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The contribution of forestry in The contribution of forestry in maintaining and expanding maintaining and expanding forest-based carbon sinksforest-based carbon sinks

Markku Kanninen, Robert Nasi, CIFORMarkku Kanninen, Robert Nasi, CIFORAlain Karsenty, CIRADAlain Karsenty, CIRAD

CLIMATE 2050Montréal, 24-26 October, 2007

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Why conserve tropical forests?Why conserve tropical forests?

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Changes, threats, risksChanges, threats, risks

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Forests and carbon sinks Forests and carbon sinks

►Contribution to carbon sinksContribution to carbon sinks Planting ‘new’ forests (A/R CDM)Planting ‘new’ forests (A/R CDM) Avoiding deforestation (conserving Avoiding deforestation (conserving

forests)forests)

►Contribution to GHG emissionsContribution to GHG emissions Deforestation is responsible for 18 to 25% Deforestation is responsible for 18 to 25%

of GHG annual emissionsof GHG annual emissions Bio-energy Bio-energy

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TrendsTrends

► During the last 40 years Deforestation: 500 M Ha Consumption of forest products: 50% increase

► During the next 40 yearsDuring the next 40 years Over 100 M Ha of new agricultural land neededOver 100 M Ha of new agricultural land needed Consumption of forest products: 50% increase 40-50% of industrial wood from plantations

► does not consider the issues related to biofuels

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The Clean Development Mechanism The Clean Development Mechanism (CDM)(CDM)

► A PES scheme for reducing emissions through A PES scheme for reducing emissions through project activities in developing countriesproject activities in developing countries

► General rules of CDM: boundaries, baseline, General rules of CDM: boundaries, baseline, additionality and leakageadditionality and leakage

► Additionality: demonstrate that the project would not have Additionality: demonstrate that the project would not have been undertaken without the incentive of carbon credits been undertaken without the incentive of carbon credits industrial plantation projects systematically rejected by CDM industrial plantation projects systematically rejected by CDM Executive BoardExecutive Board

► Leakage: demonstrate the project will nor result in Leakage: demonstrate the project will nor result in displacement of the emissions elsewheredisplacement of the emissions elsewhere

► Afforestation/Reforestation (A/R) projects Afforestation/Reforestation (A/R) projects Addressing non permanence (temporary credits)Addressing non permanence (temporary credits) Human-induced activities only: no project in degraded forestHuman-induced activities only: no project in degraded forest Ineligible if the land was covered by forest after 31/12/1989Ineligible if the land was covered by forest after 31/12/1989

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Forestry CDM: a failure?Forestry CDM: a failure?One registered project and a few more in the pipeOne registered project and a few more in the pipe

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The difficulties faced by forestry The difficulties faced by forestry CDMCDM

No real demand for temporary credits in a No real demand for temporary credits in a context of relative oversupply of context of relative oversupply of permanent credits; permanent credits;

EC do not allow European companies to use A/R EC do not allow European companies to use A/R credits to fulfill their objectives of emission reductionscredits to fulfill their objectives of emission reductions

In most tropical countries, difficulties to In most tropical countries, difficulties to secure land for plantations due to:secure land for plantations due to:

land tenure issues, land tenure issues, the bureaucratic process and low efficiency of the the bureaucratic process and low efficiency of the

administration, administration, the poor governance and ill-functioning justice the poor governance and ill-functioning justice

institutionsinstitutions

Transaction costs are high, too high for Transaction costs are high, too high for small and community-based projectssmall and community-based projects

11from Azevedo 2007

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Avoided DeforestationAvoided Deforestation (RED, REDD) (RED, REDD)

► Generic expression for RED (Reduction of Generic expression for RED (Reduction of Emissions from Deforestation) or REDD (the Emissions from Deforestation) or REDD (the 2nd D initially for Developing countries but 2nd D initially for Developing countries but used now for Degradation)used now for Degradation)

► To curb down deforestation – and To curb down deforestation – and biodiversity loss- by rewarding good land use biodiversity loss- by rewarding good land use and forestry practices (e.g. promotion of and forestry practices (e.g. promotion of sustainable forestry…) sustainable forestry…)

► Reward will be through carbon credits Reward will be through carbon credits (Kyoto assets) (Kyoto assets) oror money equivalent (special money equivalent (special fund?)fund?)

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RED/REDDRED/REDD► A mechanism proposed by PNG, Brazil and A mechanism proposed by PNG, Brazil and

others (e.g. Congo Basin’s countries), but others (e.g. Congo Basin’s countries), but with different featureswith different features

► The bottom line: financial rewards for The bottom line: financial rewards for countries reducing their deforestation countries reducing their deforestation ratesrates

► Major difficulties:Major difficulties: How to choose and set up baselines?How to choose and set up baselines? How to take into account degradation?How to take into account degradation? As a Kyoto (fungible credits, second As a Kyoto (fungible credits, second

commitment period 2013-2017) or commitment period 2013-2017) or independent (special credits or money) independent (special credits or money) instrument?instrument?

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Assessing deforestationAssessing deforestation

► Monitoring deforestation is difficult, but not Monitoring deforestation is difficult, but not impossibleimpossible

► The crux is about agreeing on the reference The crux is about agreeing on the reference baselinebaseline Most proposals suggest deriving the baseline from an Most proposals suggest deriving the baseline from an

average of past trends of deforestationaverage of past trends of deforestation Others (e.g. Congo Basin countries) claim for an Others (e.g. Congo Basin countries) claim for an

adjustment factor allowing them to increase their adjustment factor allowing them to increase their future deforestation while keeping a possibility to be future deforestation while keeping a possibility to be rewardedrewarded

Others (researchers) would prefer predictive Others (researchers) would prefer predictive baselines based on anticipated rates of deforestation baselines based on anticipated rates of deforestation by countryby country

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Historical reference: winners and Historical reference: winners and loserslosers

► Indonesia or Malaysia had high rates of Indonesia or Malaysia had high rates of deforestation in the 80 and 90’s; forest tends now deforestation in the 80 and 90’s; forest tends now to concentrate on less accessible lands: to concentrate on less accessible lands: deforestation expected slow down for ‘mechanical’ deforestation expected slow down for ‘mechanical’ reasonsreasons Future reductions likely to be non additionalFuture reductions likely to be non additional Would it be ‘fair’ to reward Indonesia and Malaysia with Would it be ‘fair’ to reward Indonesia and Malaysia with

regard to their policies vis-à-vis the forest in the past regard to their policies vis-à-vis the forest in the past decades?decades?

► Peru, Bolivia, Congo Basin are likely to be the Peru, Bolivia, Congo Basin are likely to be the losers under such baseline reference and claim for losers under such baseline reference and claim for adjusting the reference to anticipated trends of adjusting the reference to anticipated trends of deforestationdeforestation

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Can we predict deforestation Can we predict deforestation rates?rates?

► A possible solution would be to forecast a likely A possible solution would be to forecast a likely “business as usual” deforestation rate“business as usual” deforestation rate

► Chomitz et al. (2007) suggest modeling land-use Chomitz et al. (2007) suggest modeling land-use dynamics to calculate the baseline scenario. dynamics to calculate the baseline scenario. also pointing out correlations between deforestation rate also pointing out correlations between deforestation rate

in the Amazon and beef price at farm gate or with in the Amazon and beef price at farm gate or with rainfall… rainfall…

► (quite) predictable variables (e.g. population (quite) predictable variables (e.g. population growth) and (best educated) guesses: growth) and (best educated) guesses: Speculative prices of major agriculture commodities, Speculative prices of major agriculture commodities,

such as soy, oil palm, beef…? such as soy, oil palm, beef…? Evolution of rainfall and the risk of forest fires in the Evolution of rainfall and the risk of forest fires in the

context of growing climate disorders?context of growing climate disorders?

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Can governments do something?Can governments do something?

► Most factors influencing deforestation rates Most factors influencing deforestation rates are beyond the reach of governments (cash are beyond the reach of governments (cash crop commodities price changes, currency crop commodities price changes, currency exchange rates…)exchange rates…)

► In complex systems, finding a direct In complex systems, finding a direct plausible causality link between public plausible causality link between public action and a number hectares (not) action and a number hectares (not) deforested is very difficult (or impossible?)deforested is very difficult (or impossible?)

Kaimowitz and Angelsen (1999) have shown the non Kaimowitz and Angelsen (1999) have shown the non consistent effects of single variables (such as agricultural consistent effects of single variables (such as agricultural progress) on deforestationprogress) on deforestation

If deforestation slows down, how to disentangle the effect If deforestation slows down, how to disentangle the effect of public policies to the other factors insensitive of of public policies to the other factors insensitive of government action?government action?

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Exogenous factorsExogenous factors Non intentionalNon intentionalEndogenousEndogenous

factorsfactors

IntentionalIntentionalEndogenousEndogenous

factorsfactors

Type of measuresType of measures

Change in AgriculturalChange in Agriculturalcommodity pricescommodity prices

Extended climateExtended climatedisorders disorders

Changes in interest Changes in interest rates rates

Cut in fertilizerCut in fertilizersubsidies subsidies

Stringent enforcement Stringent enforcement of land-use change of land-use change lawslaws

Possibility to imputePossibility to imputethe deforestationthe deforestationreduction to thereduction to thepublic actionpublic action

NoNo yesyes yesyes

Possibility to quantifyPossibility to quantifythe net impact onthe net impact ondeforestationdeforestation

NoNo Very difficultVery difficult PossiblePossible

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Carbon credits or what else?Carbon credits or what else?

► Fears that AD would generate huge quantities of Fears that AD would generate huge quantities of “hot air” and a reduction of price of emission “hot air” and a reduction of price of emission permitspermits

► Recent report from CDM executive board suggests 20% of Recent report from CDM executive board suggests 20% of carbon credits are “non additional”…carbon credits are “non additional”…

► A possible alternative:A possible alternative: De-coupling from Kyoto: De-coupling from Kyoto: moneymoney instead of carbon credits instead of carbon credits

through an through an international fundinternational fund against deforestation against deforestation Targeting, Targeting, in priority,in priority, field actors instead of field actors instead of

governmentsgovernments Using a range of PES to favor changes in farmers’ Using a range of PES to favor changes in farmers’

productive practices and rewarding true conservation productive practices and rewarding true conservation efforts (case by case assessment)efforts (case by case assessment)

Working with governments to remove perverse Working with governments to remove perverse incentives (inappropriate subsidies, fiscal system…) and incentives (inappropriate subsidies, fiscal system…) and overcome structural threats, such as land tenure overcome structural threats, such as land tenure insecurity, corruption, justice…insecurity, corruption, justice…

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Combining economic instruments Combining economic instruments and law enforcementand law enforcement

► Detecting forest infractions (by satellite) is less Detecting forest infractions (by satellite) is less difficult than enforcing law and effective sanctions…difficult than enforcing law and effective sanctions…

► How to avoid designing a scheme in which law How to avoid designing a scheme in which law compliers will be at a disadvantage compared to compliers will be at a disadvantage compared to violators? violators? What conditions of eligibility?What conditions of eligibility? Setting differential regimes for compliers and non-compliers?Setting differential regimes for compliers and non-compliers?

► The minimum condition of success is strong signals of The minimum condition of success is strong signals of political will to enforce the law: do we want to pay for political will to enforce the law: do we want to pay for that? that? With the risk to be said : “With the risk to be said : “if you don’t pay I let my if you don’t pay I let my

forests being destroyedforests being destroyed””► The ultimate condition is (still) about choices and The ultimate condition is (still) about choices and

behavior: forest are converted because it ‘pays’ to do behavior: forest are converted because it ‘pays’ to do so (for cultivation, feeding beef, biofuels, paper…)so (for cultivation, feeding beef, biofuels, paper…)

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► Synergies of C sequestration with other PES Synergies of C sequestration with other PES schemesschemes

►Diversified rural economies and improved livelihoods►CDM projects for biodiversity corridors►Landscape level planning in watersheds

► Combine mitigation (C sequestration) measures Combine mitigation (C sequestration) measures with adaptation to climate changewith adaptation to climate change

►CDM projects to reduce vulnerability, minimize risks (forest fires, flooding, etc.) or increase resilience of ecosystems

►Joint CDM / AD projects

► Promoting sustainable forestry

Conclusions – a way forwardConclusions – a way forward

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Promoting sustainable Promoting sustainable forestryforestry

►CDM for afforestation and reforestationCDM for afforestation and reforestation Gain experience in good management Gain experience in good management Develop forest-based rural enterprisesDevelop forest-based rural enterprises Role of planted forests will increase in the Role of planted forests will increase in the

future in timber supplyfuture in timber supply►Avoided deforestationAvoided deforestation

High potential post 2012High potential post 2012 Reduce emission and conserve biodiversityReduce emission and conserve biodiversity Improve forestry practices and managementImprove forestry practices and management

23Thank you