The real price of protecting trees

Without knowing the true cost of a forest emissions-reduction mechanism, we cannot analyse the benefits, writes Peter A Minang.

Peter A Minang | China Dialogue | July 13, 2009

Science tells us that valuing forests for carbon (by financing Reduced Emissions from Deforestation and forest Degradation: REDD or REDD-plus) could help mitigate climate change and improve livelihoods. But it seems to me that delivering these benefits will depend as much on politics and institutions as on science.

Evidence from across the humid and sub-humid tropics shows that people make very low economic returns from cleared forests, when calculated per tonne of carbon dioxide (CO2) emitted. The Alternatives to Slash-and-Burn (ASB) Partnership for the Tropical Forest Margins has shown that, in Cameroon, Indonesia, Peru and the Philippines, 80% of all emissions from deforestation between 1990 and 2005 could have been avoided for less than US$5 per tonne of CO2 equivalent released.

This is a relatively low opportunity cost that should make REDD-plus very attractive for developing countries. Other studies including the Stern andEliasch reviews have also found relatively lower costs compared to other mitigation options. But are low opportunity costs enough?

Land use change in the tropics is driven by people trying to maximise their economic gain. They will always choose the most profitable option available. If REDD is to work as a real financial incentive, it must be robust enough to compete with other potential land uses.

One answer might be to target specific ecosystems, such as peatlands, that store large amounts of carbon and that don't generate much money when land use is changed. In Indonesian peatlands, for example, the ASB studies found that land users earned just US$0.10 to $0.20 per tonne of CO2 equivalent lost from changing land use. Compensating land users to conserve peatlands here could arguably be a cost-effective way to lower emissions, while maximising livelihood benefits.

Another option for REDD could be to focus on supporting trees in farmed landscapes that are intermediate between natural forests and intensive agriculture (i.e. agroforestry systems). The ASB studies show that multi-storey agroforestry systems, such as cocoa or coffee plantations in west and central Africa, or jungle rubber in Indonesia, can conserve and sequester moderate to high amounts of carbon, while also maintaining relatively high biodiversity and providing moderate profits for farmers.

But it will take more than financial incentives alone for REDD to lower emissions and improve livelihoods. REDD strategies will also have to address other issues, including causes of deforestation, sustainable forest management and monitoring capacity.

There is overwhelming evidence that deforestation in Africa and parts of Asia is largely due to agricultural expansion. So stopping it means making agriculture more efficient. This, in turn, means that funding for agricultural research and extension programmes for agricultural intensification has to be part of any effective and efficient REDD package.

Investing in agricultural intensification in the tropics is often complicated by unclear tenure and land rights. These also make designing and implementing REDD (and ensuring proper benefit sharing) complicated. Clearly, property rights would have to be reformed for REDD to be successful — which presents a whole new suite of challenges.

And some of the countries with the greatest potential for REDD also have serious governance challenges. For example, the Democratic Republic of the Congo, Nigeria, Myanmar, Sudan, Venezuela, Zambia, Zimbabwe and to some extent Indonesia are among the top 10 countries for REDD potential, but have also ranked poorly on forest governance. In many of these countries illegal logging, even in protected forests, remains a challenge.

Planning, measuring, monitoring and reporting REDD activities could prove a major stumbling block. We have learned some lessons from existing carbon markets transaction costs, like the Clean Development Mechanism (CDM), which have led to REDD readiness programmes by the World Bank and UN. But this is just a beginning to what's needed.

Many developing countries will require substantial investments in capacity building, science, policy and institutions before REDD will cut carbon emissions and benefit livelihoods. For example, countries will need technical support to develop carbon inventory systems and remote sensing capacity. And they will need support to set up the institutional infrastructure required to distribute REDD benefits and implement various incentive schemes.

Broadly speaking, developing countries will have to promote rural development that encourages high carbon stocks in landscapes with high profitability and other environmental service benefits such as water and biodiversity.

Even if monitoring and measuring can be achieved, there is the question of permanence — whether a project's emission reductions will stand the test of time, or whether they might be reversed. This issue, among others, has kept the price of carbon from developing countries' land use change and forestry at about US$4 per tonne — compared to about US$15 for the European Union. Any REDD agreement must address this differential if it is to offer developing countries effective financial incentives.

The bottom line is that our support for REDD is based on flimsy evidence. Though opportunity costs appear to be low, we still know very little about how much it will really cost a country to set up and implement REDD. So since the costs and benefits have not been well understood, we cannot realistically assess how and when REDD could deliver sustainable benefits.

Peter A Minang is acting global coordinator of the ASB Partnership for the Tropical Forest Margins at the World Agroforestry Centre in Kenya.
This article was first published at SciDev.net. It is reproduced here with permission.

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