Memorandum by the Joint Nature Conservation
Committee (JNCC)
SUMMARY OF
KEY POINTS
1. With regard to the potential for REDD-related
carbon offsets, tropical forests, including soils as well as biomass,
are of greatest interest. Tropical ecosystems, home to most of
the world's terrestrial biodiversity, a source of basic needs
and income for millions of the world's poorest people as well
as timber for international trade, also suffer the highest rates
of deforestation.
2. With pressure on tropical forests coming
from a variety of sources, the potential for carbon markets to
improve protection for tropical forests will depend on the ability
of REDD funds to successfully support the development and application
of institutional measures. Which should address the needs of all
forest stakeholders, especially local people but also diverse
commercial interests as well as various levels of government administration.
3. The significant potential environmental
benefits and risks of carbon set-aside forests derive from the
multiplicity of ecosystem goods and services that forests can
provide. The potential complementarity of managing for carbon
and other ecosystem services holds promise of a wide range of
benefits. Risks include the displacement of demand ("leakage"),
shifting management objectives and climate change, all of which
could jeopardise the permanence of forest reserves.
4. Social benefits and risks, also potentially
significant, would stem from the sheer volume of funds that might
be mobilised and their application. The poverty of forest-dependent
peoples could be significantly reduced, their skills enhanced
and jobs created through well-targeted development projects. Risks
include further impoverishment, if such schemes bar local people
from access to traditional forest resources, result in land grabs
by the state and/or local elites, or foster conflict over the
newly more valuable forest resources.
5. To the extent that wood products are,
in effect, static carbon sinks, the timber trade and the forest
products industry have an opportunity to play an important role
in this new commercial environment. Innovative management paradigms
that include carbon storage objectives would need to be underpinned
by renewed political commitment to work with local communities,
to fight corruption at every level and to ensure sustainable forest
management.
6. Assuming institutional mechanisms can
be established that secure improved forest protection, the success
of REDD-related carbon offsets in achieving climate change mitigation
will turn on whether a) in the time available, the scale of the
effort will be sufficient to make significant impact, and (b)
such schemes will divert attention from desperately needed behavioural
changes across all sectors and in all societies.
The Joint Nature Conservation Committee (JNCC)
is the statutory adviser to Government on UK and international
nature conservation. Its work contributes to maintaining and enriching
biological diversity, conserving geological features and sustaining
natural systems. JNCC delivers the UK and international responsibilities
of the Council for Nature Conservation and the Countryside, the
Countryside Council for Wales, Natural England and Scottish Natural
Heritage.
Our submission focuses on the environmental
risks and benefits of using financial mechanisms to protect forests
globally, in particular through reducing emissions from deforestation
and forest degradation (REDD).
1. FORESTS AND
CARBON
1.1 Photosynthesis, nature's means of capturing
carbon, provides the basis for plant growth and reproduction.
Forests, some of the most varied and complex assemblages of plant
and animal species, presently cover just under a third of the
Earth's total land area and contain about 60% of the carbon held
in terrestrial ecosystems, half as much again as the atmosphere.1
The distribution of carbon within the ecosystem differs by forest
type however. In boreal forests, soils hold as much as five times
the amount of carbon as above-ground biomass, whereas in tropical
systems the ratio is closer to one.2
1.2 On the basis of data collected over
the past decade, scientists estimate that human-caused emissions
from deforestation amount to about a fifth of total global carbon
emissions—the third largest source of emissions after energy
and industrial processes and more than the entire world's road
transport.3 With over 90% of deforestation occurring in tropical
forests, Brazil topped the list, contributing nearly half of all
carbon emissions from deforestation, with Indonesia second at
12.8% in the period 2000 to 2005.4
1.3 Although total forest area continues
to decrease globally, the actual rate of annual net loss, now
just over 7%, is decreasing.5 The protection of forests through
reserve and certification schemes is becoming more commonplace
and in some regions forest cover is actually increasing. Tropical
forests have the greatest primary productivity (consequently storing
more carbon than others) and the greatest biodiversity. However,
these forests are the most affected by encroachment and conversion
and are disappearing at a rate of about 5% per decade,6 as they
exist generally in countries whose populations are predominantly
poor and desperately in need of development infrastructure, especially
clean water supply, health clinics, education and electricity.
From society's perspective forests are not only the source of
economic and non-economic goods and services but also landscape
elements of important historical, social and cultural significance.
1.4 Farming and ranching account for three
quarters of forest conversion, or deforestation.7 From an economic
perspective, preserving forests is often not a very attractive
business proposition given the length of time needed to recover
a return on this investment. Consequently, forests are converted
to other land uses even though the financial returns from these
alternatives often appear not very high.8 Thus, the Stern report
concluded that "Curbing deforestation is a highly cost-effective
way of reducing greenhouse gas emissions and has the potential
to offer significant reductions fairly quickly. It also helps
preserve biodiversity and protect soil and water quality ..."9
2. CARBON MARKETS
2.1 Carbon trading mechanisms, including
forestry measures, have been operating under various auspices
since 1997. In December 2007 the international conference in Bali
sponsored by the United Nations Framework Convention on Climate
Change revisited the issue of carbon offsets and the possibility
of developing incentives for reducing deforestation and forest
degradation. To date, carbon offset investments in forestry are
primarily voluntary programmes undertaken in large part in the
name of corporate responsibility, often driven by public relations.
Although the global carbon market more than doubled over the period
2006 to 2007 (as did the European Union Emission Trading Scheme
(EU ETS) in terms of both value and number of allowances transacted),
the success of the Clean Development Mechanism is handicapped
by a lengthy approval process.10
2.2 Although the potential cost of reducing
emissions by averting deforestation and forest degradation vary,11
it is estimated the cost of conservation would be a small fraction
of the price of other, non-forest related, carbon securities.
The simplest approach may be to incorporate REDD-related carbon
credits into the existing UN carbon trading mechanisms. Some would
argue, however, that this would flood the system with cheap credits
and thus reduce their price. If this happens, there is the danger
that industrialised countries would be able to meet emission control
targets with cheap REDD offset credits and would avoid making
any real emission reductions at home.12 While the concept of paying
for forest carbon and thus forestalling deforestation is an attractive
concept from several perspectives, there remains the difficulty
of insuring that the money gets to the people who actually affect
the fate of the forest, in which case transaction costs may become
a serious consideration.
3. POTENTIAL
ROLE OF
CARBON MARKETS
IN PROTECTING
FORESTS
3.1 Deforestation stems from diverse demands
on forest resources, in particular the demand for land expansion
of agriculture, establishment of orchards and plantations, construction
of hydroelectric dams and village growth. Conversion of forest
to alternative land uses has been a part of nation-building for
millennia. Countries rich in forest seek to transform what they
perceive as their natural capital into assets more directly capable
of meeting national needs. Without effective measures to restrain
deforestation, it is estimated that the clearing of tropical forests
will release an additional 84 to 130 gigatonnes of carbon, roughly
equivalent to more than a decade of global fossil fuel emissions
(at current rates).13
3.2 Carbon markets, which can provide significant
investment funds, offer the possibility of moderating demands
on forests while providing the means to reach development goals.
Carbon markets, however, are unlikely to eliminate pressure on
forest land completely.
3.3 Increased climate variability and change
will pose a profound threat to forest ecosystems and render many
forests susceptible to a variety of man-made and natural calamities,
including wild fire, pests and invasive species. Contrary to previous
assumptions, recent research indicates that the ability of both
terrestrial and marine systems to sink carbon will likely be compromised
by changing climatic conditions. Global warming and related impacts
will very likely overwhelm any fertilising impacts of CO2 and
further reduce carbon sequestration.14 Illegal and unconstrained
logging will only exacerbate the impacts of climate change. Carbon
markets will not be able to eliminate this threat.
3.4 Because of the range of threats facing
forests, consideration should be given to setting aside a greater
area than that enabled by carbon financing alone. In addition
to the need for carbon sequestration, there is a need to protect
the biodiversity that underpins the other ecosystem services provided
by forests from the impacts of climate change. Consideration should
be given to enabling REDD mechanisms to provide greater support
for forest restoration, enhancement, and resilience strengthening,
as well as research on innovative forest management systems.
3.5 Apart from the issues of sovereignty
and monitoring associated with the establishment of REDD-related
carbon finance mechanisms, there will be significant challenges
in organising schemes that ensure that environmental and socio-economic
benefits are persistent, even permanent. Without doubt, the key
to a successful environmental outcome will be getting the socio-economic
measures correct.
4. ENVIRONMENTAL
BENEFITS AND
RISKS
4.1 While the potential environmental benefits
of carbon markets for forest set-asides are clear, the risks may
be less so. Forests set aside as carbon offsets could become de
facto nature reserves offering protection of ecosystem services,
for example, those related to soil and water. Without addressing
the underlying drivers of deforestation, however, we risk shifting
legitimate demand for agricultural land and forest products onto
other forest areas, perhaps areas more environmentally vulnerable.
Thus, environmental risks may arise from displaced demand ("leakage")
as the pressure on forest resources is transferred to new locations,
or from market instability. To the extent that carbon offsets
would limit raw materials reaching the market, set-asides may
drive up prices for timber and other forest products, especially
locally. Should carbon markets prove very volatile or unreliable
as a regular source of income, or fail altogether, these erstwhile
nature reserves could be at particular risk. As population increases,
the demand for cropland will grow. Unremunerative forests risk
becoming once again subject to uncontrolled logging and land-use
conversion.
4.2 There has also been some discussion
about limiting REDD-related payments to those areas under greatest
threat of deforestation and degradation. While this is a laudable
objective, there is also a risk that such criteria may generate
perverse incentives that actually foster deforestation. It might
be possible to limit eligibility, but the result would probably
increase transaction costs.
4.3 Finally, it should be noted that presently
the interest in the protection of natural forests centres on their
carbon stores. In future, carbon sequestration, as opposed to
stores (the process as opposed to the product), may become of
greater interest. To the extent that focus shifts to the cultivation
of plants especially efficient, either naturally or artificially
(genetically enhanced), in "sinking" carbon, the pressure
for forest land conversion may re-emerge.
5. SOCIAL BENEFITS
AND RISKS
5.1 From the social perspective the benefit
of carbon markets for REDD offsets stems from the potentially
very large amounts of money that could be raised for supporting
development projects for the people traditionally dependent on
forest resources. Theoretically the monies raised through this
mechanism could fund action by the participating recipient countries
to meet the Millennium Development Goals, while reducing pressure
on forest resources. Whether the money available through carbon
markets actually provides funding for critical infrastructure
development, social services and job creation for the rural poor
will depend on the institutions established and their management.
5.2 Certainly the success of the market
for forest-related carbon storage and sequestration will have
as much to do with who will reap the benefits as how much those
benefits will be. Insuring that all stakeholders benefit is crucial.
Non-governmental organisations and others with field experience
stress the importance of REDD revenues reaching the rural poor
who rely on the forest for their livelihood.15 In many developing
countries undefined, vague or ill-defended land ownership and
use rights are the biggest impediment to sustainable forest management.
It is axiomatic that markets, such as proposed for the REDD mechanism,
only work if resource ownership is well-defined and if the payments
get into the hands of actual land-use decision makers.
5.3 Decisions to manage tropical forest
landscapes for carbon have significant implications for the communities
that depend on the forests and associated production systems.
Maintaining a development trajectory that improves human well-being
in a socially equitable manner while maximising carbon storage,
maintaining biodiversity and ecosystem services, and facilitating
adaptation to climate change will be challenging. There is the
risk that millions of poor people who depend on the forest for
their basic needs (food, fuel, building materials and natural
products that can be sold or bartered for other necessities) will
be denied access to traditional resources, pushed further into
penury, or forced to relocate. For many poor people, essentially
the socially and economically marginalised, the forests provide
the only "social security" (or "national insurance")
they know. During the economic downturn in south-east Asia in
the late 1990s, many people looked to non-timber forest products,
freely collected in the national forests, parks and nature reserves,
to provide a source of much needed income.16 It is unlikely that
this perception of forests, whether or not reserved for carbon,
will change any time soon.
5.4 The problems that plague sustainable
forest management in the tropics, including uncertain tenure rights,
weak institutions, lax law enforcement, and inadequately resourced
administrations, would also afflict carbon forest management schemes.
Indeed, with a REDD-inspired carbon market increasing the value
of the forest, there is a risk that abuses over land rights may
increase. In anticipation of large payouts, both state as well
as elite private interests could attempt to seize control of forest
assets at the expense of local communities. In this way REDD could
quite possibly lead to the loss of land, the further disenfranchisement
of local people and increased conflict over resources.
6. POTENTIAL
IMPACTS OF
REDD-RELATED CARBON
MARKETS ON
THE TIMBER
TRADE
6.1 Over the past couple of decades commercial
forestry has evolved from an activity of mainly the temperate
and boreal forests to one of tropical and subtropical regions.
With the rapid expansion of area under forest plantations, it
is now estimated that by the middle of the 21st century as much
as 75% of all industrial roundwood will be commercially grown.17
Global wood requirements, it is said, could be met by only 2%
of the world's total forest area.18 If this is correct, then there
should be considerable potential for carbon reserves without significant
adverse affects on forest industry and trade.
6.2 Trees are both a mechanism for sinking
as well as sequestering carbon, in short, the factory and the
warehouse. The trade in timber, the raw material of the wood products
industry, could be considered as trade in "sunk carbon".
Although wood recovery from timber harvesting operations could
be improved in many regions, increased efficiency in wood processing
over the past few decades has led to better recovery of raw material,
giving rise to new products and the increased use of factory waste
as fuel stocks. Bioenergy production from forestry residues and
the substitution of wood products for fossil-fuel intensive materials
could further increase the sector's contribution to climate change
mitigation.19
6.3 The UK imports about 80% of its timber
requirement.20 However, of the top ten EU importers of illegal
wood, the UK ranks second, importing nearly 3.5 million cubic
meters, or just over 10% of the total of all estimated imports
of illegally or suspiciously sourced wood from four critical non-EU
regions (eastern Europe and Russia, south-east Asia and China,
Latin America and Africa). With much illegal timber now in the
activity of criminal gangs, it is difficult to monitor and thus
to assess the true extent of this trade. Lost receipts to governments,
industry and forest owners are estimated at about $15 billion
(£7 billion) annually. With about a third of global wood
production illegally sourced, it is estimated that illegal production
compromises wood prices worldwide by 7 to 16%.21 Exacerbating
the financial effect of these activities is the damage to the
image of the forestry sector, of the industry and of wood as a
sustainably produced, environmentally friendly material. It will
be important to take a strong stand against illegal logging if
REDD schemes are to be taken seriously. At present only 6% of
forests certified sustainably managed are located in the tropics.22
6.4 To capitalise on significant potential,
forestry will need to refine existing management regimes for producing
multiple goods and services to reflect new priorities, including
carbon storage. It would be hoped that REDD-related funding will
be available to support increased forestry research to enhance
the knowledge base needed to meet the new objectives. Institutional
innovation and better governance, as promoted by the EU's Forest
Law Enforcement, Governance and Trade (FLEGT) programme, are essential
if the forest sector is to meet expectations. Broad international
resistance to illegally harvested timber is needed not only to
support sustainable forest management but to counter political
regimes that finance their existence with conflict timber. Reduced-impact
harvesting systems would permit less environmentally disruptive
timber production with increased employment opportunities, more
varied outputs and reduced carbon emissions. Such options may
be attractive to local communities seeking to maintain traditional
culture and lifestyles.
7. CONCLUSIONS
7.1 There has been considerable interest
from diverse quarters in formalising the institutional arrangements
associated with investments in carbon offsets aimed at reducing
deforestation and forest degradation. REDD-related carbon offset
investments have the potential to accomplish diverse environmental
goals and provide extensive social benefits. However, care should
be taken not to exaggerate potential benefits, for as one study
cautioned, areas of "highest biodiversity threats and human
development needs may exist in countries that have limited income
potential".23 Moreover, although many successful projects
have been undertaken since trading in emissions units began, other
authors suggest that given the piecemeal approach characteristic
of the carbon markets currently emerging, it is unlikely that
REDD-related investments will succeed in reducing greenhouse gas
emissions to the extent required in the time available.24
7.2 It should be noted that to the extent
that REDD schemes foster a perception that the emissions problem
can be solved elsewhere, that is, in developing countries, as
opposed to becoming a joint, global effort, they risk becoming
counter-productive. From the perspective of many in society as
well as the political arena, such investments overseas, seemingly
almost beyond our control and prone to uncertain outcomes, may
actually contribute to a sense of increased vulnerability and
insecurity. The business community seems to prefer a multi-pronged
approach, ie, investment in innovation, new technology and revised
operational procedures, as well as carbon offsets, both domestic
and international. Successful REDD initiatives will undoubtedly
require a combination of government interventions and concerted
actions by both producers and consumers of forest products and
global co-operation. It is widely agreed that any significant
reduction of greenhouse gas emissions will definitely require
the participation of all economic sectors, especially forestry,
energy and agriculture—sectors often at the core of the
economic and political structures of many countries.
7.3 Recognising the motivating ability of
markets, we should be alert to the opportunity afforded by REDD-related
carbon trading to develop a wider appreciation of the variety
of environmental services provided by forest ecosystems. Reserving
forests with the objective of reducing carbon emissions will give
humanity time to develop the technology needed for "decarbonising"
energy and industrial production. If, in the future, the market
for carbon were to decline, it may be advantageous, both from
an environmental as well social perspective, to be able to maintain
the flow of this funding to many countries as payments for other
environmental services, such as water regulation or biodiversity
conservation.
7.4 Clearly there are many potential pitfalls
in the path of developing REDD-related financing. It presents,
however, an excellent opportunity for mobilising multi-national,
cross-sectoral concerted action on two related, very important
topics, namely climate change and forest conservation. Such efforts
will be buoyed by considerable support generated for REDD at a
time when deforestation rates are beginning to slow and the concept
of climate change is increasingly receiving wider acceptance.
REFERENCES
1 Streck C et al 2008. Climate change
and forests: emerging policy and market opportunities. Washington
DC: Brookings Institution.
2 Ibid.
3 IPCC. 2007. Climate Change 2007: The Physical
Science Basis. Bonn: UNFCCC.
4 Food and Agriculture Organization (FAO). 2006.
Global Forest Resources Assessment 2005: Progress towards sustainable
forest management. FAO Forestry Paper 147. Rome.
5 Ibid.
6 Ibid.
7 Geist, H J and E F Lambin. 2001. What drives
tropical deforestation. Louvain-la-Neuve: LUCC International
Project Office.
8 Strassburg, B et al. 2008. An empirically-derived
mechanism of combined incentives to reduce emissions from deforestation.
CSERGE Working Paper ECM08-01. Centre for Social and Economic
Research on the Global Environment, University of East Anglia,
Norwich, UK.
9 Stern, N H. 2006. The Stern Review: The
Economics of Climate Change. UK Government Cabinet Office
and HM Treasury. Cambridge: Cambridge University Press.
10 World Bank. 2008. State and trends of the
carbon market 2008. News Release, Cologne, Germany.
11 Ibid; IPCC. 2007. Climate Change 2007:
The Physical Science Basis. Bonn: UNFCCC.
12 Environmental Audit Committee. 2008. Reaching
an international agreement on climate change. Sixth Report
of Session 2007-08. House of Commons, London.
13 Gullison, R E et al. 2007. Tropical
forests and climate policy. Science 316:985-6.
14 Ibid.
15 Chomitz, K. 2007. At loggerheads? Agricultural
expansion, poverty reduction and environment in the tropical forests.
Washington DC: World Bank; Luttrell, C, K Schreckenberg and L
Peskett. 2007. The implications of carbon financing for pro-poor
community forestry. Forestry Briefing Paper no 13. Overseas
Development Institute (ODI), London.
16 Donovan, D G. 1999. Strapped for cash, Asians
plunder their forests and endanger their future. Asia Pacific
Issues Paper no. 39. East-West Center, Honolulu, Hawaii.
17 Freer-Smith, P H, M S J Broadmeadow and J
M Lynch, eds 2007. Forest and Climate Change. Wallingford
(UK): CABI.
18 Ibid.
19 Prebble, C. 2008. Climate change: opportunities
and challenges for the forest and wood-using industries. Confederation
of Forest Industries (UK) Ltd.
20 Ibid.
21 Hirschberger, P. 2008. Illegal wood for
the European market. Frankfurt: WWF-Germany.
22 Food and Agriculture Organization (FAO). 2006.
Global Forest Resources Assessment 2005: Progress towards sustainable
forest management. FAO Forestry Paper 147. Rome.
23 Ebeling, J, and M Yasué. 2008. Generating
carbon finance through avoided deforestation and its potential
to create climatic, conservation and human development benefits.
Philosophical Transactions of the Royal Society B (2088)363:1917-1924.
24 Ibid; Matthes, F C. 2008. Editorial. Tendances
Carbone: Monthly Bulletin on the European Carbone Market,
no 28. [September] Berlin; Myers, E C 2007. Policies to reduce
emissions from deforestation and degradation (REDD) in tropical
forests; Pirard, R 2008. Reducing emissions from deforestation
and degradation in non Annex 1 countries. Breaking the Climate
Deadlock Briefing Paper. Institut de Development Durable et
des Relations Internationals (IDDRI), Paris.
13 October 2008
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