Finance key to getting a deal on REDD+ at Durban

By Tierney Smith

Deforestation and the REDD+ scheme are set be central to the COP17 negotiations at Durban, but a deal looks impossible without the implementation of a clear finance framework.

In Cancun in 2010 an agreement was reached on Reducing Emissions from Deforestation and forest Degradation (REDD+) in developing countries. The REDD+ scheme aims to create financial value for the carbon stored in forests, offering incentives for developing countries to reduce emissions from deforestation.

It also goes beyond deforestation and degradation including the role of conservation, sustainable management of forests and enhancement of forest carbon stocks.

With deforestation accounting for around a fifth of all global emissions, halting the destruction of forests is a vital part of keeping temperature rises below 2°C. Some scientists have warned that deforestation must be reduced by 50% by 2020 for the best chance of meeting this target.

But for many countries – particularly in the developing world – deforestation is central to their economies. Whether it be the clearing of woodland for palm oil, soybeans, cattle ranches or illegal logging and charcoal production, cutting down trees is often more economical for communities than protecting them.

When veteran environmental campaigner Tony Juniper spoke to RTCC last week he observed: “Countries in some of the developing parts of the world, in Africa for example, have perfectly rational economic strategies which include deforestation.

“So they are going to need some assistance in order to do something about that now. Not next year or the year after. So some money needs to be flowing.”

Only by making forest conservation as competitive as revenue streams from the production of timber of agriculture can the world begin to tackle deforestation. The UN Environment Programme (UNEP) estimates that between $17 and $40 billion will be needed in investment by 2030 in order to meet reduction targets.

Currently rates of investment – a huge majority of which are pledged by national governments – stand at between $5 and $7 billion, representing a major funding gap.

Some countries are setting the bar. For example in June this year Norway pledged $50 million annually under a new Carbon Fund of the Forest Carbon Partnership Facility, a World Bank initiative assisting tropical and subtropical forest countries to develop REDD+. This move was mirrored by another $30 million pledged by Germany.

Options for Finance

The agreement on REDD+ at COP16 left the options for financing the scheme open for further development, but the general consensus now is that the private sector must also be involved.

A UNEP report released earlier this year said effective measures to tackle the drivers of deforestation must also be found, shifting behaviour in the private sector towards sustainable land use.

This is a sentiment shared amongst forestry researchers who call for timber to be treated in the same way as any other resource. In the same way as researchers focus on the impacts of oil volatility on businesses such as supermarkets, more research could be done into the impacts of deforestation.

For example, UNEP say that carrying on business as usual would bring climate impacts costing around $1 trillion by 2100, and stopping deforestation and degradation and planting new forests could bring benefits equivalent to two million new wind turbines.

Kristy Graham from the Overseas Development Institute agrees, telling RTCC: “The private sector is already involved as a REDD+ project developer, investor and also as agents of deforestation (largely in the agriculture sector). Therefore by changing the practices in the agricultural sector, and aligning investments with REDD+ goals, the private sector is able to contribute to REDD+ objectives.”

One option for private sector input is through forest credits being included on a carbon market. Currently forestry is only responsible for a very small percentage of the overall carbon markets – although make up a considerable amount of the voluntary market.

The main reason for this is that forestry credits have always been considered as ‘temporary’ under schemes and do not provide a lasting benefit for companies. Options to work around this would be insurance mechanisms or ‘buffers’ for the credits rather than a ‘temporary’ status for them.

Other ideas are also being considered to raise finance. In a similar way to the Green Climate Fund, aviation and shipping could potentially be a source of finance for communities halting deforestation.

Suggestions have also been made that a tax on financial transactions in developed countries could be used to fund the programme. In his recent book The God Species, environmental commentator Mark Lynas argues that a small addition to VAT would raise huge funds for the forestry sector and have a minimal impact on the people paying.

Final Hurdle

However, some argue that forestry is somewhat held ransom by an overarching legal deal. Without clear signals about climate finance and without a strong commitment from nations over their overall emissions outputs, will the incentives be there for developing nations to protect their forests?

Graham, like many others, is sceptical: “Progress on REDD+ under the UNFCCC is linked to progress on all the other issues under discussion – climate finance and a long term binding agreement on emissions reductions – which are unlikely to progress much in Durban. This is the single biggest barrier to big progress on the REDD+ agenda.”

Contact the author of this story @rtcc_tierney

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