Profitability and Sustainability in Responsible Forestry - Economic Impacts of FSC Certification on Forest Operators

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Breukink, G.
Levin, J.
Mo, K.
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This study seeks to advance knowledge about the impact of FSC certification on a company's "bottom line" through primary research on 11 forestry entities operating across four continents. More than 500 original data points are analysed to assess upfront investments, annual costs, annual benefits, and the overall net present value (NPV) of the decision to pursue FSC certification. The research can aid forest operators, as well as their financiers and donors, analyze individual projects, thereby facilitating more efficient allocation of resources. The participating companies represent a range of sizes, geographies, and sub-sectors. This research should help to establish a baseline, a common methodology, and indicative results from a small yet diverse sample. For the forest operations evaluated, the financial benefits of FSC tend to outweigh the costs, albeit with high company-by-company variance, and special consideration required for high conservation value (HCV) set-asides and intangible benefits. On average, the companies earned an extra US$1.80 for every cubic metre of FSC- certified roundwood or equivalent, over and above any new costs, due to price premiums, increased efficiency, and other financial incentives. The business case was strongest for tropical forest operations and small/medium producers (regardless of geography) who experienced significant financial gains, while temperate and large producers experienced small losses. It took the companies, on average, six years to break even on their FSC investment.

Subject Keywords
Evaluation, Forests, Ra Technical Suport, Certification, Indigenous Community, Certified Ntfp, Palm Fruit, Community Business Development, Indigenous Management Practices
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