Forests for the Trees

Catalyst / by Maywa Montenegro & Veronique Greenwood /

Five experts discuss paying countries to keep forests intact, what role carbon markets should play, and how to protect the people whose lives depend on trees.

The Catalyst: Driving Reactions to Issues in the News

How Best To Curb Deforestation?
Our Panel Responds:

Experts estimate that the logging and burning of trees is responsible for at least 20 percent of global carbon emissions. One of the main questions facing global climate negotiators, then, is what should be done about tropical deforestation. The Kyoto Protocol doesn’t address the issue, and many environmentalists would like to see deforestation addressed in a new global climate deal. At the pre-Copenhagen meeting in Bonn, a broad coalition of countries demanded that “Reducing Emission from Deforestation and Degradation” (REDD) be put high on the negotiating agenda.

One much-discussed option is to allow rich countries to offset some of their carbon emissions by paying tropical nations to preserve their forests. A market for these offset credits would provide further funding for REDD initiatives. But funding REDD through markets is controversial: In late March, Greenpeace released a report arguing that tradable forest credits would cause global carbon prices to tumble 75 percent, undermining a key incentive for the development of clean technologies. Avoided deforestation, they fear, will essentially give rich nations a mechanism to avoid making costlier emission reductions at home.

Tropical Wealth. Potential annual earnings from avoided deforestation, by country (in $millions). All information was taken from “State of the World’s Forests 2007,” a publication of the UN Food and Agriculture Organization (FAO). Values were calculated assuming $37.5 per metric ton of CO2 equivalent.

Britain’s Prince Charles, meanwhile, has recently proposed an alternative route to saving the trees. At the G-20 summit in London, he convened a side meeting to announce the results of an 18-month study commissioned by the Prince’s Rainforests Project (PRP). The study suggests rainforest nations could sign contracts committing to reduce deforestation to agreed levels, and in return, they would receive annual payments from donor nations only if satellite pictures confirm that forests remain intact. Crucially, the exchange would involve no credits that donor countries could use to offset their own emissions.

The stakes have been ratcheted higher with a study, published April 13 in PNAS, that for the first time quantified the effects of drought on tree mortality: At temperatures 4°C above average, water-deprived pines died 28 percent faster than control pines. Global warming begets deforestation, which, in turn, begets further warming.

Hardly anyone disputes that keeping the world’s forests intact is vital to the future of the planet. But should we follow Prince Charles’ lead and subsidize the preservation of forests’ ecosystem services or should we build a market for tradable credits? Is there a better way? What sorts of issues and concerns come up for climate scientists, indigenous groups, environmentalists, and governments on both sides of the exchange?

A Question of Equity

Amity Doolittle is the program director of the Yale Tropical Resources Institute. She studies land tenure and disputes in tropical societies.

Ultimately the debate should not be markets versus funds; both approaches are needed. The question is: Under which circumstance is the market more beneficial for those involved in REDD projects, and when is a fund-based approach more beneficial?

Let’s look at one scenario that would call for a fund-based approach. For many communities, concerns over governance issues, particularly land rights, is at the center of the REDD debate. In most developing countries, property rights and tenure regimes are not well articulated. Often vast swaths of land are considered state property, available for timber or plantation development, despite the fact that local communities may have subsisted on the land and its forest resources for centuries. Most forest-dependent people are unable to get private titles to their land because they lack the financial resources for the survey, do not have access to the information needed, or are actively relocated by their governments to make way for the timber or plantation development. And where native customary law may appear strong in national legislation, it can be extremely weak in practice.

Malaysia is generally considered to have strong recognition of native land rights both on paper and on the ground. However, in Sabah, Malaysia, many native agriculturalists do not have legal title to the land that has been in their families for generations. Most native farmers, who cannot afford a private surveyor, must wait an average of 20 years (and up to 50 years) before the state surveyor makes it to their land to register their claim.

Given the lack of clarity regarding land tenure, when market-based REDD projects negotiate with governments like Malaysia to purchase carbon offsets, it would be surprising if the government did not continue to overlook native land claims. And what will happen to the native communities farming the land? Will they be given factory jobs? Will they be relocated to work on an oil palm plantation? Will they become squatters on land elsewhere in the region? All of these scenarios are likely and, in fact, have happened in past clashes between native peoples, the government, and companies requesting large land concessions. In this scenario I can see a marked advantage of a fund-based approach, which could work at the project level, determining what structural obstacles might exist that would result in local land conflicts or inequitable distribution of benefits and ultimately in the destabilization of the project. Establishing secure rights to land should be the first step in any sort of project and, from that point, equitable allocation of the benefits can be more easily determined. In the short term, this approach will not be as efficient as a market-based mechanism, but in the long term, in scenarios such as this one, attention to equity and land rights will prove to be the key to a successful project.

To Offset or Not To Offset

Rhett A. Butler is the founder of, a resource on tropical forests and deforestation named by Time magazine as one of the top fifteen environmental websites.

The crux of the issue is really the fungibility of credits—whether industrialized countries can use carbon credits to “offset” their emissions. Critics say offsets will let industrialized countries off the hook for their emissions without effectively reducing the risk of global warming. Supporters say offset concerns can be addressed through strong national limits (caps) that will force real reductions in greenhouse gas emissions on a global scale but provide flexibility. Such flexibility would allow nations to shift emission cuts to sectors where they will inflict less economic damage without flooding the carbon market with cheap credits and undermining the price incentive for the development of low-carbon technologies.

Although the issue is far from settled, consensus seems to be building around a phased approach that could accommodate both markets and aid. In the early years financing would be generated by auctioning of emission allowances, fuel surcharges, or development aid offered by governments and entities like the World Bank and the UN. The money would be used for development of national REDD strategies, capacity building, and demonstration projects in REDD-eligible countries, as well as consultation with stakeholders (including indigenous people) and reform of land tenure and forestry laws. As countries reach “REDD readiness,” or the capacity to monitor and verify emissions reductions against reference levels, they would transition toward market or non-market compliance mechanisms that could generate funding needed to effectively reduce deforestation, estimated variously from $10 to $30 billion per year.

However, talk about any mechanism remains academic until there is a binding global treaty on regulating greenhouse gas emissions. Failure to secure a climate agreement in Copenhagen in December will delay progress on REDD, extending the window for continued destruction of tropical forest ecosystems. The US will play a critical part in negotiations; without serious US commitment to substantial reductions in emissions, there will be no climate deal in Copenhagen. Recent backsliding on the Waxman-Markey bill (including cutting emissions targets from 20 percent to 17 percent below a 2005 baseline) is not an encouraging sign for forests or global climate, despite prominent provisions for REDD in the proposed legislation.

The Argument for the Bonds Approach

Tony Juniper is a special adviser to the Prince’s Rainforests Project.

While it is widely hoped that a market in standing forest carbon will one day mobilize considerable sums, this is unlikely to deliver large-scale finance in less than 10 years. An interim measure is needed. The Prince’s Rainforests Project has reviewed all of the likely funding sources and has proposed that the major developed economies could collectively mobilize the billions needed via the allocation of “rainforest bonds.” These would be similar to the instruments that governments routinely issue to raise money for public investments, but in this case the money would be earmarked to stop deforestation.

Private sector investors, such as insurance companies and pension funds, would buy the bonds, and they would receive a modest rate of interest for the use of their money for the lifetime of the bonds—most likely 10 to15 years. At the end of that period, in addition to earning interest, they would get their money back from the governments who raised the bonds. In the meantime, the funds would be used to cut deforestation.

As for how the developed countries would repay the bonds, a range of options are available. One would be to introduce a Tobin tax on currency transactions, another would be to charge a small levy on insurance premiums, thereby helping that industry to contribute to the emissions reductions that are necessary for securing its future. Levies could be introduced on aviation fuel, while revenues from the auction of emissions permits under cap-and-trade schemes could also deliver billions.

An Outsider’s Perspective

William Laurance is a tropical ecologist at the Smithsonian Tropical Research Institute.

Tropical forests are being razed at a rate of around 50 football fields a minute, leading to massive carbon emissions that are worsening global warming. We simply must something about this. The question is what.
Though I don’t have a dog in this fight, the following is my opinion as an informed observer.

Greenpeace is concerned that market-based REDD schemes—using carbon-trading to conserve tropical forests—will flood the market with carbon credits, depressing their price and thus reducing incentives for developing new green technologies. However, the proponents of REDD seem well aware of this danger, and have various plans in place to minimize it. For instance, they believe they can scale up REDD projects gradually to avoid flooding the market and develop a fund structure that encourages market stability. I agree with Greenpeace on many issues, but in this case I think they risk throwing the baby out with the bathwater.

One has to admire the vision and commitment of Prince Charles, but I have doubts that his plan could provide a serious alternative to market-based REDD. The main problem is that it relies entirely on donations from wealthy nations. In a carbon market, wealthy nations get something tangible for their money, in this case carbon credits that they can use to help meet their international obligations to reduce their emissions. 

The Prince’s Rainforests Project, however, relies on altruism. I hate to sound cynical, but in today’s economic climate, it’s hard to see this idea having huge traction. Nations like Norway—which has already shown enormous generosity and leadership in supporting REDD—might donate to a scheme like this, but I doubt that many other wealthy nations would, at least not on the scale needed to seriously combat rampant deforestation. 

That having been said, there is one thing I really like about the Prince’s scheme: It will start working right away. REDD market schemes could take some years to implement, but the Prince’s plan could jump-start forest conservation immediately. If I were Bill Gates or the CEO of a wealthy corporation, I’d give the Prince’s Rainforests Project some serious thought.

Either Way, Keep These Principles in Mind

William Barclay leads Rainforest Action Network’s research team, focusing on forests, coal financing, and climate policy.

There is widespread recognition that keeping the world’s forests intact is vital to the future of the planet, yet few parties seem to be willing to sacrifice much to make it happen. Prince Charles and Greenpeace are both attempting to find savvy ways to push the discussion beyond the lowest common denominator approach that most countries are offering on the way to Copenhagen. Both are also making the point that saving forests needs to be an urgent priority, one that can’t wait until 2012 or 2032.

Developed countries undoubtedly need to support developing countries to maintain their forest cover while providing a workable and equitable framework to achieve real reductions in deforestation. But such an unprecedented global mechanism to protect the world’s remaining forests can’t be a simple one-size-fits-all process. What works for Indonesia may not work for Brazil or other tropical rainforest countries. To succeed, whether the funding source is bonds or markets, we will need to keep several key principles firmly in mind:

  • Definitions matter. The current UN definition of forests fails to distinguish between natural rainforests and plantations. Continuing this definition for future negotiations is dangerous; it would encourage the conversion of natural forests into tree plantations, securing large carbon payments while still claiming to have avoided deforestation. As plantations store as little as 20 percent of the carbon that intact natural forests do, a poor definition could actually accelerate climate change.
  • Forests are not factories. Carbon emissions from fossil fuel—or “brown carbon”—are relatively simple to calculate and we can be fairly confident in the estimates. By comparison, calculating carbon from forest ecosystems—or “green carbon”—is much more difficult. Changes in weather patterns, such as those from El Nino events, can shift entire forest landscapes from large carbon sinks into massive carbon sources from one year to the next. Accurate rainforest monitoring and verification systems present many unique challenges and are not yet in place. To create a strong system, emissions from green carbon and brown carbon must both be reduced, but they cannot be treated equally.
  • Rights must be respected. The World Bank estimates that around 1.6 billion people worldwide depend on forests for their livelihoods. Struggles to protect forests in the past prove that these people are the best forest stewards. Unfortunately, local communities are often pushed out of the game as corporations pursue land grabs and inside deals with governments. A working forest mechanism that includes local voices, respects indigenous peoples’ rights, and recognizes customary land rights is most likely to be successful in protecting forests and equitably distributing benefits. 
  • There is no magic exit from mandating deep fossil fuel emission reductions. Carbon offset mechanisms mainly serve to subsidize fossil fuel emitters in developed countries to continue business as usual. Offset mechanisms can quickly become an obstacle to achieving the required total emission reductions needed by 2050. Dedicated funds from auctioning of a small portion of international emission allowances, as proposed by Norway, offers a more effective and durable funding stream to slow deforestation.
  • Industrial country demand is a major driver of deforestation. Deforestation is increasingly driven by the demands of consumers in the developed world, rather than the subsistence needs of the local economy. This direct market demand for timber, plywood, paper products, agricultural goods like palm oil and, increasingly, government mandates for biofuels needs to be addressed for any avoided deforestation mechanism to succeed and avoid shifting deforestation from one region to another.

Originally published June 4, 2009

Tags carbon ecology environment multilateralism policy

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