"Wood balance" assessment
"Wood balance" assessments (sometimes referred to as wood-balance modelling)[5.1.2] relate to the equation Industrial Roundwood Production plus Imports minus Exports = Local End-Use. If the left hand side of the equation exceeds the right hand side, then this mismatch is ignored. If the left hand side is smaller than the right, then the difference is (inappropriately) deemed to reflect the extent of illegality in the timber industry of the given country - provided that the country can reasonably be considerd as "High Risk". Imbalances which occur if the subject were a "Low Risk" country are ignored.[-]

High Risk (/Low Risk) countries are defined here as countries whose exports of at least some forms of wood-based products from at least some regions and types of forest have a significantly high (/low) risk of including Illegal Timber.

For example, Brazil, Congo (Brazzaville) and Malaysia might be described as High Risk countries even though their exports of coniferous plywood (Brazil), FSC-certified sawnwood (Congo Brazzaville) and rubberwood furniture (Malaysia) are likely to be legal (and sustainable). However, importers should be particularly careful when carrying out due diligence concerning those countries' exports of tropical sawn wood (Amazonian Brazil), logs (south western Congo Brazzaville), and logs (Sarawak, Malaysia) given the risk that the chains of supply of those products involves illegality.

"Wood balance" assessments do not make such distictions.

Such distinctions are of course essential for any credible efforts to evaluate trends in the Illegal Timber content of bilateral trade between specific countries (for example, that from countries with which the EU is negotiating Voluntary Partnership Agreements under its FLEGT Action Plan to each EU member state). Indeed, wood balance asessments tend to distract attention from the design of legality assurance systems. If such systems do not assess the sorts of illegality which have after all prompted the large international effort to combat trade in Illegal Timber - notably the validity of concessions, eligibility of concessionaire and logging contractor, implementation of credible plan for the sustainable management of the concession, impropriety in the financing of major mills and concessions (including in the forest conversion and plantations sector) and of course gazettement and native customary rights - then they can not be accepted as evidence of legality.

The proportion of some "High Risk" countries' industrial roundwood production which grew in forest designated as permanent is tending to reduce. As in China, Indonesia and Malaysia, this is due to increases in production both from plantations (for timber or pulpwood) and from forest which is being converted. Estimates of production from conversion forest are particularly unlikely to be robust, except perhaps the quantities used by major pulp mills. It seems that much of the (increasing) quantity of industrial roundwood produced within the private sector tends not to be included in official estimates of national production of industrial roundwood, especially where the agency which makes the estimate only includes statistics for such production as is within its remit. Further, official estimates of industrial roundwood production might relate to the formal sector - rather than also the (not necessarily illegal) informal sector.

Clearly therefore, the error implicit in estimates of production might account for much of any "illegality" which wood balance assessments indicate.

Errors in making estimates of the roundwood equivalent volume of the wood-based products imported, exported and entering end-use locally might also account for much of any "illegality".

Imports are likely to be much smaller than exports in the timber sector of most High Risk "producer" countries. For logs and sawn wood, estimates which are based on weight rather than volume are particularly prone to error (large differences being applicable depending on whether the product is air dried or kiln dried) - as are estimates for wooden furniture which are based on weight or export and import value. These errors compound the unreliability of the factors by which commentators convert volume, weight or value to roundwood equivalent volume [-]. Further a range of factors should be considered for any given product group, depending on the source (large modern mill versus mobile mill; local production or imports) and destination discerning (export markets versus local mass market).

It is even less likely that estimates of the roundwood equivalent volume which enters end-use locally are robust - including because much of this is likely to be supplied by small-scale enterprises..