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Environmental Groups Propose Tradable Permit System

WW1.jpg Alana Herro works for Worldwatch, which provides "Independent research for an environmentally sustainable and socially just society." This is her first guest post for Worldchanging.

Environmental groups are pushing for the use of market mechanisms to address one of the world’s largest sources of greenhouse gas emissions—deforestation. Environmental Defense and the Amazon Institute for Environmental Research are among groups lobbying for the inclusion of one particular economic approach, known as Compensated Reduction (CR), in negotiations for the second phase of the Kyoto Protocol, the international treaty to reduce global greenhouse gas (GHG) emissions.

Similar to carbon trading, the CR plan would award tradable “credits” to countries that voluntarily reduce their deforestation rates below historical baseline levels. Those countries could then sell the credits to other nations that are unable to meet their emissions reduction goals. By providing a monetary incentive for nations to preserve their forests, the strategy would encourage greater developing-country participation in the Kyoto agreement (which currently only applies to industrial countries), the environmental groups say.

To ensure the validity of countries’ claims, compensation would be given only after a specific period of time and after sufficient satellite and on-the-ground observation. The countries would also be committed to further decreasing or at least stabilizing their deforestation rates in the future.

According to Environmental Defense and its partner groups, the clearing and burning of tropical forests is responsible for as much as 25 percent of human-created GHG emissions. South America’s Amazon Forest alone holds some 60 gigatons of carbon that might otherwise enter the atmosphere—more carbon than all countries release from cars, power plants, and other human-related activities in a decade. The environmental groups say incorporating CR into the Kyoto talks is essential because at current rates of destruction, forest losses in Brazil and Indonesia alone will negate nearly 80 percent of the emissions reductions achieved under the Kyoto Protocol by 2012. Slowing deforestation has the additional benefit of preserving biodiversity in threatened tropical forests, the groups note.

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This is a really important issue within the overall discussion of Climate Change. I would also suggest pushing certification schemes such as FSC or even a certification scheme for community based forestry where communities hold title over local land and decision making. I'm not sure if there is such a scheme currently existing but it seems to be working in the Pacific Northwest.

Either way, governments, businesses and individuals should take a hard look at the environmental footprint of their lumber sourcing.

Posted by: Jeremy Kirouac on 28 Aug 06

While the overall idea seems sound, I wonder how this will actually work in practice. Will communities be allowed to reduce deforestation, or must it occur at a national level? If so, the new system is designed by and for technocrats, keeping the revenue generated and the decision making power in their hands in a traditional top-down fashion. Anybody who has worked within a carbon trading scheme knows that Kyoto is notoriously bureaucratic and difficult to navigate. This is the reason why forest-based carbon credits through aforestation and reforestation projects are hardly traded within the Kyoto framework. While these initiatives certainly represent a baby-step in the right direction, less regulation and more open systems need to be created to generate opportunity for small business and local communities to participate.

Posted by: Agroblogger on 29 Aug 06

The question is whether the market will set the right price for a plot of forest not to be destroyed. A smallholder can make a lot of good money with a palm oil plantation, that lifts his family out of poverty. And certainly with biofuels on their way, these tropical biofuel feedstocks have become green gold.
I wonder whether the market will ever succeed in giving the righ compensation. People in the developing world know the market value of a plot of rainforest very well, so it won't be easy to convince them to give it up for a 'CR'-credit, if its below this value.

Moreover, if you look at the wealth brought about by deforestation in Malaysia or Indonesia, where millions of people make a living being rubber or palm smallholders, then it's difficult to ignore that this wealth has generated economically beneficient side-effects that are larger than the mere money made from the plantations. An entire 'economy' was born out of this.

Now CR must take this added value into account as well. If it is merely going to put a price tag on a plot of forest, nobody will be interested. It must take into account *all* the losses incurred by not burning down a plot. And these are very high.

Posted by: Lorenzo on 2 Sep 06

Moreover, as Agroblogger says, this approach is likely to be socially destructive (as in 'many people are going to die in order to preserve forests'). It's a top-down approach since it relies on (1) the total forest system as a whole and (2) monitoring by and dealings amongst governments and (3) you only get money 'post-facto', which means you have to keep smallholders who want more land, in line for a few years, without any form of compensation - an impossible task, unless you use violence and terror.

Now we all know that governments in the developing world think about their own pockets first, and about their people last.

So unless this 'CR'-scheme is coupled to a 'social justice' monitoring mechanism, it is likely to result in mass poverty, mass starvation, mass violence and mass corruption. It will also create a war of governments against their own people. Because in reality, smallholders want more land, and if a government can fill its pockets with CR-credits the money of which never reaches communities on the ground, then it will not hesitate to butcher its own people if they're touching the resource that is filling their pockets.

From a social point of view, the 'CR' thing is ultra-dangerous. A recipee for massacres.

Posted by: Lorenzo on 2 Sep 06



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