Nicaragua, like much of Central America, is high in biodiversity but is among the poorest nations in Latin America, with nearly 80 percent of the population surviving on less than two dollars a day.[i] Despite the fact that nearly 22 percent of the country’s forestland is under protected statues, between 1990 and 2000 the country experienced a 26 percent decrease in total forest area -- an estimated annual deforestation rate of between 70,000 and 100,000 hectares per year. [ii] Of the country’s original forest cover, only 25 percent remains intact today.

Nicaragua’s fragile democracy, combined with failing state and governmental institutions and high poverty rates, has allowed for rampant illegal logging. It is estimated that 50 percent of the hardwood production and 40 to 45 percent of the pine-wood production in Nicaragua is illegal.[iii] Much of the remainder of the wood has been ‘laundered,’ or mixed with legally cut lumber, and thus is considered legal despite being obtained illicitly.[iv] While illegal logging is not as entrenched and sophisticated as in Honduras, it is equally fueled by corruption and abuse on the part of government officials, local governments, and private businesses.

Despite the progress in the democratization process of the country, through free and fair elections, key state institutions – the Supreme Court of Justice, the National Assembly and the Supreme Electorate Council – continue to be plagued by political polarization, overall perception of corruption and lack of transparency in public administration. Nicaragua received a ranking of only 2.6 in Transparency International’s 2005 corruption perception index, with 0 being most corrupt and 10 being most transparent. Moreover, Nicaragua’s institutional framework and policies to protect natural resources are weak and ineffective, thus creating loopholes and opportunities for corruption and leaving rural communities and organizations vulnerable. The situation is complicated by the contradictory nature of the environmental and natural resource laws, overlapping responsibilities, and laws requiring central and municipal government cooperation without designating mechanisms for doing so.[v] Finally, conflicts between the numerous stakeholders involved over rights to the control, access, ownership, use, and commercialization of forest resources are abundant. These conflicts often result in the breakdown of community networks and stability and can lead to violence.

Illegal logging affects all aspects of Nicaragua’s economy. “The financial flows associated with illegal logging add to the informal sector and encourage speculative (e.g. real estate), shady and illegal investments.”[vi] The government loses about US$2.2-4.0 million per year in direct fiscal losses such as tax forest fees, municipal revenues, and income.[vii] If factors such as misuse of forest resources, bribes and forest fires are taken into account, the overall loss due to illegal logging in Nicaragua has been estimated at $100 million a year.[viii] Lost revenues tend to have the highest effect on the lowest income communities, and these communities are the most vulnerable to the disintegration of justice in rural areas.

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[i] UNDP Human Development Report 2005

[ii] http://www.earthtrends.wri.org

[iii] Richards, W. et al. Impacts of illegality and barriers to legality: a diagnostic analysis of illegal logging in Honduras and Nicaragua.

[iv] www.talilegal-centroamerica.org

[v] Larson, M. “Municipal forest management in Nicaragua: decentralized burdens, centralized benefits?” Retrieved 03.29.06 from www.idrc.ca

[vi] Ibid.

[vii] Richards, W. et al. Impacts of illegality and barriers to legality: a diagnostic analysis of illegal logging in Honduras and Nicaragua.

[viii] Denis Pomier, Barriers to legal compliance and good governance in the forestry sector, and impacts on the poor in Nicaragua