The Global Witness report says sand dredging has negative impacts on the environment.
The locals told investigators that the dredging already has damaged Cambodia's coastal ecosystem.
Global Witness reported that at least 790,000 tons of sand from the coast are monthly shipped out.
Europe is seeking cooperation between Cambodia and other Asian countries to eliminate illegal trade in forest products by 2013.
A World Bank report on illegal logging in 2006 said annual global losses from illegal cutting were more than $10 billion.
The agreement, signed Tuesday afternoon, includes cooperation in evaluating future business opportunities.
The report warns that failure to disclose information make solving problems difficult.
Soth Sophal decided to use his skills as a woodsman to guide tourists.
The elephants destroy crops and homes as they look for food. And sometimes they attack. In turn, people sometimes strike back.
Confrontation between farmers and wild elephants was partially solved.
The UN Food and Agricultural Organization estimates that Cambodia lost 29 percent of its primary forest cover between 2000 and 2005.
Arrests are continuing in a sweep of border provinces where illegal logging still takes place.