Do certified tropical logs fetch a market premium?: A comparative price analysis from Sabah, Malaysia

The controversy about the benefits of certification to timber producers has centered on the “market premium” and “market access” arguments. Some studies claim evidence that consumers are willing to pay a market premium between 2% and 30% for sustainably produced, certified timber products. Others doubt or flatly deny this notion. Most of these studies are based on willingness-to-pay surveys of consumer demand leaving aside the crucial question whether or not the producers of certified logs, which bear the costs of forest certification, obtain a financial reward for their efforts. The paper contributes quantitative evidence to the on-going debate. Time series of prices of certified and uncertified logs (2000 to 2004) provided by three forest management units from Sabah, Malaysia, were examined in a comparative analysis (ANOVA) of 6 species groups. The results suggest that forest management certification achieves a market premium for certified logs. In particular high quality hardwoods (e.g. Selangan Batu, Keruing) destined for the export market fetch a price premium of 27% to 56%. Lower quality timbers (e.g. Kapur, Seraya) also fetch a price premium, however the difference is less pronounced (2% to 30%).