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Resources

Key documents

• Full case study (PDF, 648kb)
• Etude de Case: Equateur
• Case study summary (PDF, 106kb)
• Presentation from experts workshop, April 2006 (PDF, 2mb)

Also on this site

• Regional Activities - Latin America
• IFM Bibliography - Ecuador

This case study examines the development and short-lived implementation of an outsourced national forest control system in Ecuador. Ecuador has a land area of 247,000 square kilometres, 45% of which is forested, and the highest deforestation rates in South America (1.2-1.47%). Estimates that 50-70% of the timber sold in the country is illegally extracted led to a nationwide debate in the 1990s. This produced the 1999 Strategy for Sustainable Forestry, which recognised the state's limited capacity and resources and directed the Ministry of the Environment to delegate to civil society and the private sector all non-strategic functions.

The ensuing policy reform process led to the establishment of an Outsourced National Forest Control System (SNTCF), enshrined in legislation in 2002. The aim of the SNTCF was to make legality more attractive by reducing the transaction costs of bureaucracy and by increasing the detection and punishment of illegal activities. It was also supposed to operate in a pro-poor manner, e.g. by introducing mobile administrative units and simplifying operational rules for small-scale natural forest managers. The SNTCF required the MoE to outsource responsibility for monitoring and administration to three independently functioning components: (i) Vigilancia Verde - a body comprising the MoE, the police, the armed forces and five NGOs - to police the road transport of forest products; (ii) individual Forest Regents - about 60 accredited foresters responsible for monitoring legality in the forest; and (iii) the Ecuadorian branch of SGS who won a competitive tender to supply administrative and verification services.

The innovation and early achievements of the SNTCF attracted worldwide attention. In 2002, Vigilancia Verde confiscated five times more illegal timber than the state had in 1999. In the few months of 2003 when Vigilancia Verde and SGS were acting together, this amount increased sharply. In addition, SGS recommended the suspension of 42 logging licences and acted efficiently and transparently in terms of provision of information. More effective controls and the reduced time required to obtain permits apparently encouraged use of the legal route for timber harvesting, although the cost of achieving legality (for natural forest timber) was slightly higher.

However, there were weaknesses in the system. Issues of financing and political interference affected all three components. There was no compensatory or incentive mechanism for forest users to counterbalance the burden of increased forest control, and the MoE was not able to implement a programme promoting forest conservation and reforestation for legal forest users, or the control of illegal activities outside the scope of the SNTCF. This situation produced a sense of unfair competition, compounded by the fact that the scheme lacked broad ownership. Although supported by the urban environmental movement and the donor community, development of the SNTCF had not effectively involved indigenous people and small-scale forest owners (who together control much of the forest) nor other government institutions.

As a result, the SNTCF was vulnerable to opposition, which focused particularly on the MoE-SGS contract. In October 2003, Ecuador's Constitutional Tribunal ruled the outsourcing of forestry administration and supervision to a private entity unconstitutional. The resulting suspension of the MoE-SGS contract led to the resumption of delegated duties by the MoE and an overall weakening of the system such that illegal logging is once again rife.

The case highlights the importance of involving all stakeholders in the design of the system, ensuring its compatibility with the constitutional and institutional context, and developing a transition strategy for all actors to move into their new roles. On the positive side, the overall architecture of the SNTCF's three independently functioning components with interacting checks and balances is considered sound and it represents an innovative way of involving civil society (through Vigilancia Verde road checks) in forest-based verification.