Tag: Geographic Asia

The Center for International Forestry Research (CIFOR) recently surveyed 23 subnational forest carbon projects in Brazil, Peru, Cameroon, Tanzania, Indonesia, and Vietnam. Their findings? Project proponents are driven to save forests, but a lack of demand and unclear tenure remain their biggest challenges.

This article was originally posted in CIFOR’s blog. Click here to read the original.

29 April 2014 | Bogor | Indonesia | Actions must be taken to clarify land tenure in forest-rich developing countries, and to improve the economic viability of REDD+ or risk jeopardizing efforts to reduce deforestation and mitigate climate change, a new study based on 23 forest carbon initiatives suggests.  

Hundreds of pilot initiatives designed to test the feasibility of REDD+, or Reducing Emissions from Deforestation and forest Degradation, have got under way in recent years. But with obstacles mounting and a climate agreement still elusive, some initiative proponents are losing their enthusiasm for REDD+, according to the study, led by the Center for International Forestry Research (CIFOR).

“The initiative proponents are a spirited, determined group of people who believe in what they’re doing to protect forests,” said William Sunderlin, principal scientist at CIFOR and lead author of The Challenge of Establishing REDD+ on the Ground: Insights from 23 Subnational Initiatives in Six Countries.

“But they’re encountering major challenges whose root causes lie outside their project boundaries, particularly tenure insecurity and what we call the ‘disadvantageous economics’ of REDD+,” Sunderlin said. “These subnational initiatives need more committed support from national and international processes to create circumstances that allow REDD+ to function as intended.”

REDD+ emerged in 2007 as a promising mechanism to slow anthropogenic climate change by providing financial incentives to keep forests standing, given that forests absorb carbon from the atmosphere and that deforestation and forest degradation contribute up to 15 percent of global greenhouse gas emissions. For example, in Indonesia, the world’s third largest emitter of greenhouse gases, more than 75 percent of emissions come from conversion of forests to farmland, agriculture and peat fires — roughly equivalent to emissions from about 400 million cars each year.

What makes REDD+ different from previous — and generally unsuccessful — efforts to reduce deforestation is that it is based on performance-based incentives. As originally conceived, REDD+ would generate a revenue stream by placing a financial value on carbon, with forest managers receiving a share of that revenue only if they actually achieved emission reductions or enhanced carbon stocks.

“Conditional incentives give REDD+ an extra point of leverage, but for this system to work, there must be a clear stream of income and it must be clear who is entitled to benefit,” Sunderlin said.

“Our study shows that these aspects in particular are weak, and this is where attention needs to be focused.”

A Contested Landscape

Insecurity over tenure — the right to own, access or use land — remains the biggest challenge for proponents, the study found.

“REDD+ is being established in places where tenure rules are often unclear and contested,” Sunderlin said.

“But the REDD+ rewards system requires clarity over who holds the right to forests or carbon, who is responsible for reducing emissions, and who can claim the benefits.”

In an earlier survey of villages in five countries involved in REDD+, more than half of the respondents reported that at least some of their tenure is insecure, and more than a fifth had been unable to exclude unwanted outsiders. Furthermore, as tenure problems are generally national in scope and origin, resolving them often lies outside proponents’ control.

The challenge, while daunting, is not insurmountable, Sunderlin notes, as path-breaking tenure reforms are beginning to take shape.

In Indonesia, for example, the government has launched the One Map Initiative to improve tenure and land-use planning, and last year a Constitutional Court ruling aimed to grant indigenous people land ownership rights.

The Highest Bidder

Yet for anyone to benefit, REDD+ must generate income in the first place, and the REDD+ revenue stream originally envisioned through trading carbon credits on carbon markets has fallen short of targets.

Undermining efforts to generate revenue are the lack of a binding international climate agreement to induce regulatory changes, weak carbon markets and the ongoing dominance of powerful business interests, according to the study.

“If you think of REDD+ as a bidding process in an auction, where those who make the highest bid can control forest land use, the bid offered by big agricultural companies often outcompetes what can be offered by REDD+,” Sunderlin said.

“This could change with the establishment of new conditions — some combination of development assistance, international or national funds, or a market-based mechanism — that can generate a stream of income from REDD+ and cover the opportunity costs of forest conversion.”

The existing funding gap is estimated at US$15 billion to US$48 billion by 2020, with the supply of carbon credits outstripping demand by 13 to 39 times, according to the International Forest Finance Project. Initiatives such as California’s cap-and-trade program show promise for generating revenue through carbon markets, but, Sunderlin said, “there is still an urgent need for something that does not yet exist.”

Nevertheless, in combination with research turning a spotlight on challenges and possible solutions, the positive developments under way and increasing impetus to act can lead to “breakthrough solutions,” he added.

“There is growing awareness among governments that tenure problems and the economics of REDD+ are fundamental and need to be resolved soon,” Sunderlin said.

“You can’t rule out the possibility of dramatic improvement in climate change mitigation policy in the next few years — simply because world leaders cannot afford to ignore climate change anymore.”

For more information about the topics of this research, please contact William Sunderlin at [email protected].

This article was originally published in the Forest Carbon Newsletter. Click here to read to read the original.

25 March 2014 | Let’s face it: Donuts are delicious. But we all know that sugary, fried goodness comes at a cost, and thanks to Donuts, Deodorant, Deforestation, a new scorecard, we now know that donuts may be bad news for forests as well as our waistlines. Published last week, the scorecard ranks fast food, personal care, and packaged food companies according to their commitments to keep deforestation-driving palm oil out of their supply chains.

Packaged food companies ranked the highest on the scorecard, with Kellogg’s, Mondolez, Nestlé, and Unilever committing to purging their supply chains of palm oil. And, facing pressure from groups such as Greenpeace and their own consciences, more companies are getting on board. Just last week, Nordic consumer goods giant Orkla promised to remove peatland destruction from its supply chain by 2017. And as of early March, Mars, the maker of M&Ms and other guilty pleasures, committed to no-deforestation sourcing and full traceability by 2015. Further upstream in the supply chain, suppliers Wilmar and Golden Agri-Resources, which together sell 55% of the world’s palm oil, have recently committed to sourcing palm that does not threaten the peat forests that sequester huge amounts of carbon.

However, as the creator of the palm scorecard, Calen May-Tobin, points out, these no-deforestation commitments are much easier said than done. Supply chains are long and winding, and altering the drivers of deforestation requires new relationships and understanding among consumers, corporations, and communities.

The nineteenth Katoomba event hosted by Ecosystem Marketplace’s parent organization Forest Trends in Iguazíº Falls, Brazil last week attempted to do just that by putting palm buyers such as Nestlé and McDonald’s in the same room with producers such as Fiagril and advocates such as Greenpeace. The event brought up questions about the effectiveness of the Roundtable on Sustainable Palm Oil, which covers 14% of palm oil worldwide, and the role of the consumer as the missing link, or perhaps the weak link, in demanding deforestation-free products.

Here in Washington D.C., we are continuing data collection for our State of the Voluntary Carbon Markets and State of the Forest Carbon Markets reports. If you either transacted carbon offsets on the voluntary market in 2013 or developed a forest or cookstove project, we would love to hear from you. Respondents can get the usual perks – including listing in our directory and inclusion of your project on the Forest Carbon Portal, if you wish. The survey will remain open until March 31.

Returning respondents may login to the survey HERE (http://survey.ecosystemmarketplace.com/carbon2014/)
And newbies can sign up HERE (http://survey.ecosystemmarketplace.com/carbon2014/users/users/add)

As always, feel free to contact Allie Goldstein at [email protected] or (+1) 202-446-1988(+1) 202-446-1988 with any questions about the survey.

—The Ecosystem Marketplace Team

If you have comments or would like to submit news stories, write to us at [email protected].

INTERNATIONAL POLICY REDDy to play it safe? Do global efforts to pay developing countries to reduce greenhouse gas (GHG) emissions from deforestation (known as REDD) aid in the fight for community and indigenous rights, or impede it? About 100 people gathered in Washington D.C. last week for the Fifteenth Dialogue on Forests, Governance, hosted by the Rights and Resources Institute (RRI), to debate this question. Arvind Khare, Executive Director of RRI, warned against moving too quickly towards REDD if ‘safeguards’ for communities are weak and land tenure still contested. Charles Di Leva of the World Bank, on the other hand, said that the current safeguards give communities various opportunities to veto activities they don’t want to take place. “If we were to require title resolution as a prerequisite, we might be excluding communities who want to participate in REDD activities,” he said. NATIONAL STRATEGY AND CAPACITY Romance, ravioli…and carbon Their carbon market is little-known outside of Italy, but Italians transacted 144,515 tonnes of emissions reductions at a combined value of more than a million euros (almost 1.4 million US dollars) in 2012. Three public initiatives dominate demand, with a few companies, such as pasta producer Jolly Sgí¡mbaro, also offsetting emissions. The Nucleo Monitoraggio Carbonio, a stakeholder group of project developers, public administrations, brokers, and buyers, is now working on the Italian Forest Carbon Code, which will “raise the quality bar of the voluntary carbon market in Italy,” according to Lucio Brotto, who has been deeply involved in the process. Read the full interview with Brotto on the Forest Carbon Portal. West Sumatra on auto pilot West Sumatra is joining Indonesia’s REDD+ program as a pilot province, unlocking financing to support projects and initiatives in an effort to reduce the steady decline of forest cover in the region, which fell 19% over a 20-year period due to factors such as corruption and ineffective forest management. “West Sumatra has shown the same vision and commitment to reducing deforestation,” said Heru Prasetyo, head of the REDD+ Agency. “This is in line with Indonesia’s commitment to reduce greenhouse gas emissions up to 41% by 2020.” Zimbabwe going public? Although Zimbabwe loses about 50 million trees per year, the country has so far not been able to tap into carbon finance to support public REDD+ projects within its borders. Zimbabwe is now working on building the infrastructure and improving its readiness to implement REDD+ projects, including engaging in technical studies of the forests and establishing a REDD+ office within the commission to focus specifically on these issues. Meanwhile, the Carbon Green Africa REDD+ project in Kariba, a private REDD+ project, could generate an estimated $406 million over three decades if the offsets are sold at average prices. Field tripping A recent conference held in the Philippines focused on advancing REDD+ in the Asia-Pacific region. Stakeholders from several countries talked about avoiding unintended social and environmental risks related to REDD+, strengthening governance and achieving co-benefits for biodiversity conservation and improved livelihood. They also participated in a field trip to the ancestral domain of the Aeta Ambala tribe at Mount Santa Rita for a close-up view of a conservation agreement in action. The conference participants agreed to work together to share experiences and build the region’s capacity to participate in REDD+ initiatives. Russia keeps forest watch Russia is thinking about launching a domestic carbon market to reduce its GHG emissions, but such a market may not be ready by 2020, Oleg Shamanov, the Russian Federation’s climate negotiator, said on the sidelines of the international climate talks in Bonn, Germany. The country wants to limit emissions in 2020 to 75% of 1990 levels. Russia’s forests are the largest in the world but road-building, logging and wildfires have increasingly degraded them, so the Russian government has begun using data provided by Global Forest Watch Russia – a partnership between the World Resources Institute and Russian forest conservation groups – to combat these activities. PROJECT DEVELOPMENT Thinking big in Colombia International development company Chemonics International last week awarded ecoPartners, ClearSky, and Offsetters a second contract to develop project documents for Colombia’s BioREDD program. Under Phase Two, the team will be responsible for creating Project Design Documents for four additional REDD+ projects in Colombia, to be verified by both the Verified Carbon Standard (VCS) and the Climate, Community, and Biodiversity Standard. The BioREDD+ program in Colombia will run from 2011 through 2014, during which $27.8 million will be invested in biodiversity, REDD, and climate change adaptation. In terms of REDD, the goals are to establish a total of eight financed REDD projects covering a million hectares, as well as a carbon baseline for the Pacific and Amazon regions. Grow rice, not methane The American Carbon Registry (ACR) last week unveiled the first reduced-methane rice project, which will avoid the emission of 6,700 tonnes of carbon dioxide (tCO2e) over 5,000 acres in California. The same day, ACR announced the expansion of its rice cultivation protocol beyond California to the Mid-South states, including the Mississippi River Delta where much of the rice in the United States is grown. Following the lead of voluntary standards, California is ever so slowly inching toward acceptance of the first agricultural-based offsets into its cap-and-trade program. Regulators also held a workshop last week on a protocol that would incentivize dry seeding or early drainage of rice fields, therefore reducing methane emissions. The protocol will go up for vote in September and could go into effect in January 2015. FINANCE AND ECONOMICS Hey, can you spare $30 billion dollars? Ecosystem services provided by tropical forests are estimated at around $6,120 per hectare per year, but total yearly forest loss still averaged 13 million hectares between 2000 and 2010. Investing $30 billion per year in REDD+ programs could accelerate the transition to a green economy and ensure that REDD+ becomes an important source of income for poor rural communities, according to a new report by the International Resource Panel and the UN REDD Programme. And it’s a drop in the bucket compared to the $480 billion paid in annual global fossil fuel subsidies. But because deforestation is driven by consumption patterns in virtually every sector of the economy, REDD+ must be integrated into all economic planning processes, the report argues. Cropping up together A new analysis by consulting firm Trucost compared the value per hectare of monoculture soybean and palm oil cultivation in Brazil to agroforestry – and the results are striking. Growing palm alongside other crops such as cocoa, passion fruit, pepper, and bananas yielded an average of $176,044 per hectare – three times higher than the per-hectare value of palm monocultures. For soybeans, agroforestry techniques yielded 11% more value per hectare ($488 versus $441). Corporate sponsors of the study included seed giant Monsanto and Brazilian beauty company Natura Cosméticos. The natural capital analysis took into account GHG emissions from fertilizer use; provisioning services such as food, timber, and water; and regulating services such as climate stability. SCIENCE AND TECHNOLOGY Till tree death do us part The Amazon’s carbon balance is a matter of life and death: living trees take carbon dioxide (CO2) out of the air as they grow, and dead trees put the GHG back into the air as they decompose. A new NASA-led study published in Nature Communications has confirmed that natural forests in the Amazon remove more CO2 from the atmosphere than they emit, reducing global warming. Lead author Fernando Espí­rito-Santo found that each year, dead Amazonian trees emit an estimated 1.9 billion tons (1.7 billion metric tons) of carbon into the atmosphere. Comparing that to various scenarios, carbon absorption by living trees always outweighed emissions from the dead ones. HUMAN DIMENSION Cleaner cow farts Colombia’s National Development Plan calls for reducing the country’s cattle land from 38 million to 28 million hectares while increasing the number of cattle. The policy – along with some international financing – has reigned in a new era of agroforestry in which ranchers are beginning to raise cattle alongside plantains, coffee, and valuable hardwoods. Though these silvopastoral systems cost between $1,000 and $2,000 to implement, most farmers see a return on investment within two years as cows begin to produce more milk and they rely less on expensive fertilizers. Agroforestry also has an interesting side-benefit for the climate. A study from the International Center for Tropical Agriculture found that cows eating forage from silvopastoral systems produced 20% less methane. Storm troopers Despite accounting for just 0.7% of tropical forest area, mangrove deforestation makes up as much as 10% of GHG emissions from deforestation globally. Delegates to the recent Restoring Coastal Livelihoods conference in Indonesia convened to try to reverse the damages of the “blue revolution” that has been converting mangroves to aquaculture ponds for shrimp production. The issue has become more urgent after Typhoon Haiyan, with a death toll north of 6,200 people in the Philippines, tragically demonstrated the dangers of destroying a coastal country’s natural storm protection. “I’m proposing for the Philippines…a minimum 100-meter solid green belt of mangroves and/or beach forests,” Jurgenne Primavera, a mangrove specialist, said. Fighting for our forests rights Indigenous and forest peoples have demanded that the international community respect their rights to the forests, lands, territories and natural resources, a demand expressed in the Palangka Raya Declaration on Deforestation and the Rights of Forest Peoples. The declaration – published after an international workshop held earlier this month in Central Kalimantan – includes a demand to halt the production, trade and consumption of commodities derived from deforestation, land grabs and other violations of the rights of forest peoples. It also demands an end to the invasion of forest peoples’ lands and forests by agribusiness, extractive industries, infrastructures, energy and green-economy projects that deny their fundamental rights. STANDARDS AND METHODOLOGY Hug a tree in the city The Climate Action Reserve (CAR) last week released a revised Urban Forestry Protocol after they received feedback that version 1.0 “presented significant hurdles to the successful implementation of urban forest offset projects.” Draft Version 2.0 thus shortened the crediting period, includes a buffer pool to insure against reversals, and introduces social and environmental co-benefits of urban forestry. CAR is holding a workshop in San Francisco on March 26 to solicit comments on the revisions (also available through a webinar), and the public comment period will be open through April 25. CAR is used on the voluntary carbon market, but the California Air Resources Board may consider CAR’s improvements for the state’s compliance Urban Forestry protocol. PUBLICATIONS Sharing the REDD wealth Until 2013, Brazil had been on a six-year winning streak in reversing deforestation, but the streak ended last year when deforestation rates surged 28%. The country is hoping to tap into REDD+ financing to help get back on the right track. And a recent report called Contributions to the National Strategy for Emissions Reduction from Deforestation and Forest Degradation (REDD+): A Proposal for Allocation Between States and the Union pitched a plan that would divide both revenues and responsibilities between the Brazilian states and the federal government, including an 80-20 split of REDD+ units in favor of the states. Learning the right lessons A recent paper entitled REDD+ as performance-based aid: General lessons and bilateral agreements of Norway reviewed the key challenges in designing and implementing performance-based aid and examined four bilateral REDD+ agreements Norway has with Tanzania, Brazil, Guyana and Indonesia. One of the main challenges is that donors are too eager to spend money. Payment should only be made if the results are achieved, but there is immense pressure for donors to spend allocated budgets because underspending is seen as a sign of poor planning and performance. And the lessons learned included being realistic about the challenges and not basing all REDD+ aid on performance. Errors of omission In November 2013, the US federal government pegged the social cost of carbon at $37/tCO2e in 2007 dollars for 2015, an increase from the $24/tCO2e estimate in 2010. But a new report called Omitted Damages: What’s Missing from the Social Cost of Carbon by EDF, the Institute for Policy Integrity at NYU School of Law and the Natural Resources Defense Council finds that estimate to be on the low side because of the omission of many climate impacts. “The public picks up the tab for the types of extreme weather events that come more frequently with a changing climate,” said Gernot Wagner, a Senior Economist at EDF. “But the government is not fully assessing climate risks in its decision-making.” JOBS REDDX Manager – Forest Trends Based in Washington, D.C., the REDDX Manager will organize and develop new partnerships, communication and fundraising strategies. The successful candidate will have a master’s degree, two to three years of experience managing international programs with multi-million and multi-year budgets, and knowledge of REDD+ finances and payments for ecosystem services (PES) mechanisms. French, Spanish and Portuguese language skills preferred. – Read more about the position here REDD+ Coordinator – VCS Based in Washington D.C., the REDD+ Coordinator will join VCS for one year, with the possibility of permanent employment; and will be responsible for coordinating Jurisdictional and Nested REDD+ pilot programs globally. Eligible candidates must have excellent knowledge of REDD+ voluntary and regulated carbon markets, and the implementation of REDD+ programs and/or projects, with a minimum of two years of work experience in the field. Proficiency in French or another language relevant to the Africa or Southeast Asia regions preferred. – Read more about the position here Senior Program Officer – VCS Based in Washington D.C., the Senior Program Officer for Agriculture, Forestry and Other Land Use (AFOLU) will be the key point of contact for project developers on AFOLU methodology, and promote the adoption of the standard. The successful candidate will have a minimum of four years of professional experience working in the land use sector, understanding of carbon market concepts (both voluntary and compliance), and willingness to travel, including internationally. – Read more about the position here Director, CGIAR Research Program on Forests, Trees, and Agroforestry (FTA) – CIFOR Based in Bogor, Indonesia, the Director will provide intellectual leadership in building a shared vision for the FTA research agenda; facilitate and oversee research outcomes; and manage work plans, budgets, and reporting. The successful candidate will have a PhD in a relevant discipline, at least 15 years of experience, an open and transparent leadership style, and excellent interpersonal and communication skills. – Read more about the position here Agroforestry Systems Scientist – World Agroforestry Centre Based in Yaounde, Cameroon, the Agroforestry Systems Scientist for the West and Central Africa region will provide scientific leadership in on-farm agroforestry research on smallholder farms in the humid tropics, with a focus on management systems for cocao, fruit, timber and coffee. The position requires a PhD in Agricultural Science and a minimum of five years work experience, at least four of which must be in developing countries. – Read more about the position here ABOUT THE FOREST CARBON PORTAL The Forest Carbon Portal provides relevant daily news, a bi-weekly news brief, feature articles, a calendar of events, a searchable member directory, a jobs board, a library of tools and resources. The Portal also includes the Forest Carbon Project Inventory, an international database of projects including those in the pipeline. Projects are described with consistent ‘nutrition labels’ and allow viewers to contact project developers. ABOUT THE ECOSYSTEM MARKETPLACE Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact [email protected].

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Two consumer product giants were met with support from environmental groups but were also pushed to make changes faster when they joined the wave of companies committing to deforestation-free palm oil with support from environmental groups.

This article was originally published on Mongabay.com. Click here to read the original.

25 March 2014 | On Monday General Mills and Colgate-Palmolive both announced palm oil policies that go beyond standards set by the Roundtable on Sustainable Palm Oil (RSPO), the industry’s main certification body. The policies include provisions to protect wildlife-rich rainforests and carbon-dense peatlands, while respecting the rights of local communities.

Environmentalists say greener palm oil is better for orangutans, whose habitat in Malaysia and Indonesia is being rapidly destroyed for oil palm plantation. Photos by Rhett A. Butler.

The policies are similar to commitments made in recent weeks by Kellogg’s, Mars, and Orkla, although both have shortcomings according to environmental campaigners. Greenpeace says that Colgate-Palmolive’s 2020 target for implementing its policy should be moved up to 2015, while the Union of Concerned Scientists (UCS) says General Mills policy should use the “industry standard” definition of High Carbon Stock forests when determining whether palm oil is free from deforestation.

Nonetheless both groups welcomed the commitments and urged more companies to establish similar deforestation free policies for palm oil in order to show growers there is indeed a market for greener palm oil.

“It’s really up to major brands to turn the tide on the palm oil industry,” said Sharon Smith of the Union of Concerned Scientists, which recently released a scorecard ranking American companies on their palm oil sourcing policies. “If companies start demanding palm oil that’s deforestation-free, peatlands-free and exploitation-free, palm oil producers will start providing a better product. This better oil will also reduce emissions. It’s a win-win for consumers and the environment.”

“Indonesia’s forests are precious to all of us: they are the earth’s lungs, people’s homes, and habitat to countless animals including the endangered Sumatran tiger. But if we don’t stop forest destruction all of this will disappear,” said True Blood actress Kristin Bauer, who recently joined Greenpeace’s campaign to push for more forest-friendly palm oil. “More brands need to step up and follow Colgate’s lead.”

Deforestation in Malaysian Borneo for oil palm plantations.

Greenpeace added that the commitments put more pressure on Proctor & Gamble (P&G), a Colgate-Palmolive competitor that is currently the focus of an aggressive campaign by the activist group.

“With pledges from Unilever, Nestlé, L’Oréal and now Colgate-Palmolive to clean up their supply chains, P&G is choosing to lag behind its competition,” said Areeba Hamid, forest campaigner at Greenpeace International, in a statement. “There’s a huge difference between Colgate’s detailed policy and P&G’s empty commitment to the Roundtable on Sustainable Palm Oil’s weak certification scheme. It’s time P&G joined Colgate, Unilever, L’Oréal and Mars in guaranteeing its products are free from forest destruction.”

Palm oil production is the largest direct driver of deforestation in Malaysia and Indonesia, whose forests are home to endangered orangutans, tigers, rhinos, and elephants.

Additional resources

REDD+ is complicated business, even for seasoned forestry professionals. Now CIFOR is organizing a training workshop for Southeast Asian journalists interested in gaining a better understanding of forestry science in general and REDD+ in particular.

This article was originally posted on the website for the Forests Asia Summit 2014. Click here to read the original.

24 February 2014 | The Center for International Forestry Research (CIFOR) is accepting applications from early to mid-career journalists in Southeast Asia to attend the residential workshop: “Reporting on Forests in Southeast Asia”. The workshop provides journalists with the rare opportunity to see the inner workings of forestry science, through hands-on experience from the field to the conference table.

Held at the CIFOR HQ in Bogor, Indonesia from 30 April – 4 May, 2014 (followed by the 2-day Forests Asia Summit on 5, 6 May), the program will give journalists an opportunity for one-on-one interviews with leading scientists, policy makers and science communicators to explore and understand various issues affecting Southeast Asia’s forests and people including: coastal forests, food security, illegal logging, timber trafficking, livelihoods and climate change.

Click here to apply.

The program will also include seminars on finding the human story in science, reporting politicized science, understanding a research paper, future social media trends and understanding statistics.

Fellows will gain a better understanding of forestry science research methods, cultivate scientific resources and sharpen their reporting skills through innovative teaching methods and a field visit. Fellows will also attend the two-day Forests Asia Summit, and will return to work with dozens of story ideas they can pursue.

Fellows must have the support of their media organization to participate, with the idea that stories they produce coming out of the Summit will be published in their respective media outlets.

What does the Fellowship include?
The Fellowship award includes accommodation, airport transfer, meals, tuition and travel support.

Who should apply?

You should be:

• A working print, radio, TV or online journalist with at least 2 years of reporting experience
• A national of an ASEAN member country
• Interested in forest issues

Apply now

Your application should include:

• This completed form
• Your resume/CV
• Three samples of professional work completed in the last two years (PDF, Word, YouTube. Please advise if VHS or DVDs need to be posted).
• Letter of support from your Editor confirming:
  • Your participation in the Fellowship
  • Stories coming out of the Fellowship and the Forests Asia Summit will be published by your media organization

Send applications to Michelle Kovacevic at [email protected] by 5pm GMT, Monday 3 March, 2014.

Additional resources

High-tech Singapore has been slow to embrace the voluntary carbon markets, but two in-country projects just sold carbon credits to fund massive upgrades to green LED lightbulbs and improved cooling systems. Ecoinvest Services, the offset retailer, is now looking for interested buyers.

13 February 2014 | Despite its status as a leading Asian economy, Singapore has lagged behind its neighbors in developing carbon offsets. But the sale of two energy efficiency projects could pave the way for more to come in this densely-packed, high-tech country. The first project replaced five chillers, and saved an estimated 2,169 tCO2e, through improved cooling installations at New Tech Park, while the second saves a similar amount – 2,397 tCO2e per annum – replacing inefficient light bulbs with LED lights at Jurong Town. The Jurong Town project refitted more than 86,000 LED in 588 residential building corridors, staircases and communal areas.

“[Singapore] has a great track record in technology so energy efficiency is a good fit,” explains Grattan MacGiffin, a manager at Ecoinvest Services, about the Swiss-based company’s decision to acquire 8,469 Verified Carbon Units (VCUs) from both projects.

India and China have traditionally provided the lion’s share of Asia-based offsets. But Southeast Asia’s total volume of voluntary carbon offsets grew to 3 million tonnes (MtCO2e) in 2012, according to Forest Trends’ Ecosystem Marketplace’s State of the Voluntary Carbon Markets report. Among the newer players contributing to growth in the region – including Thailand, Cambodia, Indonesia, Malaysia and the Philippines – Singapore was noticeably absent.

Not for long, hopes MacGiffin. The success of these initial projects could lead to more offsets in the future as both methodologies could be easily replicated throughout Singapore. “This will be a test case. Let’s see who buys these and maybe we can draw some parallels.”

Now that they have the credits, Ecoinvest will begin the search for buyers. Though it’s too early to identify any specific parties, MacGiffin believes the projects will appeal to a range of buyers because of their emphasis on technology investment and resulting social impact through reductions in energy costs. Businesses understand that it makes sense “to save money as well as to save the environment,” he said.

Sticking true to historic transactions, the European market might be interested. In last year’s State of report, energy efficiency projects in Asia grew significantly in market share and were predominantly purchased by those buyers. Last year’s report also witnessed a significant increase in the purchase of Asian offsets by Asian buyers – so there’s potential for Ecoinvest to find a buyer closer to the projects’ home.

These projects reflect an evolving market, MacGiffin said. “It’s not all about obvious large-scale projects anymore – [people] are exploring different locations, different technologies, different methodologies.”

24 October 2013 | Some problems are complex. Others are simple. And often the twain converge.

Take, for example, the complex challenge of climate change. It’s caused by almost everything we do. It impacts us in ways that are difficult to fathom. And fixing it will require us to completely update the global energy sector.

Contrast this with the fairly straightforward problem of indoor air pollution. This one is caused by traditional stoves that burn dirty fuels inefficiently. It kills four million people every year. And fixing it will require us to replace about 1 billion traditional stoves with cleaner varieties.

Simple? Yes — but not easy, because those billion stoves are scattered all across the world, and replacing them also requires marketing, education and training. Aid agencies, nonprofits and commercial manufacturers have spent decades building up successful regional programs, but many are finding it difficult to get that extra bit of finance that can turn medium-sized efforts into larger ones and larger ones into massive ones.

Increasingly our research shows that the critical, final piece of finance is coming from a surprising source.

Stoves and fire pits, it turns out, pump hundreds of millions of tons of carbon dioxide into the atmosphere every year. That makes them part of the climate-change problem, which means we all have an interest in replacing them.

Over the years, standard-setting organizations like the Gold Standard and the Clean Development Mechanism have made it possible to generate carbon offsets by helping distribute clean cookstoves. In some cases, the credits provide deep discounts for poor people and aid agencies, but most of the money goes towards manufacturing, marketing, distribution and testing of stoves and fuels — activities that support a sustainable market that generates reductions many times higher than the number of credits generated.

Last year, carbon markets funneled more than $167 million into clean cookstove distribution, according to our most recent report produced in partnership with the Global Alliance for Clean Cookstoves and unveiled by former US Secretary of State Hillary Clinton last week in New York. That’s a huge proportion of the $246 million that carbon revenues have contributed to the stove sector over time.

The Funding Mosaic: Carbon Finance Is One Piece Of The Puzzle

The Alliance

The Alliance itself has more than 800 partners around the world, and its aim is to get these efficient stoves into 100 million households by 2020. Our research shows that Alliance partners distributed 8.2 million stoves in 2012 — up from 3.6 million the year before — and that carbon finance helped pay for about half of them.

That’s especially good news for women — because it not only means better health, but less time spent gathering wood and more time spent doing other things that improve their lives. Indeed, the report found that 172 of the Alliance partners had made it a priority to empower women.

Armed with this understanding, social entrepreneurs can now tap into carbon finance to attack other seemingly intractable social challenges — like women’s rights, indigenous empowerment and subsistence farming.

To promote this understanding, the Skoll Foundation supports Forest Trends, the environmental nonprofit that publishes Ecosystem Marketplace and pilots efforts like the Surui Carbon Project in Brazil. Forest Trends was created by foresters to explore the interplay between economy and ecology, and it’s been invited to participate in the Social Entrepreneurs Challenge. Launched on September 30 by the Skoll Foundation and Huffington Post, this is the largest CrowdRise campaign ever, involving scores of social entrepreneurs from around the world. You can participate by shouting us out on Huffington Post or sponsoring us on CrowdRise, where we aim is to raise $45,000 by November 22.

As in cookstoves, a little often goes a long way. If enough of us meet our goals, Skoll will step up with matching funds that we’ll use to expand our coverage into these fascinating and important mechanisms.

Donate Here

Read about cookstoves in Spanish here.

Clean Cookstoves: How They Slash Carbon Emissions

Hillary Rodham Clinton: How The Global Alliance Works

Additional resources

Following the landmark use of political risk insurance on a REDD+ project in Cambodia, project developers elsewhere have also tapped into the insurance – most recently on a bamboo reforestation project in Nicaragua. Despite these examples of early mover activity, awareness of political risk coverage and how it can help finance carbon offset projects is still very limited.

27 August 2013 | In 2011, a few years after US-based land-use carbon consultant Terra Global Capital (TGC) launched its Oddar Meanchey REDD Project in Cambodia, it asked the Overseas Private Investment Corporation  (OPIC)  to shield its investment from political risk.

More specifically, the project helps Buddhist monks and other community members reduce greenhouse gas emissions from deforestation and forest degradation (REDD), and it does so in a way that could serve as a template for community-based REDD projects around the world. But it’s located in a country that most investors don’t understand. So TGC asked OPIC, the US government’s primary development finance agency, to provide protection against the risks of expropriation, war, and civil unrest – risks familiar not only to Cambodia, but to countries around the world. In the very first instance of political risk insurance for a forest carbon offset project, OPIC came through with $900,000 in political risk insurance – a service that the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) also offers.

Between the two of them, OPIC and MIGA have so far insured several carbon offset projects around the world designed to promote sustainable forestry, wind farms, and solar energy, allowing them to move forward in some of the world’s riskiest political and economic environments.

Nicaragua’s bamboo kingdom

In 2012, MIGA provided its first political risk insurance to a carbon offset project on the Atlantic Coast of Nicaragua, where EcoPlanet Bamboo (EPB) has been developing a forest carbon offset project to support its work reforesting degraded pasture land with guadua aculeate, a native bamboo species. The project is just one piece of the company’s growing efforts to provide timber manufacturing industries with a sustainable alternative fiber in order to reduce pressure on natural forests.

The production of palm oil is expanding and threatening forests in  Nicaragua’s coastal region, not far from EcoPlanet Bamboo’s sustainable bamboo plantations. For the land to be primed for palm oil, the forests are being burned, sometimes without removing the timber.

While EPB hopes to use carbon finance to meet debt repayments and support bamboo-processing activities and social programs in the area, MIGA’s $27-million guarantee backs the company’s investment in the purchase and conversion of degraded land into commercial bamboo plantations for the sale and export of bamboo fiber.  

Troy Wiseman, CEO and Co-Founder of EPB, says he was initially attracted to MIGA’s political risk coverage due to the perception of Nicaragua as a high-risk environment, especially in Europe, where EPB had the opportunity to raise debt finance for the project. Despite Nicaragua’s recent economic turnaround, the country still has a reputation among investors as one of Latin America’s least-developed countries, with high poverty rates following decades of political instability. Political risk insurance, he reasoned, could help overcome that hurdle and lower the interest rate at which EPB could access capital.

In April 2011, land preparation began at EcoPlanet Bamboo Central America’s Rio Siquia Plantation.

“Once we had political risk insurance, you could take the risk argument away because the cost of capital  would come down,” says Wiseman. “It came down for us by about 40%.”

As for the insurance itself, aside from the potential payoff in case an insurance claim is triggered, Wiseman notes that having MIGA on the contract reduces the risk that expropriation even occurs in the first place. MIGA underwriter Gloriana Echeverria says that’s partly because the Nicaraguan government is a shareholder in MIGA, which means it’s literally invested in its performance.

“This reduces the chance of expropriation because the government is unlikely to interfere with a project that has MIGA – and therefore the World Bank – as its partner,” she says. “We’ve gotten involved in over 100 cases where the investor has a certain problem with the government interfering. MIGA can mediate between the government and the investor to arrive at a solution that will make both parties happy.”

Political risk aside, the decision to invest in the project using carbon finance required taking on a significant amount of risk in its own right. “No one really had a proven bamboo methodology at a commercial level that could be duplicated,” says Wiseman. Indeed, EPB is the first organization to use a bamboo-based carbon offset methodology on a project validated under the Verified Carbon Standard (VCS) and the Climate, Community, and Biodiversity Alliance (CCBA), and is also certified under the Forest Stewardship Council for sustainable forest management.

EPB’s project is not a pure carbon offset project insofar as it derives revenues from bamboo sales. MIGA’s financial analysis of the project takes into account all revenue streams. For projects that are strictly dependent on carbon finance, Echeverria says MIGA’s financial analysis could differ in accounting for the financial sustainability of the project. A project relying solely on carbon revenues could be seen as a riskier project to insure.

Navigating the kitchen sink

For project developers trying to distinguish between OPIC and MIGA insurance, the primary difference is that OPIC requires majority US participation in an investment, whereas MIGA is open to nationals of any of its 179 member countries as long as the coverage is for a cross-border investment. MIGA is usually competitive in the riskier countries where investors are more concerned about getting the World Bank umbrella effect of deterrence, whereas OPIC tends to focus its activities in countries where a strong bilateral relationship might exist with the US. There is also a private political risk insurance market, but arguably without the deterrence effect. It is unclear whether carbon offset project developers have used this market.

Guada aculeate bamboo growing wild in their native habitat on EcoPlanet Bamboo’s Rio Kama Plantation. November 2011.

Ultimately, MIGA can provide up to $220 million in insurance coverage per project, whereas OPIC can provide up to $250 million  – both agencies able to provide additional coverage through reinsurance. But how affordable is political risk insurance at the end of the day? And what incentives exist to help project developers invest in poor and risky countries where capital is hard to come by?  

The cost of the policy depends on the country, with insurance premiums rising significantly for particularly high-risk environments. For countries in the middle tier, the insurance itself may not be prohibitively expensive, but cash-strapped project developers looking to tap into political risk insurance can ultimately face additional upfront costs if—unlike EPB or TGC—they aren’t already in compliance with the prerequisite environmental, anti-corruption, and other policies required to land MIGA and OPIC insurance.

“There is already significant environmental work that project developers have to deal with in order to register with VCS and CCBA, which may be costly,” says Ruth Ann Nicastri, Managing Director of Political Risk Insurance at OPIC. “Terra Global Capital had already started those processes before they sought political risk insurance from us, so those costs were already taken into account in their budget. For project developers working on projects that haven’t taken the steps to obtain that kind of rigorous certification, it might be onerous to suddenly have to meet OPIC’s environmental requirements.”

For smaller projects that cannot afford certain evaluations, OPIC sometimes undertakes these evaluations as part of its own due diligence process, she notes. OPIC also provides discounted rates for small businesses, while MIGA provides subsidized rates for investments of $10 million or less with an average 25% discount, with specific rates depending on the country.

Beyond that, some have floated the idea of having public entities, possibly domestic, help subsidize insurance fees. “Depending on the country, it may be possible to provide additional layers of subsidy or premium pricing in a way that could offset political risk insurance premiums,” says Cameron Prell, Senior Counsel at US-based law firm McGuireWoods.

Project developers also have the option to apply to grants from donor agencies such as FMO, the Dutch development bank, that have strong stated interests in sectors relevant to carbon offset projects such as agribusiness, energy, food, and water to underwrite the cost of the insurance premium instead of provide a traditional grant or donation, Wiseman notes.

If a tree falls in the forest…

In spite of early-mover activity, there is still relatively low awareness that political risk insurance is available for forest carbon offset projects through MIGA and OPIC. The default risk management tool remains the buffer pool approach, which requires that project developers set aside carbon credits as reserves in order to cover unforeseen losses in carbon stocks.

“I don’t see the buffer pool approach as having a necessarily conflicting goal as these new emerging products, but the purpose of the buffer pool is definitely not to encourage financing,” says Stephen Matzie, Investment Officer at the US Agency for International Development (USAID), the US federal government’s principal aid agency. “It does require a significant amount of credits over the project’s lifetime, but I think it’s one of those things that can be tweaked to encourage private financing.”

While reportedly cheaper than the buffer pool approach, political risk insurance does not cover the broad set of risks that are technically covered by the buffer pool approach.

“OPIC and MIGA political risk insurance are advisable in many emerging markets that lack a robust regulatory regime for forest carbon,” Prell says. “However, the riskier markets are going to potentially result in higher premiums. Regardless, the insurance products should not be viewed as a sufficient instrument able to cover the current market demand and price risks inherent in forest carbon projects.”

There has been some push to expand the offering of products that can cover exposure to political risk alongside other risks. “The private sector and willing development finance institutions are developing additional guarantees that may address some measure of market risk, including project performance and valuation,” he notes. “The coverage is not 100%, but such mechanisms could provide some measure of risk mitigation for investors.”

USAID’s Development Credit Authority has been a prime innovator in this space, having been approached in early 2012 to develop a special loan guarantee for REDD activities. The agency is now working on several transactions simultaneously, with the one furthest along covering the Choco region in Colombia where it’s helping local communities pull together a REDD project. USAID’s guarantee covers a broad range of risks in addition to political risk, including those associated with verification, weather, and the production of carbon credits.

The path forward

Carbon offset projects continue to enter the pipeline to tap into political risk insurance on a case-by-case basis, including new prospects in Colombia, Brazil, and Indonesia. However, whether the market can see scaled-up adoption is hard to say.

While the use of MIGA’s political risk insurance for carbon offset projects is limited thus far, Prell notes that there has been some discussion about the potential for a new political risk insurance product for forest carbon to be modeled after the index-backed agricultural insurance programs offered by the World Bank’s Global Index Insurance Facility.

On OPIC’s end, Nicastri says, “As far as we can tell, we’re still the only ones willing to cover regulatory risk for forest carbon. However, OPIC is happy to work with other insurers to provide the product to a broader range of investors.”

As for EcoPlanet Bamboo? “We plan to use political risk insurance in every country where we plant bamboo as we embark on a new goal of reforesting 1 million acres of degraded land in Southeast Asia and Brazil, while expanding our current footprint in Africa,” says Wiseman. Some of this work could potentially include a carbon offset element.

29 July 2013 |The Bonn International Cooking Energy Forum in Germany was the site for the unveiling of StovePlus, a program to provide residents of developing countries in Africa and Asia with alternatives to inefficient cookstoves. GERES, the French non-profit organization behind the new program, aims to distribute 2 million improved cookstoves in these regions by 2017 through StovePlus.

Nearly 3 billion people in the world rely on solid biomass for cooking and heating on a daily basis, but most of them use inefficient devices and open fires, leading to 4 million premature deaths every year, according to the Global Burden of Disease Study commissioned by the Institute for Health Metrics and Evaluation. Reliance on biomass also puts great pressure on natural resources, putting the world’s forests at risk, GERES notes.

The StovePlus program aims to strengthen the clean cooking sector and provide technical support to project developers in South-East Asia and West Africa, with the support of the Global Alliance for Clean Cookstoves (the Alliance). The Alliance provides funding to the GERES Biomass Energy Lab in Cambodia, one of the services offered in StovePlus. In 2012, the Alliance released a request for proposals (RFP) to enhance capacity for a global network of centers to provide testing, cookstove development, and capacity building services. Thirteen centers were selected for awards in Bolivia, Cambodia, China, Ghana, Honduras, India, Kenya, Nepal, Nigeria, Peru, Senegal, South Africa, and Uganda (lab and field). Under the RFP, $1.6 million was made available to support these centers.

Cookstove projects can provide significant health benefits and empower women – who often walk long distances to collect the necessary wood fuel for heat or cooking purposes – by freeing up their time and increasing their household income, says Jennifer Tweddell, Manager of Carbon Finance and Impact Investing for the Alliance. In addition to reducing greenhouse gas (GHG) emissions, the projects also have the impact of reducing deforestation, she says.

Clean cookstoves have become all the rage in the voluntary carbon markets, with voluntary buyers funneling $80 million toward offsets from these and water filtration projects last year, according to the State of the Voluntary Carbon Markets 2013 report. These household devices that burn fuel more efficiently or not at all (thus reducing GHG emissions while sparing households from harmful smoke inhalation) were the voluntary market’s fourth most popular mitigation activity – transacting 5.8 MtCO2e, or 80% more than in 2011. These projects have so far delivered at least 4 million cookstoves from 45 projects to developing country households with the aid of carbon revenues, the report finds.

In 2012, carbon finance for clean cookstove distribution reached 15 country locations on three continents, according to the report. The most prominent project locations included Peru, Ghana, Mozambique and Kenya.

Developers of cookstove projects are determined to secure buy-in from stove users, with only 2% of clean cookstove projects engaged in stove giveaways and the majority of projects charging users between $2 and upwards of $140 per device, a finding that pleased Tweddell.

“We’re very much in favor of a market-based approach so we’re glad that there aren’t a lot of free giveaways because we really feel that to be sustainable and to reach universal adoption, which would be 500 million households, you can’t do that on donor dollars and (corporate social responsibility),” she says. “You do that through having a thriving marketplace where people at the base of the pyramid are consumers who go out and actually purchase these products from social enterprises that are also making a profit doing that.”

Transactions of clean cookstove offsets were valued at $65.3 million in 2012 – 54% more than in 2011. Over time, the value of private sector support for clean cookstove carbon projects is estimated to be $145 million.

The average price for offsets from clean cookstove projects was $11.3/tCO2e in 2012, representing a 15% fall in price from 2011’s $13.2/tCO2e. The price decline was attributed to the growing volume of available cookstove project offset supply and a lack of clarity regarding certified emissions reduction demand in the European Union Emissions Trading System – a source of demand for some clean cookstove offsets. But the price for cookstove projects was well above the volume-weighted average price of $5.9/tCO2e of all project types seen in 2012.

“I really do think it’s because of all the additional benefits that these projects bring,” Tweddell says. “Certainly, you can tell a really great story about having a health benefit, improving the lives of people in developing countries, as well reducing your carbon emissions.”

In trying to attract investment, the Alliance often hears people talk about the crash of the carbon markets, but the report is very useful because it provides evidence of the higher prices commanded by these charismatic projects, she says.

“That helps us to demonstrate the value to potential buyers, but also to investors who often don’t understand the carbon markets and are a little bit leery of businesses that are reliant on carbon revenues,” she says.

For more findings on cookstoves and other voluntary carbon projects, read the Ecosystem Marketplace report here.

Additional resources

Following the landmark use of political risk insurance on a REDD+ project in Cambodia, project developers elsewhere have also tapped into the insurance – most recently on a bamboo reforestation project in Nicaragua. Despite these examples of early mover activity, awareness of political risk coverage and how it can help finance carbon offset projects is still very limited.

27 August 2013 | In 2011, a few years after US-based land-use carbon consultant Terra Global Capital (TGC) launched its Oddar Meanchey REDD Project in Cambodia, it asked the Overseas Private Investment Corporation  (OPIC)  to shield its investment from political risk.

More specifically, the project helps Buddhist monks and other community members reduce greenhouse gas emissions from deforestation and forest degradation (REDD), and it does so in a way that could serve as a template for community-based REDD projects around the world. But it’s located in a country that most investors don’t understand. So TGC asked OPIC, the US government’s primary development finance agency, to provide protection against the risks of expropriation, war, and civil unrest – risks familiar not only to Cambodia, but to countries around the world. In the very first instance of political risk insurance for a forest carbon offset project, OPIC came through with $900,000 in political risk insurance – a service that the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) also offers.

Between the two of them, OPIC and MIGA have so far insured several carbon offset projects around the world designed to promote sustainable forestry, wind farms, and solar energy, allowing them to move forward in some of the world’s riskiest political and economic environments.

Nicaragua’s bamboo kingdom

In 2012, MIGA provided its first political risk insurance to a carbon offset project on the Atlantic Coast of Nicaragua, where EcoPlanet Bamboo (EPB) has been developing a forest carbon offset project to support its work reforesting degraded pasture land with guadua aculeate, a native bamboo species. The project is just one piece of the company’s growing efforts to provide timber manufacturing industries with a sustainable alternative fiber in order to reduce pressure on natural forests.

The production of palm oil is expanding and threatening forests in  Nicaragua’s coastal region, not far from EcoPlanet Bamboo’s sustainable bamboo plantations. For the land to be primed for palm oil, the forests are being burned, sometimes without removing the timber.

While EPB hopes to use carbon finance to meet debt repayments and support bamboo-processing activities and social programs in the area, MIGA’s $27-million guarantee backs the company’s investment in the purchase and conversion of degraded land into commercial bamboo plantations for the sale and export of bamboo fiber.  

Troy Wiseman, CEO and Co-Founder of EPB, says he was initially attracted to MIGA’s political risk coverage due to the perception of Nicaragua as a high-risk environment, especially in Europe, where EPB had the opportunity to raise debt finance for the project. Despite Nicaragua’s recent economic turnaround, the country still has a reputation among investors as one of Latin America’s least-developed countries, with high poverty rates following decades of political instability. Political risk insurance, he reasoned, could help overcome that hurdle and lower the interest rate at which EPB could access capital.

In April 2011, land preparation began at EcoPlanet Bamboo Central America’s Rio Siquia Plantation.

“Once we had political risk insurance, you could take the risk argument away because the cost of capital  would come down,” says Wiseman. “It came down for us by about 40%.”

As for the insurance itself, aside from the potential payoff in case an insurance claim is triggered, Wiseman notes that having MIGA on the contract reduces the risk that expropriation even occurs in the first place. MIGA underwriter Gloriana Echeverria says that’s partly because the Nicaraguan government is a shareholder in MIGA, which means it’s literally invested in its performance.

“This reduces the chance of expropriation because the government is unlikely to interfere with a project that has MIGA – and therefore the World Bank – as its partner,” she says. “We’ve gotten involved in over 100 cases where the investor has a certain problem with the government interfering. MIGA can mediate between the government and the investor to arrive at a solution that will make both parties happy.”

Political risk aside, the decision to invest in the project using carbon finance required taking on a significant amount of risk in its own right. “No one really had a proven bamboo methodology at a commercial level that could be duplicated,” says Wiseman. Indeed, EPB is the first organization to use a bamboo-based carbon offset methodology on a project validated under the Verified Carbon Standard (VCS) and the Climate, Community, and Biodiversity Alliance (CCBA), and is also certified under the Forest Stewardship Council for sustainable forest management.

EPB’s project is not a pure carbon offset project insofar as it derives revenues from bamboo sales. MIGA’s financial analysis of the project takes into account all revenue streams. For projects that are strictly dependent on carbon finance, Echeverria says MIGA’s financial analysis could differ in accounting for the financial sustainability of the project. A project relying solely on carbon revenues could be seen as a riskier project to insure.

Navigating the kitchen sink

For project developers trying to distinguish between OPIC and MIGA insurance, the primary difference is that OPIC requires majority US participation in an investment, whereas MIGA is open to nationals of any of its 179 member countries as long as the coverage is for a cross-border investment. MIGA is usually competitive in the riskier countries where investors are more concerned about getting the World Bank umbrella effect of deterrence, whereas OPIC tends to focus its activities in countries where a strong bilateral relationship might exist with the US. There is also a private political risk insurance market, but arguably without the deterrence effect. It is unclear whether carbon offset project developers have used this market.

Guada aculeate bamboo growing wild in their native habitat on EcoPlanet Bamboo’s Rio Kama Plantation. November 2011.

Ultimately, MIGA can provide up to $220 million in insurance coverage per project, whereas OPIC can provide up to $250 million  – both agencies able to provide additional coverage through reinsurance. But how affordable is political risk insurance at the end of the day? And what incentives exist to help project developers invest in poor and risky countries where capital is hard to come by?  

The cost of the policy depends on the country, with insurance premiums rising significantly for particularly high-risk environments. For countries in the middle tier, the insurance itself may not be prohibitively expensive, but cash-strapped project developers looking to tap into political risk insurance can ultimately face additional upfront costs if—unlike EPB or TGC—they aren’t already in compliance with the prerequisite environmental, anti-corruption, and other policies required to land MIGA and OPIC insurance.

“There is already significant environmental work that project developers have to deal with in order to register with VCS and CCBA, which may be costly,” says Ruth Ann Nicastri, Managing Director of Political Risk Insurance at OPIC. “Terra Global Capital had already started those processes before they sought political risk insurance from us, so those costs were already taken into account in their budget. For project developers working on projects that haven’t taken the steps to obtain that kind of rigorous certification, it might be onerous to suddenly have to meet OPIC’s environmental requirements.”

For smaller projects that cannot afford certain evaluations, OPIC sometimes undertakes these evaluations as part of its own due diligence process, she notes. OPIC also provides discounted rates for small businesses, while MIGA provides subsidized rates for investments of $10 million or less with an average 25% discount, with specific rates depending on the country.

Beyond that, some have floated the idea of having public entities, possibly domestic, help subsidize insurance fees. “Depending on the country, it may be possible to provide additional layers of subsidy or premium pricing in a way that could offset political risk insurance premiums,” says Cameron Prell, Senior Counsel at US-based law firm McGuireWoods.

Project developers also have the option to apply to grants from donor agencies such as FMO, the Dutch development bank, that have strong stated interests in sectors relevant to carbon offset projects such as agribusiness, energy, food, and water to underwrite the cost of the insurance premium instead of provide a traditional grant or donation, Wiseman notes.

If a tree falls in the forest…

In spite of early-mover activity, there is still relatively low awareness that political risk insurance is available for forest carbon offset projects through MIGA and OPIC. The default risk management tool remains the buffer pool approach, which requires that project developers set aside carbon credits as reserves in order to cover unforeseen losses in carbon stocks.

“I don’t see the buffer pool approach as having a necessarily conflicting goal as these new emerging products, but the purpose of the buffer pool is definitely not to encourage financing,” says Stephen Matzie, Investment Officer at the US Agency for International Development (USAID), the US federal government’s principal aid agency. “It does require a significant amount of credits over the project’s lifetime, but I think it’s one of those things that can be tweaked to encourage private financing.”

While reportedly cheaper than the buffer pool approach, political risk insurance does not cover the broad set of risks that are technically covered by the buffer pool approach.

“OPIC and MIGA political risk insurance are advisable in many emerging markets that lack a robust regulatory regime for forest carbon,” Prell says. “However, the riskier markets are going to potentially result in higher premiums. Regardless, the insurance products should not be viewed as a sufficient instrument able to cover the current market demand and price risks inherent in forest carbon projects.”

There has been some push to expand the offering of products that can cover exposure to political risk alongside other risks. “The private sector and willing development finance institutions are developing additional guarantees that may address some measure of market risk, including project performance and valuation,” he notes. “The coverage is not 100%, but such mechanisms could provide some measure of risk mitigation for investors.”

USAID’s Development Credit Authority has been a prime innovator in this space, having been approached in early 2012 to develop a special loan guarantee for REDD activities. The agency is now working on several transactions simultaneously, with the one furthest along covering the Choco region in Colombia where it’s helping local communities pull together a REDD project. USAID’s guarantee covers a broad range of risks in addition to political risk, including those associated with verification, weather, and the production of carbon credits.

The path forward

Carbon offset projects continue to enter the pipeline to tap into political risk insurance on a case-by-case basis, including new prospects in Colombia, Brazil, and Indonesia. However, whether the market can see scaled-up adoption is hard to say.

While the use of MIGA’s political risk insurance for carbon offset projects is limited thus far, Prell notes that there has been some discussion about the potential for a new political risk insurance product for forest carbon to be modeled after the index-backed agricultural insurance programs offered by the World Bank’s Global Index Insurance Facility.

On OPIC’s end, Nicastri says, “As far as we can tell, we’re still the only ones willing to cover regulatory risk for forest carbon. However, OPIC is happy to work with other insurers to provide the product to a broader range of investors.”

As for EcoPlanet Bamboo? “We plan to use political risk insurance in every country where we plant bamboo as we embark on a new goal of reforesting 1 million acres of degraded land in Southeast Asia and Brazil, while expanding our current footprint in Africa,” says Wiseman. Some of this work could potentially include a carbon offset element.

An Indonesian entity called Greenomics this month accused the Rimba Raya Biodiversity Reserve Project of failing to secure usage rights and overstating the amount of forest it had saved. A quick dive into available documents, however, shows it’s Greenomics that failed to do its homework.

23 July 2013 | Earlier this month, a document entitled “Rimba Raya Conservation Project’s claims could mislead the public and the carbon market” popped up on an Indonesian site called Greenomics.org. The cover page made two incendiary claims that, if true, would mean that one of the largest REDD projects on the planet had both failed to secure tenure and overstated the amount of forest it had saved.

“Not true that the Indonesian Government has approved 64,000 hectares for Rimba Raya Conservation Project,” the cover proclaimed.

“More than 60% of area whose ecosystem is to be restored under the Rimba Raya Conservation Project was not originally slated for palm oil plantation development,” it blared.

Neither claim, however, is standing up to scrutiny, and a quick literature review shows that the Greenomics “report” selectively references government decrees and letters that support its claims while inexplicably ignoring those that prove it wrong. Indeed, every “smoking gun” the Greenomics authors claim to have discovered is also referenced in the May 2013 Verification Report, which is the document that auditors from SGS Global Services were required to compile in the process of certifying the project under the Verified Carbon Standard (VCS). You can download it by clicking “Verification Report” to the right, or by going to the relevant VCS documents page.

The Greenomics report also fails to differentiate between the project’s accoun/ting area (the 47,237 hectares on which it’s actually generating credits) and its management zone (the 63,828 hectares within which the accounting area lies); and it misrepresents the status of the land at the time the project began. Finally, it claims that notarized letters of support from various ministers have no meaning without secondary letters, but provides no legal basis for that claim.

Additionality

The document rightly points out that 18,642 hectares of the project area are in the Tanjung Puting National Park, and it implies this territory was already protected before the project began. But it ignores readily-available documents that tell the full story. Specifically, it ignores the fact that the state moved the boundary of the park into the project area after the carbon project had already saved that portion of forest.

You can see this by turning to page 12 of the Project Document (see “Project Document”, right) or scrolling to the map below. It shows all of the region’s planned palm oil concessions from 2008, with the then-planned project management zone outlined in green and the carbon accounting area outlined in orange within this. Not coincidentally, the carbon accounting area coincides with a massive area shaded gray – this is land that the government had designated for planned palm oil concessions, despite the Greenomics claims to the contrary. It’s the reason the project came into existence, and it’s why they were credited with preventing 2,462,212 tons of carbon dioxide from being emitted from July 2009 through June 2010.

Here is the map as it appears in the report:

The National Park

In this map, the National Park is to the left of the project, because that’s where it was when the project began. It wasn’t until March 2013 – long after the project developers had saved the forest – that the state expanded the park into the project area. At that point, the project developers entered into a Cooperation Agreement (see “Cooperation Agreement”, right) spelling out their new obligations as custodians of a piece of national park, but they had already been protecting the forest for years. Greenomics, however, implies that the project was placed in the park from the start, which it was not.

For additional proof, you can turn to the Additionality Support Documents (see “Additionality Support Documents”, right), which contain licenses granted on the properties before the project began – clearly showing that palm oil developers were lining up to develop the land, and clearly demonstrating that the forest would have been cleared for palm oil if the project not been created.

Who has the Rights?

Greenomics also rambles on and on about the lack of any individual document or decree giving project developers the right to the 64,000 hectares (actually, 63,828) – ignoring two simple facts: one, that the total area isn’t one parcel, but several; and two, that these parcels are governed by different decrees and agreements. The SGS Global Services auditors covered this on pages 11 through 13 of their Verification Report, where they reference each of the decrees and agreements covering each property as well as a letter from the Ministry of Forestry’s Director General of Forestry Planning, Bambang Soepijanto, summarizing and reiterating the project developers’ rights in a letter (see “Working Area Letter”, right). If all this documentation, plus the notarized letter from the minister and the auditors’ report aren’t enough for Greenomics, what is?

Only one of the parcels referenced in these documents is the 36,331-hectare parcel that Greenomics focuses on. Another is the 18,642 hectares for the National Park, which we covered above. Another one, which Soepijanto identifies as being 8,855 hectares, is treated in the Verification Document as two parcels of 2,394 hectares and 6,512 hectares each that had been given over to commercial palm oil operators. Interestingly, the auditors did find some language that at first appeared to annul the project developer’s rights to the first of these small properties, but the issue duly noted and resolved. Finally, there are two smaller parcels of 820 and 95 hectares each – both of which are also referenced by auditors and by Soepijanto.

With so many pieces of the puzzle so readily available, one has to wonder why Greenomics chose to focus on just a few. It does appear they are right about one thing: someone seems intent on misleading the public and the carbon market, but it doesn’t appear to be the Rimba Raya project developers.

Additional resources

A new Forest Trends brief compares and contrasts case studies from two villages in Vietnam to highlight the implications of illegal logging on REDD+ and FLEGT as well as the role of community participation and land tenure agreements in forest governance. Meanwhile the Ecosystem Marketplace Carbon Program gears up for its final round of data collection in preparation for the 2013 State of the Forest Carbon Markets report.

This article was originally published in the Forest Carbon newsletter. Click here to read the original.

15 July 2013 | Hot off the Forest Trends press, a  new brief  explores the implications of small-scale illegal logging on REDD+ and Forest Law Enforcement, Governance and Trade (FLEGT) initiatives in Vietnam.

The brief highlights the rationale of clear and secure tenure rights for local people living near forests containing timber – not just to occupy them, but also to sustainably harvest forest assets if they so choose.  Without these rights, locals are excluded from forest benefits and more likely to illegally log. According to the brief, “increasing resources dedicated to law enforcement in the absence of changes in incentive structures” is not enough to stop illegal logging.

To contrast what hasn’t worked in  forest governance in small-scale forest management  and what has worked, Forest Trends presents case studies from the villages of Ban Y and Phuc Minh (whose names have been changed) in Hoa Binh and Binh Dinh provinces. In Ban Y, forest tenure rights granted to villagers by the government excluded tree harvesting rights. As a result, community members were barred from extracting timber from these forests, despite their historical claims on the forests, legal tenure rights, and livelihood needs. Harmful illegal logging ensued, with Ban Y villagers taking on the largest risk and least benefits while government officials, brokers, and traders captured most of the benefits.

Conversely in the village of Phuc Minh, while villagers received similar tenure rights as in Ban Y, their forest was not under the prohibitive protection category and instead received support from the German Development Bank for a community forestry project that combined forest protection with sustainable harvest techniques. Villagers actively participated in decision-making on how to distribute timber revenues and remaining harvested timber, prioritizing community members in need and those who complied with forest protection responsibilities.

The lessons learned from Vietnam’s forest governance experience have direct implications for FLEGT and REDD+, whose missions both prioritize actions against illegal logging. For forest carbon in particular, the brief stresses that the effectiveness of community-based REDD+ efforts relies on the reorientation of law enforcement to support rather than oppose small-scale forest management. In addition, the brief says the design of REDD+ should combine performance-based payments for forest protection with active use and management by smallholders, since REDD+ payments alone are unlikely to provide sufficient incentives for forest protection.

Learn more about Forest Trends’ recommendations on FLEGT and REDD+ in Vietnam  here and keep reading below for the inside scoop on other important forest carbon developments!

Here at Ecosystem Marketplace, we are in the final stages of data collection in preparation for our 2013 State of the Forest Carbon Markets report. If your organization has developed forest carbon projects for the voluntary or compliance carbon market in 2012, we invite you to describe your project and any 2012 transactions by participating in our survey before July 31, 2013. This will be the final deadline for organizations wishing to take part in this year’s report.  

Forest carbon project developers that provide project-level information – whether or not you have transacted credits yet – can also choose to have their project profiled as the Forest Carbon Portal’s Featured Project. You can also specify your preferred level of confidentiality – from completely open (including transaction prices and volumes) to completely confidential. Create a profile and submit your responses here!

If you have comments or would like to submit news stories, write to us at [email protected].

International Policy Mission accomplished After a mission to Panama in early June, an independent investigation and evaluation team  recently published its initial findings regarding Panama’s withdrawal from the UN-REDD+ Programme. After receiving input from a range of in-country stakeholders, the report was compiled by the investigation and evaluation team and later presented at the UN-REDD Policy Board meeting in Lombok, Indonesia at the end of June. Preliminary findings confirm faults in the National Programme design as well as the absence of a participatory process, leading to the exclusion of indigenous peoples in program activities. The investigation and evaluation team plans to return to Panama and release a final report in August.   US Policy Follow the golden rule? Following a  ruling by the U.S. Court of Appeals for the District of Columbia Circuit  in  Center for Biological Diversity v. U.S. Environmental Protection Agency  (EPA), forest owners are encouraging the EPA to prioritize the completion of amendments to its greenhouse gas regulations in order to take advantage of the carbon benefits of forest bioenergy. The ruling concluded that the EPA “did not adequately justify its decision to temporarily defer biogenic emissions from its greenhouse gas regulations”, but did not clarify whether the EPA could finalize “permanent amendments to its rules regarding the treatment of such emissions.”  The greenhouse gas amendments are expected to greatly impact the degree to which private forest owners in the U.S. are able to provide forest carbon offsets.     Project Development Disney helps dreams come true A new  article  translated from Ecosystem Marketplace’s  Valorando Naturaleza  provides an in-depth look into Conservation International’s VCS/CCB-validated Alto Mayo REDD+ project in Peru, and Disney’s $3.5M contribution to the project. Tracing its roots back to 2008, the project has resulted in the mainstreaming of sustainable agriculture practices in the area, preservation of local biodiversity, and the generation of 3 MtCO2 in emissions reductions to date. Of that, 400,000 tCO2e has been attributed to Disney’s contribution and gone toward offsetting the company’s carbon footprint. Disney has since agreed to provide a second grant of $3.5M to Conservation International’s work in Alto Mayo.     A rumble in the jungle Greenomics Indonesia, a non-governmental conservation organization, recently  accused the Rimba Raya Conservation project for its alleged false claim  of obtaining approval from the Indonesian government for a 64,000-hectare carbon project, reportedly the world’s largest. Vanda Mutia Dewi, national program coordinator for Greenomics Indonesia, asserted that Rimba Raya conservation received an ecosystem restoration permit in March 2013 for only 36,331 hectares of land and believes that of the remaining hectares, 18,642 hectares are in the possession of the Tanjung Putting Conservation Park. Indonesia’s Forestry Ministry said that a cooperation plan agreed to by the Tanjung Putting Conservation Park and Rimba Raya Conservation could not yet accommodate carbon market activities.   A minor setback   Elsewhere in Indonesia, AusAid – the Australian government’s foreign development assistance agency – recently announced its  plan to end its support for a major forest restoration project on the island of Borneo. The $47-million project, known as the Kalimantan Forests and Climate Partnership (KFCP), aimed to restore 200,000 hectares of peatland and reduce 700 MtCO2e over 30 years. However, it encountered approval delays and objection from officials and local communities. Australia’s withdrawal, along with the challenges of Indonesia’s bureaucracy and opposition from multiple parties, could potentially set back Indonesia’s REDD Programme. While the “main thrust” of KFCP has ended, both the Australian and Indonesian governments are discussing which parts of the project could benefit from additional work over this next year.   Yunnan in the thicket of it While seven pilot emissions trading schemes are in various stages of initiation across China,  Yunnan Province launched its own carbon sequestration program  on June 17, when China debuted its National Low-Carbon Day. Yunnan Forestry Investment Company (YFI) sold 17,800 tCO2e worth of carbon credits at 1.07M yuan (US$174,000) to the Guangdong-based Friends of Iron and Steel. The Yunnan Development and Reform Commission brokered the deal. The offset purchase will help finance YFI’s work to plant and maintain forest and bamboo groves, supported by a 30-year lease granted by the provincial government to manage 3,500 ha of unused land in Xishuangbanna Dai Autonomous Prefecture. The project is expected to sequester 550,000 tCO2e over three decades.   Judgment day for co-benefits The following Climate Community & Biodiversity Alliance projects, Abote Community-Managed Reforestation Project, Buffelsdraai Landfill Site Community Reforestation Project, REDD+ de la Concesií³n para Conservacií³n Alto Huayabamba Project, and the New Leaf Carbon Project are  now accepting public comments  on whether their project documents meet CCB requirements. The first two projects will accept comments through July 24, while the latter two will accept comments through July 28.     National Strategy & Capacity   Binh there, done that   An Ecosystem Marketplace  article  summarizes Forest Trends’ recent paper on Vietnam’s Forest Law Enforcement, Governance and Trade (FLEGT) and REDD+ initiatives, exploring policies pertaining to illegal logging. Through two case studies in the provinces of Hoa Binh and Binh Dinh, the paper discusses the history behind deforestation in the two regions and examines the lack of clear and secure tenure and land use rights, which has further contributed to deforestation and aggravated an already corrupt forest governance system. According to the paper, in order for FLEGT and REDD+ to succeed, forest governance must support small-scale community forest management with equitable distribution of tenure rights and other benefits to local people.   Bridging the Great Wall As China rolls out seven domestic pilot emissions trading schemes this year – with the city of Shenzhen’s debuting last month – market actors are wondering how carbon offsets will fit into the picture.  A new Ecosystem Marketplace article  provides a breakdown of the types of offsets eligible for trading, existing supply and potential demand, as well as what’s on the horizon. Offset methodologies approved for use by China’s National Development and Reform Commission (NDRC) do not yet cover forestry and land use, which is still in the process of being vetted. Domestic initiatives like the Panda Standard, China’s first voluntary carbon standard, are seeking NDRC approval for their afforestation/reforestation methodologies.     Beyond the forest In the district of Tanjung Jabung Barat on the Indonesia island of Sumatra, a  Reducing Emissions from All Land Uses (REALU) project  is in full swing. REALU, an initiative funded by the Norwegian Agency for Development Cooperation, “operates in several countries to find out how to reduce greenhouse gas emissions within an entire landscape rather than just from a particular activity or sector.” The REALU project provides technical assistance to help support the Indonesian government’s low-emissions development plans, currently concentrating its efforts on a 16,000-hectare plot of protected peat forest. Central to the work is a low-carbon land-use planning method developed by the World Agroforestry Centre in collaboration with the government’s district planning and development agency.   To log or not to log A new report by The Australia Institute  asserts that it makes more financial sense to conserve the native forests of southern New South Wales for carbon credit generation than to continue logging, valuing forest carbon abatement opportunities at $222 million over the next 25 years. The government of New South Wales does not agree, stating that the report used incorrect assumptions and is based on an unrealistically high carbon price. While the federal government’s Carbon Farming Initiative could broaden its reach in the future, to date, native forestry logging operations are not yet eligible under the scheme.     Ethiopia off on good foot The REDD Desk recently added  Ethiopia to its collection of REDD+ readiness profiles. As part of the Climate Resilient Green Economy Strategy (CRGE), Ethiopia joins the ranks of the Guyana, Vietnam and Indonesia in building a development plan intended to reduce emissions from the forestry sector and encourage a low-carbon development path. In addition to developing a green economy, the CRGE Strategy intends to help Ethiopia achieve a middle income country status by 2025. Ethiopia is in its second phase of REDD+ readiness with two pilot projects, Bale Mountains Eco-Region REDD+ Project and the Oramia Region REDD+ Pilot Programme, currently underway.     Columbian consultations At a recent UN-REDD Programme Policy Board meeting, Colombia presented its Readiness Preparation Plan, highlighting both government and non-government participation and consultations with woman and youth. In response, the Policy Board approved  $4 million in funding earmarked for Columbia’s National Programme, as well as another $4 million for a community grant initiative that will provide resources and build capacity in local communities while empowering them to engage in REDD+ activities. Last year, Colombia held an inception workshop for the creation of a Colombia-based market platform for voluntary carbon offset transactions, to have an initial focus on forest carbon.   The crown jewel Over the last ten years, wildfires and mountain-pine beetle infestations have taken their toll on forest land in British Columbia. The B.C. provincial government recently announced a partnership with the Carbon Offset Aggregation Cooperative to plant trees on Crown land,  allowing private-sector companies to engage in carbon offset activities through reforestation efforts. Through the B.C. Forest Carbon Partnership Program, more than one million trees could be planted in the next five years. According to Ben Parfitt, a resource policy analyst with the Canadian Centre for Policy Alternatives, “the success of the private-sector project will likely hinge on the market value of carbon offsets.   Science & Technology Review Seeing hotspots Recently launched, the  Mitigation Lab, a new laboratory under the World Agroforestry Centre’s Climate Change Unit,  is intended to help researchers identify and quantify GHG emissions from “hotspots” across a variety of ecosystems including forests, agriculture, and dairy farming. The lab’s gas chromatographs are capable of analyzing 120 GHG samples over an eight-hour time period, allowing researchers to compare GHG emissions between landscapes on which climate-smart agriculture has been practiced and those on which it has not – ultimately expected to provide evidence that climate-smart agriculture in fact contributes to climate change mitigation while increasing farm production.   Speaking volumes Scientists and climate change experts are now able to access tree models for forest volume, biomass and carbon stock through an online platform for the first time.  GlobAllomeTree, launched by the Food and Agriculture Organization (FAO) of the United Nations, uses allometric equations to evaluate different forest services like timber production and bioenergy strategies involving forest volume, biomass, and forest carbon, and is expected to support REDD+ efforts. “This is the first time that countries have access to an extensive database of tree models used to evaluate resources worldwide,” says FAO Forestry Officer Matieu Henry. “It allows them to get a clear picture on their forests’ capacities to store carbon.”   Publications & Tools REDD+y to integrate Integrating Communities into REDD+ in Indonesia, a PROFOR working paper, addresses how REDD+ can tackle underlying community issues such as lack of access to forest land. The report provides background on REDD+ in Indonesia and highlights the need to integrate community development approaches into a REDD+ framework, the role of communities in Indonesia’s forestry sector, as well as mechanisms for addressing a multitude of community-level funding needs.   Keep your options open Published by Forest Carbon Asia,  REDD+ Biodiversity Safeguards: Options for Developing National Approaches  explores the potential to develop a national safeguard approach that would comply with both international policy commitments and national policy frameworks. In light of the Cancun Safeguards and Aichi Biodiversity Targets, this brief discusses REDD+ readiness activities in relation to biodiversity across 20 Asian countries, including a discussion of Vietnam’s national safeguard approach.     Jobs 2 Positions– The Nature Conservancy   Based in Mexico, the  Agricultural Economist, Yucatan Peninsula  will contribute to the establishment of Mexico’s REDD+ Program on the Yucatan Peninsula and develop the regional/local assessments, tools, and frameworks for the design and implementation of sub-national REDD+ strategies. Candidates should have a Bachelor’s and 5+ years’ experience in conservation practice. Based in Brazil, the Coordinator, Amazon Forest  will provide technical and political leadership and support for The Nature Conservancy’s REDD+ work in the Amazon and will build strategic, scientific and technical capacity among staff and partners on REDD+. Candidates should have a Bachelor’s and experience in REDD+, forest conservation and/or sustainable agricultural production.     Global Climate Change Specialist – ECODIT   Based in Washington, D.C., the Global Climate Change Specialist will identify ways to integrate clean energy, land use and carbon sequestration, and adaption to climate change and development efforts. Candidates should have a Master’s Degree in a field relevant to climate change-related science and policy and 5+ years of experience in environmental management. Read more about the position  here.   Technical Specialist – Plan Vivo Foundation Based in Edinburgh, the Technical Specialist will select and prepare approved methodologies for projects to use under Plan Vivo Standard 2013 and coordinate and conduct technical reviews of project documents. Candidates should have a Master’s in ecosystem services or a related discipline such as environmental management or forestry. Read more about the position  here.     Junior REDD+ Policy Consultant – Climate Focus Based in Thailand, the Policy Consultant will support the USAID funded “Lowering Emissions in Asia’s Forests” (LEAF) project and will help coordinate work and prepare advice on issues affecting REDD+ policy design. Candidates should have a Bachelor’s Degree and 3+ years of experience in natural resource management, forest policy, or the carbon markets. Read more about the position  here.     2 Positions – Conservation International Based in Botswana, the  Manager, Government Liaison and Environmental Policy  will be responsible for liaising with the Government of Botswana on matters related to the Gaborone Declaration and supporting policy research on Natural Capital Accounting, PES and REDD. Candidates should have a Master’s or PhD in environmental, political or social sciences and 2+ years’ experience in environmental policy. Based in Indonesia, the  Deputy, Chief of Party  will oversee a team in the North Sumatra program area and will be responsible for local coordination, monitoring and development of the annual Sustainable Landscapes Partnership program workplan. Candidates should have a Bachelor’s in natural resource management or a related field and 7+ years’ experience with public-private partnerships.     2 Positions – World Wildlife Fund Based in Zambia, the  Community Forest Lead, Community-Based Forest Management Program  will be responsible for leading efforts to sustainably manage 700,000 hectares of Participatory Forest Management Areas in Zambia. Candidates should have a Master’s in rural development, forestry, natural resource management or a related field and 7+ years’ experience. Based in the Democratic Republic of the Congo, the  Chief of Party, Central Africa Forest Ecosystems Conservation  will direct staff, oversee grant, sub-grants and consulting contracts and coordinate with staff from WWF and partner organization on a daily basis. Candidates should have at least a Master’s in forestry, conservation biology or a related field and 8+ years’ field experience.     Chief of Party – CARE   Based in Zambia, the Chief of Party will contribute to the USAID/Zambia’s Climate Change Program Objective and the Community-Based Forest-Management Program for REDD+ Readiness. Candidates should have at least a Master’s Degree in forestry, ecosystem services, natural resource management, or international development and 10+ years of leadership experience in managing international development programs. Read more about the position  here.   ABOUT THE FOREST CARBON PORTAL The Forest Carbon Portal provides relevant daily news, a bi-weekly news brief, feature articles, a calendar of events, a searchable member directory, a jobs board, a library of tools and resources. The Portal also includes the Forest Carbon Project Inventory, an international database of projects including those in the pipeline. Projects are described with consistent ‘nutrition labels’ and allow viewers to contact project developers.   ABOUT THE ECOSYSTEM MARKETPLACE Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact [email protected].

Additional resources

As China rolls out seven domestic pilot emissions trading schemes this year – with the city of Shenzhen’s debuting last month – market actors are wondering how carbon offsets will fit into the picture. Here, we provide a breakdown of the types of offsets eligible for trading, existing supply and potential demand, as well as what’s on the horizon.

9 July 2013 | Designated as China’s first special economic zone back in 1980, the fast-growing city of Shenzhen has come to epitomize the country’s move toward market-oriented economic policies. On June 18, Shenzhen set yet another precedent when it launched the first of seven pilot programs to help pave the way for a national cap-and-trade program.

Under the pilot program, 635 companies in Shenzhen, responsible for about 38% of the city’s emissions, face obligations to reduce their carbon intensity by 6.68% on average per year by 2015.

The first day of trading on the Shenzhen Emissions Rights Exchange saw eight transactions of emissions allowances completed for a total of 21,112 tCO2e. Allowance prices ranged from 28 to 32 yuan per tonne, close to the expected price of 30 yuan per tonne (US$4.89).

While only allowances have been traded so far, emitters have the option of trading carbon offsets in the form of Chinese Certified Emission Reductions (CCERs), which are issued by the National Development and Reform Commission (NDRC). The NDRC allows existing projects registered with the UN’s Clean Development Mechanism (CDM) to register as CCER projects – a source of potential relief for CDM suppliers reeling from the protracted collapse in prices for CDM project offsets (CERs) and the recent ban on CERs from non-least developed countries for use in the European Union Emissions Trading Scheme (EU ETS).

Beyond the historically strong relationship between suppliers of Chinese renewable energy offsets and European buyers, there is potential for CERs from China-based projects to fetch higher prices from domestic buyers should the pilots manage their prices well. With more than 70% of the world’s CERs issued in China as of the end of 2012, a big question on the minds of Chinese CER suppliers is how much domestic demand they can actually expect to absorb existing and new offset supply.

Ramping up

Initial reactions to China’s new pilot activities have generally been positive among stakeholders, but elements of the system remain hazy. Liable emitters are expected to not only monitor, report, and verify their emissions, but also to participate in auctions. For the bulk of Chinese companies, trading offsets – or allowances for that matter – is an unfamiliar arena.

“Even the few Chinese companies that are in a joint venture with a European or international company that has experience in the EU ETS or California’s market are just now getting organized,” notes Jeff Swartz, Director of International Policy at the International Emissions Trading Association (IETA), which oversees a working group in China to build capacity for the new pilots. “Policymakers haven’t actually traded allowances or purchased offsets, so there’s an imperative need to share information and work with companies in existing systems that have.”

What’s eligible?

In March, the NDRC released its first batch of 52 CCER methodologies eligible for domestic emissions trading, all of which are adapted from existing CDM methodologies.

The list stays true to China’s traditional focus on renewable energy, energy efficiency and fuel switch, and methane. It also controversially includes methodologies for HFC-23 and N2O industrial gas offsets, which the EU ETS banned post-2012 in response to critique regarding their environmental integrity.

Some say it is important for industrial gas suppliers to be able to access the domestic market – now their only major prospective source of demand – for recourse, however, a recent analysis by Climate Bridge – a major China-based project developer and wholesaler – expresses concern that the inclusion of industrial gas projects could crowd out China’s domestic offset market and potentially subject pilot schemes to low carbon prices as experienced in the EU ETS.

Offsets from non- or pre-CDM projects are eligible for voluntary emissions trading if they apply methodologies that have been approved by the NDRC, according to interim government regulations. While not explicitly stated, this could potentially provide a bridge for projects developed to the Verified Carbon Standard (VCS) and Gold Standard, which certify many of their projects according to CDM methodologies.

NDRC-approved methodologies do not yet cover forestry and land use, which the NDRC said it is still vetting alongside other CDM methodologies. Domestic initiatives like the Panda Standard, China’s first voluntary carbon standard developed by the China Beijing Environment Exchange and BlueNext with the support of Winrock International, are in the process of seeking approval from the NDRC for afforestation/reforestation methodologies.

Gauging demand

Domestic demand for offsets will inevitably vary between Shenzhen and other emerging pilots. After factoring in the level of emission reduction targets and allowances provided through the system (totaling 100 MtCO2e between 2013-2015 for Shenzhen alone), the scope of supply and demand for offsets will depend on the existing supply of offsets eligible for use under each pilot, as well as limits set on the use of offsets against emitters’ compliance obligations (tentatively 10% on average across China’s various planned pilots).

“Policymakers are very aware of the fact that if they open up a fire hydrant, they could have a situation in which supply exceeds demand,” says Swartz. “However, I suspect they face a difficult situation in restricting offsets because some of the companies that they’re asking to participate in the ETS from the compliance point of view have also supplied CDM offsets in the past.”

Given China’s large existing offset supply in certain areas, many project developers have been slow to embark on new projects until sufficient demand can soak up existing inventories. Climate Bridge’s analysis  predicts that Shenzhen will have limited potential for new offset project development, as “the existing CER supply in this region already makes up more than 8% of the capped emissions.” The company expects other pilot jurisdictions like Tianjin, on the other hand, to have strong demand for new CCERs given the dearth of existing CDM projects in the area.

Greater demand (and clarity) ahead?

Over the course of this year, other pilots are busy incubating in the cities of Beijing, Tianjin, Shanghai, Chongqing, and the provinces of Hubei and Guangdong – each setting their own limits on offset location and project type. The plan is to eventually link the schemes together as a foundation for a national cap-and-trade program as early as 2016, following the release of China’s next Five-Year Plan.

Should China’s carbon market eventually link with other markets abroad, China would be a net exporter of offsets, at least for the foreseeable future. The probability of cross-border linkages is still pretty slim at this point according to Wenjie Zhuang, Senior Project Manager at Climate Bridge.

“China’s carbon market is in early stages – there is no national-level program yet,” she says. “And while the design of China’s pilot schemes has drawn lessons from trading systems all over the world, they also show many innovations in design.”

Key results from a Forest Trends paper on the government of Vietnam’s Forest Law Enforcement, Governance and Trade (FLEGT) and the country’s REDD+ initiatives finds that illegal logging can only be curtailed with policies promoting small scale forest use and management that benefit the local communities.

8 July 2013 | Strategies attempting to curb illegal logging in Vietnam must provide forests benefits for the local communities in order to be effective. This means clear and secure tenure rights are distributed to the local people.

It’s a key lesson to consider in the Forest Law Enforcement, Governance and Trade (FLEGT) and Reduced Emissions from Deforestation and Forest Degradation (REDD+) initiatives currently pursued by the Government of Vietnam and the focus of NGO and Ecosystem Marketplace publisher Forest Trends’ Information Brief on Vietnam deforestation.

The brief examines two case studies from Hoa Binh and Binh Dinh provinces that illustrate how differences in the allocation of clear and secure tenure and use rights affected the prevalence of illegal logging. In the small Dao village of Ban Y (all village names have been changed), villagers were not given meaningful tenure rights to the local forest. Villagers can only derive benefit from the forest if they actively participate in illegal logging. In the Kinh village of Phuc Minh, villagers received full tenure rights, with the result that the villagers themselves protected local forests against outside encroachment guaranteeing a sustainable timber harvest and long term benefits.

Background

Despite the Government of Vietnam’s attempts to increase enforcement, illegal logging is still a pressing concern in Vietnam today. The trade in illegally sourced timber involves a range of actors from large-scale and powerfully connected networks to small-scale operators, and affects all forests across the country and including those zoned for protection. The persistence of small-scale illegal logging has given rise to significant public concern and increasingly severe law enforcement efforts by the central government.

The Vietnamese media typically portrays small-scale Illegal logging as being perpetrated by poor villagers who invade government property containing natural forest with valuable timber. Corrupt forest protection officers are described as turning a blind eye on the villagers’ illegal practices, and they all collude with traders to perpetuate this trade in illegal timber for personal gain. Media and government recount this simplified story, leading to widespread calls upon the central government to strengthen law enforcement by “cleaning up” Vietnam’s forest protection apparatus and increasing the human and financial resources allocated to enforcement.

Research shows that this conventional account of small-scale illegal logging is overly simplistic. Illegal practices are not simply due to the presence of poor villagers, corrupt local officers and illegal traders. Nor is the widespread presence of illegal logging simply due to a lack of law enforcement. Illegal practices instead reflect a combination of factors, a key one being the lack of tenure rights given to local people living near forests containing valuable timber, thus legally excluding them from forest benefits including those from timber. Increasing resources dedicated to law enforcement in the absence of changes in incentive structures for all involved will not work.

Ban Y: Small-Scale Illegal Logging in a Protection Forest

In 1995, government policies on forestland allocation granted individual households in Ban Y tenure rights for forestland. However, this transfer of tenure rights did not include the concurrent transfer of tree harvesting rights to the villagers. The local forestlands were classified as protection forests for watershed protection. Households were not allowed to extract any timber from these forests, despite their historical claims on the forests, legal tenure rights and livelihood needs.

Despite the prohibition, villagers began to cut trees for cash income. Villagers used relatively harmful “cut and run” extractive techniques, typically damaging a dozen smaller trees when cutting and hauling each big log, leaving branches and small trees behind. This damage is increasingly further within forest areas as high value trees are being progressively depleted. Timber cut in the forest near Ban Y was brought to Huu Bang, a timber trading village near Hanoi, and eventually ended up as furniture in Vietnam’s domestic markets.

Despite mandates to check the legality of timber harvesting, trade and transport of timber, a complex chain of government officials allowed the illegally sourced logs to be transported between Ban Y and Huu Bang, and were facilitated by traders, local brokers and village leaders.

In this case study, one single timber trader was a critical facilitator, making payments to village leaders, local brokers (called “lawmakers” by villagers), tax and traffic officers. The local brokers would in turn make payments to other government officials who would ultimately allow the timber to pass into the wholesale markets (Figure 1). The trader’s truck encountered no difficulties when passing through a series of checkpoints overseen by various local government officials.

Among all actors involved in getting the timber from tree to market, Ban Y villagers benefitted the least and bore the most risk. While collectively government officials (23) and brokers (2) captured the most (39%) of the benefits, on a per capita basis the trader made the most profit (Figure 2). Villagers received 30% of total benefits, but the benefit was spread between numerous villagers, and they spent more time and bore more risks (e.g., injuries associated with logging and hauling of the tree) than the other groups. The average return for a day’s labor was a mere 29,000 VND (or US$1.80 in 2004, when the research was undertaken). The trader obtained 9% of the total benefit as a single person and was not exposed to the same kinds of risks as the villagers. A wholesaler in Huu Bang received 22%.

Why did the villagers cut the trees?

The 1995 forestland allocation in Ban Y did not ensure forest protection. While the villagers received formal rights to the land, they did not receive any rights to the trees on the land. Villagers were unable to translate the formal rights into tangible benefits for themselves – either for cash income or subsistence needs.

As might be expected, villagers in Ban Y ignored the government’s restriction placed on the forest and continued to conduct their customary practices in the forest with reference to the rights that they had enjoyed historically. “Forest belongs to villagers” was a common expression, allowing villagers to justify the logging regardless of the government’s prohibition. They were driven by high demand and lucrative prices being offered on the domestic timber market. Despite the low nominal benefits, the prices being offered by local traders enticed the villagers to collude with the trader and local officials. The tale of Ban Y is repeated across Vietnam, driving the depletion of timber and degradation of forests.

Phuc Minh: Forest Protection and Management by Village Community

Similar to Ban Y village, the village of Phuc Minh received the formal tenure rights (The district People’s Committee granted the village tenure rights to the forest for a 50-year period under a single title) to the forest lands around their village. However, in this case, the Phuc Minh forest lands were not placed in the prohibitive protection category. In fact, with technical and financial supports from German Development Bank (KfW) through a community forestry project, the allocation was given with the understanding that villagers would combine forest protection with low-impact logging to ensure both positive social and environmental outcomes. The German Reconstruction Bank (KfW)-funded project aimed to improve local livelihoods and forest conditions by way of community forest management (Community forest management rested on the allocation of 364 ha of natural forest containing valuable timber to Phuc Minh village in 2008), helping the villagers’ Community Forest Management Board to establish community forest protection and development regulations which set out the rights and duties of the community with regard to forest use and management. Villagers and project staff report that community management put an effective stop to illegal activities. The villagers received the permission to harvest trees only after they demonstrated an increase in timber volume and forest value since the time of allocation.

Technical and financial assistance from the KfW project undoubtedly increased not only the ability of villages to obtain meaningful rights to forest resources, but also their technical capacity. The project trained villagers in forest inventories, silvicultural management, and harvesting techniques. Villagers conducted a forest inventory to determine the status and timber value of the forest they had been allocated. They contracted technical staff to develop and submit forest management and sustainable timber harvesting plans to the district People’s Committee for approval. They conducted the first timber harvest in 2010-2011, extracting almost 100 m3 of timber through sustainable harvesting techniques.

Villagers assumed an active role in decisions about the use of the harvested timber. They decided to give preference to community members in need. With support from the project and local authorities, the Community Forest Management Board organized a tender process for the sale of the remaining timber. They also decided how to use generated revenues after paying the applicable resource tax and fees to the Commune People’s Committee. Retaining around 60% of total revenues, villages decided to fund the operations of the Community Forest Management Board, pay for protection activities and invest a significant share in the village forest development fund.

Perhaps most importantly, villagers who could prove compliance with their responsibilities for forest protection were allowed to withdraw operational funds from a collective village savings book established with the Bank for Social Policies. This savings book was funded out of revenues from the harvested timber in recognition of the wider benefits generated by the villagers’ forest and the expenses incurred by villagers in protecting the forest.

Community forest management was successful in Phuc Minh not only because villagers derived tangible benefits from the forest and participated in decision-making but also because their benefits were linked to performance in forest protection. Support provided by the KfW project clearly also contributed to the success.

Tapping the potentials of small-scale forest management

Ban Y and Phuc Minh offer two contrasting cases on how forest governance can accommodate small-scale forest management. The comparison demonstrates that in the context of similar law enforcement arrangement existed in the two villages, the critical significance of the full package of tenure and use rights which enable villagers’ ability to derive tangible benefits from forests for sustainable forest management.

The observations from Ban Y demonstrate that villagers will not make constructive contributions to forest management if they are not given full tenure rights including the use right or are excluded from forest benefits. The inability of the villagers to benefit from nearby forest resources enticed villagers to team up with a timber trader because they were not able to derive benefits from the forest otherwise. Local officials colluded in the illegal practice for personal gains. Villagers benefitted from the arrangement benefit but ended up gaining the least among all involved actors. This provided little incentive for villagers to manage the forest in a sustainable manner.

Experience from Phuc Minh shows that villagers will take on a constructive role for sustainable forest management if they are given full tenure rights–in this case including the right to harvest timber from the forest. Secure tenure rights and guaranteed timber harvests resulted in a strong incentives for community members to work together with local forest protection officers to protect the forest and prevented the emergence of the coalition driving illegal logging in Ban Y.

These insights reveal that law enforcement alone will not solve the problem of small-scale illegal logging in Vietnam. In the worst case, further criminalization of logging would provide added impetus to illegal activities by empowering corrupt local officials, increasing the profits made by traders and wholesalers, and diminishing the benefits accruing to villagers.

The centrality of tenure rights calls for renewed emphasis on forestland allocation to local communities and forest reclassification from protection to productive purposes. The significance of tenure right also questions the continuing use of short-term contracts in forest protection and management because they do not involve the transfer of tenure rights.

Implications for FLEGT and REDD+

The insights presented above have direct implications for Vietnam’s Forest Law Enforcement, Governance and Trade (FLEGT) and Reduced Emission from Deforestation and Forest Degradation (REDD+) initiatives. Objectives and measures to combat illegal logging figure prominent in both. The Voluntary Partnership Agreement (VPA) to be signed with the European Commission (EC) in the future accords high significance to actions stopping illegal logging. Similarly, Vietnam’s proposal for the second phase of the UN-REDD Programme foresees allocation of significant funds for measures against illegal logging.

Currently, the emerging EC – Vietnam FLEGT VPA is supposed to cover both imported and domestically produced wood materials. Domestic illegal logging will only be curtailed if Vietnamese policies promote governance that accommodates small-scale forest use and management, and allows local communities to benefit from the forest. Additional, specific implications for FLEGT are:

• The emphasis in Vietnam’s FLEGT needs to be more on the G than the E, i.e. emphasize governance reforms over simple forest law enforcement.
• The legality definition under FLEGT will only serve legal forest governance if it makes suitable adjustments to Vietnam’s current legal framework, including rights to villagers’ right to timber from natural forests currently managed by State entities.
• The development of Vietnam’s FLEGT VPA requires broad-based consultations with all kinds of stakeholders at national and local levels.

Similarly, REDD+ will achieve reductions in deforestation and forest degradation only if REDD+ actions accord small-scale forest management a constructive role. Specific implications include the following:

• Full-scale implementation of REDD+ requires the expansion of forestland allocation to local communities in order to provide positive incentives for villagers’ participation through real benefits derived from the forest.
• The design of REDD+ needs to combine performance-based payments for protection of forests with their active use and management by smallholders because REDD+ payments alone are unlikely to provide sufficient incentives for protection.
• REDD+ requires a reorientation of law enforcement from obstructing to supporting small-scale management.

Key Messages

• Villagers’ lack of clear and secure tenure rights is a key driver of small-scale illegal logging
• Sole reliance on law enforcement is likely to aggravate small-scale illegal logging because it provides local officials more opportunities for bribery
• FLEGT will reduce illegal logging only if forest governance accommodates small-scale forest management
• REDD+ will increase forest carbon stocks only if law enforcement supports small-scale forest management instead of obstructing it

Additional resources

29 July 2013 |The Bonn International Cooking Energy Forum in Germany was the site for the unveiling of StovePlus, a program to provide residents of developing countries in Africa and Asia with alternatives to inefficient cookstoves. GERES, the French non-profit organization behind the new program, aims to distribute 2 million improved cookstoves in these regions by 2017 through StovePlus.

Nearly 3 billion people in the world rely on solid biomass for cooking and heating on a daily basis, but most of them use inefficient devices and open fires, leading to 4 million premature deaths every year, according to the Global Burden of Disease Study commissioned by the Institute for Health Metrics and Evaluation. Reliance on biomass also puts great pressure on natural resources, putting the world’s forests at risk, GERES notes.

The StovePlus program aims to strengthen the clean cooking sector and provide technical support to project developers in South-East Asia and West Africa, with the support of the Global Alliance for Clean Cookstoves (the Alliance). The Alliance provides funding to the GERES Biomass Energy Lab in Cambodia, one of the services offered in StovePlus. In 2012, the Alliance released a request for proposals (RFP) to enhance capacity for a global network of centers to provide testing, cookstove development, and capacity building services. Thirteen centers were selected for awards in Bolivia, Cambodia, China, Ghana, Honduras, India, Kenya, Nepal, Nigeria, Peru, Senegal, South Africa, and Uganda (lab and field). Under the RFP, $1.6 million was made available to support these centers.

Cookstove projects can provide significant health benefits and empower women – who often walk long distances to collect the necessary wood fuel for heat or cooking purposes – by freeing up their time and increasing their household income, says Jennifer Tweddell, Manager of Carbon Finance and Impact Investing for the Alliance. In addition to reducing greenhouse gas (GHG) emissions, the projects also have the impact of reducing deforestation, she says.

Clean cookstoves have become all the rage in the voluntary carbon markets, with voluntary buyers funneling $80 million toward offsets from these and water filtration projects last year, according to the State of the Voluntary Carbon Markets 2013 report. These household devices that burn fuel more efficiently or not at all (thus reducing GHG emissions while sparing households from harmful smoke inhalation) were the voluntary market’s fourth most popular mitigation activity – transacting 5.8 MtCO2e, or 80% more than in 2011. These projects have so far delivered at least 4 million cookstoves from 45 projects to developing country households with the aid of carbon revenues, the report finds.

In 2012, carbon finance for clean cookstove distribution reached 15 country locations on three continents, according to the report. The most prominent project locations included Peru, Ghana, Mozambique and Kenya.

Developers of cookstove projects are determined to secure buy-in from stove users, with only 2% of clean cookstove projects engaged in stove giveaways and the majority of projects charging users between $2 and upwards of $140 per device, a finding that pleased Tweddell.

“We’re very much in favor of a market-based approach so we’re glad that there aren’t a lot of free giveaways because we really feel that to be sustainable and to reach universal adoption, which would be 500 million households, you can’t do that on donor dollars and (corporate social responsibility),” she says. “You do that through having a thriving marketplace where people at the base of the pyramid are consumers who go out and actually purchase these products from social enterprises that are also making a profit doing that.”

Transactions of clean cookstove offsets were valued at $65.3 million in 2012 – 54% more than in 2011. Over time, the value of private sector support for clean cookstove carbon projects is estimated to be $145 million.

The average price for offsets from clean cookstove projects was $11.3/tCO2e in 2012, representing a 15% fall in price from 2011’s $13.2/tCO2e. The price decline was attributed to the growing volume of available cookstove project offset supply and a lack of clarity regarding certified emissions reduction demand in the European Union Emissions Trading System – a source of demand for some clean cookstove offsets. But the price for cookstove projects was well above the volume-weighted average price of $5.9/tCO2e of all project types seen in 2012.

“I really do think it’s because of all the additional benefits that these projects bring,” Tweddell says. “Certainly, you can tell a really great story about having a health benefit, improving the lives of people in developing countries, as well reducing your carbon emissions.”

In trying to attract investment, the Alliance often hears people talk about the crash of the carbon markets, but the report is very useful because it provides evidence of the higher prices commanded by these charismatic projects, she says.

“That helps us to demonstrate the value to potential buyers, but also to investors who often don’t understand the carbon markets and are a little bit leery of businesses that are reliant on carbon revenues,” she says.

For more findings on cookstoves and other voluntary carbon projects, read the Ecosystem Marketplace report here.

Additional resources

Five years in the making, the Rimba Raya Biodiversity Reserve Project  has overcome seemingly insurmountable political challenges to become one of the largest-ever REDD projects to see its emission reductions verified under the Verified Carbon Standard by proving that it reduced greenhouse gas emissions by more than two million tons in one year – and may reduce nearly 120 million by the time it finishes.

4 June 2013 | Two years ago, Indonesia’s Rimba Raya Biodiversity Reserve was on the rocks after the country’s Ministry of Forestry  turned more than half of its 80,000 hectares over to palm oil interests – an act that prevented it from becoming the first carbon project to generate credits under the Verified Carbon Standard (VCS) for saving endangered rainforest and reducing greenhouse gas emissions from deforestation and forest degradation (REDD). By the end of last year, however, the project had been saved – reportedly after intervention by powerful forest friends like Singapore-based businessman Rusmin Widjaja, Central Kalimantan Governor A. Teras Narang, and several green-minded wives of high-ranking officials. VCS then signed off on its design, and all that remained was for an independent auditor to make sure that the design was, in fact, being implemented and the promised emission-reductions were, in fact, taking place.

Last week, independent auditor SCS Global Services confirmed that the project had, in fact, prevented the emission of roughly 2.2 million tons of carbon dioxide into the atmosphere over the year ending in July, 2010, meaning it can now sell 2,181,352 Verified Carbon Units (VCUs) from that period. Over the course of its 30-year life, the project aims to reduce emissions by 119 million tons.

Located in  the state of Central Kalimantan, it covers almost 64,000 hectares and aims to preserve carbon-rich tropical peat swamp and forest, originally slated for development into palm oil plantations, while also providing a critical reserve for endangered Orangutans.

“The Rimba Raya project has undergone a lengthy and complex review process,” said Dr.  Robert J. Hrubes  , SCS Executive Vice President. “The scale of this project is truly precedent setting, demonstrating a strong market value in preserving forests.”

The region has suffered from high rates of deforestation and is home to over 94 threatened and endangered species, including the Bornean Orangutan. Orangutan Foundation International, operated by renowned primatologist and conservationist Dr.Birute Mary Galdikas  , is the NGO Partner and Project Beneficiary for the project. The sale of carbon credits will fund the preservation of critical Orangutan habitat.

“Rimba Raya will be one of the most important Orangutan conservation projects in the world, said Galdikas.  “It is nothing less than the promise of survival for the endangered Orangutan.”

“We are exhausted but overjoyed to have earned verification for the Rimba Raya project,” said  Todd Lemons  , CEO of InfiniteEARTH, the project developer. “While this project has faced monumental hurdles, SCS’ experience assessing REDD projects proved invaluable for fairly evaluating our compliance with the VCS standard and verifying that these emissions reductions are as real and valuable as we believe they are.”

The project also meets the requirements of the Climate, Community and Biodiversity Alliance (CCBA) standard by supporting the livelihoods of local communities and the area’s rich biodiversity. It was the first in the world to earn Triple Gold Validation under the CCBA standard.

Additional resources

An Indonesian entity called Greenomics this month accused the Rimba Raya Biodiversity Reserve Project of failing to secure usage rights and overstating the amount of forest it had saved. A quick dive into available documents, however, shows it’s Greenomics that failed to do its homework.

23 July 2013 | Earlier this month, a document entitled “Rimba Raya Conservation Project’s claims could mislead the public and the carbon market” popped up on an Indonesian site called Greenomics.org. The cover page made two incendiary claims that, if true, would mean that one of the largest REDD projects on the planet had both failed to secure tenure and overstated the amount of forest it had saved.

“Not true that the Indonesian Government has approved 64,000 hectares for Rimba Raya Conservation Project,” the cover proclaimed.

“More than 60% of area whose ecosystem is to be restored under the Rimba Raya Conservation Project was not originally slated for palm oil plantation development,” it blared.

Neither claim, however, is standing up to scrutiny, and a quick literature review shows that the Greenomics “report” selectively references government decrees and letters that support its claims while inexplicably ignoring those that prove it wrong. Indeed, every “smoking gun” the Greenomics authors claim to have discovered is also referenced in the May 2013 Verification Report, which is the document that auditors from SGS Global Services were required to compile in the process of certifying the project under the Verified Carbon Standard (VCS). You can download it by clicking “Verification Report” to the right, or by going to the relevant VCS documents page.

The Greenomics report also fails to differentiate between the project’s accoun/ting area (the 47,237 hectares on which it’s actually generating credits) and its management zone (the 63,828 hectares within which the accounting area lies); and it misrepresents the status of the land at the time the project began. Finally, it claims that notarized letters of support from various ministers have no meaning without secondary letters, but provides no legal basis for that claim.

Additionality

The document rightly points out that 18,642 hectares of the project area are in the Tanjung Puting National Park, and it implies this territory was already protected before the project began. But it ignores readily-available documents that tell the full story. Specifically, it ignores the fact that the state moved the boundary of the park into the project area after the carbon project had already saved that portion of forest.

You can see this by turning to page 12 of the Project Document (see “Project Document”, right) or scrolling to the map below. It shows all of the region’s planned palm oil concessions from 2008, with the then-planned project management zone outlined in green and the carbon accounting area outlined in orange within this. Not coincidentally, the carbon accounting area coincides with a massive area shaded gray – this is land that the government had designated for planned palm oil concessions, despite the Greenomics claims to the contrary. It’s the reason the project came into existence, and it’s why they were credited with preventing 2,462,212 tons of carbon dioxide from being emitted from July 2009 through June 2010.

Here is the map as it appears in the report:

The National Park

In this map, the National Park is to the left of the project, because that’s where it was when the project began. It wasn’t until March 2013 – long after the project developers had saved the forest – that the state expanded the park into the project area. At that point, the project developers entered into a Cooperation Agreement (see “Cooperation Agreement”, right) spelling out their new obligations as custodians of a piece of national park, but they had already been protecting the forest for years. Greenomics, however, implies that the project was placed in the park from the start, which it was not.

For additional proof, you can turn to the Additionality Support Documents (see “Additionality Support Documents”, right), which contain licenses granted on the properties before the project began – clearly showing that palm oil developers were lining up to develop the land, and clearly demonstrating that the forest would have been cleared for palm oil if the project not been created.

Who has the Rights?

Greenomics also rambles on and on about the lack of any individual document or decree giving project developers the right to the 64,000 hectares (actually, 63,828) – ignoring two simple facts: one, that the total area isn’t one parcel, but several; and two, that these parcels are governed by different decrees and agreements. The SGS Global Services auditors covered this on pages 11 through 13 of their Verification Report, where they reference each of the decrees and agreements covering each property as well as a letter from the Ministry of Forestry’s Director General of Forestry Planning, Bambang Soepijanto, summarizing and reiterating the project developers’ rights in a letter (see “Working Area Letter”, right). If all this documentation, plus the notarized letter from the minister and the auditors’ report aren’t enough for Greenomics, what is?

Only one of the parcels referenced in these documents is the 36,331-hectare parcel that Greenomics focuses on. Another is the 18,642 hectares for the National Park, which we covered above. Another one, which Soepijanto identifies as being 8,855 hectares, is treated in the Verification Document as two parcels of 2,394 hectares and 6,512 hectares each that had been given over to commercial palm oil operators. Interestingly, the auditors did find some language that at first appeared to annul the project developer’s rights to the first of these small properties, but the issue duly noted and resolved. Finally, there are two smaller parcels of 820 and 95 hectares each – both of which are also referenced by auditors and by Soepijanto.

With so many pieces of the puzzle so readily available, one has to wonder why Greenomics chose to focus on just a few. It does appear they are right about one thing: someone seems intent on misleading the public and the carbon market, but it doesn’t appear to be the Rimba Raya project developers.

Additional resources

As China rolls out seven domestic pilot emissions trading schemes this year – with the city of Shenzhen’s debuting last month – market actors are wondering how carbon offsets will fit into the picture. Here, we provide a breakdown of the types of offsets eligible for trading, existing supply and potential demand, as well as what’s on the horizon.

9 July 2013 | Designated as China’s first special economic zone back in 1980, the fast-growing city of Shenzhen has come to epitomize the country’s move toward market-oriented economic policies. On June 18, Shenzhen set yet another precedent when it launched the first of seven pilot programs to help pave the way for a national cap-and-trade program.

Under the pilot program, 635 companies in Shenzhen, responsible for about 38% of the city’s emissions, face obligations to reduce their carbon intensity by 6.68% on average per year by 2015.

The first day of trading on the Shenzhen Emissions Rights Exchange saw eight transactions of emissions allowances completed for a total of 21,112 tCO2e. Allowance prices ranged from 28 to 32 yuan per tonne, close to the expected price of 30 yuan per tonne (US$4.89).

While only allowances have been traded so far, emitters have the option of trading carbon offsets in the form of Chinese Certified Emission Reductions (CCERs), which are issued by the National Development and Reform Commission (NDRC). The NDRC allows existing projects registered with the UN’s Clean Development Mechanism (CDM) to register as CCER projects – a source of potential relief for CDM suppliers reeling from the protracted collapse in prices for CDM project offsets (CERs) and the recent ban on CERs from non-least developed countries for use in the European Union Emissions Trading Scheme (EU ETS).

Beyond the historically strong relationship between suppliers of Chinese renewable energy offsets and European buyers, there is potential for CERs from China-based projects to fetch higher prices from domestic buyers should the pilots manage their prices well. With more than 70% of the world’s CERs issued in China as of the end of 2012, a big question on the minds of Chinese CER suppliers is how much domestic demand they can actually expect to absorb existing and new offset supply.

Ramping up

Initial reactions to China’s new pilot activities have generally been positive among stakeholders, but elements of the system remain hazy. Liable emitters are expected to not only monitor, report, and verify their emissions, but also to participate in auctions. For the bulk of Chinese companies, trading offsets – or allowances for that matter – is an unfamiliar arena.

“Even the few Chinese companies that are in a joint venture with a European or international company that has experience in the EU ETS or California’s market are just now getting organized,” notes Jeff Swartz, Director of International Policy at the International Emissions Trading Association (IETA), which oversees a working group in China to build capacity for the new pilots. “Policymakers haven’t actually traded allowances or purchased offsets, so there’s an imperative need to share information and work with companies in existing systems that have.”

What’s eligible?

In March, the NDRC released its first batch of 52 CCER methodologies eligible for domestic emissions trading, all of which are adapted from existing CDM methodologies.

The list stays true to China’s traditional focus on renewable energy, energy efficiency and fuel switch, and methane. It also controversially includes methodologies for HFC-23 and N2O industrial gas offsets, which the EU ETS banned post-2012 in response to critique regarding their environmental integrity.

Some say it is important for industrial gas suppliers to be able to access the domestic market – now their only major prospective source of demand – for recourse, however, a recent analysis by Climate Bridge – a major China-based project developer and wholesaler – expresses concern that the inclusion of industrial gas projects could crowd out China’s domestic offset market and potentially subject pilot schemes to low carbon prices as experienced in the EU ETS.

Offsets from non- or pre-CDM projects are eligible for voluntary emissions trading if they apply methodologies that have been approved by the NDRC, according to interim government regulations. While not explicitly stated, this could potentially provide a bridge for projects developed to the Verified Carbon Standard (VCS) and Gold Standard, which certify many of their projects according to CDM methodologies.

NDRC-approved methodologies do not yet cover forestry and land use, which the NDRC said it is still vetting alongside other CDM methodologies. Domestic initiatives like the Panda Standard, China’s first voluntary carbon standard developed by the China Beijing Environment Exchange and BlueNext with the support of Winrock International, are in the process of seeking approval from the NDRC for afforestation/reforestation methodologies.

Gauging demand

Domestic demand for offsets will inevitably vary between Shenzhen and other emerging pilots. After factoring in the level of emission reduction targets and allowances provided through the system (totaling 100 MtCO2e between 2013-2015 for Shenzhen alone), the scope of supply and demand for offsets will depend on the existing supply of offsets eligible for use under each pilot, as well as limits set on the use of offsets against emitters’ compliance obligations (tentatively 10% on average across China’s various planned pilots).

“Policymakers are very aware of the fact that if they open up a fire hydrant, they could have a situation in which supply exceeds demand,” says Swartz. “However, I suspect they face a difficult situation in restricting offsets because some of the companies that they’re asking to participate in the ETS from the compliance point of view have also supplied CDM offsets in the past.”

Given China’s large existing offset supply in certain areas, many project developers have been slow to embark on new projects until sufficient demand can soak up existing inventories. Climate Bridge’s analysis  predicts that Shenzhen will have limited potential for new offset project development, as “the existing CER supply in this region already makes up more than 8% of the capped emissions.” The company expects other pilot jurisdictions like Tianjin, on the other hand, to have strong demand for new CCERs given the dearth of existing CDM projects in the area.

Greater demand (and clarity) ahead?

Over the course of this year, other pilots are busy incubating in the cities of Beijing, Tianjin, Shanghai, Chongqing, and the provinces of Hubei and Guangdong – each setting their own limits on offset location and project type. The plan is to eventually link the schemes together as a foundation for a national cap-and-trade program as early as 2016, following the release of China’s next Five-Year Plan.

Should China’s carbon market eventually link with other markets abroad, China would be a net exporter of offsets, at least for the foreseeable future. The probability of cross-border linkages is still pretty slim at this point according to Wenjie Zhuang, Senior Project Manager at Climate Bridge.

“China’s carbon market is in early stages – there is no national-level program yet,” she says. “And while the design of China’s pilot schemes has drawn lessons from trading systems all over the world, they also show many innovations in design.”

Five years in the making, the Rimba Raya Biodiversity Reserve Project  has overcome seemingly insurmountable political challenges to become one of the largest-ever REDD projects to see its emission reductions verified under the Verified Carbon Standard by proving that it reduced greenhouse gas emissions by more than two million tons in one year – and may reduce nearly 120 million by the time it finishes.

4 June 2013 | Two years ago, Indonesia’s Rimba Raya Biodiversity Reserve was on the rocks after the country’s Ministry of Forestry  turned more than half of its 80,000 hectares over to palm oil interests – an act that prevented it from becoming the first carbon project to generate credits under the Verified Carbon Standard (VCS) for saving endangered rainforest and reducing greenhouse gas emissions from deforestation and forest degradation (REDD). By the end of last year, however, the project had been saved – reportedly after intervention by powerful forest friends like Singapore-based businessman Rusmin Widjaja, Central Kalimantan Governor A. Teras Narang, and several green-minded wives of high-ranking officials. VCS then signed off on its design, and all that remained was for an independent auditor to make sure that the design was, in fact, being implemented and the promised emission-reductions were, in fact, taking place.

Last week, independent auditor SCS Global Services confirmed that the project had, in fact, prevented the emission of roughly 2.2 million tons of carbon dioxide into the atmosphere over the year ending in July, 2010, meaning it can now sell 2,181,352 Verified Carbon Units (VCUs) from that period. Over the course of its 30-year life, the project aims to reduce emissions by 119 million tons.

Located in  the state of Central Kalimantan, it covers almost 64,000 hectares and aims to preserve carbon-rich tropical peat swamp and forest, originally slated for development into palm oil plantations, while also providing a critical reserve for endangered Orangutans.

“The Rimba Raya project has undergone a lengthy and complex review process,” said Dr.  Robert J. Hrubes  , SCS Executive Vice President. “The scale of this project is truly precedent setting, demonstrating a strong market value in preserving forests.”

The region has suffered from high rates of deforestation and is home to over 94 threatened and endangered species, including the Bornean Orangutan. Orangutan Foundation International, operated by renowned primatologist and conservationist Dr.Birute Mary Galdikas  , is the NGO Partner and Project Beneficiary for the project. The sale of carbon credits will fund the preservation of critical Orangutan habitat.

“Rimba Raya will be one of the most important Orangutan conservation projects in the world, said Galdikas.  “It is nothing less than the promise of survival for the endangered Orangutan.”

“We are exhausted but overjoyed to have earned verification for the Rimba Raya project,” said  Todd Lemons  , CEO of InfiniteEARTH, the project developer. “While this project has faced monumental hurdles, SCS’ experience assessing REDD projects proved invaluable for fairly evaluating our compliance with the VCS standard and verifying that these emissions reductions are as real and valuable as we believe they are.”

The project also meets the requirements of the Climate, Community and Biodiversity Alliance (CCBA) standard by supporting the livelihoods of local communities and the area’s rich biodiversity. It was the first in the world to earn Triple Gold Validation under the CCBA standard.

Additional resources

Key results from a Forest Trends paper on the government of Vietnam’s Forest Law Enforcement, Governance and Trade (FLEGT) and the country’s REDD+ initiatives finds that illegal logging can only be curtailed with policies promoting small scale forest use and management that benefit the local communities.

8 July 2013 | Strategies attempting to curb illegal logging in Vietnam must provide forests benefits for the local communities in order to be effective. This means clear and secure tenure rights are distributed to the local people.

It’s a key lesson to consider in the Forest Law Enforcement, Governance and Trade (FLEGT) and Reduced Emissions from Deforestation and Forest Degradation (REDD+) initiatives currently pursued by the Government of Vietnam and the focus of NGO and Ecosystem Marketplace publisher Forest Trends’ Information Brief on Vietnam deforestation.

The brief examines two case studies from Hoa Binh and Binh Dinh provinces that illustrate how differences in the allocation of clear and secure tenure and use rights affected the prevalence of illegal logging. In the small Dao village of Ban Y (all village names have been changed), villagers were not given meaningful tenure rights to the local forest. Villagers can only derive benefit from the forest if they actively participate in illegal logging. In the Kinh village of Phuc Minh, villagers received full tenure rights, with the result that the villagers themselves protected local forests against outside encroachment guaranteeing a sustainable timber harvest and long term benefits.

Background

Despite the Government of Vietnam’s attempts to increase enforcement, illegal logging is still a pressing concern in Vietnam today. The trade in illegally sourced timber involves a range of actors from large-scale and powerfully connected networks to small-scale operators, and affects all forests across the country and including those zoned for protection. The persistence of small-scale illegal logging has given rise to significant public concern and increasingly severe law enforcement efforts by the central government.

The Vietnamese media typically portrays small-scale Illegal logging as being perpetrated by poor villagers who invade government property containing natural forest with valuable timber. Corrupt forest protection officers are described as turning a blind eye on the villagers’ illegal practices, and they all collude with traders to perpetuate this trade in illegal timber for personal gain. Media and government recount this simplified story, leading to widespread calls upon the central government to strengthen law enforcement by “cleaning up” Vietnam’s forest protection apparatus and increasing the human and financial resources allocated to enforcement.

Research shows that this conventional account of small-scale illegal logging is overly simplistic. Illegal practices are not simply due to the presence of poor villagers, corrupt local officers and illegal traders. Nor is the widespread presence of illegal logging simply due to a lack of law enforcement. Illegal practices instead reflect a combination of factors, a key one being the lack of tenure rights given to local people living near forests containing valuable timber, thus legally excluding them from forest benefits including those from timber. Increasing resources dedicated to law enforcement in the absence of changes in incentive structures for all involved will not work.

Ban Y: Small-Scale Illegal Logging in a Protection Forest

In 1995, government policies on forestland allocation granted individual households in Ban Y tenure rights for forestland. However, this transfer of tenure rights did not include the concurrent transfer of tree harvesting rights to the villagers. The local forestlands were classified as protection forests for watershed protection. Households were not allowed to extract any timber from these forests, despite their historical claims on the forests, legal tenure rights and livelihood needs.

Despite the prohibition, villagers began to cut trees for cash income. Villagers used relatively harmful “cut and run” extractive techniques, typically damaging a dozen smaller trees when cutting and hauling each big log, leaving branches and small trees behind. This damage is increasingly further within forest areas as high value trees are being progressively depleted. Timber cut in the forest near Ban Y was brought to Huu Bang, a timber trading village near Hanoi, and eventually ended up as furniture in Vietnam’s domestic markets.

Despite mandates to check the legality of timber harvesting, trade and transport of timber, a complex chain of government officials allowed the illegally sourced logs to be transported between Ban Y and Huu Bang, and were facilitated by traders, local brokers and village leaders.

In this case study, one single timber trader was a critical facilitator, making payments to village leaders, local brokers (called “lawmakers” by villagers), tax and traffic officers. The local brokers would in turn make payments to other government officials who would ultimately allow the timber to pass into the wholesale markets (Figure 1). The trader’s truck encountered no difficulties when passing through a series of checkpoints overseen by various local government officials.

Among all actors involved in getting the timber from tree to market, Ban Y villagers benefitted the least and bore the most risk. While collectively government officials (23) and brokers (2) captured the most (39%) of the benefits, on a per capita basis the trader made the most profit (Figure 2). Villagers received 30% of total benefits, but the benefit was spread between numerous villagers, and they spent more time and bore more risks (e.g., injuries associated with logging and hauling of the tree) than the other groups. The average return for a day’s labor was a mere 29,000 VND (or US$1.80 in 2004, when the research was undertaken). The trader obtained 9% of the total benefit as a single person and was not exposed to the same kinds of risks as the villagers. A wholesaler in Huu Bang received 22%.

Why did the villagers cut the trees?

The 1995 forestland allocation in Ban Y did not ensure forest protection. While the villagers received formal rights to the land, they did not receive any rights to the trees on the land. Villagers were unable to translate the formal rights into tangible benefits for themselves – either for cash income or subsistence needs.

As might be expected, villagers in Ban Y ignored the government’s restriction placed on the forest and continued to conduct their customary practices in the forest with reference to the rights that they had enjoyed historically. “Forest belongs to villagers” was a common expression, allowing villagers to justify the logging regardless of the government’s prohibition. They were driven by high demand and lucrative prices being offered on the domestic timber market. Despite the low nominal benefits, the prices being offered by local traders enticed the villagers to collude with the trader and local officials. The tale of Ban Y is repeated across Vietnam, driving the depletion of timber and degradation of forests.

Phuc Minh: Forest Protection and Management by Village Community

Similar to Ban Y village, the village of Phuc Minh received the formal tenure rights (The district People’s Committee granted the village tenure rights to the forest for a 50-year period under a single title) to the forest lands around their village. However, in this case, the Phuc Minh forest lands were not placed in the prohibitive protection category. In fact, with technical and financial supports from German Development Bank (KfW) through a community forestry project, the allocation was given with the understanding that villagers would combine forest protection with low-impact logging to ensure both positive social and environmental outcomes. The German Reconstruction Bank (KfW)-funded project aimed to improve local livelihoods and forest conditions by way of community forest management (Community forest management rested on the allocation of 364 ha of natural forest containing valuable timber to Phuc Minh village in 2008), helping the villagers’ Community Forest Management Board to establish community forest protection and development regulations which set out the rights and duties of the community with regard to forest use and management. Villagers and project staff report that community management put an effective stop to illegal activities. The villagers received the permission to harvest trees only after they demonstrated an increase in timber volume and forest value since the time of allocation.

Technical and financial assistance from the KfW project undoubtedly increased not only the ability of villages to obtain meaningful rights to forest resources, but also their technical capacity. The project trained villagers in forest inventories, silvicultural management, and harvesting techniques. Villagers conducted a forest inventory to determine the status and timber value of the forest they had been allocated. They contracted technical staff to develop and submit forest management and sustainable timber harvesting plans to the district People’s Committee for approval. They conducted the first timber harvest in 2010-2011, extracting almost 100 m3 of timber through sustainable harvesting techniques.

Villagers assumed an active role in decisions about the use of the harvested timber. They decided to give preference to community members in need. With support from the project and local authorities, the Community Forest Management Board organized a tender process for the sale of the remaining timber. They also decided how to use generated revenues after paying the applicable resource tax and fees to the Commune People’s Committee. Retaining around 60% of total revenues, villages decided to fund the operations of the Community Forest Management Board, pay for protection activities and invest a significant share in the village forest development fund.

Perhaps most importantly, villagers who could prove compliance with their responsibilities for forest protection were allowed to withdraw operational funds from a collective village savings book established with the Bank for Social Policies. This savings book was funded out of revenues from the harvested timber in recognition of the wider benefits generated by the villagers’ forest and the expenses incurred by villagers in protecting the forest.

Community forest management was successful in Phuc Minh not only because villagers derived tangible benefits from the forest and participated in decision-making but also because their benefits were linked to performance in forest protection. Support provided by the KfW project clearly also contributed to the success.

Tapping the potentials of small-scale forest management

Ban Y and Phuc Minh offer two contrasting cases on how forest governance can accommodate small-scale forest management. The comparison demonstrates that in the context of similar law enforcement arrangement existed in the two villages, the critical significance of the full package of tenure and use rights which enable villagers’ ability to derive tangible benefits from forests for sustainable forest management.

The observations from Ban Y demonstrate that villagers will not make constructive contributions to forest management if they are not given full tenure rights including the use right or are excluded from forest benefits. The inability of the villagers to benefit from nearby forest resources enticed villagers to team up with a timber trader because they were not able to derive benefits from the forest otherwise. Local officials colluded in the illegal practice for personal gains. Villagers benefitted from the arrangement benefit but ended up gaining the least among all involved actors. This provided little incentive for villagers to manage the forest in a sustainable manner.

Experience from Phuc Minh shows that villagers will take on a constructive role for sustainable forest management if they are given full tenure rights–in this case including the right to harvest timber from the forest. Secure tenure rights and guaranteed timber harvests resulted in a strong incentives for community members to work together with local forest protection officers to protect the forest and prevented the emergence of the coalition driving illegal logging in Ban Y.

These insights reveal that law enforcement alone will not solve the problem of small-scale illegal logging in Vietnam. In the worst case, further criminalization of logging would provide added impetus to illegal activities by empowering corrupt local officials, increasing the profits made by traders and wholesalers, and diminishing the benefits accruing to villagers.

The centrality of tenure rights calls for renewed emphasis on forestland allocation to local communities and forest reclassification from protection to productive purposes. The significance of tenure right also questions the continuing use of short-term contracts in forest protection and management because they do not involve the transfer of tenure rights.

Implications for FLEGT and REDD+

The insights presented above have direct implications for Vietnam’s Forest Law Enforcement, Governance and Trade (FLEGT) and Reduced Emission from Deforestation and Forest Degradation (REDD+) initiatives. Objectives and measures to combat illegal logging figure prominent in both. The Voluntary Partnership Agreement (VPA) to be signed with the European Commission (EC) in the future accords high significance to actions stopping illegal logging. Similarly, Vietnam’s proposal for the second phase of the UN-REDD Programme foresees allocation of significant funds for measures against illegal logging.

Currently, the emerging EC – Vietnam FLEGT VPA is supposed to cover both imported and domestically produced wood materials. Domestic illegal logging will only be curtailed if Vietnamese policies promote governance that accommodates small-scale forest use and management, and allows local communities to benefit from the forest. Additional, specific implications for FLEGT are:

• The emphasis in Vietnam’s FLEGT needs to be more on the G than the E, i.e. emphasize governance reforms over simple forest law enforcement.
• The legality definition under FLEGT will only serve legal forest governance if it makes suitable adjustments to Vietnam’s current legal framework, including rights to villagers’ right to timber from natural forests currently managed by State entities.
• The development of Vietnam’s FLEGT VPA requires broad-based consultations with all kinds of stakeholders at national and local levels.

Similarly, REDD+ will achieve reductions in deforestation and forest degradation only if REDD+ actions accord small-scale forest management a constructive role. Specific implications include the following:

• Full-scale implementation of REDD+ requires the expansion of forestland allocation to local communities in order to provide positive incentives for villagers’ participation through real benefits derived from the forest.
• The design of REDD+ needs to combine performance-based payments for protection of forests with their active use and management by smallholders because REDD+ payments alone are unlikely to provide sufficient incentives for protection.
• REDD+ requires a reorientation of law enforcement from obstructing to supporting small-scale management.

Key Messages

• Villagers’ lack of clear and secure tenure rights is a key driver of small-scale illegal logging
• Sole reliance on law enforcement is likely to aggravate small-scale illegal logging because it provides local officials more opportunities for bribery
• FLEGT will reduce illegal logging only if forest governance accommodates small-scale forest management
• REDD+ will increase forest carbon stocks only if law enforcement supports small-scale forest management instead of obstructing it

Additional resources