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Issue 257
November/December 2009
Resilience & Climate Change

Biocultural Diversity

Time for Action
by
A lone Brazilian nut tree (protected in Brazil since 1994) stands amidst land cleared for soya plantations Photograph: Daniel Beltrá/Greenpeace

A lone Brazilian nut tree (protected in Brazil since 1994) stands amidst land cleared for soya plantations Photograph: Daniel Beltrá/Greenpeace

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Time for Action

The kind of leadership that was shown in bailing-out the banks should now be demonstrated to protect the tropical rainforests.

For more than three decades the international community has made different attempts to combat the ongoing challenge of tropical forest clearance. Initial concerns were spurred-on by disappearing wildlife, impacts on forest peoples and the degradation of environmental services such as soil protection and maintenance of clean rivers. But now the debate has moved on. At the heart of the discussion about tropical forests today is the matter of carbon, and how to keep it in the trees and the soils beneath them, and thus out of the atmosphere.

Centre stage in this new discussion are negotiations taking place under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC) through talks on Reducing Emissions from Deforestation and Forest Degradation – or REDD. The aim is to find ways of cutting the vast carbon emissions arising from tropical forest loss through new funding streams to help countries shift towards lower-carbon development pathways – and create some form of market mechanism to stop deforestation.

The discussion has been controversial and intense, with passionately held views on all sides. Some have argued that market mechanisms hold grave risks, for example in potentially undermining the land rights of Indigenous peoples, and through the purchase of cheap ‘forest carbon credits’ enabling industrialised countries to get off the hook in meeting their own targets. Others maintain that, as Western governments face massive national budget pressures, markets offer the only viable way of generating the vast sums of money needed to help slow down forest loss, and that is why, they argue, we need to urgently find the means to trade forest carbon credits in carbon markets.

All the while, however, the forests continue to fall. Some six million hectares of diverse tropical forests are cleared every year. As a result, hundreds of millions of tonnes of carbon dioxide are pouring into the atmosphere. Indeed, the emissions arising from tropical deforestation are today greater than those from the whole transport sector – with an estimated 17% of total emissions arising from human activity, this is more than all the world’s cars, planes and ships combined. When the service provided by the forests in absorbing some 15% of the emissions arising from human activity is taken into account, it becomes clear that any serious attempt to avoid the worst effects of climate change must include a credible attempt to slow down, stop and then reverse tropical deforestation.

Despite the controversy and disagreements, the negotiations currently taking place might put in place at least the foundations for some future market or fund that could ultimately deliver finance at the scale needed to make a serious difference. It is clear, however, that even if an agreement is forged in these negotiations, it will not be possible to generate substantial funds for years, perhaps taking more than a decade to deliver finance at an appropriate scale.

This delay can be expected because of the time it will take to work out all the rules needed to govern the new mechanism, the likely period needed to resolve technical questions (for example, linked to how to measure the carbon held in and under forests) and because of the time it will take many tropical forest countries to establish the capacity to run a new and potentially complex mechanism. During the course of that decade, another sixty million or more hectares of tropical forest could be cleared. This is forest that the world cannot afford to lose, giving rise to the rather important question of what can be done now to slow down the rate of loss.

Since late 2007 the Prince of Wales’ Rainforests Project (PRP) has been seeking answers to this and related questions. One result was published in April 2009 in the form of an Emergency Package for Tropical Forests. Based on nearly eighteen months of research and intense analysis, the project team generated a set of proposals that could mobilise finance immediately, providing tropical countries with the economic space they need to embark on lower-carbon and more sustainable development paths.

In the end the reasons for deforestation are economic, and any serious attempt to slow down forest loss needs to provide alternatives to the income derived from activities ranging from logging to farming and from agri-business feeding global commodity markets to minerals exploitation. All these activities generate income (as well as causing forest loss) and if the destructive impacts are to be reduced then countries will need to put in place different development plans from the ones they have now. The loss of income arising from the stoppage of deforestation has to be compensated for.

Creating that economic space is one of the most important priorities for the international community; but not as an act of traditional overseas aid, and less still in the form of loans. The transaction should be seen more like the payment of a utility bill – the price of maintaining services that are vital for human wellbeing everywhere. Without the rainforests, the prospects for sustainable development will be fatally undermined everywhere. But how much will it cost to provide that economic space for countries to embark on a different style of development?

The 2006 report The Economics of Climate Change (The Stern Review) estimated that the annual bill to cut tropical rainforest clearance in half by 2020 was in the order of US$10–15 billion. The PRP concluded that this kind of finance must be urgently deployed to compensate countries for keeping their forests intact, by replacing the revenues they would otherwise derive from land activities such as cattle exports, soya bean production, palm oil expansion or an increase in logging.

One idea from the PRP is for a new agency to be set up. It would negotiate with countries on how much money they would need to depart from deforestation activities. The agency would disburse funds and monitor performance. Countries would be compensated in direct proportion to how much forest they saved, thus creating a clear and direct financial incentive to keep the forests standing.

One possible funding mechanism proposed by the PRP is the use of government bonds. These would be offered to private investors such as insurance and pension companies and would yield a modest rate of return over the lifetime of the bonds – say, ten to fifteen years – for the investors. At the end of the period, the investors would get their money back having earned a secure rate of return for the time the governments had use of their money. This is a perfectly normal financial arrangement. Indeed, governments routinely issue hundreds of billions of dollars worth of bonds each year. These would be rainforest bonds, however, and the money raised would be passed to the new agency which in turn would disburse finance in accordance with the agreements reached with the tropical forest countries.

Of course there would need to be a whole range of safeguards to ensure that the money was spent in ways that promoted real benefits on the ground, thus requiring minimum standards for financial management, governance and stakeholder participation. This too would be a job for the new agency – to ensure that proper standards were maintained.

As for the governments issuing the bonds, they would have choices in how to repay investors as the bonds matured. They could simply raise money through taxation, or they could align repayment with other climate-protection policies they will in any event need to implement over the next decade and beyond. For example, they could allocate money derived from the auctioning of credits in their ‘cap and trade’ schemes, they could tax aviation fuel, they could put in place a Tobin tax on international currency transactions or they could look at ways to charge small levies on certain kinds of insurance premium. During the course of ten to fifteen years these kinds of measures could raise many billions, and in the process help cut carbon in the rich countries too.

If we are to avoid a climatic catastrophe that would affect all life on Earth, then deforestation must be stopped quickly, and at the same time, drastic cuts in emissions from fossil fuels must take place. While there are many ideas on how best to do this, the one thing that we are truly short of is time.

In April this year, governments came together through a new process to look at the potential emergency measures that might be put in place to cut deforestation. Perhaps the kind of leadership that was shown in bailing-out the banks will now be demonstrated in the provision of the much more modest finance needed to bail-out one of our planet’s ailing life-support systems. Let’s hope so, for we may not have too many more chances to make the difference needed. For, unlike the banking system, when our natural capital is depleted no cash injection will bring it back.

For more details about the Prince’s Rainforests Project see www.rainforestsos.org

Tony Juniper is an independent sustainability campaigner and a Special Adviser to the Prince’s Rainforests Project.

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