Development & Aid, Environment, Tierramerica

Going Beyond the Carbon Market

MONTEVIDEO, Mar 29 2009 (IPS) - It is true that the carbon market has favored corporations more than developing countries, admits John Nash, the World Bank's lead economist for Latin America and the Caribbean.

With an incisive report in hand about the future of Latin America and the Caribbean if action is not taken to fight climate change, economist John Nash defends the role of the World Bank and underscores the need to expand what are known as “clean development mechanisms.”

Nash, the World Bank's lead economist for the region, set out a dramatic scenario for what will come about if there is no agreement reached to replace the Kyoto Protocol on climate change — a treaty that has been in force since 2005 and expires in 2012.

A new treaty is the goal of the Conference of Parties to the United Nations Framework Convention on Climate Change, a 10-day event to take place in December in Copenhagen.

The clean development mechanism (CDM), as laid out in the Kyoto Protocol, must be expanded, including a program for reducing carbon emissions caused by deforestation and forest degradation (REDD) that extends the trade of carbon credits, said Nash.

The CDM allows governments and companies from the industrialized North to surpass their greenhouse gas emissions limits in exchange for investing in “clean” projects in the developing South.

In the negotiations “we are going to take indigenous rights into full account,” Nash told Tierramérica in an interview in Montevideo, where he presented the report he co-authored, “Low Carbon, High Growth: Latin American Responses to Climate Change.”

As a result of climate change, farming in the region could collapse, with a reduction of 12 to 50 percent in South America by 2100, says the report. The Andean glaciers could disappear in the next 20 years due to rising temperatures, and the area covered by tropical forests could shrink 20 to 80 percent.

TIERRAMÉRICA: How did governments respond to this report?

JOHN NASH: In general, satisfactorily. The most important doubt that some proposed was about the message that the developing world should participate in efforts to reduce emissions when “it's a problem created by the rich countries.”

We understand that point of view very well. But many steps can be taken that are not incompatible with growth and plans to fight poverty.

TIERRAMÉRICA: What is your assessment of the carbon market?

JN: Nobody expected that those markets would be the total solution to the problem. The intent was to establish a series of pilot programs. The plan has been more or less successful, but the reductions resulting from those markets are not on a scale that can affect the agreed goals.

The Clean Development Mechanism must be expanded, including actions to prevent deforestation and to promote sector-based programs and policies that can achieve the scale of emissions reductions that we need.

TIERRAMÉRICA: How do you respond to criticisms that the carbon market has favored corporations more than developing countries?

JN: They are right. The green credits can satisfy the companies' requirements without reducing their emissions in their countries of origin, which is why the wealthy nations must take action. It must be established that they take on their own reduction commitments, particularly the United States.

TIERRAMÉRICA: One proposal for expansion is the Reduced Emissions from Deforestation and Forest Degradation (REDD). What is the World Bank's position?

JN: We recognize the importance of that proposal and so we have established this mechanism, which has two parts. One is support for governments, for which 20 developing countries have been chosen, 10 of them in Latin America and the Caribbean. The World Bank will provide technical assistance for pilot programs to prepare for the post-Kyoto regime.

But each country has its own strategy as well. We support the right of each State to follow its own path. As such we will have a variety of experiences, which will probably help in the selection of which are the best.

The other part is a mechanism to finance concrete anti-deforestation development projects.

TIERRAMÉRICA: Among the criticisms is the lack of participation of indigenous peoples, the native inhabitants of the affected areas.

JN: The World Bank has safeguard policies, which should be followed in preparing each project, and one is to protect the indigenous peoples. In this process of post-Kyoto preparation, we are going to take the rights of those communities into full account.

I believe there won't be inconsistencies. In many cases, the most effective way to protect forests is to create a system of land possession for the communities who live in those areas.

TIERRAMÉRICA: Precisely, one of the criticisms is the lack of ownership titles in those areas…

JN: Yes, to date one of the things fueling deforestation is that nobody has ownership of the land and so companies come to exploit the resources. I hope that in the future an ownership system is created for those communities, as a mechanism for protecting the forests. In that way we will put an end to that problem.

TIERRAMÉRICA: In the REDD framework there can be programs for investing in forestry for industrial purposes, such as plantations for producing paper. Does the World Bank see this as a risk?

JN: The Bank finances those projects in the private sector, it's true. But, although it's not my area, I know that there are safeguard policies as well, and they are very careful about the possible negative environmental and social effects of the plans they finance.

TIERRAMÉRICA: Do you think a new climate agreement will finally be reached in Copenhagen?

JN: I think so… if not there won't be a next meeting.