Governing through Markets: Forest Certification and the Emergence of Non-State Authority

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In recent years a startling policy innovation has emerged within global and domestic environmental governance: certification systems that promote socially responsible business practices by turning to the market, rather than the state, for rule-making authority.This book documents five cases in which the Forest Stewardship Council, a forest certification program backed by leading environmental groups, has competed with industry and landowner-sponsored certification systems for legitimacy. The authors compare the politics behind forest certification in British Columbia, the United States, Germany, the United Kingdom, and Sweden. They reflect on why there are differences regionally and nationally, discuss the impact the Forest Stewardship Council has had on certification programs initiated by forest company and forest owner associations, and assess the ability of private forest certification to address global forest deterioration.

Author Biography: Benjamin Cashore is assistant professor of sustainable forest policy and chair, Program on Forest Certification, Global Institute of Sustainable Forestry, at Yale University's School of Forestry and Environmental Studies. Graeme Auld is a PhD student at Yale University's School of Forestry and Environmental Studies. Deanna Newsom is TREES Program Associate, Rainforest Alliance, Richmond, Vermont.

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Editorial Reviews

From the Publisher
"An excellent book that will make a significant contribution to an important emerging area of research."—Aseem Prakash, University of Washington

"A rich theoretical and empirical contribution to our understanding of private environmental governance in the forestry sector in several industrial countries. It will be of considerable interest to those involved in environmental management and governance."—David J. Vogel, University of California, Berkeley

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Product Details

  • ISBN-13: 9780300101096
  • Publisher: Yale University Press
  • Publication date: 9/28/2004
  • Edition description: New Edition
  • Pages: 352
  • Product dimensions: 6.10 (w) x 9.30 (h) x 1.00 (d)

Read an Excerpt

Governing Through Markets


Yale University Press

Copyright © 2004 Yale University
All right reserved.

ISBN: 978-0-300-10109-6

Chapter One

The Emergence of Non-State Market-Driven Authority

Hubert Kwisthout made bagpipes. He practiced his craft for over twenty years and, through hard work and perseverance, established a reputation for creating exquisite instruments capable of producing beautiful music. For Kwisthout, his bagpipes were much more than a product for sale-they represented to his customers an extension of himself and his art. It was for these reasons that Hubert Kwisthout became increasingly concerned about a moral dilemma that he could not rationalize away. Kwisthout relied on tropical hardwood imports to produce the wood components of his bagpipes, and during the 1980s, evidence accumulated indicating that the wood was coming from tropical forests that were being degraded by poor forest management practices or destroyed by conversion to other uses. The beauty he was creating with his bagpipes was contributing to the destruction of tropical forests and the endangerment of a wide range of species and habitats. The response by citizens and environmental groups in Europe and North America concerned about tropical forestdestruction at this time was to promote boycotts of tropical timber. These efforts treated wood products from the tropics, regardless of the source, as contributing toward deforestation and species loss. This approach bothered Kwisthout, who, dependent on tropical wood for his bagpipes, felt there had to be a way to buy wood from companies and landowners who practiced sustainable forest management. But how could this happen? Illegal logging, poor governmental institutions, and widespread corruption in many developing countries meant that relying on government might not produce the desired results.

There had to be another way. Kwisthout's first solution was to form a trading company in the United Kingdom whose purpose was to purchase timber from environmentally sound sources. Kwisthout quickly learned, however, that those claiming to sell sustainable timber had no way of verifying that the sources were actually sustainable. Another idea came to Kwisthout. Why not have environmental groups and other social interests devise a set of rules governing sustainable forest management, independently certify companies who practice these standards, and thus enable consumers to purchase wood products from companies who pass the certification process?

It was a relatively simple solution that would have enormous and complex impacts. While Kwisthout had no way of knowing it at the time, his support of this kernel of an idea would trigger a series of events that would present global and domestic environmental governance with one of the most innovative and startling institutional designs of the past 50 years: forest certification. The advent of forest certification systems ushered in a new breed of sustainable development institutions outside of traditional governmental processes that would offer fundamentally different ways of creating policy and implementing policy choices. And as we reveal in this book, something else happened that Kwisthout could never have envisioned. Thus far, the regions in the world where certification has been the most debated, supported, and institutionalized are not the tropics but rather the countries of the North, where well-organized environmental, social, and business interests, caught in longstanding struggles over temperate and boreal forest resource use, have sought to define and shape forest certification efforts.

This book is an effort to explore the emergence and support for these new institutions and understand better their effects in terms of addressing and promoting sustainable development. We refer to these new institutions as "non-state market-driven" governance systems because rule-making clout does not come from traditional Westphalian state-centered sovereign authority but rather from companies along the market's supply chain, who make their own individual evaluations as to whether to comply to the rules and procedures of these private governance systems. Environmental groups and other non-governmental organizations (NGOs) attempt to influence company evaluations through economic carrots (the promise of market access or potential price premiums) and sticks (public and market campaigns aimed at pressuring companies to support certification).

Understanding how these private governance systems emerge and gain rulemaking authority is an important question for at least four reasons. First, an intense competition is currently being waged between the program originating from Kwisthout's idea, the international Forest Stewardship Council (FSC) certification program, which has strong support from most of the world's leading environmental groups, and industry and landowner initiated certification programs that have emerged in North America and Europe. We argue that the outcome of this competition is crucial to understanding whether non-state market-driven governance in the forest sector will result in privatizing "up" (Vogel 1995) existing public policy rules governing sustainable forest management, or whether a privatizing "down" or benign "sideways" incremental approach will emerge. Second, depending on how they emerge and their ultimate form and function, non-state market-driven governance systems could come to be seen by key actors as a more legitimate arena (Bernstein 2001b) in which to create environmental policy than traditional public or shared public/private forms of decision-making (Coleman and Perl 1999; Clapp 1998). Third, supporters argue that these private governance systems could improve environmental performance because perceived or potential market benefits may work to encourage commitments in ways that traditional command and compliance public policy processes have been unable (Gunningham, Grabosky, and Sinclair 1998). While such conclusions appear premature, the fact that so many groups believe that certification programs will have such an impact renders these private systems worthy of rigorous and sophisticated research. Fourth, non-state market-driven governance systems are quickly emerging in other sectors, such as food (Food Alliance 2001), coffee (Fair 2001), tourism (Rainforest Alliance 2002), and fisheries (Simpson 2001). An analysis of the forest sector will facilitate hypothesis building for research in other sectors, thus contributing to a comparative cross-sector research agenda into the ways in which non-state market-driven governance systems emerge within different environmental policy problem arenas.

We have chosen to address these questions by comparing support for forest certification in the United States, British Columbia (Canada), Germany, the United Kingdom, and Sweden. These cases were chosen because they have two pertinent characteristics. First, they are all actively involved in the production and consumption of industrial wood and paper products. For example, in the UK and Germany, higher reliance on imports exists, while in BC, exports are the driver of local production. These differences allow us to explore how they might influence support for certification in producing versus consuming countries.

These cases also vary according to the structure of their forest sector and public policy approaches to sustainable forest management-factors that we argue are key to understanding the emergence of and support for non-state market-driven governance systems. We chose industrialized countries for two reasons. First, this choice permitted us to control for broad patterns of economic development that distinguish the developing from developed world. Second, these cases are especially significant, as they were all early participants in forest certification, giving us the opportunity to identify key factors that lead to differing paths of non-state market-driven governance development. We fully expect future research to explore developing countries, especially those tropical countries that first provided the interest in forest certification. At the same time, and as we detail below, it does appear that if non-state market-driven governance fails to institutionalize fully in developed countries, it could very well disappear as an innovative policy instrument to address forest deterioration globally. And the inverse may well be true-institutionalizing certification in the North may create the strongest and most effective way of developing certification institutions in the global South.

The Puzzle

Guided by the above questions and an analytical framework detailed in chapter 2, we noted remarkable patterns of initial convergence, then divergence, among the cases under review. In all cases under review, support for certification followed similar patterns where environmental groups and their allies supported the prescriptive and wide-ranging international FSC program, while forest companies and forest landowner associations expressed skepticism. In all the cases, the vast majority of companies and landowners initially either failed to support any form of certification or created their own rival domestic programs designed to compete with FSC.

These quite remarkable stories of convergence quickly turned into divergence (table 1.1), as FSC and FSC-competitor programs and their core supporters undertook a wide variety of market-based strategies aimed at changing forest company and forest owner support toward the FSC. The impacts of these strategies were uneven across our cases. In BC, forest companies and industry groups dropped their exclusive support for the industry-initiated program and participated in the FSC standards development process, attempting to work within the FSC to forge an agreement on sustainable forest management standards. Likewise in the UK initial reluctance on the part of most forest landowners to support the FSC turned into grudging support and eventual acceptance of the FSC standards. And in Sweden, industrial companies quickly dropped their hesitation over the FSC process and chose early on to support the FSC, while non-industrial private landowners eventually walked away from the FSC and created their own certification program. In the US, however, very few forest companies and forest owners have given the FSC any type of support, instead focusing massive efforts and resources on creating and modifying the industry and landowner alternative programs. Likewise in Germany the FSC has not been able to alter forest sector support significantly, with most state forestry agencies and private landowners preferring the industry program.

Why is it that forest companies and forest landowners in some countries and regions altered their support for forest certification programs to include the environmental group-conceived FSC, while in other regions, forest companies and forest landowners have remained steadfast in their support of industry or landowner programs?

The purpose of this book is to systematically explore this question. We chose to focus on "forest company and forest landowner" support for the FSC as our dependent variable because it presented the most striking divergence when we applied our framework to each case and because forest companies and landowner choices are the ultimate target of certification programs. Why some companies and forest owners would choose to support environmental group-supported certification programs when industry and landowner associations offer more flexible and less prescriptive alternatives is a curious, seemingly counterintuitive result. The answer to this question may shed light on the conditions under which companies embrace private standards that go beyond what their own associations would prefer and hence is important not just to the forestry case, but to other sectors as well where non-state market-driven governance systems are emerging. We focus on support for the FSC not because it is necessarily more important than FSC-competitor programs but because it was the observed differences in FSC support over time that emerged as a key puzzle worthy of scientific exploration. And though our question focuses on divergent levels of support for the FSC, answering this question necessarily requires that we systematically address why different interests, institutions, and actors came to support FSC-competitor certification pro- grams, or none at all. These are inquiries that necessarily contribute to broader questions of non-state market-driven governance that we return to in the conclusion to this book.

The Argument

Our general argument is that three structural factors-the place of the country/region in the global economy; the structure of the domestic forest sector; and the history of forestry on the pubic policy agenda-strongly affect efforts by the FSC supporters to gain forest company and forest owner support. In some countries these factors combine to create a hospitable environment to such efforts, while in other countries these factors combine to limit such efforts. And the logic of this argument is important: when a hospitable environment exists the FSC and its supporters are able to "convert" forest companies and owners, without having to change significantly the FSC and its approaches. However, when a relatively inhospitable environment exists, the FSC and its supporters will have to "conform" to forest company and owner criticisms of the FSC, if they are going to have any chance of gaining some degree of support. If our argument is correct, these differences have profound implications for understanding the general "upward" and "downward" movement of rules concerning sustainable forest management, as non-state market-driven governance systems, with very different conceptions regarding both governance processes (who gets to shape the rules) and standards, compete for legitimacy and rule-making authority. This is because efforts to gain forest company and landowner support may result in the FSC certification program reducing the stringency of its rules as it conforms to landowner and company concerns, while FSC-competitor programs may increase the stringency of their rules as they attempt to conform to baseline minimum certification standards being demanded along the market's supply chain. Our book thus traces how efforts to achieve legitimacy put pressures on both the FSC and FSC competitors to alter their rules upward or downward.

This argument is not deterministic. Instead, we follow David Vogel's approach (Vogel 2001, 1995) in which he argues that increased market integration could lead to increased environmental and social production standards, but only when active environmental and other groups specifically pressure governments to put such wording in rules governing increased market transactions. Hence we argue that while each country or region's structural features offer unique incentives and approaches to the FSC and its supporters in their efforts to gain forest company and landowner support, we cannot predict whether the FSC and its supporters will make choices consistent with this environment. Nor can we predict the specific choices made by those strategists who are aware of the impact of these features on the ability of the FSC to gain support. This means that our analysis must carefully explore the interaction between a region or country's structural environment, the specific choices made by the FSC and its supporters, and the path dependencies that are created as they engage in trial and error efforts to gain legitimacy. Similarly we must trace policy choices made by the FSC-competitor programs in their efforts to head off FSC efforts and the effects of these efforts on FSC policy choices. We review the interaction between the promotion of the FSC by environmental and social agents and the structural features that both mediate and inform these efforts. We theorize in the conclusion about the implications of these interactions for the institutionalization of forest certification as an alternative for global and domestic environmental governance.


Excerpted from Governing Through Markets by BENJAMIN CASHORE GRAEME AULD DEANNA NEWSON Copyright © 2004 by Yale University. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

1 The emergence of non-state market-driven authority 3
2 The research design : toward an analytical and explanatory framework 31
3 British Columbia, Canada 59
4 The United States 88
5 The United Kingdom 129
6 Germany 160
7 Sweden 189
8 Competing for legitimacy 219
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  • Anonymous

    Posted November 27, 2005

    Winner of Sprout Prize

    This book, which explores the ability of the marketplace to reverse global forest destruction has won the International Studies Association¿s 2005 Harold and Margaret Sprout Award for the best book of the year on environmental policy and politics. Governing Through Markets: Forest Certification and the Emergence of Non-State Authority, by Yale professor Benjamin Cashore and his two former masters students, Graeme Auld and Deanna Newsom, analyses a 10-year, multimillion-dollar effort by nongovernmental organizations to transform global environmental governance by embracing marketplace incentives, rather than governments, for rule-making authority. The selection committee lauded Governing Through Markets for its ¿excellent empirical research¿ and for ¿breaking new ground on one of the hottest topics in both the practice of and scholarship on international environmental politics.¿

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