The Post-Staples State: The Political Economy of Canada’s Primary Industries

Chapter IX: “The Post-state Staples Economy: The Impact of Forest Certification as a NSMD (NSMD) Governance System” – Benjamin Cashore (Yale), Graeme Auld, James Lawson, and Deanna Newsom101

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Chapter IX: “The Post-state Staples Economy: The Impact of Forest Certification as a NSMD (NSMD) Governance System” – Benjamin Cashore (Yale), Graeme Auld, James Lawson, and Deanna Newsom101


Virtually all of the literature on Canada as a “staples state” has focused on two related topics: the impact of a historically staples-based economy on the development of the Canadian state’s structure, function and policy outcomes; and, given these historical influences, the ability and capacity state officials might have to veer Canada off this “hinterland” pathway by facilitating a more diversified and industrialized Canadian economy less dependent on the US “metropole”. While these foci are important, the dramatic arrival in the 1990s of Non-State Market Driven (NSMD) governance systems that focus largely on regulating staples extracting sectors such as forestry, fisheries, and mining, has raised three important questions for students of the staples state. First, what impact do non-state forms of governance have on the ability of state actors to promote the development of a post-staples state? Second, can non-state forms of governance address policy problems (such as environmental and social regulations governing resource exploitation) in ways that a staples and/or post staples–state have proven unable? Third, and arguably most importantly, ought scholarship on the staples state (reviewed in Wellstead’s
Chapter) confront its underlying assumption that power and authority have a state based territorial logic? The answer to this last question deserves careful reflection – since NSMD governance systems are granted authority to create policy, in the first instance, from markets that do not conform to traditional state-centred territorial boundaries.

This chapter addresses these questions by carefully exploring the development of “forest certification”, the most advanced case of NSMD governance globally, in the Canadian forest sector. We assess support among industrial forest companies and environmental groups for creating a policy arena devoid of state authority, and the role of traditional public policy processes in influencing these evaluations. Following this introduction, a second section identifies the emergence of forest certification in its global and Canadian contexts. A third section outlines the key features of forest certification that render it a form of NSMD governance. This section identifies how certification draws on both the market’s non-territorial unit of analysis in the first instance, and then on a geographic unit of analysis for building support and specific regulations. A fourth section identifies how certification emerged in British Columbia and the Maritimes, as fierce battles between and within certification programs occurred over efforts to determine the role and scope of forest certification in regulating forest staples extraction. The chapter concludes by reflecting on the role of NSMD systems in providing a new arena in which to regulate staples extraction, and how they might intersect with traditional public policy approaches.

Emergence of Forest Certification and its Two Conceptions of Non-State Governance

A number of key trends have coalesced to produce increasing interest in NSMD governance systems generally and within forestry specifically. The first trend can be traced to the increasing attention placed on a country’s foreign markets in an effort to influence domestic policy (Risse-Kappen 1995; Keck and Sikkink 1998), a process Bernstein and Cashore (2000) refer to as internationalization.2 Market-based campaigns often deemed these easier than attempting to influence domestic and international business dominated policy networks. The second trend is the increasing interest in the use of voluntary-compliance and market mechanisms (Harrison 1999; Tollefson 1998; Prakash 1999; Gunningham, Grabosky, and Sinclair 1998; Webb 2002). At the international level Bernstein (2002) has noted that a norm complex of "liberal environmentalism" has come to permeate international environmental governance, where proposals based on traditional command and compliance "business versus environment" approaches rarely make it to the policy agenda (Esty and Geradin 1998). In this context, Speth (2002) and others have argued that business-government and business-environmental group partnerships have created the most innovative and potentially rewarding solutions to addressing massive global environmental problems. A third trend can be traced to increased concern beginning in the 1980s among environmental groups and the general public about tropical forest destruction. Boycotts were launched, and a number of forest product retailers, such as B&Q in the UK, Ikea in Sweden, and Home Depot in the US, paid increasing attention to understanding better the sources of their fiber and whether their products were harvested in an environmentally friendly manner. The final trend favoring an interest in NSMD environmental governance in the forest sector can be traced to the failure of the Earth Summit in 1992 to sign a global forest convention (Humphreys 1996). Indeed, participation in the forestry PrepComs for the Rio Summit led many officials from the world's leading environmental NGOs to believe that Rio would either produce no convention or a convention that would look more like a "logging charter."

Two Conceptions of Forest Certification

By 1992, ongoing frustration with domestic and international public policy approaches to global forest deterioration created an arena ripe for a private sector approach. But unlike voluntary self-regulating programs in which business took the initiative in their creation (Prakash1999), transnational environmental groups took the lead in creating certification institutions. In the case of forestry, the World Wide Fund for Nature (WWF) spearheaded a coalition of environmental and socially concerned environmental groups, who joined with select retailers, governmental officials, and a handful of forest company officials to create the international Forest Stewardship Council (FSC). Officially formed in 1993, the FSC turned to the market for rule making authority by offering forest landowners and forest companies who practiced “sustainable forestry” (in accordance with FSC policies) an environmental stamp of approval through its certification process, thus expanding the traditional “stick” approach of a boycott campaign by offering “carrots” as well.

Table. 1.2, Conceptions of forest sector NSMD certification governance systems

Table 1: Different Conceptions

Conception One

Conception Two

Who participates in rule making

Environmental and social interests participate with business interests


Rules – substantive



Rules – procedural

To facilitate implementation of substantive rules

End in itself (belief that procedural rules by themselves will result in decreased environmental impact)

Policy Scope
Broad (includes rules on labor and indigenous rights and wide ranging environmental impacts)

Narrower (forestry management rules and continual improvement)

Source: Cashore (2002)

The FSC created nine “principles” (later expanded to 10) and more detailed “criteria” that are performance-based, broad in scope and that address tenure and resource use rights, community relations, indigenous peoples, workers’ rights, environmental impact, management plans, monitoring and conservation of old growth forests, and plantation management (See Moffat 1998: 44; Forest Stewardship Council 1999). The FSC program also mandated the creation of national or regional working groups to develop more specific standards based on the broad principles and criteria.

The FSC program is based on a conception of NSMD governance that sees private sector certification programs forcing upward sustainable forest management (SFM) standards. Perhaps more important than the rules themselves is the FSC “tripartite” conception of governance in which a three-chamber format of environmental, social, and economic actors, each with equal voting rights, has emerged. At the international level each chamber is itself divided equally between North and South representation (Domask 2003). Two objectives were behind this institutional design. The first was to prevent business dominance in policy-making processes in the belief that this would encourage the development of relatively stringent standards, and facilitate on-the-ground implementation. The second was to ensure that the North not dominate at the expense of the South – a strong criticism of the failed efforts at the Rio Earth Summit to achieving a binding global forest convention (Domask 2003; Meidinger 1997; Meidinger 2000).102

The lumping together in one chamber those economic interests (i.e., companies and non-industrial forest owners) who must actually implement SFM rules with companies further along the supply chain who might demand FSC products has been the source of much controversy and criticism. It has negatively affected forest owners evaluations of the FSC (Sasser 2002; Rametsteiner 1999) and encouraged the development of “FSC alternative” certification programs offered in all countries in North American and Europe where the FSC has emerged. In the US, the American Forest and Paper Association created the Sustainable Forestry Initiative (SFI) certification program. In Canada, the Canadian Standards Association (CSA) program was initiated by the Canadian Sustainable Forestry Certification Coalition, a group of 23 industry associations from across Canada (Lapointe 1998). And in Europe, following the Swedish and Finnish experiences with FSC-style forest certification, an “umbrella” Pan European Forest Certification (PEFC) system (renamed the Program for the Endorsement of Forest Certification in 2003) was created in 1999 by European landowner associations that felt especially excluded from the FSC processes.

In general, FSC competitor programs originally emphasized organizational procedures and discretionary, flexible performance guidelines and requirements (Hansen and Juslin 1999: 19). For instance, the SFI originally focused on performance requirements, such as following existing voluntary “best management practices” (BMPs), legal obligations, and regeneration requirements. The SFI later developed a comprehensive approach through which companies could chose to be audited by outside parties for compliance to the SFI standard, and developed a “Sustainable Forestry Board” independent of the AF&PA with which to develop ongoing standards. And similar to the SFI, the CSA focus began as “a systems based approach to sustainable forest management” (Hansen and Juslin 1999: 20) where individual companies were required to establish internal “environmental management systems” (Moffat 1998: 39). The CSA allows firms to follow criteria and indicators developed by the Canadian Council of Forest Ministers, which are themselves consistent with the International Organisation for Standardization (ISO) 14001 Environmental Management System Standard and include elements that correspond to the Montreal and Helsinki governmental initiatives on developing criteria and indicators for sustainable forest management. (While more flexible and discretionary than FSC on environmental performance requirements, some industry officials assert that the CSA is as rigorous on rules for community consultation and a multi-stakeholder standards development process than the FSC’s requirements).

The PEFC is itself a mutual recognition program of national initiatives and draws on criteria identified at the Helsinki and Lisbon Forest Ministers Conferences in 1993 and 1998, respectively (PEFC International 2001). National initiatives are not bound to address the agreed upon criteria and indicators (Ozinga 2001), as the PEFC leaves the development of certification rules and procedures to the national initiatives. A PEFC Secretariat and Council that tends to be dominated by landowners and industry representatives determine the acceptance of national initiatives into the PEFC recognition scheme (Hansen and Juslin 1999). From the start, the program was explicitly designed to address forest managers’ universal criticisms that the FSC did not take sufficient account of private landowners’ interests.

These FSC-competitor programs initially operated under a different conception of NSMD governance than does the FSC: one that is grounded in the belief that business interests ought to strongly shape rule-making, with other nongovernmental and governmental organizations acting in advisory, consultative capacities. Underlying these programs is a strongly held view that there is incongruence between the quality of existing forest practices and civil society’s perception of these practices. Under the SFI, CSA, and PEFC conceptions, certification is, in part, a communication tool that allows companies and landowners to better educate civil society. With this conception procedural approaches are ends in themselves, and individual firms retain greater discretion over implementation of program goals and objectives. This conception of governance draws on environmental management system approaches that have developed at the international regulatory level (Clapp 1998; Cutler, Haufler, and Porter 1999).

Table 2: Comparison of FSC and FSC competitor programs in Canada





Environmental groups, socially concerned retailers



Types of Standards: Performance or Systems-based

Performance emphasis


Territorial focus




Third party verification of individual ownerships




Chain of custody




Eco-label or logo

Label and Logo

Logo, label emerging


Source: Cashore, Auld and Newsom, (2004)
Terms: Performance-based refers to programs that focus primarily on the creation of mandatory on the ground rules governing forest management, while systems-based refers to the development of more flexible and often non-mandatory procedures to address environmental concerns. Third Party means an outside organization verifies performance; Second Party means that a trade association or other industry group verifies performance; First Party means that the company verifies its own record of compliance. Chain of Custody refers to the tracking of wood from certified forests along the supply chain to the individual consumer. A logo is the symbol certification programs use to advertise their programs and can be used by companies when making claims about their forest practices. An eco-label is used along the supply chain to give institutional consumers the ability to discern whether a specific product comes from a certified source.

Key Features of NSMD Environmental Governance

Six key features distinguish NSMD governance from other forms of public and private authority. The most important feature of NSMD governance is that there is no use of state sovereignty to enforce compliance. The Westphalian sovereign authority that governments possess to develop rules and to which society more or less adheres (whether it be for coercive Weberian reasons or more benign social contract reasons), does not apply. There are no popular elections under NSMD governance systems and no one can be incarcerated or fined for failing to comply. Rather, a private organization develops rules designed to achieving pre-established objectives (sustainable forestry, in the case of forest certification).

Table 3: Key Features of NSMD governance

Role of the state

State does not use its sovereign authority to directly require adherence to rules

Institutionalized governance mechanism

Procedures in place design to created adaptation, inclusion, and learning over time across wide range of stakeholders

The social domain

Rules govern environmental and social problems

Role of the market

Products being regulated are demanded by purchasers further down the supply chain

Role of stakeholders and broader civil society

Authority is granted through an internal evaluative process


Compliance must be verified

Source: Cashore (2002) and Bernstein and Cashore (2004)

A second feature of NSMD governance is that its institutions constitute governing arenas in which adaptation, inclusion, and learning occur over time and across a wide range of stakeholders. The founders of NSMD approaches, including forest certification, justify these on the grounds that they are more democratic, open, and transparent than the clientelist public policy networks they seek to replace. A third key feature is that these systems govern the “social domain” (Ruggie 2003)– requiring profit-maximizing firms to undertake costly reforms that they otherwise would not pursue. This distinguishes NSMD systems from other arenas of private authority, such as business coordination over technological developments (the original reason for the creation of the International Organization for Standardisation) that can be explained by profit seeking behavior in which reduction of business costs is the ultimate objective. To be sure, these arenas are important, but they are very different beasts, with very different authority mechanisms, than NSMD systems.

The fourth key feature is that the various stakeholders, including environmental groups, companies, and landowners, make their own evaluations about whether to grant authority to these news systems. These evaluations are affected or empowered by the fifth key feature of NSMD governance: authority is granted through the market’s supply chain. Much of the FSC’s and its domestic competitors’ efforts to promote sustainable forest management (SFM) are focused further down the supply and demand chain toward those value-added industries that demand the raw materials, and ultimately, toward retailers and their customers (Bruce 1998: chapter 2; Moffat 1998: 42-43). While landowners and forest companies may be appealed to directly with the lure of a price premium or increased market access, environmental organizations may act through boycotts and other direct action initiatives to convince large retailers, such as B&Q and Home Depot, to adopt purchasing policies favoring the FSC, thus placing more direct economic pressure on forest managers and landowners. The sixth key feature of NSMD governance is the existence of verification procedures designed to ensure that the regulated entity actually meets the stated standards. Verification is important because it provides the validation necessary for certification program to achieve legitimacy, as certified products are then demanded and consumed along the market’s supply chain. This final feature distinguishes NSMD systems from many forms of corporate social responsibility initiatives that require limited or no outside monitoring (Gunningham, Grabosky and Sinclari 1998: Chapter Four).

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