Could the new Forest Alliance improve nature financing?
Protecting tropical forests is not cheap. Although research shows that for every dollar spent on protecting or restoring tropical forests Rebate up to $7 In terms of economic benefits, deforestation continues in most tropical rainforest countries.
In Brazil, the Democratic Republic of the Congo (DRC) and Indonesia, A total of more than 50% of the shares In the world’s rainforests, financial incentives are still driving deforestation associated with agriculture and extractive industries. While firm enforcement of existing laws is necessary to control the problem, it is also critical to design new economic initiatives to encourage forest conservation and restoration.
Cut down trees in the forest. photo: Andre Mora pass pixel
The new alliance of the three countries is being touted as a “OPEC (Organization of Petroleum Exporting Countries) forests“given the potential power it may have to set prices and limit the supply of credit to forest conservation and restoration systems. If successful, this type of agreement and coordinating body could be a game-changer for the Democratic Republic of the Congo, Brazil and Indonesia. Yet , there are no real details on how the system will work, and the rules are yet to be worked out as to what the coalition will produce. Not only for the three countries, but for the world as a whole, the system is fair and effective in reducing deforestation is crucial.
Builds on previous initiatives to reduce deforestation
Over the past few years, extensive efforts have been made to pay landowners and the state to reduce and avoid deforestationThe sources of funding for these programs vary, ranging from government programs to NGO-driven conservation campaigns and, more recently, carbon credit systems that allow polluters to “offset” their emissions by paying for conservation and carbon sequestration elsewhere.Many of these lines of credit are traded through mandatory schemes run by the government, but others are issued in voluntary markets that have been rife with scandals and verification challenge Last few years.
A major source of funding for reducing deforestation in tropical countries is Reduce emissions from deforestation and degradation programs, also known as REDD+.The REDD+ system emerged in the mid-2000s as a way for wealthy countries and corporations to finance forest conservation and reduce deforestation through international treaties such as Paris agreementthe focus shifted from individual project-based financing to broader national agreements known as Govern REDD+. REDD+ systems are considered important in preventing climate change and nature loss, but in the past they have faced problems in actually ensuring forest integrity and protecting the rights of local communities in and out of forests.
as The fight for voluntary carbon markets and international agencies hope to continue formalizing the structure of REDD+, a new alliance between Indonesia, the Democratic Republic of the Congo and Brazil that aims to be a game-changer in forest financing. three countries, Who concluded more than a decade of negotiations last November, have agreed to coordinate the protection of forests within their borders and limit potential leakage between them.while other organizations in the Forest State, such as Alliance of Rainforest NationsHaving tried such an arrangement before, bringing Brazil into the deal would ensure that this new forest coalition has enormous bargaining power when it comes to selling carbon credits.This may further affect the viability of existing voluntary carbon markets and accelerate the trend towards countries directly controlling or owning carbon credit projects in tropical forests, such as Recent actions in Zimbabwe. But exactly what will happen as this alliance moves forward remains unknown.
rewriting the balance of power
Ruben Lubowski, Adjunct Professor at Columbia University’s School of International and Public Affairs and Chief Carbon and Environmental Market Strategist at Lombard Odier Investment Managers, has extensive experience in research and advice on REDD+ initiatives. He believes the agreement could be transformative, with the opportunity to rewrite the balance of power in funding for reducing deforestation.
“The idea that these governments see this as an economic opportunity is positive. Many have long believed that both Indonesia and Brazil could become “green superpowers” with a comparative advantage in producing green goods, not to mention carbon sequestration credits .It makes sense to see this as a green development strategy and a strategic choice for countries,” he said. As major players in the space, these countries “have real political leverage in this emerging carbon market and net-zero world,” he added.
Buyers are currently setting price terms when it comes to carbon payments and other incentives to reduce deforestation and nature-based services.But it’s entirely possible that countries like this use their clout to get richer countries to meet more ambitious climate goals, such as loss and damage.
photo: David Riano Cortez pass pixel
However, problems can arise if this power is used for rent-seeking, or if the system is exploited for financial gain at the expense of smaller players.
“When I think about OPEC, I think about monopolies and manipulating commodity prices, which can be problematic,” Lubowski said. OPEC price manipulation Oil production is legendary, with little positive impact on environmental outcomes or the stability of many OPEC countries. In a worst-case scenario, the three Forest Alliance countries could use their clout to disadvantage other producers of carbon credits by strategically raising and lowering prices, potentially reducing the amount that smaller countries spend on conservation and restoration. stable funds.
but with Some experts estimate the carbon price to be around $100 per metric ton The net-zero target needs to be reached, and due to volatility and issues maintaining credit quality, supply-side pressures could help to achieve this. With coordination, these countries have the potential to issue carbon credits on a really large scale. But how the projects that account for those credits will work is another matter.A popular choice is Jurisdiction or “sovereign credit” framework, which is used to issue credits to reduce deforestation because of its low likelihood of leakage and individual projects being problematic.Organizations like the Rainforest Nations Alliance are already pushing for wider adoption of sovereign credit, which has already begun Impact the existing carbon credit market. Lubowski suggested that such a framework might work for Forest Alliance, since coordination would take place at the national level.
“The jurisdictional approach addresses many of the issues around leakage and permanence, and fits very well with jurisdictional strategy,” he said. But while this approach would be more effective in reducing emissions at scale and measuring performance across forest regions, “indigenous groups are right to be skeptical of government proposals and agreements,” Lubowski noted.
In fact, creating a system that also takes Indigenous and local land rights into account is probably the most contentious issue in the successful implementation of the Forest Alliance.Agricultural and extractive deforestation have devastating effects on Indigenous communities and others who live in and around forests because Recent attempted genocide against the Yanomami Proven in the hands of Brazilian Amazon gold miners. But conservation efforts, especially payments for deforestation reduction programs, have their own history of crowding out, underpaying and even displacing Indigenous groups. Brazil, Indonesiaand Democratic Republic of the Congo There are problems here, and politicians in power are usually the factors that decide how to deal with reducing deforestation and respecting indigenous rights. If the new Forest Alliance is to succeed in reversing deforestation, it must ensure the active participation of Indigenous communities.
Finally, to succeed, the new Forest Alliance needs to develop transparent guidelines for tracking and accounting for carbon sequestration and other forest ecosystem services, manage prices transparently to support the overall market, and drive the world towards a higher carbon Price direction developments and clearer access to high-quality credit. It may then better transform the broader carbon market and REDD+ system. Doing so requires thoughtful planning, international support and, most importantly, careful consultation with the indigenous groups living in the targeted protected forests.
The stakes are high, and the outcome of the agreement could help define the legacy of the three countries and their political leaders on a global scale. As the coalition further formalizes, international organizations working to reduce deforestation and all players in existing carbon markets should take note. If successful, the Forest Alliance will shape the global carbon conservation landscape for decades to come.
Ezekiel Maben is a student at Columbia University MPA Environmental Science and Policy Program.
