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How to save the Amazon rainforest
Rhett A. Butler, mongabay.com
January 04, 2009
A look at emerging mechanisms to protect the world's largest rainforests. A broad array of articles on solutions to Amazon deforestation can be found at the conclusion of this piece.
Given these trends, it is apparent that conservation efforts alone will not determine the fate of the Amazon or other rainforests. Some argue that market measures, which value forests for the ecosystem services they provide as well as reward developers for environmental performance, will be the key to saving the Amazon from large-scale destruction. In the end it may be the very markets currently driving deforestation that save forests.
IS FOREST CARBON THE ANSWER?
Excluded from receiving carbon credits under the Kyoto Protocol, the "reducing emissions from deforestation and degradation" (REDD) mechanism found new life in 2005 as a result of efforts by the Coalition for Rainforest Nations, a group of tropical countries that seek to be paid for the carbon stored in their forests. The idea has since gained momentum as a wide range of interests, including the private sector, development experts, policymakers, and environmentalists, have embraced REDD as a means to fund forest conservation and poverty alleviation efforts to the tune of billions of dollars per year while, at the same time, fighting climate change. REDD was a hot topic of discussion at last month's UNFCCC meeting in Poznan, Poland.
How REDD Works
REDD operates on the premise that developing countries should be compensated for reducing emissions from deforestation and degradation. Beyond this, the details – including the forests and countries included in the scheme, reference levels for measuring emissions reductions, distribution of funds, and financing – are still being negotiated during a series of UNFCCC meetings culminating in this year's Conference of the Parties in Copenhagen (COP-15). In essence REDD projects draw funding from a pool of money generated through donations, investors seeking to profit from the sales of carbon credits, or auctions of carbon credits in compliance markets, depending on the model. The funds are used to finance initiatives that promote direct forest conservation, reduce emissions from deforestation and degradation, and/or possibly involve enhancement of carbon stocks through reforestation or other activities. Ostensibly REDD offers the potential to make forest conservation pay for itself, but as past adventures in conservation have shown, it takes more than money to make conservation effective – namely forest preservation efforts must directly benefit local communities. Development experts say that REDD initiatives are doomed if they exclude local people and fail to address the underlying drivers of forest degradation and destruction.
National GHG emissions from industrial sources (electricity generation, transportation, buildings, etc) and Land Use, Land-Use Change and Forestry (LULUCF) 2000
(Click image to enlarge)
To date discussions laying the groundwork for proposed forest conservation financing schemes like REDD have largely excluded those who will be most affected by their implementation: rural populations living in and around forests, including indigenous people. As a result, while such mechanisms could ultimately benefit forest-dwellers, many indigenous groups strongly oppose measures to use forests as giant carbon offsets. Their opposition will likely continue until they play a greater part in determining policy.
Chief among their concerns is the potential for a "land grab" whereby governments, carbon traders, and speculators secure rights of the ecosystem services provided by forests without the consent of the people who live within the forests. In places where land rights are poorly defined, such claims could be used to evict forest people from lands upon which they have been living for generations. Therefore the development of policy mechanisms like REDD will involve thorny issues like traditional land rights as well as broader questions on how compensation will be structured and what measures will effectively conserve forests without driving more people into poverty. In the end, there is little doubt that support from forest people will be critical in making "avoided deforestation" schemes a reality.
These points were recently emphasized in a set of guiding principles for including forests in climate change issued last month by the Forests Dialogue on Climate Change, a coalition consisting of more than 250 representatives of governments, forestry companies, trade unions, environmental and social groups, international organizations, forest owners, indigenous peoples and forest-community groups.
"REDD and other climate change mitigation and adaptation measures will only achieve lasting results if they are adapted to conditions on the ground and help meet the needs of local people," said Forests Dialogue in a statement. "Mechanisms to engage and build capacity among local stakeholders so they can participate effectively in decision-making are of fundamental importance."
Dr. Daniel Nepstad, a leading tropical forest ecologist who now heads up conservation at the Gordon and Betty Moore Foundation, says that while these fears are valid, REDD may offer a better alternative than the status quo – which has long led to the displacement of native peoples from their lands at the hands of developers.
"REDD can benefit biodiversity conservation as well as indigenous and rural peoples," Nepstad wrote in a report co-authored last year with Stephan Schwartzman of Environmental Defense and Paulo Moutinho of the Instituto de Pesquisa Ambiental da Amazônia (IPAM). "To succeed, national REDD programs must be consistent with UNFCCC and other UN principles, be transparent and have the active involvement of indigenous peoples and forest communities."
"Rejecting REDD will not defend indigenous rights. Substituting official aid from developed countries for carbon market funding will not be a better, less risky alternative for reducing deforestation. Indigenous rights abuses, often caused by the same activities that drive deforestation, must be addressed directly."
Still other groups are taking a harder line, opposing any incorporation of REDD into international climate policy until the rights of forest people are determined and other issues are worked out.
"To attain sustainable forest and climate initiatives, forest peoples must be fully consulted about their design," said Tom Griffiths of Forest Peoples Program, an indigenous rights' organization. "International donors must also ensure that human rights and forest sector reforms are guaranteed before any international funding is released to developing countries for their national actions on forest and climate issues.'
"It is alarming that such dangerous forest carbon trading proposals are getting traction at the UN talks while so many critical questions are left unanswered," Kate Horner, Friends of the Earth US climate campaigner, said in a statement following the group's release of a critique on the World Bank's Forest Carbon Partnership Facility, an initiative to kickstart REDD projects. "We fear that this could be disastrous for biodiversity, the rights of forest-dependent communities around the world and even our climate. If forest carbon trading proposals are accepted, it would create the climate regime's largest loophole by allowing rich countries to buy their way out of emission reductions."
Buying Their Way Out
Concerns over rich countries using forestry to cheaply "buy their way out" of reducing emissions are not new. The inclusion of REDD-like mechanisms in the 1997 Kyoto Protocol was held up by this very issue with environmental heavyweights like WWF leading the opposition. The group, along with other campaigners, argued at the time that "avoided deforestation" would allow developed countries to meet emission reduction requirements without cutting emissions from industrial sources, including power generation, construction, agriculture, and transportation. WWF and other avoided deforestation opponents feared that rich countries would be "let off the hook" by simply paying tropical countries to cease forest clearing, instead of pushing energy efficiency, pollution controls, and other measures. In the meantime, deforestation continued unabated, with Indonesia and Brazil alone losing some 300,000 square kilometers of forest -- an area the size of Italy or the Philippines -- since talks in 2001 officially excluded avoided deforestation from the Kyoto Protocol.
WWF's opposition in the face of ongoing forest destruction sparked a bitter rift among environmentalists, but at an "avoided deforestation" policy meeting in New York this September, WWF's president and CEO Carter Roberts said it would now support efforts to get forests recognized as a critical component of addressing climate change.
"The Amazon, if it were a country, would be in the top seven emitters of greenhouse gases in the world," Carter said. "Unless the world has policies that recognize that value of standing trees and forests, we will have failed."
"In Kyoto, WWF was pivotal in keeping forests out. We have changed our position," he added.
REDD advocates are also winning support from non-traditional partners, including humanitarian organizations, faith-based aid groups, governments – led by Norway, which has pledged hundreds of millions of dollars per year to tropical forest conservation – and the World Bank, which has launched its own program to seed REDD projects. Nevertheless critical elements are needed to getting REDD off the ground, including a framework for forest carbon, strong commitment from polluting countries to reduce their emissions, and effective strategies for implementation, says Johannes Ebeling, an analyst for EcoSecurities, a carbon-trading firm.
"There needs to be a clear and reliable political framework in order to provide confidence to the private sectors (as well as to NGOs and others) that are willing to invest money into forest conservation (or any carbon forest activity). As long as rules are not clear – e.g. regarding eligible activities, fungibility of credits, import restrictions into important markets such as the EU ETS – the risks for most investors simply are too high," he said, noting that prior attempts to include forestry in emissions reductions schemes have left participants disappointed. "Many early movers from back then never received the rewards they hoped for because eligibility rules changed in retrospect."
Once a framework is in place, there needs to be "sufficient and reliable demand from carbon buyers – industrialized countries and their domestic industries – for carbon credits, including forestry credits," says Ebeling. This requires both "ambitious reduction targets" and the possibility to use external credits – including forestry credits – to meet a portion of these targets.
Dr. Philip Fearnside, a leading researcher at the National Institute for Research in the Amazon (INPA), agrees that serious reductions are needed to both address climate change and make REDD viable.
"If the world' s governments become serious about controlling global warming, they will have to make much larger cuts in their net emissions than they have so far – lowering emissions to something on the order of 80% below 1990 levels," he said.
"The key fact at the moment is that the overall commitments are still up for negotiation; they are not fixed beforehand as they were in the years following the 1997 Kyoto conference," he continued. "This means that limiting or excluding REDD has no benefit for climate, and would only result in the countries agreeing to reduce their emissions by less. The focus must be in assuring that the carbon in REDD is real."
Nepstad, along with Schwartzman and Moutinho, believes that having a strong policy framework would prevent REDD credits from flooding the carbon market, thereby triggering a catastrophic drop in carbon prices that would undermine incentives for renewables and energy efficiency initiatives.
Once climate policy is in place, the challenges of implementation will come into focus. Going beyond the difficulties of determining land ownership and rights to resources, these include "extremely challenging governance conditions in many tropical forest countries, complex land-use pressures due to scarce agricultural land and unclear land tenure situations, very high profits from alternative land-uses such as destructive logging or conversion for cash crops," says Ebeling. "Readiness funding can address some of these if employed cleverly, but most important is political will in host countries."
Preliminary research suggests that once a framework for develops, pure economics alone may boost REDD. In areas where infrastructure is poor and carbon stores are high, REDD may offer attractive economic returns relative to conventional logging and agricultural use of forest land, especially for rural communities, which are often bypassed by industrial development of rainforests. For example, a study by CIFOR and the World Agroforestry Centre (ICRAF) showed that Indonesia currently is seeing benefits of $0.34 per ton of CO2—mostly from agriculture. By comparison, EU carbon prices are presently more than $20 per ton. Meanwhile, research by Dr. Daniel Nepstad at the Woods Hole Research Institute has found break-even points of less than $5 per ton of carbon for forgoing development of most of the Amazon. Cattle ranching—the leading driver of deforestation in the Brazilian Amazon—has offered significantly less than that in the past. Further, because REDD is compatible with sustainable harvesting of forest products, low-impact ecotourism, and other environmental services payments, it could become an integral part of rural development schemes. Taking REDD into account, the Woods Hole Research Institute estimates that reducing deforestation in the Brazilian Amazon to nearly zero within a decade would cost $100 million to $600 million per year, an amount lower than the opportunity cost of forgone profits from deforestation-dependent agriculture and ranching. In other words, REDD could offer the most cost-effective way to end deforestation. The Eliasch Review, a British government-commissioned report on avoided deforestation, estimates that a cap-and-trade system that includes forest carbon could generate $11-19 billion per year by 2020 to finance forest conservation. The funds could potentially halve global deforestation rates.
Seeing the enormous potential of REDD, governments and investors are already positioning themselves for a forest carbon market. Several models are emerging for financing and distributing carbon, ranging from profit-driven investor-backed projects to Brazil's massive Amazon Fund. Variations and hybrids of the models abound.
Last December, the entity formerly known as Merrill Lynch became the first major U.S. bank to invest in an avoided deforestation project, putting $9 million towards rainforest conservation in Sumatra. The bank hoped to lock up forestry carbon credits while they were cheap and sell them at a higher price in either voluntary markets or should they emerge, compliance markets. The deal, brokered by Australia-based Carbon Conservation between Merrill Lynch, Flora and Fauna International, the provincial government of Aceh and others, could generate up to $432 million in gross carbon financing over the next 30 years by preventing logging and conversion of Ulu Masen forest in Aceh province for oil palm plantations. Benefits from the deal are expected to extend well beyond the bank – Aceh Governor Irwandi Jusuf sees the initiative as a key step in the region's recovery from the devastating 2004 tsunami and three decades of civil war. To support the project, Irwandi has imposed a moratorium on logging, hired more than 1,000 former fighters as rangers, and laid out plans for the development of "forest compatible environmentally sustainable business, such as improved post harvest technologies, community-services for the nature tourism industry, forest tree and fruit tree nurseries," according to the Project Design Note. Management and administration will be conducted largely at a local level through traditional community leaders.
Since the unveiling of the Aceh deal, investor-led REDD projects have mushroomed around the world. Many of these operate as partnerships between local communities, governments, development agencies, NGOs, and carbon investors. The World Bank is helping jumpstart projects in more than two dozen countries with its $300-million Forest Carbon Partnership Facility which builds capacity for countries to earn compensation through REDD.
Although some have questioned the voluntary nature of the concept, Norway has committed up to one billion to the scheme by 2015 contingent on Brazil's success in reducing deforestation. Others – including Wal-Mart – are rumored to be mulling contributions.
"The Amazon Fund is history's biggest experiment in conservation," said Nepstad. "It is a bold response to a challenge issued to the world by Brazil's Minister of Environment, Marina Silva, in December of 2006, at the Conference of the Parties of the UN climate change treaty in Nairobi. Silva announced to the world that Brazil would create a tropical forest fund to help reduce their greenhouse gas emissions caused by deforestation and forest degradation. At the time, the response to this challenge was that it would be very difficult for Brazil to raise any money to put into the fund. Then along came the Norwegian government, and put a billion dollars on the table. If Brazil succeeds in substantially reducing Amazon deforestation, it can use the money."
"What is particularly ingenious about the Norway response is that it comes with no prescription—no recipe for how to achieve the reduction," Nepstad continued. "Unlike previous large-scale conservation programs, such as the G7 Pilot Program for the Protection of Brazilian Rainforests, the Norwegian response is ‘hands off'. Now, the ball is in Brazil's court. The key question is whether or not the Brazilian government can design a process that allows for significant engagement of Amazon forest stakeholders, and effective measures to slow the main drivers of deforestation, to achieve the reductions. This will be the first big test of REDD."
Brazil has been vague on how the funds will be used but the Bolsa Floresta program in the state of Amazonas could serve as a model for compensating rural populations for avoiding activities that result in deforestation. The program, launched last year, includes pays forest families living near Uatuma Reserve about $25 per month to not clear primary forest lands in return for making 'no smoke'. Residents are also provided with health care, clean water, and greater access to education.
"The Bolsa Floresta is fine as a demonstration of how funds can reach traditional residents in the Amazon interior," said Fearnside. "The money so far comes from the Amazonas state government's budget, which obviously is limited as a financial base. The Bolsa Floresta's connection to state-government " sustainable development" reserves is encouraging as a stimulus to expanding the area under some form of protected status, and as a means of increasing grassroots support for the reserves [but] a firmer financial basis is needed."
Fearnside added that he things the Amazon Fund will need to move beyond a voluntary model.
"The Amazon Fund is a positive development, but I believe that funds based on mandatory commitments will be a firmer basis for slowing deforestation from 2013 onwards," he said.
But the potential doesn't end with REDD. Investors are already betting that forests will be worth more than the carbon they store.
ECOSYSTEM SERVICESIn March a private equity firm took the unprecedented step of purchasing the rights to environmental services generated by a 371,000-hectare rainforest reserve in Guyana. London-based Canopy Capital is effectively banking that the services generated by a living rainforest—including rainfall generation, biodiversity maintenance, and water storage—will eventually see compensation in international markets. The deal is unusual in that 80 percent of the profit will go to local communities through micro-credit loans to sustainable economic activities, according to Iwokrama. Another 4 percent will go to the Global Canopy Program, an alliance of 29 scientific institutions that seeks to better the understanding of tropical ecosystems.
Hylton Murray-Philipson, director of Canopy Capital, says the deal seeks to develop a market for the "utility value" of living rainforests.
"The only way we are going to turn this thing around is through a profit motive. This is what is needed to harness the power of markets. But it doesn't stop with making a profit—we are also going to have to deliver a better living for local people," he said. "We need to start valuing the intrinsic parts of the forest as an intact entity rather than having to convert it for something else."
Canopy Capital is working to develop an index so that forests around the world can be easily evaluated for their worth as an intact ecosystem. The beauty of the system is that it provides direct incentive for facilitating conservation efforts.
"The index would incorporate all of the characteristics to create a yardstick by which forests around the world could be measured to give a degree of uniformity for the investor," explained Murray-Philipson. "An advantage to the rating system is that it could promote the development of new reserves and conservation areas. For example, if you are a twenty-something-year-old with a love for nature and a sharp mind it would become worth your while to go to a difficult part of the world to try to ‘improve' a forest area by forming relationships with local beneficiaries to bring them on board, stopping illegal logging, and conducting a biodiversity survey. These actions would basically up your score in the weighting system, thereby making the forest more valuable. It's a way of harnessing the profit motive."
Another example comes from the island of Borneo where New Forests, a Sydney-based investment outfit now backed by Al Gore's private equity fund Generation Investment Management, has established a wildlife conservation banking scheme based on the rehabilitation of a degraded forest reserve. The company says it expects to earn annual returns in the 15-25 percent range by selling "biodiversity conservation certifications" to palm oil developers, energy firms, and other businesses seeking to improve their environmental credentials. The funds will endow a perpetual conservation trust that will finance efforts to reduce forest fires and restore the rainforest canopy.
"We hope that via a commercial approach to conservation, we may be able to contribute to a sustainable landscape on Borneo that includes palm oil, timber production, and wildlife conservation, all being managed on a commercial basis in harmony," David Brand, managing director of New Forests, said.
The examples suggest that a market for ecosystem services is indeed emerging and could prove to be a model for financing large-scale conservation while simultaneously providing profit opportunities for private firms. While corporations pursuing commercial interests could end up protecting global forests, poor countries could have a new way to capitalize on their natural assets without destroying them.
"Halting deforestation is an opportunity to score a big win against climate change," Andrew Mitchell, director of the Global Canopy Program, said. "These forests support the livelihoods of 1.4 billion of the world's poorest people, and offer services critical to humanity's survival, such as rainfall generation and maintaining half of all life on Earth—benefits we all need but do not yet pay for."
"Forests fall because they are worth more cut down than standing. This is a classic example of a market failure, but ecosystem services could change that," he added.
How much to save?
Ecosystem services payments hinge on the capacity of ecosystems to continue to provide services. Turning back to the Amazon, a question that emerges is how much forest needs to be conserved to avoid diminishment of the services if affords humanity. Dr. Nepstad suggests we are already approaching a critical tipping point.
"The Amazon rainforest has already entered a dieback, in which the vicious cycle between land use (cattle ranching, logging), seasonal drought, and fire are rapidly degrading enormous swathes of rainforest each year. We need to bring deforestation to a halt as rapidly as possible and foster the regeneration of forest on that portion of the region's 600 thousand plus square kilometers of cleared land that is unproductive—more 100 thousand square miles. Our goal must be 80% forest cover to protect the region's rainfall system."
Brazil's target – a 70 percent reduction in net deforestation over the 1995-2005 baseline by 2018 – is less ambitious but is an acknowledgement of both the importance of maintaining substantial forest cover in the Amazon and the potential of forest carbon as an economic asset.
MARKET INCENTIVESBeyond the rise of compensation for ecosystem services, there are other signs that deforestation can be slowed, including improved fire management by large-scale landholders, growing concern in some commodity markets about the environmental performance of developers, new opportunities for sustainable development and gains in productivity, and establishment of protected areas in regions where development is expanding rapidly.
Dr. Nepstad says that landowners in the Amazon—especially those with fire-sensitive investments like orchards, intensive-cattle operations, and managed timber harvesting—are curtailing the use of fire as a land-management tool, reducing the incidence of fires that escape into neighboring forest areas.
At the same time, positive signs are coming from industry. Soy and beef producers are responding to new emphasis on environmental performance from commodity buyers—soy growers in Mato Grosso are adhering to a moratorium on clearing of rainforest for soy production, while cattle ranchers are forming their own certification system for environmental standards. The Brazilian government has recently lent support to these efforts by cracking down on illicit commodity production in the Amazon, sending in troops while implementing fines and threatening credit access to landowners who buy or trade soy, beef, and other products produced on illegally deforested lands. Still, the Brazilian government needs to do more to improve governance by rooting out corruption and enforcing existing laws. Such efforts should take advantage of the country's state-of-the-art satellite monitoring of the Amazon, which gives Brazil has the capacity to monitor from above. To be effective, Brazil needs to follow through with on-the-ground enforcement, but commodity certification systems may help substitute for governance when law enforcement falls short.
But for such certification systems to work, there must be buy-in from consumers. Now that Amazon deforestation is increasingly driven by industry, rather than subsistence agriculture, environmental advocacy groups can take advantage of corporate sensitivities to public image without the risk of undermining the livelihoods of millions of rural poor. In other words, the economic transition occurring in the Amazon has effectively given NGOs new leverage in consumer awareness campaigns.
"The single best thing [the United States] could do would be to become a leader on climate change," said Tom Lovejoy, director of the Heinz Center, an environmental policy group. "A lot of things would then fall into place."
Apart from U.S. policies, international approaches to addressing deforestation in the Amazon will fail unless they recognize Brazil's rights as a sovereign nation. While staunchly defending its right to develop its resources as it sees fit, Brazil has come around to the idea that preserving at least some of the Amazon is not at odds with economic growth. In fact economic integration of the Amazon as a viable ecosystem could augment livelihoods for some of Brazil's most desperate people.
INDIGENOUS PEOPLEIndigenous involvement in reducing Amazon forest loss does not start and end with terra preta. Indigenous groups control more than a fifth of the Amazon and will be a key part of any "solution" to deforestation. These groups have fought for decades to win rights to the forest land they have used for countless generations. If they choose to preserve it, they should be fairly compensated. REDD may be the ideal vehicle for such compensation, funding sustainable development initiatives and the employment of indigenous park guards. Already some indigenous groups in the Brazilian Amazon – including tribes in the Xingu and Acre – are experimenting with carbon finance as a way to preserve the forests they steward.
Recent research has shown that indigenous reserves are particularly effective at slowing forest clearing in high-deforestation frontier regions. A study by researchers at the Woods Hole Research Center and the Instituto de Pesquisa Ambiental da Amazonia found that the incidence of fire and deforestation within indigenous reserves was half that of surrounding unprotected areas.
Indigenous lands occupy five times the area under protection in parks and are currently "the most important barrier to Amazon deforestation," according to a statement issued by the Woods Hole Research Center. "Some conservationists argue that with acculturation to market society, indigenous peoples will cease to protect forests," but they study "found that virtually all indigenous lands substantially inhibit deforestation up to 400 years after contact with the national society."
"Protecting indigenous and traditional peoples' lands and natural areas in the Amazon works to stop deforestation," explained Nepstad, who was lead author of the study. "The idea that many parks in the tropics only exist 'on paper' must be re-examined as must the notion that indigenous reserves are less effective than parks in protecting nature."
"The people who best know, use, and protect biodiversity are the indigenous people who live in these forests."
"The best way to protect ancestral rainforests is to help the Indians hold on to their culture, and the best way to help them hold onto their culture is to help them protect the rainforest," he added.
But it will take more than just indigenous reserves to save the Amazon. There is no magic bullet. A plan to sustainably manage the Amazon must be multi-faceted, involving a multitude of stakeholders including native people, poor colonists, and industry.
Saving the AmazonThe loss of more than 150,000 square kilometers of forest over the past eight years has shown that a business-as-usual approach will not be enough to conserve the bulk of the Amazon. Forests must offer tangible economic benefits in order for them to be protected as intact ecosystems. The ecosystem services market may be the best near-term mechanism for realizing this value. At the same time, improved governance, new market-based compensation systems that reward environmental performance, and continued expansion of protected areas will be key to saving forests like the Amazon.
Please note: This article serves as a general overview of emerging mechanisms that could conserve the Amazon. There are hundreds of other solutions-oriented articles at rainforests.mongabay.com including, for example
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