paper can be recycled

In fact, the paper industry is perfectly happy to use recycled paper for some uses. “Recycled paper has been the fastest growing fibre source for paper industry already for over 15 years, it has substituted gradually for wood-based pulp in fibre furnish,” explained Pöyry’s Petteri Pihlajamäki to Finnish researcher Tove Selin in 2004.[62]

Between 1991 and 2006, the use of recycled paper in member countries of the Confederation of European Paper Industries increased from about 26 million tons to about 49 million tons.[63] In 2000, the European paper industry launched a “European Declaration on Paper Recycling” which set a series of voluntary standards and targets for the paper industry. In 2006, the industry launched a second Declaration aiming to increase the paper recycling rate in Europe to 66 per cent by 2010.[64]

However, while the proportion of paper manufactured from recycled paper has more than doubled since the 1960s (from about 20 per cent in 1961 to 46 per cent in 2005), the overall production of paper is still increasing.[65] In other words, the total amount of paper manufactured from trees increases each year.

And using recycled paper is not by itself a solution to the problems caused by the pulp and paper industry. One problem is that in recent years, paper recycling has been globalised. An increasing amount of used paper from Europe has been exported to Asia, particularly to China. In 2006, European countries exported a total of 7.7 million tonnes of recycled paper to Asia, more than double the amount exported to Asia in 2002..[66] Exporting used paper to China to manufacture cardboard packaging to import goods to Europe might make sense on a purely economic level. But the greenhouse gas emissions from transporting waste paper around the world can no longer be ignored. Neither can the fact that if used paper is exported from Europe that means that it is not available to be recycled in Europe – precisely where the demand for paper products is high.

Another problem with recycled paper is that there is often little regulation of the labels used on recycled paper products. A recent scandal in Japan revealed that even when the industry says that it is using recycled paper, there may be little guarantee that it is actually doing so. In January 2008, the Japan Paper Association announced that 17 of its 38 member companies (including Oji Paper and Nippon Paper) had lied about the amount of used paper contained in their products that they sold as “recycled paper”.[67]

Using recycled paper is one way of reducing the impact of the North’s paper consumption. But it still doesn’t address the issue of over-consumption. The only way to address over-consumption is by reducing consumption.

Journalist Richard Tomkins clearly explains the implications of Northern over-consumption in a 2006 article in the Financial Times:

“If . . . people really wanted to make an impact on greenhouse gas emissions, they would have to make big sacrifices – so big that it is hard to imagine any government having the courage to advocate them.

“People’s top priority, for example, would need to be a reduction in their consumption of goods. Recycling bits of packaging is as nothing compared with the vast savings in energy and resources that could be made if people bought fewer products. The biggest source of greenhouse gas emissions is the energy used to manufacture and deliver the goods that end up in our homes – furniture, kitchen equipment, televisions, toys, computers, clothes and food. You do not need to recycle if you do not buy anything in the first place.”

Tomkins then rejects his own suggestion: “The implications of lower consumption, however, hardly bear thinking about. . . . we would very likely be looking at the prospect of perpetual recession or worse – anathema to governments for which the annual rate of economic growth is a virility symbol.”[68]

The implications of runaway climate change also “hardly bear thinking about”. Consuming less would be an important contribution to avoiding climate change – and one of the ways of consuming less paper is to consume fewer goods. Less advertising, less packaging and less waste. In June 2008, a group of more than 50 NGOs in Europe launched the “Shrink” campaign, which is aimed at reducing paper consumption in Europe by at least half.[69]

Last year, Mandy Haggith, the co-ordinator of the Shrink campaign, travelled by train and boat from her home in Scotland to Sumatra, Indonesia.[70] “I was horrified by how destructive our paper footprint is,” Haggith says.

“I met Indonesian villagers fighting a land-claim with a paper company that is growing acacia on their community land to make copy paper for sale in European and North American markets. I asked them what I could do to help their fight, and they told me to ask people in Europe to use less copy paper. To show real solidarity with people struggling with multinational extractive industries, it is not enough for us to shift our consumption from one brand to some other, hopefully slightly less obnoxious, brand. That only displaces the problem. Consuming differently is not good enough, we need to consume less AND differently.”[

]

Financing overcapacity

Part of the problem lies in the way the pulp and paper sector finances its expansion. The industry is notoriously cyclical. When paper prices are high, profits are up and the industry invests in expansion – banks are happy to lend to an industry that is growing. The result is overcapacity and eventually a price collapse. A drop in demand linked to a slow down in global economic growth has the same effect on pulp and paper prices. Overcapacity exacerbates the problem. In both cases, the result is that the industry has to run its mills at less than capacity or start closing down mills.

A quick look at the recent history of booms and busts in the pulp and paper industry indicates what the industry might have in store in the next few years as the financial crisis causes a slow down in paper consumption and a squeeze on loans for new pulp mills.

The pulp and paper industry expanded rapidly in the 1980s, followed by a crisis at the end of the decade – a direct result of the overcapacity in the sector. In 1992, the Financial Times described the problems faced by the paper industry:

“Pulp and most grades of paper represent classic examples of cyclical industries. And they are becoming more and more classical as each down-draught of the cycle appears to become increasingly deep and long.

“One reason is the growing size of paper machines. A world-scale competitive paper plant now has a capacity of at least 200,000 tonnes a year, and sometimes more than 300,000 tonnes, explains Mr Denis Christie, paper, pulp and packaging analyst at James Capel.

“Each time a new plant comes on-stream it adds a significant chunk to regional capacity. Most paper groups demonstrate lemming-like behaviour when the economic cycle is at its peak. Unwilling to lose market share, they invest in these new increasingly large plants simultaneously, aggravating the subsequent imbalance of supply and demand.”[

]

Since 1992, the scale of pulp and paper mills has increased dramatically. Modern pulp mills can produce about one million tons of pulp a year and cost more than US$1 billion to build. To repay the debts incurred, companies aim to run the pulp mills 24 hours a day, seven days a week.

The industry’s justification for the ever-increasing scale of pulp and paper mills is simple. “Economies of scale ensures lower costs per unit produced,” says Petteri Pihlajamäki, of forestry consulting firm Pöyry. “I agree that if you would build many small mills you would employ more, but these are private companies and they prefer the economy of scale.”[73]

A quick look at the past 15 years of pulp prices illustrates the problems that the industry creates through its rapid expansion and over-supply. In 1993, the price for one ton of market pulp was US$390. The price shot up to more than US$1,000 a ton in 1995.[74] As the price increased, the industry expanded rapidly. Orders for paper machinery went up. “For investors in the pulp and paper sector, none of this is good news,” commented the Financial Times in 1995. Share prices in companies fell when they announced major expansions. Investors were worried that the industry was repeating the previous cycle where over-investment created over-capacity that led to a collapse in paper prices when demand weakened.[75]

Sure enough, the price of pulp fell to US$610 a tonne in 1997,[76] leading to a series of mergers and lay-offs, particularly in North America. In 1997, International Paper announced that it was cutting 9,000 jobs (10 per cent of its workforce) and selling US$1 billion in assets. Canada’s Abitibi-Price and Stone-Consolidated merged to form the world’s biggest newsprint producer, Abitibi-Consolidated.[77]

The price of pulp peaked in September 2000 at US$710 a tonne. A global recession starting in 2001 led to a reduction in the amount of paper consumed globally. The price of pulp fell to a low of US$440 in December 2002. Since then, it has increased steadily. In June 2004, it stood at US$661.[78] During the summer of 2008, pulp prices were around US$900 a ton, but fell to US$600 a ton in October as a result of the global financial meltdown.[79]

There are several factors that are likely to affect the pulp and paper industry in the coming years. The credit crunch, unstable oil prices (which were high earlier in 2008, but are currently low) and the threat of a world recession will affect how easy it is for companies to raise capital. Economic recession means reduced consumption of paper globally. However, pulp and paper companies don’t only raise money when they plan new projects such as new pulp mills or new plantations. Much of the finance that pulp companies raise is not directly project finance. Financing comes from issues of shares or bonds as well as general corporate financing.

Private equity funds have started buying up pulp and paper companies. Madison Dearborn Partners one of the biggest private equity companies in the US owns stakes in Boise Cascade, Buckeye Cellulose, Graphic Packaging Corporation, Packaging Corporation of America and Smurfit Kappa.[80] In 2005, Cerebus Capital Management bought MeadWestvaco’s paper business for US$2.3 billion[81] setting up a new company called NewPage. Stora Enso subsequently sold off its north American operations to NewPage.[82]

Since 2004, Finnish consulting firm Pöyry has organised a yearly event for private equity investors in London. During Pöyry’s “private equity breakfast”, representatives of private equity companies meet at Claridges Hotel to eat a traditional English breakfast while listening to Pöyry’s “views and perspectives on the opportunities emerging throughout the forest industry value chain”.[83]

Private equity is based on capital raised from private sources rather than on the public stock exchange. Private equity firms aim to buy companies cheaply, asset strip and sell as quickly as possible for as large a profit as possible. Or, as Pöyry puts it, “The ownership time horizon of private equity is limited and there is always an exit strategy in mind. Compared to traditional investment companies, private equity is not a silent investor and actively influences the performance and strategic direction of management.”[84]

If private equity firms were to start taking over large scale pulp operations and industrial tree plantations in the global South, running them purely for short term profit, the social and environmental impacts could be even more severe than at present.

Increasingly though, pulp and paper companies are selling off assets as a way of raising finance. In 2005, for example, International Paper started to sell off the forests and plantations which provided its raw material. Before the sale, International Paper was the world’s second largest private land owner.[85]

International Paper’s sale of its forests and plantations reflects an industry trend. Pulp and paper industry analyst Dennis Neilson notes that

“In recent years there have been many new investment funds and companies from Europe and North America that have invested in planted forest [sic] investments around the world, including in developing countries and those with economies in transition, where subsidies or incentives for investment exist and social and environmental prerequisites less rigid. When investment conditions become less favourable investors demand that their funds are invested elsewhere.”[

]

The trend of investing in plantations started in the 1980s, with institutional pension and endowment funds investing in plantations purely for financial returns (as opposed to pulp companies which invest in plantations as a means of ensuring supplies of cheap raw material – in order to maximise their financial returns). This investment drive was partly a result of the fact that the value of plantations owned by forest products companies was not reflected in the companies’ share prices. Companies, especially those based in the US, which were facing financial difficulties, decided to cash in on this value by selling their plantations. Meanwhile, many financial institutions were looking to diversify their investment portfolios to include plantations.[87]

In 1981, forest products companies owned some 23.5 million hectares of managed forests in the US. By the end of 2007, the figure had fallen to about 6 million hectares. Meanwhile, investment by institutional funds in global plantations and managed forests has increased from less than US$1 billion in 1985, to more than US$30 billion in 2007. Since 2005, several European based private and listed funds have set up to invest in plantations – some formed specifically to invest in plantations where carbon trading is a possibility.

A new type of organisation, “Timber Investment Management Organisations” (TIMOs) has emerged to manage these investments in plantations. The number of TIMOs has increased from two or three in the 1980s, to more than 25 today. Investors can buy up very large areas of land and divide it up for resale, in the hope of attracting higher bids for smaller blocks of land. Plantations can be subdivided and sold off as hunting and recreational blocks, or for residential or industrial use. In 2005, a hedge fund bought all of Boise Cascade’s plantations in the US and within 18 months had split up the plantations and resold them to TIMOs.[88]

TIMOs have invested about US$40 billion in plantations worldwide: 91% in North America; 5% in Australia; 2% in South America and 2% elsewhere.[89] TIMOs establish funds which invest for about 10 years, raising finance from institutional investors. Those TIMOs investing outside North America have developed funding mechanisms which allow them to avoid most (or all) taxes.[90]

Investment in plantations in the South could be set to increase. In March 2008, more than 100 potential investors in plantations took part in the “Timberland Investing Latin America Summit” in Sao Paulo, Brazil. According to a recent survey of US pension funds and university endowments, more than US$8 billion is available to be invested worldwide in forest and plantation operations.[91]

Another type of investment institution investing in plantations are called “Timberlands Real Estate Investment Trusts (T-REIT)”. These have grown rapidly since 2000. The largest private plantation owner in the world is a T-REIT called Plum Creek[92] TIMOs and T-REITs tend to invest in plantations rather than native forests. They have invested in plantations in Oceania, Chile, Brazil, South Africa and Uruguay. One US based-fund is establishing plantations in Tanzania.

Another new development in plantations investment is the development of specialist country funds. In 2007, a Colombian plantation investment fund was launched, and a Japanese plantation fund may start up in 2008.[93]

Sovereign Wealth Funds (SWFs) are yet another new source of funding which could start investing heavily in plantations. They certainly have enough money to do so. At the end of 2006, these funds held a total of US$2.5 trillion. This figure could grow to US$5 trillion by 2010 and US$12 trillion by 2015. In September 2007, a new SWF, China Investment Corporation was launched, with US$200 billion to invest.[94]

So far, these new investment vehicles have had little influence on the way that pulp mills and plantations are established in the South, as the profiles of pulp projects in Section 2 of this report illustrate. Pulp mills and plantations have been established in the South, with more traditional sources of funding – and the help of generous subsidies from public institutions in Europe and the North.

Carbon trading

Carbon trading could provide a massive new subsidy for the pulp industry’s expansion in the South. Companies attempt to claim that the trees they are planting in the South are absorbing carbon from the atmosphere and thus helping to reduce climate change. Awkward facts, such as the impossibility of predicting what would have happened if the tree plantation had not been established, are brushed aside.

Botnia, for example, is taking advantage of the Clean Development Mechanism (CDM) under the Kyoto Protocol of the United Nations Convention on Climate Change. The CDM allows companies to offset their greenhouse gas emissions by buying carbon credits from projects in the global South which are supposed to reduce greenhouse gas emissions. Botnia hired two consulting firms: Carbosur from Uruguay, and Finland’s Pöyry to investigate the possibilities of gaining financing through the CDM.

Botnia’s CDM project involves burning black liquor from the pulping process to generate electricity. The pulp mill generates more electricity than it needs, and sells surplus electricity to the public electricity network in Uruguay. Botnia thus claims to be reducing emissions in Uruguay. In addition to selling electricity, Botnia will sell carbon credits. But to qualify for the CDM, a project must be able to prove that it is “additional”. That is, it must prove that carbon credits are not being granted to a project that would have been carried out anyway – without carbon financing. In fact, Botnia’s CEO Erkki Varis said in 2005, “I expect the factory to be very competitive, with estimated production costs of about half of those of modern Finnish pulp factories.”[95] There is no evidence to show that Botnia would not have used waste products from the pulping process to produce electricity if it were not financed through the CDM. The CDM is simply a way for Botnia to increase its profits.

Oji Paper hopes to get financing for its plantations in Laos through the Clean Development Mechanism. To do so, it will have to convince CDM’s board that it is planting on “degraded land” and that it is not clearing forest in order to establish its plantations. But researchers in Laos have documented that Oji Paper has in fact cleared forest, including large trees, to make way for its plantations. It is also planting on villagers’ land, currently being used for swidden agriculture or cattle grazing.[96] Oji Paper will also have to convince the CDM’s board that the project is “additional”. Since Oji Paper started planting trees in Laos in 2004, and the area of plantations has expanded each year since then, arguing that the project is “additional” and could only go ahead with carbon financing, would simply be a lie.[97]

By selling carbon credits from plantation projects and pulp mills, the industry is not addressing climate change. Even if we assume that the project is genuinely additional and would not have taken place without CDM financing, the net result is not a reduction in emissions. The CDM is in fact making things worse by allowing emissions of greenhouse gases to continue.

No more subsidies!

The generous subsidies handed out to the pulp and paper industry raises the question of why industrial tree plantations are established in the South and for whose benefit. In 1993, Ricardo Carrere wrote that

“The economic convenience of tree crops for Third World countries must be questioned. Despite the obvious contradiction in a world ruled by the neo-liberal ideology, tree plantations are being subsidised in a number of countries with support from a wide range of agencies, including the World Bank.

“The question is why? If investment in plantations were great business, subsidies would not be necessary. The answer lies in the industrialised countries’ wish to secure the supply of this raw material at the lowest possible price. Subsidies, linked to credits and support, at the present price levels make this investment profitable.”[

]

While subsidies provided by governments in the South are perverse, even more perverse are the subsidies in the form of cheap loans and political support from multilateral and bilateral aid agencies, which supposedly have a mandate of reducing poverty. These international subsidies play a vital role in encouraging commercial investors to invest. Because of the political risk of the countries involved, or the financial risk of investing in a cyclical industry such as pulp and paper, the support of the World Bank, regional development banks or the European Investment Bank is often necessary before commercial banks will risk investing in pulp mill projects.

In a 2006 report, Andy White of the Rights and Resources Group, Gary Bull of the University of British Columbia and Stewart Maginnis of IUCN looked at the impact of subsidies to industrial plantations. They found that direct subsidies to industrial plantations amount to US$2 billion per year. This is small compared to the US$400 billion in subsidies paid each year for agriculture, but the authors note that it is more than four times the amount of development aid spent on forest conservation each year.[99]

“[T]he market distortions caused by these subsidies diminish incentives to invest in and conserve natural forests,” White, Bull and Maginnis pointed out. “Top plantation companies have dramatically captured a growing share of the global forest products market over the past 40 years, contributing to a major price decline for almost all forest product categories.” They recommend (among other things) that “Technical and financial support to community and other small-scale forest businesses – since they are such strong contributors to local employment and economic development.” Industrial tree plantations are the exact opposite of this – large scale, poor providers of employment and disastrous for rural economies.

Dennis Neilson, a pulp and paper industry analyst and proponent of industrial tree plantations, confirms the importance of subsidies for plantations in his 2007 report for the FAO: “There has been one very important factor which has linked almost all successful planted forest (sic) expansion projects internationally. That has been the application by governments of generous direct subsidies, and/or tax concessions to planted forest establishment and management.”

Neilson acknowledges the problems caused by such subsidies:

“There is always a lot of criticism about providing free handouts, or tax concessions to any project. Such schemes invariably attract ‘fast money’ investors who are only motivated by greed and not by the worthiness of the project itself; and it also invariably means that planted forests get established in the wrong areas, outside sensible guidelines for suitable soils, rainfall and other factors necessary to grow a successful tree planted forest crop.”[

100

]

Further evidence of the perverse nature of subsidies for industrial tree plantations comes from a 2003 study produced by the Centre for International Forestry Research (CIFOR) titled Fast-Wood Forestry. CIFOR notes in the report that subsidies to the pulp industry and industrial tree plantations create distortions to the economy, both internationally and locally. Subsidies make plantations viable on land which may be better put to other uses, such as agriculture, community forestry, forest conservation or logging. Companies that do not receive subsidies are put at a disadvantage. Subsidies reduce the cost of raw material to the pulp industry, thus making paper cheaper and encouraging the consumption of paper products.[101] CIFOR cites a submission by IUCN and WWF to the World Bank in 2002 which argued that “Large amounts of money that could have been better invested, either within or outwith the forest sector, have gone to support ill-conceived planting schemes.”[102]

CIFOR concluded its Fast-Wood Forestry report with the recommendation to phase out subsidies to industrial tree plantations: “The sooner subsidies to commercial plantations are phased out, or at least dramatically reduced, the better. Subsidies create economic distortions and make plantations viable in situations where other land uses might make better economic and environmental sense.”[103]

Section 2 »

References

[2] Mario Higino Leonel (2005) “Forest Plantations in Brazil”, Advisory Committee on Paper and Wood Products – FAO, Vancouver, 31 May 2005.

[3] Poschen, Peter and Mattias Lövgren (2001) “Globalization and sustainability: The forestry and wood industries on the move”, International Labour Organisation, Geneva, page 64.

[4] “The sad figures of employment generated by plantation companies”, World Rainforest Movement Bulletin no. 50, September 2001.

[5] “Uruguay: Semi-slave work in plantation forestry”, World Rainforest Movement Bulletin no. 74, September 2003.

[6] Poschen, Peter and Mattias Lövgren (2001) “Globalization and sustainability: The forestry and wood industries on the move”, International Labour Organisation, Geneva, page 63.

[7] Poschen, Peter and Mattias Lövgren (2001) “Globalization and sustainability: The forestry and wood industries on the move”, International Labour Organisation, Geneva, page 65.

[8] For a detailed response to this sort of pro-plantations propaganda, see Ricardo Carrere (1999) “Ten Replies to Ten Lies”, World Rainforest Movement.

[9] Robert Jackson at Duke University has produced a series of reports about the impact of eucalyptus plantations in Argentina. See Chris Lang (2008) “Argentina: Scientists confirm that plantations dry up streams and contaminate groundwater”, World Rainforest Movement Bulletin no. 128, March 2008.

[10] Abare and Jaakko Pöyry (1999) “Global Outlook for Plantations”, Abare Research Report 99.9, Australian Bureau of Agricultural and Resource Economics, Canberra, page 35.

[11] Ted Williams (2000) “False Forests”, Mother Jones, 1 June 2000.

[12] “The Greenhouse Gas and Carbon Profile of the Canadian Forest Products Industry”, Special Report No. 07-09, National Council for Air and Stream Improvement, 2007.
See also Chris Lang (2007) “The paper industry and the ‘business of climate change’”, World Rainforest Movement Bulletin no. 125, December 2007.

[13] “World Bank foresters deny that plantations alleviate pressures on forests”, World Rainforest Movement Bulletin no. 41, December 2000.

[14] The consultant was Neil McCubbin and he said this in May 2006 at RISI’s Latin American Pulp and Paper Outlook Conference in Brazil.

[15] “CDE sues Celco for Licancel plant contamination”, BNamericas.com, 11 September 2007.

[16] Chris Lang (2005) “Indonesia: The health impacts of living near Indah Kiat’s pulp and paper mills”, WRM Bulletin no. 97, August 2005.

[17] Ricardo Carrere (2005) “On the pulp trial in Finland: the other side of the coin”, Group Guayubira, June 2005.

[18] Korinna Horta (2008) “Forests and Climate Change”, presentation given during the UN Climate Change talks in Accra, Ghana, 18-20 August 2008.

[19] See, for example, Larry Lohmann and Marcus Colchester (1990) “Paved with good intentions: TFAP’s road to oblivion”, The Ecologist, Vol. 20, No. 3, May-June 1990.

[20] Raymond Colitt (2005) “Brazil is top of the tree in tale that is no pulp fiction: Faster-growing wood and lower production costs are luring paper-makers from Europe and North America”, Financial Times, 21 June 2005.

[21] Machteld Spek (2006) “Financing pulp mills: an appraisal of risk assessment and safeguard procedures”, Center for International Forestry Research (CIFOR), Bogor, Indonesia, page 6.

[22] Raymond Colitt (2005) “Brazil is top of the tree in tale that is no pulp fiction: Faster-growing wood and lower production costs are luring paper-makers from Europe and North America”, Financial Times, 21 June 2005.

[23] “Global Forest and Paper Industry Survey: 2006 Edition – Survey of 2005 Results”, PricewaterhouseCoopers, 2006, page 5.

[24] Enrique Tessier (1989) “Exporters’ cause for concern – Problems for Finnish manufacturers”, Financial Times, 13 December 1989.

[25] UPM-Kymmene today has about 100 production facilities in 14 countries. For a detailed history of UPM-Kymmene, see “Company History: UPM-Kymmene Corporation” Hoover’s Profile.

[26] “UPM-Kymmene and APRIL: The Chinese-Indonesian connection”, World Rainforest Movement Bulletin no. 38, September 2000.

[27] Päivi Munter (2005) “Finland stomachs nuclear growth”, Financial Times, 31 October 2005.
Construction of the Olkiluoto 3 nuclear plant started in 2005. In 1986, Finland was about to order a new nuclear power plant. The Chernobyl catastrophe put paid to those plans, for almost twenty years. Enrique Tessier (1989) “Exporters’ cause for concern – Problems for Finnish manufacturers”, Financial Times, 13 December 1989.

[28] Frits Beurskens (2007) “Editorial”, European Pulp and Paper, CEPI’s external newsletter, Issue 19, January/February 2007.

[29] Adrian Whiteman (2005) “Recent trends and developments in global marNielsonkets for pulp and paper”, Paper presented at Paperex 2005 – International Technical Conference on Pulp and Paper Industry, 3-5 December 2005, New Delhi, India, page 42.

[30] Adrian Whiteman (2005) “Recent trends and developments in global markets for pulp and paper”, Paper presented at Paperex 2005 – International Technical Conference on Pulp and Paper Industry, 3-5 December 2005, New Delhi, India, page 3.

[31] “Stora Enso: pulping old-growth forests – old-growth forest wood route documented by Greenpeace, 10 January, 2007”,
In January 2008, Greenpeace photographed clearcut old-growth forests in eastern Finland. Trees up to 400 years old were logged. The wood was sold to Stora Enso’s pulp and paper mill in Oulu and to UPM’s paper mill in Kajaani.

[32] “Greenpeace reveals that production of magazines and packaging linked to destruction of Europe’s last ancient forests”, Greenpeace, 22 March 2007.

[33] “Environmental Balancing Act”, Paper Watch, BILT Corporate Communications, Issue no. 52, 5 July 2004, page 4.
Paper Watch is the Indian company BILT’s corporate publication.

[34] “Environmental Balancing Act”, Paper Watch, BILT Corporate Communications, Issue no. 52, 5 July 2004, page 4.

[35] Leslie Crawford (1992) “Cheaper land, faster trees – Regional report: Latin America”, Financial Times, 14 December 1992.

[36] Oliver Pye (2005) Khor Jor Kor Forest Politics in Thailand, White Lotus Press.

[37] Ricardo Carrere and Larry Lohmann (1996) Pulping the South Industrial Tree Plantations and the World Paper Economy, Zed Books, page 237.

[38] Oliver Pye (2005) Khor Jor Kor Forest Politics in Thailand, White Lotus Press, page 109.

[39] Ricardo Carrere and Larry Lohmann (1996) Pulping the South Industrial Tree Plantations and the World Paper Economy, Zed Books, page 237.

[40] “Land claims and indigenous people”, Mondi’s website.

[41] Graham Ferreira (2005) “Richards Bay expansion: Higher capacity, improved environmental performance”, Know-How Wire, Jaakko Pöyry Client Magazine, June 2005.

[42] Dennis Neilson (2007) “Corporate Private Sector Dimensions in Planted Forest Investments”, Forestry Department Food and Agriculture Organization of the United Nations Planted Forests and Trees Working Paper Series, Working Paper FP/40E, October 2007.

[43] Dennis Neilson (2007) “Corporate Private Sector Dimensions in Planted Forest Investments”, Forestry Department Food and Agriculture Organization of the United Nations Planted Forests and Trees Working Paper Series, Working Paper FP/40E, October 2007.

[44] “Uruguay: Either with the people or with pulp mills and tree plantations”, World Rainforest Movement Bulletin no. 83, June 2004.

[45] “Uruguay: Either with the people or with pulp mills and tree plantations”, World Rainforest Movement Bulletin no. 83, June 2004.

[46] “Uruguay: Though not yet in operation, Metsa Botnia’s pulp mill already smells rotten”, World Rainforest Movement Bulletin no 113, December 2006.

[47] The most notorious example is Bob Hasan, a close friend of Indonesian dictator Soeharto. Hasan was jailed for corruption after Suharto’s fall. Chris Lang (2006) “Indonesia: Deutsche Bank pulls out of UFS pulp project”, World Rainforest Movement Bulletin no. 102, January 2006.

[48] See, for example, my post on Pulp Inc: “APP and APRIL still cannot legally supply their pulp mills”, 10 April 2008.

[49] “Global Forest and Paper Industry Survey: 2006 Edition – Survey of 2005 Results”, PricewaterhouseCoopers, 2006.

[50] The statistics in this section come from “Key Statistics 2006 European Pulp and Paper Industry”, Confederation of European Paper Industries, 2007.
The statistics refer to CEPI member countries, which in 2006 included Austria, Belgium, Czech Republic, Finland, France, Germany, Hungary, Italy, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, The Netherlands, United Kingdom.

[51] Bernard Simon (1994) “Survey of World Forest Products (2): Paperwork expands – Forest products fight for survival in the electronic age”, Financial Times, 17 May 1994.

[52] The statistics come from World Resources Institute’s Earthtrends website. WRI’s source is the UN Food and Agriculture Organization’s 2007 FAOSTAT on-line statistical service.

[53] Chris Lang (2006) “Zambia and paper”, Pulp Inc., 11 September 2006.

[54] The statistics come from World Resources Institute’s Earthtrends website. WRI’s source is the UN Food and Agriculture Organization’s 2007 FAOSTAT on-line statistical service.

[55] “ForestEthics Launches ‘Do Not Mail’ Campaign to Stop Junk Mail”, ForestEthics press release, 11 March 2008.

[56] Fiona Harvey (2004) “The green bins as a last resort”, Financial Times, 14 December 2004.

[57] Justin Toland (2008) “Inventing more uses for paper”, RISI blog.

[58] Oji Paper’s website.

[59] Bernard Simon (1994) “Survey of World Forest Products (2): Paperwork expands – Forest products fight for survival in the electronic age”, Financial Times, 17 May 1994.

[60] “Forests flushed down the toilet”, WWF press release, 21 November 2005.

[61] “Forests flushed down the toilet”, WWF press release, 21 November 2005.

[62] Tove Selin (2004) “Jaakko Pöyry and the Fin(n)ished Forests of the Mekong Region”, Watershed, Vol. 9, No. 3, March-June 2004.

[63] “Key Statistics 2006 European Pulp and Paper Industry”, Confederation of European Paper Industries, 2007.

[64] “European Declaration on Paper Recycling 2006-2010”, European Recovered Paper Council, c/o CEPI, 2006. The following European associations are Signatories to the European Declaration on Paper Recycling:
CITPA – International Confederation of Paper and Board Converters in Europe
ERPA – European Recovered Paper Association
ETS – European Tissue Symposium
INGEDE – International Association of the Deinking Industry
INTERGRAF – International Confederation for Printing and Allied Industries

[65] The statistics come from World Resources Institute’s Earthtrends website. WRI’s source is the UN Food and Agriculture Organization’s 2007 FAOSTAT on-line statistical service.

[66] “Key Statistics 2006 European Pulp and Paper Industry”, Confederation of European Paper Industries, 2007.
Some of CEPI’s statistics reflect the crazier side of globalisation. In 2005, CEPI countries imported 6 million tons of recycled paper from Latin America while they exported 4 million tons back to Latin America. “Annual Statistics 2005 European Pulp and Paper Industry”, Confederation of European Paper Industries, May 2006.

[67] “17 papermakers falsified data: report”, Kyodo News, 26 January 2008.

[68] Richard Tomkins (2006) “Is recycling utter rubbish?”, Financial Times, 8 July 2006.

[69] For more information and to sign the pledge to use less paper, see shrinkpaper.org.

[70] Mandy Haggith’s book based on her trip: Paper Trails: from trees to trash, the true cost of paper, was published by Virgin Books on 3 July 2008.

[71] I interviewed Mandy Haggith by email, 3 June 2008.
See Chris Lang (2008) “‘Shrink’: A new campaign to stop the madness of paper over-consumption”, World Rainforest Movement Bulletin 131, June 2008.

[72] Paul Abrahams (1992) “Leaving the roller-coaster – Merchanting and added-value papers”, Financial Times, 14 December 1992.

[73] Tove Selin (2004) “Jaakko Pöyry and the Fin(n)ished Forests of the Mekong Region”, Watershed, Vol. 9, No. 3, March-June 2004.

[74] Deborah Hargreaves (1997) “Helsinki exchange to launch first pulp futures”, Financial Times, 24 January 1997.

[75] Christopher Brown-Humes, Bernard Simon and Wolfgang Munchau (1995) “Machinery makers paint a far brighter picture”, Financial Times, 23 November 1995.

[76] Deborah Hargreaves (1997) “Helsinki exchange to launch first pulp futures”, Financial Times, 24 January 1997.

[77] Bernard Simon (1997) “Pulp industry shake-out gathers pace”, Financial Times, 10 July 1997.

[78] Kevin Morrison (2004) “Nybot sees future in pulp trading”, Financial Times, 22 December 2004.

[79] Gordon Hamilton (2008) “Global crisis ends plans for B.C. pulp mill”, Vancouver Sun, 8 October 2008.

[80] Bernard Simon (2005) “Sector that’s suffered a bit of a pulping”, Financial Times, 28 June 2005.
“Portfolio”, Madison Dearborn Partners website.

[81] James Politi (2005) “Cerberus to buy MeadWestvaco paper arm”, Financial Times, 19 January 2005.

[82] Vidya Ram (2007) “Stora Enso Finds American Exit Route”, Forbes, 29 September 2007.

[83] Cormac O’Carroll and Aestan Orstadius (2007) “Private equity breakfast with Pöyry in London”, Know-How Wire, Pöyry Client Magazine, 2/2007.

[84] Cormac O’Carroll and Aestan Orstadius (2007) “Private equity breakfast with Pöyry in London”, Know-How Wire, Pöyry Client Magazine, 2/2007.

[85] Jeremy Grant and Dan Roberts (2005) “Oil prices pump up costs”, Financial Times, 25 July 2005.

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