We live in times of warming. Perhaps the climate is the most obvious expression of an economic acceleration that has warmed up its engines, burning everything in its path. In just a few short decades, productivity has grown enormously. We have seen the emergence of economies of scale, an ever increasing accumulation of capital, a rising number of corporate mergers, the expansion of markets, globalization.
In this scenario, where power is increasingly concentrated and inequalities ever more heightened, national economies very often end up subordinated to the power of giant transnationals, leading to the prioritization, promotion and facilitation of forms of production that serve this model and, to an ever greater extent, financial speculation. Obviously, this means large-scale production, with high yields in the short term, involving large investments of private capital, corporate control, intensive use of technology, and access to large or medium-sized markets.
At the other end of the chain, completing a vicious circle, markets are created for excessive consumption. In some countries, with the largest consumer markets, the turnover of merchandise has reached a dizzying pace. Everything is used, thrown out and rapidly replaced, everything comes packaged and ready to eat, from the most distant corners of the world to your supermarket shelf. There is an ever growing need for more iron, more wood, more pulp, more energy. The planet has been turned into an enormous impersonal market, without the enticing aromas and vendor-customer exchanges of a “bazaar”… Goods are produced by corporations, transported by corporations, sold by corporations.
Obviously, local economies, community management and collective ownership have no place in planning that prioritizes exports, macroeconomics and capital investments.
It would appear that nobody takes into account the “externalized” costs of the massive use of water, the loss of soil nutrients, the destruction of ecosystems, the voracious appetite for fossil fuels and resulting irreparable release of carbon, the social breakdown caused by the expulsion and marginalization of local communities, the loss of direction in the search for well-being or “Living Well.”
The pulp and paper industry
The forestry sector has been no exception in this process. Since the mid-1990s, paper and paperboard consumption has rapidly grown, initially at the expense of tropical forests primarily, in countries like Indonesia and Malaysia. The pulp and paper industry began to expand, and alongside it, the industrial forestry sector, basically dominated by companies from the North, where much of the world’s pulpwood is produced and paper consumption is highest. But industrial plantations of fast-growing trees (mainly eucalyptus) with relatively short rotation periods (between six and ten years, depending on the region) have been established in the South and have expanded at the expense of different ecosystems, such as native forest in the case of Chile, or grasslands in the case of Uruguay and South Africa. Later, an increase in manufacturing capacity gave rise to the emergence of Southern conglomerates as well.
The expansion of the forestry industry has been facilitated by legal frameworks and the injection of generous direct and indirect state subsidies and tax exemptions, which have fostered the establishment of monoculture tree plantations in countries like Chile, Brazil, Uruguay, New Zealand, Indonesia, Vietnam and Kenya, to name just a few examples. In all cases, it is powerful private interests who have benefited – some have involved major national capital, others, foreign investment.
A number of other actors have played a fundamental role in the expansion of the forestry industry. FAO, in particular, has placed at its service not only the technological paraphernalia of the “Green Revolution”, but also its influence, helping to disguise monoculture plantations as “forests” with its definition categorizing them as “planted forests”.
Consulting firms like Pöyry of Finland have also contributed significantly through the promotion, research, planning and design of pulp and paper mills and tree plantations.
For their part, bilateral agencies (among which Japan’s JICA stands out in particular), state investment and export credit agencies, and multilateral agencies have provided easily accessible financing both to plantation companies and the governments that subsidize them. Among the multilateral institutions, the World Bank has provided cheap finance for the establishment of millions of hectares of tree plantations. (1)
New actors: Speculative funds
And who owns the plantations? In addition to the previously mentioned pulp and paper companies, new actors from the financial world have now entered the scene, investing billions of dollars in the acquisition of land and the establishment of tree plantations. Seeking to diversify their investment portfolios, financial vehicles such as pension funds, Timber Investment Management Organizations (TIMOs), Timberlands Real Estate Investment Trusts (T-REITs) and hedge funds have set their sights on the industrial plantation sector. According to a report published by FAO (2), the total investment in tree plantations by these vehicles was estimated at about 50 billion dollars in 2007.
TIMOs, investment management vehicles based in the United States, accumulate funds from a number of institutional investors who may not want to directly buy and manage plantations, or may want to invest only small amounts of their funds. TIMOs tend to establish funds which invest for a period of ten years.
T-REITs, real estate investment funds geared specifically to the forestry sector, developed in the United States and have grown rapidly since 2000. According to the abovementioned FAO report, the largest private plantation owner in the world, Plum Creek, is a T-REIT. Since 2004, the investment assets of a number of forest product companies have been restructured into T-REIT vehicles, which are more tax efficient for stakeholders.
Up until now, these two financial vehicles – TIMOs and T-REITs – have invested in a relatively limited number of countries: Oceania, Chile, Brazil, South Africa and Uruguay, where the tree plantation sector is well established.
Since 2005 another class of plantation investor has emerged: so-called “hedge funds”, financial vehicles that operate with high-risk funds. The wealth of inexpensive credit available in the global financial system until mid-2007 enabled these funds to outbid forest product companies, TIMOs and REITs to acquire large areas of tree plantations, which they generally resell.
A number of European private funds that invest in tree plantations in Europe and other parts of the world have also developed. Some have been formed specifically to invest in the potential carbon market, one of the false solutions to climate change created by the unwillingness of global economic and political power to attack the root of the problem of global warming: the release of tons of carbon dioxide into the atmosphere resulting from the unsustainable consumption of fossil fuels (oil, coal, gas).
New problems with a “green” economy
This same unwillingness has led to the emergence of the supposed shortcut of biofuels, as a way to continue feeding the same voracious system of the globalized economy, except with a different kind of food. New problems. The biofuel demand in Europe has been catapulted by the 2009 European Parliament directive on renewable energy, which sets binding national targets for EU member countries to achieve a 20% share of energy from renewable sources in total energy consumption and a 10% share of energy from renewable sources in transport by the year 2020. This has spurred an avalanche of foreign investors grabbing up land in Africa, South America and Southeast Asia to establish plantations of oil palm and other trees to supply wood chips and pellets for biomass energy.
A briefing by the International Institute for Environment and Development (IIED) (3) reports that in 2011 alone, five major pellet facilities went into production in Canada, Norway, Russia and the United States, with a total combined capacity of around three million tonnes. On the supply side, the spotlight is on Africa. Numerous companies are descending on the continent to establish plantations or replant existing ones for this purpose. Deals have been signed to produce wood chips for export to Europe and other markets by replanting old rubber plantations in Ghana and Liberia.
The briefing cites a number of cases of foreign investments in tree plantations that are wholly or partially for biomass energy, which involve not only private sector investment, but state participation as well. US acquisitions include 60,700 ha in Guyana, 5,000 ha in Ghana and 11,700 ha in India; European investment includes 126,000 ha in Mozambique; and South Korea has acquired 60,000 ha in Cambodia and 200,000 ha in Indonesia (the latter through an agreement between the two governments).
Biomass plantations have the flexibility to sell into different markets, depending on price fluctuations: if fuel prices fall, they can be used to sell timber or pulp, or even carbon credits. The IIED mentions the case of a Norwegian company, Green Resources Ltd. (see Mozambique, WRM series Nº 14 athttp://www.wrm.org.uy/countries/Mozambique/book.pdf), which is acquiring land in Mozambique and Tanzania to establish plantations that involve all three economic activities, that is, supplying wood products and pulp, biomass energy, and carbon credits.
Among the new trends that could further contribute to an increase in plantations is the REDD+ mechanism (see WRM Bulletin 169), which views tree plantations as a strategy to reduce carbon emissions. The government of Indonesia has already announced that, for this very purpose, it plans to plant millions of hectares of tree plantations which it refers to as “new forests” – an absurd misnomer endorsed by FAO.
Another emerging threat is the field that has come to be known as “bioeconomy”. It involves a plan to manufacture everything – from plastics to fuel to textiles – from trees and other sources of cellulose in place of fossil fuels. It would also entail the use of dangerous technologies like genetic engineering, synthetic biology and nanotechnology.
Finally, the Green Economy, a concept that will have a starring role at the upcoming Rio+20 Summit to be held in Rio de Janeiro in June 2012, is being interpreted in a way that will once again render any attempt at change completely spurious. There is a great deal of talk about the new business opportunities that will be opened up by the Green Economy, for investments in key resources like water, renewable energy, biodiversity and forests (and this undoubtedly includes plantations), the mobilization of financial resources, the encouragement of private sector participation with the support of public spending. UNEP might talk about investing in “sustainable” reforestation, but we know very well that unless the large-scale monoculture plantation model – which is as profitable for big corporations as it is destructive to local communities and the environment – is challenged and opposed, it will all amount to nothing but empty words.
We are facing a crucial moment, a crossroads. Humankind can continue to be dragged to the edge of the abyss by the powerful forces of commercial interests that will not turn back on their own, or it can have the courage to alter the current course and reclaim the ethical principles of the collective interest, the common good, interdependence with nature. At WRM, this is the direction we are striving towards.
By Raquel Núñez Mutter, WRM, raquelnu@wrm.org.uy
(1) “Pulping the South: Industrial Tree Plantations in the World Paper Economy”, Ricardo Carrere and Larry Lohmann, http://www.wrm.org.uy/plantations/material/PulpingSouth.pdf
(2) “Corporate private sector dimensions in planted forest investments”, D.A. Neilson, ftp://ftp.fao.org/docrep/fao/011/i0627e/i0627e09.pdf
(3) “Biomass energy: Another driver of land acquisitions?”, Lorenzo Cotula, Lynn Finnegan and Duncan Macqueen, The International Institute for Environment and Development (IIED), August 2011,http://pubs.iied.org/pdfs/17098IIED.pdf
