By Khalil Walji, a Forestry Consultant, and Kai Milliken, a Forestry Peatland Intern, with the U.N. Food and Agriculture Organization.
After a pause, the conference room becomes quiet as the final speaker concludes remarks on global finance and its contribution to halting deforestation.
The discussion between panelists at an international conference on halting deforestation with an agenda tailored to determine how to curb forest loss by 2020, played out in typical fashion – a few experts on stage delivering remarks seemingly either too short or far too long, at times so specialized it was as if they were speaking to themselves.
Nonetheless, some of the facts were eye opening as we came to the stunning realization that the amount of public funding channelled to address deforestation is magnitudes smaller than the profits made by private companies dismantling them. A disheartening reality that confirms plenty of hard work lies ahead to achieve the sustainable development goals laid out by the United Nations.
However, in the question and answer session after the panel, a remark from a delegate altered the mood of the room, sparking discussion and piquing interest while steering away from familiar and conventional rhetoric.
Speaking not of “cut blocks,” a term referring to a parcel of forestland cleared and designated for replanting in temperate zones – a comfortable point of discussion for most foresters, instead speaking of “blockchain.”
A relatively unknown technology but one with great potential across multiple land sectors. Perhaps most simply described as a next generation data management platform that can store and move data through a digital platform across a decentralized network.
The technology could increase transparency along a forest product chain — empowering the consumer choice to purchase products with a sustainable life cycle and resulting in a new ally against deforestation. A novel interjection and a much-needed tool given that close to 7.2 million hectares of forest are lost each year, equivalent to 27 soccer fields each minute, according to the World Wide Fund for Nature.
The delegate’s intervention leaves the remainder of the room with plenty of questions, but it is clear not one of the panelists is equipped to respond. No one is willing to touch this topic. It is apparently too new, raw and too uninformed.
DEFORESTATION AND THE ROLE OF THE CONSUMER
The dominant driver of tropical deforestation relates to globally traded timber and agricultural commodities to meet increasing consumer demand. The ability to verify the sustainability of a product can make or break the bottom line, much less the ecological integrity of the earth’s biosphere. Agriculture accounts for approximately 80 percent of deforestation worldwide and production is expected to intensify to feed a population projected by the United Nations to be 9-10 billion by 2050. The pressure on standing forests has never been greater.
The costs to the environment and the economy from land and forest degradation are immense, estimated at $2 to $4.5 trillion a year, but consumers may be a great vehicle for change, ultimately holding the key to unleash positive market forces if they can see and track the impact of their choices.
Current efforts to green brands through eco- or bio-labelling has yielded little impact in halting deforestation, especially in tropical ecosystems. Currently, there are crucial gaps in information for tracking and verifying sourcing across the supply chain, which leaves consumers with little trust and diminished public will to push for change. Simply put, contemporary frameworks and tools appear to fall short on their promises. Blockchain offers promise by attempting to replace unwieldy accounting systems with greater efficiency and transparency in tracking corporate activities.
WHAT IS BLOCKCHAIN? FREEDOM IN TRANSPARENCY
In today’s marketplace, items are mostly purchased through money-based transactions, however, in some scenarios, the marketplace operates as a ledger. In essence, as a credit system recording various “I owe you” and “you owe me” transactions. Historically, buying bread meant a baker could track the status of your joint account and how many loaves of bread he might trade for your sack of sugar. Today, the credit system is simplified through the use of cash and cards.
While the legacy “traditional” financial system has served the world well, questions over transparency and trust exist. This is particularly pertinent in the corporate structures of many companies that manufacture products around the globe. Currently, corporate ledgers are highly centralized, owned and managed by the individual companies and are restricted, meaning the public places their trust in those conducting record keeping and auditing to verify the source of products – a high profile example of this is IKEA’s supplied code of conduct- IWAY which has come to be cumbersome and difficult to track and verify in countries such as China.
Blockchain aims to address some of the shortfalls of the current system through an electronic ledger of transactions made with digital currencies; however, the ledger is stored openly, on a database, across multiple nodes in a decentralized network, owned by every person and no single person, accessible to all to validate and verify freely.
Beyond accessibility, blockchain is founded on the principle of “immutability and censorship resistance,” satisfying questions of validity and ensuring the inalterability of transactional information, once stored and confirmed in a block. These features give it an edge over current market tracking systems, making it an enticing technology to track responsibly sourced products. This could be a game changer in the fight against deforestation – especially if it can garner public trust and translate into meaningful impacts on the ground. If consumers truly hold the key to positive market forces, their trust and conscious consumption should trigger a wave of sustainable compliance standards by corporations.
THE POTENTIAL OF BLOCKCHAIN
Blockchain technology is immensely promising and can make significant contributions by auditing supply chains, tracking and trading carbon offset credits, and by protecting communities through securing and storing land title deeds.
By incorporating blockchain into time stamping of date and location of wood products, with the use of a unique product number – products can be traced back to their origin and verified for contamination/tampering along the supply chain.
These features allow for a degree of transparency and accountability desperately sought in forest management and rarely achieved through great effort in our conventional, centralized databases. Companies that fail to adapt and demonstrate they are serious about making change should theoretically become redundant in the wake of growing consumer knowledge. All this serves to deter illegal logging whilst ensuring the products legally sourced and produced truly fall within the realm of sustainability standards.
Blockchain is already being used to improve visibility in the timber supply chain by using digital seals in transactions paired with timber DNA. These are tracked from the source to the final destination, to verify that companies are purchasing sustainably sourced wood. Another example of blockchain application is Origin Trail, a European based firm using blockchain to leverage data collected in the food supply chain to enhance transparency and food safety. The product provides end-use consumers with a clear understanding of the origin of their consumer goods and incentivizes suppliers to share, verify, and store supply chain data.
By allowing companies to incorporate open source models that aim to verify their use of capital and their impact on the environment, consumers will increase trust in corporations, and gain a powerful tool that can thoroughly evaluate companies on their environmental, social and manufacturing .
A GLIMPSE INTO THE FUTURE: LIVING THE REVOLUTION
The cryptocurrency-blockchain frenzy of 2017 saw the rapid rise of an emerging asset class sparking over-exuberant mass speculation on the excitement of this technology’s utility. Fast forward to 2019 and the stark downturn of the market is doing the exact opposite – unfounded mass skepticism and questions over the future of this emerging technology currently loom.
Nonetheless, It is already being used to verify external impacts of sourcing and will only continue to be utilized in many more applications – International Union for Conservation of Nature is currently using blockchain technology for conservation; and the U.N. World Food Programme has found salient solutions using cash transfers in Pakistan and Jordan to fight hunger in refugee camps. We believe that the innovative application of blockchain can be immense and the potential impact for combating deforestation is acute. Although it is in its infancy and its integrity has been somewhat tarnished by speculative whims, this “noise” should not detract from the fundamental utility of what it offers to the future of supply chain/forestry management.