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Natural Resource Governance around the World

How to protect efficiently the forests without reinforcing the commercial pressures on land?

Questioning carbon market

Documents of reference

Gardette Yves-Marie (ONF international), Locatelli Bruno (CIRAD), Les marchés du carbone forestier, Comment un projet forestier peut-il vendre des crédits carbone ?, mai 2007.

Do forests really store carbon ? Short scientific reminder

In order to understand well the role of the forests in the fight against global warming, it is important to get to the heart of the matter and to explain the biological phenomenons through which trees can absorb carbon but also reject it in the atmosphere.

Trees, thanks to the photosynthesis process, are able to absorb CO2 in the atmosphere and to immobilize the carbon by producing organic molecules that help the tree’s growth. In the same time, trees reject oxygen. Thus, a growing tree can logically be considered as a “carbon sink”. Nevertheless, once the tree is dying and falls apart it releases carbon, that it stocked during the growing phase, in the air in the form of CO2 and it consumes oxygen. Globally, during the life span of a tree, the carbon balance is zero. It is the same thing at the scale of the forest. A growing forest absorbs CO2, a mature forest absorb as much CO2 as it releases and a dying forest releases CO2.

At the global level, the young forests (growing) are those temperate forests in Northern America, Europa and Russia. They are fighting efficiently against global warming by absorbing an important amount of CO2.

In France, for instance, forests absorb around 12% of the greenhouse gases released by human activities. Tropical forests of Latin America, Africa and Asia are mature ones and their carbon balance is zero. However they constitute enormous carbon sinks and deforestation of these areas means releasing huge quantity of carbon in the form of CO2 in the atmosphere. Scientists estimate that carbon emissions due to deforestation are constitutive of 20% of the global international emissions. Concerning forests that fall apart, or more exactly dying trees, a unique solution is valid: to give more value to the wood as a product by using it for furniture or construction. This will allow to extend the period of carbon storage for dozens or even hundreds of years.

As Clément Chenost concludes : “A forest fighting efficiently against global warming is a sustainably managed forest, which optimizes carbon sequestration and value of wood products1”.

I. Planting trees to fight against global warming: reafforestation as a carbon sink creation

1.Afforestation and reafforestation projects

  • in the CDM framework (Kyoto market)

Only afforestation and reafforestation activities are approved in the CDM framework. This decision, taken in Marrakesh, 2001, consequently sets aside conservation activities or forest management for the first period of engagement (2008-2012).

Afforestation and reafforestation are defined as changes in the land use from a non forest-covered area to a forest-covered area. Forest is characterised as a land with a area included between 0,05 and 1 ha, carrying trees from 2 to 5 meters high that branches are covering more than 10% to 30% of the area.

We call afforestation the plantation of a forest on a field that never carried trees during the 50 last years, and re-afforestation the plantation of a forest on a field that did not carry trees over the course of the 50 last years. In any case, in order to be approved, a afforestation or re-afforestation project has to show that the field did not carry any forest at the date of 31st December 1989 and up to the project starting date.

As we reminded in the introductive box, the carbon stocked in the forest is not immobilized for ever and can be released in the atmosphere. Carbon credits granted in exchange for afforestation or re-afforestation projects in the CDM framework are consequently temporary credits, contrary to permanent credits granted to projects that directly reduce greenhouse gases emissions.

Moreover, for countries of the Annex 1, the use of forest credit are limited. For each year of the engagement period, a country can use forest credit only when less than 1% of the emissions of the base year (1990).

  • Voluntary markets

The voluntary market, or compensation market, allows companies or individual to buy emissions reductions to compensate or neutralize their impacts on the environment for ethical or green marketing reasons.

Voluntary markets can be linked with Kyoto markets (with engagement) since companies and individuals have the possibility to buy Kyoto markets credits (for example, quotes from the European market or CDM projects credits). Nevertheless, in most of the cases, credits that are exchanged on the voluntary markets respond to independent modalities, proceedings and standards.

Main credits providers on voluntary markets offer to calculate and compensate companies or individual emissions by purchasing credits which are used to fund projects of emissions reduction or, more often, carbon sequestration projects (afforestation or re-afforestation). Furthermore, voluntary markets offer credits coming from avoided deforestation (see part II) while these projects are still officially under discussion in international negotiations. At last, the credits are not submitted to localisation criteria identified in Kyoto: afforestation or re-afforestation projects that give carbon credits can take place in industrialised countries as well as Southern countries.

Even if voluntary markets are still limited, they are growing fastly. Moreover, the size of the forest projects in the voluntary markets (56% in 2006) is beyong comparison with the size of the forest projects in the MDC framework (around 1%).

The study of Yves-Marie Gardette (ONF international) and Bruno Locatelli (CIRAD)2 gives a localisation of the voluntary forest projects. Among 172 projects identified, 65,7% are located in the countries of the Annex 1 and 34,3% in other countries. Totally, almost 30% of the projects are located in the United States (that did not ratify Kyoto protocol), almost 20% are located in Europe (mainly Germany and United Kingdom), 16% in Latin America (mainly Brazil, Ecuador, Argentina and Mexico), 14% in Australia (that did not ratify Kyoto protocol neither) and 11% in Asia (mainly India and Malaysia). At the same time, one should specify that among 71 credits providers inventoried on voluntary markets, only one is located in Southern countries: Brazil. 34% of them are from the USA and 31% are Europeans.

2.Carbon sinks: a real good scientific idea?

Therefore, forests can be used in CDM framework or on voluntary markets to compensate greenhouse gases emissions and to create credits exchangeable on carbon credits markets. However, environmentalist NGO have often defended the point of view saying that “carbon sinks projects, temporary, should not be implemented to compensate permanent emissions of fossil fuel and this, due to the risks of stocked CO2 discharge”3.

This position seems shared by some scientific studies, which prove that forest do not take part in the greenhouse gases reduction as much as we thought. As we reminded in the introductive box, the carbon balance of the trees during their lifespan is indeed zero. Trees do absorb carbon (but it is difficult to evaluate which volumes) during their growing phase but they also do release some when they are dying (naturally or as a consequence of human activities). Moreover, a study conducted by the University of California shows that growing CO2 emissions directly affect the storage capacity of the natural carbon sink (oceans and biosphere). The more CO2 emissions will increase, the less natural carbon sinks, generally speaking and forests in particular, will be able to absorb CO2.

At the same time, several scientists remind us that forests, as the whole biosphere, are directly facing the consequences of the current climatic change. Risks of fire increase in the same time than the risks of drought and floods are more and more common and wrenching. Threats like diseases and insects grow as far as the temperature increase.

In consequence, carbon sinks projects do not offer to the climate any real advantage at the long term: the carbon stocked by trees in afforestation projects is not sustainably stocked. As said the Climate action Network4, « carbon sinks are reversible, which means that they can become a source of releasing for various reasons, including the climate change itself”. Fires, insects attacks and growing need in farmlands are likely to transform the today carbon sinks into sources tomorrow. Besides, whereas carbon absorptions are slow, carbon emission are generally fast and this increases the risk of fast release of significant amount of carbon in the atmosphere.

Finally, afforestation or reafforestation projects, integrated or not in regulated markets, seem to be a wrong response to the climate change challenges that the humankind are facing today.

Worse, they may divert our attention and help the real polluters not to take their responsibilities in simply reducing their consumption of fossil fuels.

3.Political and environmental risks

Moreover the fact that it does not bring any real advantage in the fight against climate change, carbon sinks projects can damage biodiversity conservation. It is indeed particularly tempting for the industrialised countries and their industries to invest in afforestation projects in the South that can be reduced in reality to low-cost trees plantation on wide areas with high-sequestration rate species. These projects are particularly useless in terms of biodiversity protection or ecosystems resilience.

In addition, these afforestation projects requires that investors acquire rights on the area dedicated to plantation. Land used for plantation in the CDM framework are more often land with unsolved property conflicts or land with customary rights not recognised by the positive law. The implementation of afforestation projects in the CDM framework encourages consequently the eviction of rural population that cultivated land before the investment and the negation of their customary and formal rights.

To conclude, the integration of carbon sinks projects in the CDM mechanisms is often accused to reduce significantly the incitations to technology transfers.

II. Preserve forests to fight against climate change: the avoided deforestation

1.Struggle against deforestation in the international agreements to fight against climate change: birth of the REDD mechanism

At the moment, the United Nations Framework Convention on Climate Change (UNCCC) do not plan any tool to fight against deforestation. Only afforestation or reafforestation activities are eligible as CDM of Kyoto protocol. Nevertheless one estimates that today 17% of the CO2 emissions are due to deforestation activities, making forests the third source of greenhouse gases emissions after energy and industry sectors.5

The avoided deforestation has been excluded of Kyoto protocol for two main reasons. First, part of the developing countries were afraid to loose their sovereignty on a important part of their territory. Then, the avoided deforestation could facilitate the creation of several low-price credits on carbon markets, that would not encourage countries of the Annex 1 to really reduce their emissions.

However, during the 11th conference which took place in Montreal, 2005, Costa Rica and Papua New-Guinea suggested to include in the Climate convention framework some incentives to reduce the tropical deforestation process. Some suggestions have been considered at various moments in order to have an international agreement on the inclusion of avoided deforestation projects in the UNCCC framework after 2012 (end of the 1st period of engagement in the Kyoto protocol).

For the moment, position of the Southern countries is still not unified. Countries member of the Coalition for Rainforest Nations (CfRN)6 stand up more for a linkage between positive incentive mechanisms and Northern countries engagement in the Kyoto protocol framework. They are in favour of the market system implementation, so the carbon credits coming from avoided deforestation would be exchangeable at the international level. Countries from the Congo basin defend almost the same position, except that they highlight the deterioration of the forest mass and not only deforestation itself.

Brasil, in the other side, stands up for positive incentives mechanisms not linked to the engagement of the Annex 1 countries or to any type of market system. It suggests to implement a funds that Southern countries could voluntary join and that would reward countries making special efforts (efforts being evaluated in regard to a reference deforestation rate and a real deforestation rate). Brazil, like other CfRN countries, is not in favour of the recognition of forest deterioration process.

Other countries of Latin America are using the variety of tools to implement and suggest, in the same time, to create a carbon funds (supplied with a taxes system to be defined), to implement a capacity building funds (supplied with cooperation funds and development aid)that would launch pilot projects and to implement market tools linked to the Northern countries engagement and that could be included in the existing CDM framework.

Anyway, in the Bali action plan (approved during the Bali Conference, December 2007), countries have decided to include the “reduction of emissions linked to deforestation and forest deterioration” in the negotiation process of the new international climate agreement after 2012.

2.Avoided deforestation: mechanisms already implemented

The topic of avoided deforestation is thus reopened to the negotiation since 2005 and the way it will be integrated in the international agreement about reduction of greenhouse gases emissions at the end of this 1st period of engagement in the Kyoto process remains unclear. Nevertheless, pilot experiences are currently going on in various countries for 10 years. Report from Yves-Marie Gardette and Bruno Locatelli (see note 2) makes a census of various experiences, among which the Bio Carbon Fund and the Noël Kempff project. This last project, implemented in Bolivia in 1997, includes the reduction of around 17 millions of tons of CO2 during 30 years by protecting the Noël Kempff park (end of the deforestation, park boarders extension and limitation of the slash-and-burn cultivation activities). More officially, the Bali action plan planned the implementation of pilot experiences in 2008 and 2009, that would allow to precise more the REDD mechanisms to launch after 2012. Nowadays, it is too early to evaluate the impacts of the official pilot projects.

But the most interesting example of project implemented out of the international negotiation framework, may be in the Amazonas State, Brazil7. Three times bigger than France, Amazonas State can be proud of its deforestation rate which is around 2% of its area compared to the 20% in the neighbouring states of Para and Rondônia. This situation has to be linked with the lack of terrestrial communication lines and the priority given to the development of the industrial and commercial free-taxes area of Manaus, that concentrated activities. Government tried to limit its development by creating new protected areas (40% of the State area under various status, today).

Governor, Eduardo Braga, associated with of Lula da Silva, was elected in 2002 under the banner of citizen and responsible ecology. In 2003, he created the “green free-taxes area” program with the objective of supporting the forest production, agro-pastoralism, fishing in an way that it is adapted to the environment, socially fair and economically viable. It aims at building an alliance with the small forest holder and local people, at modifying the forest exploitation rules to make the forest sustainable and to turn its inhabitants into its main defenders.

However, financial sources are lacking and the power struggle does not allow to go further in the use of public resources. Some years later, a new program has been implemented, which aims at moving the State into a pioneer in the struggle against climate warming and at attracting funds from the international sphere.

The Law 3135 on climate change, environment preservation ans sustainable development (voted in June 2007) created consequently a labelling system called “friends of climate and Amazonian forest”. This labelling allows the participating companies to give value to their environmental engagement and to rely on green marketing. The mid-term goal for Rudardo Braga and Virgilio Viana, his environment adviser, is to be able to sell carbon credits corresponding to part of the Amazonian forest protected from a deforestation process.

To fund this policy, tax shelter have been implemented in order to attract private investments. A foundation (Amazonas Sustentavel Foundation) has been created to collect supporting funds for the forest protection in the Amazonas state. Today, it is managed by Virgilio Viana himself. It is co-funded by Amazonas state and Bradesco bank (at a level of 8 millions euros each) and it is planned to increase the resources by requesting the private sector. Bradesco bank promised to add 4 millions Euro per year during 5 years by using financial tools such as pension fund, capitalization titles or investment fund. Other big private group, like Yamamay (lingerie line) or Marriott International (hostelling company) have invested in some reserves or have made some financial gift to the foundation, before opening stores or hotels in the region.

One of the element is the Bolsa Floresta, a redistribution system for the local people in charge of the forest conservation. Today, Jacques Denis estimates that 4000 households are benefiting from this with 50 reais monthly (20 Euro) and more than the double should benefit from this in the end of 2008, beginning of 2009.

Vitoria Amazônia, environmental education association, criticizes the opaqueness of the functioning of Amazonas Sustensavel foundation. For the members of the association, companies, which give funds to the foundation, embellish their image with short-term investments. They create a forest private income really profitable whereas local people that can sustainably protect their environment will continue to receive their low Bolsa Floresta. Therefore, the risk of indirect privatization of a important part of the Amazonian forest is real. Ademir Ramos comments, told by Jacques Denis are clear: “The Amazonian preservation started to be a real business. […] One monetizes the forest. But from an ethical point of view, we can not reduce it to a simple trade issue.

Risks of privatization of the Amazonian forest are even more important than the final objective is thence to allow owners of the “preserved forests” to obtain Carbon emission licenses exchangeable on the international carbon credits markets. But who are the “owners” of the forest? The case of the Swedish billionaire Johan Eliash is exemplary. In 2005, he purchased the Gethal sawmill and owned almost 160 000 hectares of forest in the Amazonas state, in the name of the environment preservation. Some months later, Brazilian authorities inculpate him for having illegally timbering 230 000 trees. But who cares! In 2008, he declared to the El Globo that one can take over the whole Amazonia for 50 billions dollars.

This project is not as insane as we can believe. Today, INCRA8 announces that 5,5 billions hectares are already in foreign hands. And the probability to finally obtain carbon credits exchangeable for each hectare of preserved forest increases even more the commercial pressures on this area. Ana Paulina Aguiar Soares9, questioned by Jacques Denis, declares that “Carbon credits means to privatize the forest in the favour of the international companies. In the name of environment preservation, companies become owners of the forest. Then, what will happen for inhabitants, associations, cooperatives?

Even the fact that this question is not answered, we already know that this experience conducted in Amazonas state could be extended quickly to the whole Brazil. The 1st of August 2008, president Lula da Silva signed up a decree creating the Amazonian Fund, which could attract 15 billions Euro of gifts up to 2021 and that should fund projects of Amazonian forest preservation suggested by the Ministry of Environment. We do not know yet how and under which conditions these projects would permit the creation of carbon credits.

3.Avoided deforestation and space competition

Risks of forests privatization, induced by the creation of market mechanism around avoided deforestation projects seem pretty real, especially for big tropical forests. Moreover, one should question the conditions that allow regulation of the deforestation by REDD mechanisms.

The system philosophy, which pays individuals or companies protecting the forest, means that these actors are only following their own interests. They avoid deforestation and get a remuneration in return (direct wage like Bolsa Floresta in the Amazonas state or carbon credits exchangeable on the international markets), because it is economically profitable for them to preserve the forest. But what will happen once forest preservation will not be profitable any more?

The perversity of this market-way-of-thinking comes partly from the fact that the carbon credits recognition is possible only if common goods, like “national” land or forests, can be privatized. Once a forest exploiter, a farmer, or a breeder destroys the forest and releases important carbon quantity, he does not have to pay for the environmental impact to the planet. Similarly, states do not have to report to all the nations about the bad consequences of their agriculture and forest policies. The right to use and abuse resources is recognized to the sovereign states, which are often the legal “owner” of the ground.

This new combination allows the state to negotiate carbon credits with foreign companies that can consequently obtain rights to pollute. It creates a new type of beneficiaries, private companies most of the time, that benefits from a new type of private income and that has to implement the preservation policy not realized by the state in order to protect this source of private income.

Policy that we would expect form a responsible state would be to share incomes instead of creating new income sources through partnerships with private actors (foreign or national) interested in helping the state to reach the mentioned goals.

This market system, which could officially allow the sustainable management of forest is indeed particularly dangerous and unpredictable at the long term. Considering the current competition for space, one should question the liability of this system. Commercial pressures on land are more and more important: companies need space to create big food production unit, for example. In Amazonia, cattle breeding is the first cause of deforestation. Brazil became the first international exporter of beef meat in direction of the Northern America and Europe. David Kaimovitz, director of CIFOR at this time, observed humorously that cattle breeders are turning Amazonian forest into minced meat. Is it really profitable or would it be sustainably profitable to protect forest whereas by deforesting, we can create pastures and be sure to cover occidental markets with beef meat?

Same question for soya that became the second cause of deforestation in Amazonia after cattle breeding. Areas dedicated to soya production doubled in Brazil since 2000. The expansion driver is, of course, the cattle breeding boom : 164 millions Brazilian cattle heads have to be fed! Furthermore, Brazil became the second soya exporter in the world behind United States. In 2003, soya exportations counted for 6% of the Brazilian GDP. These exportations are mainly due to the need in soya meal on the European markets because after the 2nd world war Europe stopped to produce its own oil seeds that it needed and this situation was exacerbated by the mad cow disease and the prohibition of animal floor in the food of the cattle.

In the same time, the need for farm lands in order to produce agrofuels never stops to grow. It seems wise to say that a remuneration system for actors who preserve the forest will not be efficient to fight against deforestation when the space competition in the international context will create more and more commercial pressures over land easily exploitable, especially forest land of the South. It may be the time to think that the market is probably not able to answer the big challenges faced by humankind, particularly the climate warming. Pascal Lamy10, himself, declared : “Among phenomenons that capitalism and its value system are not able to face, the most evident is the climate warming”.

 

1Green is beautiful, webzine number 2, La forêt: « puits » ou « sources » de CO2 ? 

2Les marchés du carbone forestier, Comment un projet forestier peut-il vendre des crédits carbone? May 2007

3Information note of the CAN-France about the exclusion of carbon sinks from European CO2 quotes exchange system, April 2007.

4The Climate action Network (CAN) gathers main environmentalist NGOs and NGOs promoting sustainable energy and transports in relation with the climate changes. It is representative of the Climate Action Network International (CAN), international network with more than 430 NGOs in the North and the South.

5See the report by Coordination Sud, Lutte contre le changement climatique: l’horloge tourne. Retours sur la Conférence des Nations Unies sur le changement climatique, 1-12 décembre 2008, Poznan (Pologne).

6CfRN is an intergovernmental agency, which objective is to promote the sustainable management of the tropical forest and to fight against deforestation. It is supported by Chile, Bolivia, Costa Rica, Panama, Nicaragua, Guatemala, Dominican Republic, CAR, DRC, Congo, Gabon, Fiji islands, Papua New-Guinea, Salomon Islands and Vanuatu.

7See the article from Jacques Denis and published by le Monde Diplomatique in October 2008: « Le business de la « forêt verte » en Amazonie ».

8National Institute of Colonisation and Agrarian Reform

9Ana Paulina Aguiar Soares left Incra in 1996. She is geographer, teacher in the federal university of Manaus, and close to Landless People’s Movement (MST).

10Pascal Lamy is director of the WTO. Comments given by Hervé Kempf in Pour sauver la planète, sortez du capitalisme!

Bibliography

CIFOR documents, on line: www.cifor.cgiar.org

Climate Action Network (CAN) documents, on line: www.climatenetwork.org/ and its national partners (for instance, RAC-f for France: www.rac-f.org/ )

Rights and Resources Initiative (RRI) documents, on line: www.rightsandresources.org/

Friends of the Earth International, Climate and Deforestation, REDD Myths, a critical review of proposed mechanisms to reduce emissions from deforestation and degradation in developing countries, December 2008.

Gardette Yves-Marie (ONF international), Locatelli Bruno (CIRAD), Les marchés du carbone forestier, Comment un projet forestier peut-il vendre des crédits carbone?, Mai 2007.

Coordination Sud, Lutte contre le changement climatique: l’horloge tourne. Retours sur la Conférence des Nations Unies sur le changement climatique, 1-12 décembre 2008, Poznan (Pologne), February 2009.

Valentin Bellassen, Renaud Crassous, Laura Dietzsch et Stephan Schwartzman, Réduction des émissions dues à la déforestation et à la dégradation des forêts: quelle contribution de la part des marchés carbone?, in Etude Climat, n°14, September 2008.

IUCN, Making REDD work for the poor, October 2008. www.iucn.org/about/work/programmes/economics/?2052/Making-REDD-Work-for-the-Poor

Denis Jacques, Le business de la « forêt verte » en Amazonie, in le Monde Diplomatique, October 2008.

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