Value chain alliances: what are they and why are they important?
CSFEP is working with partners to explore the feasibility of climate smart forest value chain alliances and making them operational in three geographies—a region in Brazil, a region in India, and the Pacific Northwest of the USA.
A climate smart forest value chain alliance can be defined as a voluntary collaboration of stakeholders that is committed to coordinate production and value-adding activities that enhance the sink, storage, and substitution effects in forests, forest products, building materials, and buildings. Such an alliance would ideally involve value chain actors from sourcing of raw materials on forest lands (e.g., forest managers) to wood processing (e.g., sawmill owners, engineered wood processors) to intermediaries in the building sector such as design and engineering companies (e.g., architects, design studios) and construction firms to end users such as private and commercial real estate developers. Other important stakeholders include finance providers for each step of the value chain and government actors shaping the policy and market conditions of supply and demand areas for climate smart wood, forest products, construction materials, and new buildings.
An alliance can pursue various objectives including a narrow focus on specific value chain challenges. For example, members of an alliance can aim at improving forest management and sourcing practices, using climate smart production technologies, increasing traceability of inputs, or improving the reporting on carbon dioxide sequestration, storage, and substitution effect throughout the value chain. Alternatively, an alliance can pursue broader objectives that seek to improve the policy and market conditions for a climate smart forest economy in the supply and demand areas.
Different entry points, markets, and policy environment for climate smart forest value chains in the chosen geographies
CSFEP is working with partners in Brazil, India, and the Pacific Northwest of the USA to determine the scope and feasibility of a value chain alliance. Multiple opportunities exist to advance a climate smart forest economy and build associated value chains in all three geographies,
The entry points for a climate smart forest economy and markets to establish climate smart forest value chains, however, vary greatly across the chosen geographies. Both Brazil and India have no track record yet of building with wood at large scale. In addition, because of their size and many forest products grown in the two countries, further subregional and commodity specific exploration is required to make any alliance relevant and manageable. In the Pacific Northwest of the USA, the demand and supply for climate smart wood, and associated business and policy environment have more matured, and voluntary collaboration of stakeholders to advance aspects of a climate smart forest economy is under way. The exploration of value chain alliances in the three regions has been based on the following assumptions and observations:
The opportunity to create Brazil’s first climate smart forest economy value chain alliance must link landscape restoration to market demand in cities. A new value chain alliance could motivate and provide support to early movers in the construction sector and influence Brazil’s traditional aesthetics of construction buildings in cities. Brazil is facing a growing housing deficit in the millions, most of it needed by low-income families. Hybrid wood buildings and mass timber technology can change the economic calculus permitting to redesign underutilized spaces in central areas of cities for affordable housing and other uses and become part of broader strategies to reduce the carbon footprint of urban areas. Experience to reforest degraded lands with native species, sustainable forestry, and agroecosystems is maturing in Brazil, and evidence for certified and low-impact forestry operations is growing.
The opportunity to create India’s first climate smart forest economy value chain alliance must also link landscape restoration to market demand for wood from urban and rural areas. A new value chain alliance, focused on a specific region and commodity, could catalyze early movers in the construction and other wood related sectors and foster a restoration economy in urban and rural areas. India has committed to restore 26 million hectares of land, which can be achieved by protection and restoration through interventions like agroforestry, riverbank plantations, linear plantations, and enhanced urban green spaces. India’s recent elimination of its 25-year prohibition to use timber in construction represents an opening to decarbonize the country’s construction sector and meet the growing housing needs of millions through hybrid wood buildings and mass timber technology. Furthermore, easing in the issuing of transit permits creates an opportunity for enhancing livelihoods through tree-based products and using timber for long-lived wood products and other uses.
In the Pacific Northwest of the USA, key elements for a new climate smart forest economy are in place, and a Climate Smart Wood Group has begun to operate to respond to changes in demand and policy signals. Factors favorable for climate smart value chains include tremendously productive natural forests that can sustainably supply economically viable products over the long-term. The region has increased manufacturing opportunities for engineered wood, and there is growing market interest in climate smart wood, which has been augmented by political interest and support. Public and private institutions have strong capacity to plan, monitor, and enforce laws and standards. Members of the Climate Smart Wood Group envision a new forest economy in the Pacific Northwest that shifts to forest management practices that emphasize and incentivize carbon storage, resilience, biodiversity, and other ecosystem services.
What has been accomplished in the three geographies?
CSFEP has partnered with the World Resources Institute Brasil (WRI Brasil) in Brazil and WRI India in India to explore the feasibility of value chain alliances. In the USA, CSFEP is working with Ecotrust and the Climate Smart Wood Group to formalize and amplify its ongoing efforts. The following is a summary of progress as of September 2022:
Brazil Value Chain Alliance. The World Resources Institute Brasil (WRI Brasil) has now outlined two strategic options for a value chain alliance: (1) Southern region including Paraná and Santa Catarina states focused on the production of exotic pine, all close to existing plantation and engineered wood operations and housing demand from São Paulo, Rio de Janeiro, and Minas Gerais; (2) São Paulo State, Espírito Santo State, and southern Bahia State, all most suitable for growing native species and having a high consumer demand potential. The latter states have an advanced legal framework to manage native species in restored areas, and a viable timber market for these species can be envisioned (although it will require considerable time). 17 participants in a virtual consultation perceived the formation of an alliance as relevant and worthwhile but were equally divided on choosing a regional priority and on launching a new alliance or linking to an existing forum. A rapid assessment of the literature and interviews with key experts and stakeholders were the foundation for this virtual workshop. The WRI Brasil team is now exploring the best way to produce a final set of more detailed observations for one of the strategic options.
India Value Chain Alliance. The World Resources Institute India (WRI India), partnering with the Centre for Responsible Business (CRB), chose local bamboo species as the most suitable commodity to open the door for a climate smart forest economy and identified Madhya Pradesh State (Central India) as the most promising geography to build India’s first value chain alliance for bamboo. The partners are now prioritizing start-up activities and tentative partners for such an alliance to raise funds for its launch, while at the same time finalizing a white paper that summarize efforts over the past eight months. Drawing from a master list of 64 stakeholders, the partners consulted close to 100 people in a national workshop, two consultations in regions rich in bamboo resources (Guwahati, Northeast India and Bhopal, Central India), and 14 one-on-one conversations. These consultations and a literature review helped the partners determine the criteria to select a suitable commodity and finalize their choice of geography and strategy for an alliance with discussion with strategic partners like Tamil Nadu Agriculture University, with which WRI signed an MoU in March 2022.
Creating a Climate Smart Forest Economy in the Pacific NW. Over the past months, Ecotrust and its partners have begun to amplify and expand the efforts of the Climate Smart Wood Group in four strategic areas:
Advance actions to build a stronger coalition. A half-time coordinator is now supporting the Climate Smart Wood Group. Participating organizations submitted a successful proposal to the USDA Partnership for Climate Smart Commodities which will offer USD 25 million over five years to expand climate smart forest monitoring, marketing, wood procurement, and communication efforts in the Pacific Northwest. It will also channel USD 10 million in direct payments for climate smart practices to landowners, mills, and manufacturers over the next five years.
Provide strategic support for individual Tribes and elevate visibility and awareness of tribal forestry and other climate smart forest managers. Ecotrust has coordinated with several tribal partners to strengthen quantitative efforts to measure embodied carbon and develop communications strategies. Ecotrust has continued to use publicly available data to highlight climate smart forest management practices on tribal lands such as the 2022 AIA Seattle Summit Practicing Equity and Advocacy in Rapid Decarbonization, building on Ecotrust’s ongoing embodied carbon work.
Convene an embodied carbon research co-production team to advance the recognition and incorporation of good forest management into Life Cycle Assessment (LCA) for applications in Environmental Product Declarations and Whole Building LCAs. Ecotrust and the Carbon Leadership Forum organized a 17-member Technical Advisory Committee to advance the embodied carbon research in support of LCAs, and regular meetings commenced in May 2022.
Produce cross-sector outreach and educational materials in support of the above. A communication plan is in place, and work has started to spotlight the Tribes in the Pacific Northwest practicing climate-smart forestry and other innovative actors that are increasing awareness and transparency for a climate smart forest product supply chain and green buildings.