The study, carried out by Forest Trends, also finds that the majority of this illegal destruction was driven by overseas demand for agricultural commodities including palm oil, beef, soy, and wood products.
"We've known that the production of agricultural commodities is a principal driving force behind deforestation, but this is the first report to show the outsize role that illegal activities play in the production of hundreds of food and household products consumed worldwide," said Michael Jenkins, President and CEO of the Washington-based NGO.
“Urgent action is needed to help countries where these agricultural products are being grown, both for governments to enforce their own laws and regulations, and for businesses aiming to produce commodities legally and sustainably."
According to the study, in the forests of Indonesia, 80% of deforestation was illegal, mostly for large-scale plantations producing palm oil and timber, 75% of which is exported.
Illegal deforestation is also a problem in most other countries across Asia, Latin America, and Africa losing large areas of tropical forest.
According to the report, the international trade in agricultural commodities produced on land illegally converted from tropical forest is worth an estimated US$61 billion per year.
The EU, China, India, Russia, and the US are among the largest buyers of these commodities.
The study estimates that almost 40% of all palm oil and 20% of all soy traded internationally comes from land that had been illegally deforested. Nearly 70-80% of the palm oil and plantation wood and pulp from Indonesia were destined for foreign markets.
"There is hardly a product on supermarket shelves that is not potentially tainted," adds Lawson. Forest Trends says the report highlights that urgent action is needed.