Blockchain applications series – Forestry
Climate change is a pressing issue for many consumers. Studies show that more consumers are choosing to buy from companies that align with the UN SDGs and that demonstrate a commitment to the environment. One of the industries that is in the firing line is forestry.
We know that poor forestry management has led to some serious and devastating down the line impacts in places like The Amazon. So, what are the key issues with forestry and how can blockchain technology help protect our forests and keep companies accountable? That’s what today’s article explores.
Key issues affecting sustainable forestry
The timber industry is at a crossroads. For a long time, it has tolerated the illegal trade of logs from unregistered logging operations. This has impacted severely on the long-term sustainability of forests and contributed heavily to the destruction of habitats.
Sustainability is once again at the forefront of the conversation in the timber industry, but also in all industries in general.
Provenance is one of the hardest things to prove in our global economy. Wild places are one of the resources most at risk from illegal timber trade, as it's difficult to prove the planks were bought legally.
Wood from illegal logging operations quickly enters the legal supply chain and then becomes almost impossible to detect. This contributes to the continued existence of these harmful operations and, in the process, forests, jungles and habitats are destroyed and this has a devastating ripple effect on indigenous people. For example, in Brazil, illegal logging has led to border disputes, water supply issues and increased urban populations.
At its core, provenance is a supply chain management problem. And as with many supply chain management problems, blockchain technology can be the solution. In fact, there are some projects already implementing the technology in the field to prevent illegal logs from entering the market.
Blockchain and Forestry
Blockchain technology is a distributed ledger. It registers transactions into a common record that cannot be modified by a single party. These transactions are recorded in the ledger and bundled into blocks where a consensus algorithm organizes the data, creating a common history and verifies the integrity of the information.
As the data was agreed upon by the implementation of consensus, no one party in the system can change it. Record keeping in this way can prevent people from introducing false information and compromising the system.
Supply chains, especially forestry-related supply chains, rely on a paper trail such as invoices, bills of lading, shipping manifestos and other signature/stamp trade documentation. These systems are vulnerable to fraudulent claims and errors and malicious interventions. They are easy to tamper with and often found to be compromised when audited.
Blockchain technology can fundamentally change the way forestry commodities are traced over the supply chain. It ends the reliance on paper-based documentation and easy-to-tamper physical records, all of which lies at the core of why it is so easy to introduce illegal logging into the regular market.
With blockchain technology in play, logging records would be collected via GPS data. This information would automatically be recorded in the distributed ledger, and from there tracked across all the supply network links. The final product would be traceable to its origin.
In addition, the blockchain could show that the original loggers were paid fairly for their work and are receiving a premium by abiding by conservation laws. That way they would lose any incentive to cheat the system or engage in illegal timber trade.
Examples of blockchain technology in forestry
There are a number of organizations and companies addressing forestry provenance issues with blockchain technology.
Some examples are:
- Forest Stewardship Council's (FSC) beta version of their FSC blockchain Chain of Custody (CoC) supply chain standard. It uses a private blockchain, not a public one, and it protects the data in that way.
- Preferred by Nature, a non-profit organization working to generate better land management and business practices for climate change initiatives operating in 100+ countries.
Both of these projects are implementing blockchain technology standards for forestry and land management. They are still in beta or pilot phases but the use case for the technology is promising.
Woodlands, jungles, forests and similar habitats are very delicate. Their preservation will take a global effort and blockchain technology is giving us the tools to accomplish this. The immutable record created by the distributed ledger cannot be changed by single parties, ensuring the integrity and veracity of the data.
Blockchain technology is solving key issues for the forestry industry through provenance tracking and other applications of the technology, and in so doing, custody of NFTs, tokens and coins is vital. At Unido, we are supporting dApps by providing a secure crypto self-custody solution for forestry businesses. Join our Discord community to learn more about how we can support your industry in breaking into the digital assets ecosystem.
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