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ENVIRONMENT: Can the Free Market Slow Deforestation?

Stephen Leahy

BROOKLIN, Canada, Oct 24 2006 (IPS) - Tropical forests’ ability to store carbon dioxide and mitigate climate change makes them more valuable than alternative uses like pasture or lumber, and rich countries ought to pay tropical countries to preserve their forests, the World Bank says.

However, some environmentalists caution that while reducing deforestation is vital, a so-called carbon trading system is the wrong approach and too complicated to implement.

The world’s tropical forests have been shrinking at a rate of five percent per decade since the 1950s. In the past five years, more than 50 million hectares of tropical forest have been lost – an area nearly the size of France. Aside from the loss of biodiversity, destruction of ecosystems and other negative impacts, deforestation is a major source of human-made emissions of climate-altering greenhouse gases (GHGs).

In fact, deforestation contributes almost twice as much GHGs as does all road transport around the world.

“The trees are worth more alive, storing carbon, than they would be worth if burned and transformed to unproductive fields,” said Kenneth Chomitz, lead author of the World Bank report released Monday.

“A Brazilian rancher clearing a hectare of prime Amazonian forest for a pasture worth 300 dollars releases 500 tonnes of carbon dioxide into the atmosphere as the trees burn and rot,” Chomitz told IPS.

But on the European carbon trading market, where carbon is worth 15 dollars per tonne, that hectare of forest left standing is a 7,500-dollar asset.

In other words, European industry pays 15 dollars to offset each tonne of their carbon dioxide emissions so that they can meet their international emission quotas. A wind farm, which produces no emissions, can sell carbon credits.

“In clearing the forest the rancher is destroying a 7,500-dollar asset to create one that’s worth 300 dollars,” he said. “We ought to be clever enough to figure out a way to compensate landowners and national governments for preserving the carbon in their forests.”

The Kyoto Protocol’s “Clean Development Mechanism” (CDM) allows member countries to meet their reduction targets by funding emissions cuts elsewhere and helping developing countries reduce their carbon emissions. However, although reforestation is part of the CDM, preventing or avoiding deforestation is not allowed.

“It’s a big asymmetry in the Protocol,” Chomitz said. “Tropical forests are being cut down while tree planting for carbon credits goes on next door.”

If developing nations could obtain income from reducing deforestation, they could use the money to preserve forests and stimulate more productive agriculture on poor quality land, he says.

Costa Rica and Papua New Guinea have already asked the United Nations Framework Convention on Climate Change to examine incentives for countries to avoid deforestation through forest carbon credits, says the Bank’s “At Loggerheads?” report.

The Bank estimates the value of carbon traded in 2005 to be about 10 billion dollars, with a potential to bring much more in new financing for sustainable development in the South.

The issue is expected to be a major topic in the United Nations Climate Change Conference in Nairobi in mid-November, says Chomitz.

It will be a hotly debated issue.

Many environmentalists have long opposed the idea of trading “brown carbon” from coal plants for “green carbon” in forests, says Bill Barclay, global finance campaigner with the Rainforest Action Network, an environmental group with offices in San Francisco and Tokyo.

“We shouldn’t be trading one for the other, they aren’t the same thing,” Barclay told IPS.

Carbon emissions from fossil fuels are essentially permanent, remaining in the atmosphere for hundreds of years. Carbon in forests is dynamic – a forest fire, flood or disease outbreak can kill the trees, releasing all that carbon into the atmosphere.

While it is tempting to finance forest preservation through carbon trading markets, it would be very complex to set up a system that measured and monitored the carbon being stored in various tropical forests for decades. Reducing industrial emissions is easier and more effective, he says.

Chomitz acknowledges this difficulty but believes that with GPS and satellite observations, monitoring and enforcement is possible.

Buying cheap “green carbon” credits to offset industrial emissions is an easy way of avoiding doing anything different in the industrialised North, says Barclay. That money would be better invested in new low-carbon technologies. Forests themselves are threatened by climate change, and one-third of the Amazon could be lost according to some projections, he says.

“We need to do both – slow our fossil fuel emissions and reduce deforestation rates. But we’re not doing a very good job of either,” Barclay noted.

The World Bank report also says that poverty alleviation should be part of the carbon trading-forest conservation framework.

“Now is the time to reduce pressures on tropical forests through a comprehensive framework that integrates sustainable forest management into the global strategy for mitigating climate change and preserving biodiversity,” said Katherine Sierra, vice president of sustainable development at the World Bank.

The World Bank report neglects to note that the main driver of deforestation is the consumption of cheap beef, soya, lumber and other products by the rich countries of the North. And Bank policies have played a significant role, such as financing soya farm expansion into the Amazon forest and savannah region in the early 1990s to supply European markets, says Barclay.

Deforestation currently makes a few people rich but the new institutions and technologies of a carbon-trading forest conservation network have the potential to counter that, maintains Chomitz.

A better approach would be for industrialised governments to put money into a fund that would compensate national governments for reducing the overall rate of deforestation in their countries, he said.

“Reducing deforestation provides a host of benefits including preservation of biodiversity as well as reducing carbon emissions,” Chomitz said, adding that tackling the causes of deforestation would also go a long towards solving the problem.

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