Illicit Extraction: Consequences for the Environment, Conflict, and Human Rights

June 24th, 2011

Illicit financial flows don’t just concern people taking cash (illegally) over boarders. They are also about people taking goods (illegally) over boarders. Some of these goods fall within the traditional concept of transnational crime—for example, drugs and human trafficking—and some outside the conventional scope—including natural resources like fish, wildlife, and timber.

The Global Financial Integrity report Transnational Crime in the Developing World estimates the flow of funds generated by the illicit sale and trade of wildlife is $7.8 to $10 billion annually, the trade in fish is $4.2 to $9.5 billion, and the annual value of the illicit market in timber is approximately $7 billion. While these figures make an important step forward in monetizing the losses developing countries endure as a result of these illicit trades, they do not show the entire picture.

The trade in the illicit extraction of natural resources (even excluding other goods like gold, oil, diamonds and colored gemstones) has grave consequences for the local populations. It is important to remember that the extraction of some kinds of natural resources, including wildlife and vegetation, has costs beyond the loss of tax revenue and political stability that are traditionally associated with the drug and mineral trades. These other natural resources have value as they remain fixed, so the act of extraction has a cost.

Take illegal trans-boundary logging.  Deforestation associated with illegal logging can deprive developing country citizens of a resource that has value even as it remains in the ground. In fact 1.2 billion people worldwide depend on forests for wood, fuel, fodder and food. Forests also provide a vital global environmental good to the entire world as they serve as a carbon sink and absorb carbon from the air; this in turn is an important resource for the developing countries which hold them. The World Bank estimates the economic value of farmland, forests, minerals, and energy worldwide exceeds $44 trillion, of which $29 trillion is in developing countries. They also estimate conserving forests would avoid greenhouse gas emissions worth $3.7 trillion by 2030.

Likewise, the illicit trade in wildlife and fish has harmful effects on the environment and severe consequences for poverty. People in remote, marginal, and forested areas often rely on food that is hunted or collected from the wild, particularly in times of drought or other stress. Many people in developing countries use wild resources to diversify their livelihoods, including trading, handicrafts, tourism, or even formal employment. Declines in access to wildlife resources can cost those in developing countries income, livelihood diversification opportunities, and result in increased vulnerability.

Just as these illicit trades deepen poverty for the inhabitants who rely on the environmental goods, robbing the victims of a basic human right, they also contribute to conflict. As Global Witness has revealed, illegal logging in Cambodia has funded military campaigns and fueled a civil war. Revenue from timber and petroleum continue to flow to the corrupt political elite, which uses its wealth to tighten its grip to power.

This year, on October 6th and 7th, the Task Force on Financial Integrity and Economic Development will host their annual conference. This year’s conference, which will be held in Paris, is titled “Tackling the Shadow Financial System: A Working Plan for the G20.” The subject Illicit Extraction: Consequences for the Environment, Conflict and Human Rights will be the subject of one of the breakout panels.


Written by Ann Hollingshead

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