Why Do Mainstream Media Always Seem To Get REDD Wrong?

28 October 2013 | The American Tea Party hates Obamacare. They hate it with a visceral passion because it’s a government program that may – just may – succeed where the private sector failed. Such a success would invalidate basic Tea Party tenets, so they fight it with everything they have: a few rational points and a barrage of lies, half-truths, and innuendo.

Sadly, the tactic worked. Instead of a rational debate on national healthcare, we have a cacophony of non-points and negations.

Some of the same people also hate climate science, and for the same reason: if the science is right, then their premises are wrong, and that can’t be. So they bring out the lies, the half-truths, and the innuendo – again polluting public discourse.

But the ideological right doesn’t have a monopoly on this brand of intellectual pollution. Some of our friends in the environmental community have applied this same tactic to their own bogeyman: a new wave of tools to finance forest protection called “REDD+”.

The acronym stands for “reduced emissions from deforestation and degradation”, and it describes a set of practices that includes the use of private carbon offset purchases and government-to-government payments earned by people – and policies – that save the world’s critical forest areas.

REDD+ has emerged as a powerful tool for financing forest conservation, and forestry-based carbon offset purchases alone have financed the protection of over 26 million hectares in developing countries, according to data that we’ll be releasing in our next State of Forest Carbon Markets report. That’s larger than the entire forested area of the Democratic Republic of the Congo, or the total land area of Ecuador.

Along the way, programs using REDD finance have put tens of thousands of indigenous people to work and preserved the habitat of 139 endangered species. Results like these have earned it the backing of indigenous people from Brazil to Kenya, the support of green-minded companies like Disney and Microsoft, and the sponsorship of lawmakers from Mexico to Indonesia. Well-regarded international NGOs from Conservation International to The Nature Conservancy not only employ these tools to fund their massive conservation solutions, but spearheaded their creation more than 30 years ago.

Yet certain ideologues hate REDD, and they hate it with the same visceral passion that the Tea Party hates Obamacare. They hate it because they think the profit motive got us into this climate mess, and there’s no room in their worldview for a market-based mechanism that succeeds where philanthropy and traditional policies have failed.

Rather than subject their views to the pros and cons of rational debate, however, they’ve unleashed their own barrage of lies, half-truths, and innuendo; and like the Tea Party barrage, it’s worked.

Even the generally reliable Atlantic Monthly took the bait, and the result is a piece entitled “The Forest Mafia: How Scammers Steal Millions Through Carbon Markets“. It harvests a particularly cartoonish anti-REDD meme from an entertaining but sloppy segment that the Australian version of 60 Minutes produced last year.

The piece tells the story of David Nilsson, a serial swindler who likes to talk big and dress like Crocodile Dundee. A few years ago, he pretended to be a forest carbon project developer, and he tried to swindle some indigenous people in Peru.

His goofy plans, however, didn’t resemble any legitimate attempt at forest carbon mitigation, and most of the indigenous people he targeted as partners wouldn’t sign with him. The contracts he did sign were declared invalid, and he was roundly ignored by everyone who knew anything about conservation-based climate solutions. He has also been rightly barred from ever entering Peru, according to media reports.

60 Minutes rightly identified him as a charlatan, but they failed to differentiate him from the legitimate (i.e, boring) conservation project developers who really are using these financing tools to save endangered rainforest. Then (perhaps because there’s no glory in “exposing” an irrelevant wannabe), 60 Minutes cast him as the Bond Villain of the carbon markets: the archetypal “carbon cowboy” who is too colorful to resist, too easy to lampoon, and too much of a clown to be taken seriously. Al Jezeera picked up the meme as well, and now the Atlantic has taken the bait.

In fact, The Atlantic takes it a step further. Not only do they cast Nilsson in his familiar role as the cartoonish heavy, but they cobble together bits of a half-dozen other stories from one, two, and even three years ago – nearly all of which are outdated, many of which are irrelevant, and some of which were recognized by credible actors as wrong the day they came out. (The gist of the piece is that nasty practices like phishing and tax-dodging exist, and someone will find a way to apply them to REDD, so REDD is bad.)

The Atlantic rightly pillories Nilsson’s revolting attempts to swindle indigenous people, but it also implies that these practices take place in legitimate REDD projects. In so doing, it ignores the fact that conservation projects only work if indigenous people are on board. That, in fact, is a pillar of REDD finance and part of its beauty: it rewards indigenous people for acting as guardians of the rainforest, because it compensates them for being providers of an ecosystem service. While logging and mining extract value from the forest, conservation finance helps indigenous people keep the value there, and that means it requires their active participation. That means it works best if you treat them as equal partners rather than as museum pieces.

Legitimate project developers have always worked with indigenous people as equal partners, and the new generation of project developers are indigenous leaders themselves – like Chief Almir Surui (Disclosure: I’m helping him on his autobiography). He spent the last six years building a privately-financed conservation project by and for his own community. REDD made his project possible, and REDD itself was made possible by existing carbon standards.

Standard-setting, by the way, is another pillar of REDD finance, but the Atlantic makes only passing reference to it – and when it does, it gets it wrong, referring to the Verified Carbon Standard as the “Voluntary Carbon Standard” – a moniker that VCS abandoned two years ago.

By ignoring its sophistication, the story is able to characterize REDD as a well-intentioned device that was created by eggheads but then hijacked by scoundrels like Nilsson. In reality, the Nilssons of the world are frozen out of REDD, largely because the eggheads who created VCS and other standards knew what they were doing. But the eggheads don’t blunder around the forest dressed like Crocodile Dundee, so they don’t make good television, and they don’t get covered by 60 Minutes.

Anyone who has worked in media knows what’s happening here: a fun read needs a compelling villain, and Nilsson comes prepackaged. He’s the perfect foil for a grandstanding journalist trying to cast himself or a favorite “activist” in the role of hero.

If a journalist wants to cast the people he’s writing about as heroes and villains, he should at least make sure the characters are relevant to the larger issues he’s trying to explore. Why pick out a clown like Nilsson when scores of interesting and relevant climate heroes are doing private conservation right?

Almir is a “certified” hero, and he also dresses colorfully (Cowboys and Indios, anyone?), but there are scores of others. American project developer Mike Korchinsky and his Kenyan partner, Chief Pascal Kizaka, are using REDD to protect 500,000 acres of endangered forest in the Kasigau District in Kenya, while a woman named Leslie Durschinger is working with Buddhist Monks and subsistence farmers in the former Khmer Rouge stronghold of Oddar Meanchey, Cambodia, to save forest there. Both of these are fascinating (and colorful) stories that illustrate how REDD really works. Both projects broke new ground – both technically and socially – in project development, and both have been virtually ignored by the mainstream media.

The National Geographic of Canada did actually dive into the weeds of a project there in a way that was entertaining and informative, but that’s the exception that proves the rule. Other coverage of the same project has been muddled at best. Critiques of REDD are certainly needed if the mechanism is going to deliver real benefits, but those critiques need to be accurate.

The one good thing you can say about mainstream treatments of this topic is that they usually do touch on the critical challenges that REDD projects face. But then they they almost always ignore the real ways these challenges are being met.

Let’s take just one: tenure, which is generally phrased as being about who owns the land. This is another pillar of REDD, because if indigenous people don’t have rights to their land, they can’t reap the benefits of REDD. Lack of clear tenure has hurt many indigenous people when loggers and others come to take their resources.

Let’s now look at how Chief Almir dealt with it. Before starting his project, he asked Forest Trends (which publishes Ecosystem Marketplace) to see if there was a way to straighten out the tenure issue. Forest Trends commissioned the law firm of Trench, Rossi and Watanabe (an associated firm of Baker & McKenzie) to determine if the Surui actually owned the rights to carbon in the trees on their territory. They found that, yes, indigenous people do own the rights to income generated by carbon sequestration, and Chief Almir then leveraged this opinion into support for his project. It was a deft political maneuver, and now other indigenous groups are building on that, and similar dynamics are playing out across the globe.

REDD, in other words, is being used to help indigenous people resolve the tenure issue that loggers and others have worked so hard to obfuscate, which means REDD is helping people make progress on a thorny issue that decades of more traditional “activism” have failed to address, yet the Atlantic ignores this fact – just as it ignores almost anything that’s happened in real-world REDD in the last three years.

Take, for example, the REDD Offsets Working Group (ROW), a scientific body that just wrapped up years of open consultations among indigenous leaders, environmentalists, and governments. The ROW codified a set of rigorous procedures for making sure REDD works both for the environment and the indigenous people who use it, and it published a detailed backgrounder and policy brief in English, Spanish, and Portuguese that addresses all the issues that the Atlantic implies aren’t being dealt with.

That’s the real REDD: a concrete set of rules and procedures agreed on through an open process among diverse stakeholders and delivering tangible results – yet it’s been virtually ignored by the mainstream media.

Instead of trying to first understand and the explain and question real-world REDD, mainstream publications have been devoting massive amounts of coverage to swindlers pushing imaginary projects, and then daring to quote people who dismiss real carbon quantification processes as “imaginary” (as The Atlantic did) or unworkable (as Harper’s did three years ago in a cover story called “Conning the Climate: Inside the Carbon-Trading Shell Game“).

The Harper’s piece wasn’t as bad as the recent Atlantic piece, but it did commit the sin of sloth. The author brought the reader on a colorful journey into the rainforest, laid out the concepts, and then abruptly concluded that it was all so complicated that it will never work.

Ask Chief Almir how “imaginary” or unworkable the process is.

2013-10-25-MeasuringTrees.jpg


Members of the Paiter-Surui measuring trees to determine their carbon content.

In order to earn their carbon offsets, the Surui had to first determine which parts of their forest were in danger, and then they had to prove that only finance from the sale of offsets would enable them to save it. After that, they had to develop a plan for saving it, then get that plan approved by a series of auditors and review panels, then implement a logging moratorium, then enforce that moratorium, and finally prove that they did everything they said they were going to do.

As a first step, they brought in economists from a Brazilian organization called IDESAM to analyze logging patterns and the economic needs of indigenous people in the region. The economists looked at patterns of land-use across the region and developed new analytic tools and methodologies using the detailed rules of VCS. Those rules, in turn, follow principles that the Intergovernmental Panel on Climate Change (IPCC) developed by drawing on decades of research by thousands of independent scientists into what causes deforestation, how to measure the amount of carbon captured in trees, how to determine what is and isn’t “endangered”, and how to credit people for positive interventions.

After all this, the economists concluded that, of the 248,147 hectares that comprised the Surui territory, roughly 13,000 hectares would have to be converted to farmland over the next 30 years if the people were to survive. Thus the Surui will only receive carbon offsets for protecting a small proportion of their territory – the portion they would have had to harvest to survive. It’s this type of nuance that underscores another of the great misconceptions on REDD: for, while clowns like Nilsson (and reporters who fail to do their homework) assume that REDD is a lucrative endeavor, the fact is that while it can be a money-maker, it’s nowhere near as lucrative as logging or farming. As Chief Almir says, “It will always be easier to chop down the forest than to preserve it.”

And preservation is an active endeavor. Chief Almir and his people spent the long and tedious VCS assessment period patrolling the territory to keep out illegal loggers. He also threatened to prosecute even members of his own people who colluded with loggers, and the loggers responded with a bounty on his head. At least one local tried to earn that bounty, so the federal government assigned members of the elite Força Nacional to give him 24/7 protection.

Despite these challenges and the best efforts of opponents to discredit him and the financing mechanism – including many quoted in the Atlantic article – Almir persevered. In August, Brazilian cosmetics giant Natura Cosméticos stepped up to buy the first tranche of Surui Carbon Credits, and now scores of other indigenous people are developing projects of their own.

This is all part of a rigorous process that’s evolved over decades – the same process that the Atlantic dismisses as “imaginary” and Harper’s dismissed as too complicated to work.

Well, yes – it is complicated, but it’s also working, and it’s working incredibly well. What’s not working is the media that’s charged with informing the public – largely because a contingent of ideologically-driven organizations are hell-bent on making sure that non-traditional conservation finance never gets a fair hearing, and because reporters aren’t doing their homework.

If they did actually open their books, they’d find plenty of material from organizations like Forest Trends, Conservation International, and others.

Mindful of the knowledge gap, WWF recently teamed up with the University of California at San Diego to launch a course in terrestrial carbon accounting. I took the course this summer, and can tell you that baselines are far from “imaginary”. They’re just not as much fun to write about as characters like Nilsson are.

The failure of media to even try to understand these new tools for conservation finance is a truly global tragedy, because we stand at a critical juncture when both forests and the people who depend on their services – that’s all of us, by the way – are in a peculiar race for survival. On one hand, trees are mopping up the carbon that we’ve pumped into the atmosphere, and because there is more carbon to mop up, they’re getting fatter at a faster rate than they did before. Trees we save today, in other words, could end up sequestering more carbon than they have in the past, making conservation an even more valuable tool than it’s been to date.

But the research is mixed on how forests will respond to climate change. Intact forests may continue to thrive – or they may succumb to droughts and pestilence. That’s already happening in the Pacific Northwest, where the northern pine beetle is thriving in the longer summers, and trees are dying as a result.

REDD in one of many tools that we can use to slow climate change, but it has its limitations, and it needs to be examined critically if it’s to deliver meaningful results. That’s why we need the media to let us know if REDD is working or if it isn’t – but they can’t do that if they’re so preoccupied with cowboys and cartoons that they neglect their calculus. If they’re going to report on REDD, they need to first invest a bit of time into learning what it is. VCS is REDD. ROW is REDD. Nilsson is not REDD.

A combination of ideological campaigning and journalistic laziness got us into the climate mess. A similar campaign is conspiring to keep us from exploring very real and scalable solutions to that mess, and journalistic laziness is again enabling that campaign. By swallowing the disinformation fed to them and not learning before they lecture, outlets like the Atlantic could end up doing more damage to forests and forest communities than all the carbon cowboys combined.

How Carbon Markets Save Lives And Slash Pollution

 

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
2013-10-04-CookstovesChart.JPG

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

REDD+ Fact Sheet

NOTE: We cobbled this together from old “State of Forest Carbon Markets” reports. It is not a definitive primer, and we will update it over the coming weeks.

Additional resources

Key Companies Have Stepped Up on Climate Change.
Will Governments Leave Them in The Lurch?

Voluntary REDD projects are actively protecting more than 14 million hectares of endangered forest, but most multilateral funding looks destined for countries with no history of REDD and no local expertise. This makes sense from a capacity-building perspective, but is it the right approach?

NOTE: This story originally appeared on the Huffington Post, where Forest Trends is participating in the Social Entrepreneurs’ challenge. You can view the original here. If you’d like to see more of this sort of content, feel free to support us in the challenge here.

23 October 2013 |For three years now, the people of Kenya’s Kasigau Corridor have been protecting 500,000 acres of endangered dryland forest to prevent 54 million tons of carbon dioxide from soaring into the atmosphere. That’s good for all of us, and as a reward they hope to earn REDD+ (reduced emissions from deforestation and degradation) carbon offsets for keeping greenhouse gasses locked in trees.

Our research shows they’re far from alone. Voluntary carbon projects like these are actively protecting more than 14 million hectares of endangered forests around the world (see “Leveraging the Landscape: State of the Forest Carbon Market“) — a figure that has certainly grown in the past year.

Not only are these private-sector actors protecting millions of hectares of endangered forest, but they are doing so in a way that creates rigorous methods for measuring the amount of carbon captured in forests — methods that others can learn from and implement themselves.

And that, in fact, is exactly what’s happening, with state and regional governments around the world harvesting lessons learned in the voluntary carbon markets to develop their own home-grown programs (a trend we identified in “Bringing it Home: Taking Stock of Government Engagement with the Voluntary Carbon Market“).

So, why are these green-minded entrepreneurs risking hundreds of millions of dollars to save the forest and develop new methods that the rest of us can use? Partly because governments told them to — as Conservation International (CI) highlighted in a September white paper called “REDD+ Market: Sending Out an SOS.”

Drawing on research from our Ecosystem Marketplace initiative and elsewhere, CI recounts in clear language how governments signaled green-minded entrepreneurs that they’d be rewarded for taking action on climate change by saving endangered forest, but how these same governments are now leaving some of the most productive projects in limbo.

The Pact
The paper shows how the private sector began stepping up as early as 2007, when the United Nations Framework Convention on Climate Change (UNFCCC) formally recognized the idea of creating a REDD mechanism. It explains how entrepreneurs ramped up their activities after the 2009 Copenhagen Accord and federal cap and trade legislation in the US promised support for REDD+, which meant that entrepreneurs who developed REDD projects would be able to sell their offsets into government programs iwhen those programs materialized. It also offers this summary of results so far, based just a handful of projects:

What REDD Has Wrought
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Beyond the three big projects highlighted above, the paper points to a review of 41 projects that created thousands of jobs, built schools, and funded scholarships. It points, in other words, to a mechanism that is working — and is delivering results with limited resources from voluntary buyers.

And now governments are finally stepping up, with more than $30 billion in “fast-start” financing (as tracked by the World Resources Institute, our own REDDX initiative, and others) for projects that get rolling early. Almost none of that funding, however, is flowing to projects that are already rolling and have already delivered results. Instead, it’s going mostly to new pilots that have little transparency and no track record whatsoever.

It’s a problem we’ve covered extensively in the past, and one that CI illustrates with this chart, showing where World Bank money being deployed under the Forest Carbon Partnership Facility (FCPF) is going.

The Private-Public Disconnect
2013-10-07-Mismatch.JPG

To be fair, the FCPF and other such funds weren’t created to support small, individual pilots, but rather to support national-level accounting mechanisms. That’s well and good, but those small, individual projects add up to a lot of forest already saved and scores of important lessons already learned, and countries that have nurtured them are in danger of being short-changed.

Voluntary carbon projects have already earned the trust of US companies like Microsoft and Disney and developing country companies like Brazil’s Natura Cosmetics, which are more than willing to voluntarily buy REDD offsets that conform to standards that they know and trust.

But these voluntary buyers are the minority, and private-sector funding won’t begin to flow on the kind of scale needed to slow climate change until governments impose global caps on greenhouse gas emissions, enacting policies that reward conservation with an adequate price on carbon. Until that happens, governments that choose to support REDD need to make sure that they are not leaving the good projects already underway in the lurch. Otherwise, not only will we lose the progress made to date, but we will dampen the enthusiasm of green entrepreneurs to take on risk to do the right thing.

How Can You Keep the Info Flowing?
This post is built on research generated by Forest Trends, a nonprofit environmental organization founded by foresters and economists to explore the interplay between economy and ecology. It’s part of our participation in the Social Entrepreneurs Challenge, which was launched on September 30 by the Skoll Foundation and Huffington Post. It’s a CrowdRise campaign designed to raise awareness and funding for social entrepreneurs, and we can certainly use it.

If you like our posts, be sure to shout us out on Huffington Post or to share us with your friends. If you really like them, be sure to help us out with a small donation here.

Thanks!

 

Additional resources

Calling All Fans Of Ecosystem Marketplace: Here Is Your Chance To Help Us Help You!

For eight years, Ecosystem Marketplace has been bringing you news and analysis on the interplay between nature and the economy. Now the Skoll Foundation is providing a chance for you to help us ratchet up our work. Here’s how you can help us serve you better.

22 October 2013 | Just over two weeks ago, the Skoll Foundation and Huffington Post launched the “Skoll Social Entrepreneurs’ Challenge,” a global fundraising effort for innovative enterprises like Forest Trends that seek to promote sustainable solutions to the world’s problems.

Hosted on Edward Norton’s CrowdRise platform, this effort runs through November 22 and puts us in the running for matching funds and dedicated prizes through daily and weekly challenges. If you’re a regular reader of Ecosystem Marketplace, then you know our value – and now is your chance to show us what you think it is.

How our Funding Works

As part of Forest Trends, Ecosystem Marketplace receives pieces of larger grants earmarked for research into specific topics such as forest carbon, water, or biodiversity. We also raise money from sponsors for our annual “State of” reports, which offer a deep dive into markets for voluntary carbon, forest carbon, water, and habitat.

While we’re able to cover our day-to-day operations this way, we often lack the little bit extra that makes it possible for us to commission in-depth features on complex subjects like watershed payments in Kenya or breaking stories that require us to track down rumors or dive into the weeds and fact-check complex public documents.

For these activities, there’s often no budget – and that means we sometimes have to let important stories pass us by.

Where your Money Goes

Any money you send us for the Social Entrepreneurs’ Challenge will go to Forest Trends, which publishes Ecosystem Marketplace and keeps us going. They will, however, also be watching to see how much of this challenge largesse comes from Ecosystem Marketplace and how much from the rest of the organization, and that helps us make a case for more funding to cover stories that are important but don’t fit into our existing budget.

This means we can set aside funding for free-lancers who can pitch in when we need it – and in this case, a little goes a long way. Generally speaking, an in-depth feature that takes a week to report will cost between $1000 and $1400 if we bring in one of our award-winning reporters to cover it. Breaking stories cost anywhere from $100 to $400, depending on the work involved.

If we raise just $5000 under the Ecosystem Marketplace banner and receive matching funds, we could use that to generate an additional ten features per year – or, at the very least, to generate the bandwidth to respond to breaking stories that we might not otherwise be able to cover.

How you can Donate

This is a team effort across all of Forest Trends, but we do have an in-house competition going just to keep it interesting. Skoll has given us individual pages on the Forest Trends site, and if you have a personal relationship with one of us or particularly like our work, then by all means donate under our name. If you like us all, you can spread the wealth – or, to keep it simple, just randomly donate on one of our pages.

Financially, it doesn’t matter whose page you donate on – the winner just gets bragging rights – but the more EM team members who bring in money, the more we can clamor for funding to get our articles done.

And, of course, if you’d rather just put it in the general Forest Trends pot, you can do that as well.

The Roster

Here are the Ecosystem Marketplace team members and what they do. Again, it only matters for fun whose name you donate under, but if you have a personal relationship with one of us, it’s a nice nod of appreciation. The key thing is that the more Ecosystem Marketplace raises, the stronger our case for funding for news and features.

Steve Zwick

Steve Zwick is Managing Editor. He’s responsible for all site content, and he has a monkey on his head.

Molly Peters-Stanley

Molly Peters-Stanley is Managing Director, but gets second billing because she doesn’t know how to access the CMS. In addition to overseeing the operation, she puts out the annual “State of the Forest Carbon Markets” and “State of the Voluntary Carbon Markets” reports and manages to contribute the occasional news or feature story.

 

Genevieve Bennett

Genevieve Bennett is our Senior Associate for Market Tracking in Water and Biodiversity. She handles big birds and helps Molly with the “State of Watershed Markets Report”. She also contributes news and feature stories to the site.

Kelli Barrett

Kelli Barrett is our Editorial Assistant. She lives in a giant pile of sand on the shores of Lake Michigan, and she’s our go-to free-lancer for breaking stories in water and biodiversity. She also helps reporters and bloggers access our content and keeps the content flowing smoothly.

Allie Goldstein

Allie Goldstein is a Research Assistant in our carbon program, where she writes articles and contributes to the “State of the Voluntary Carbon Markets” and “State of the Forest Carbon Markets” reports.

Kelley Hamrick

Kelley Hamrick is also a Research Assistant for our carbon program and contributes to both the “State of the Forest Carbon Markets” and the “State of the Voluntary Carbon Markets”.

Gloria Gonzalez

Gloria Gonzalez is our Senior Associate for Carbon. When she’s not knee-deep in some swamp somewhere, she’s working with Molly on the “State of the Voluntary Carbon Markets” and “State of the Forest Carbon Markets” reports or generating copious amounts of news and feature content for the site.

Daphne Yin

Daphne Yin is wrapping up as our Voluntary Carbon Associate. Over the past few years, she has contributed to the “State of” reports, and she continues to write news and feature stories on a regular basis. Though her official tenure with us is ending, we have a feeling she’ll be with us unofficially for many years to come.

The General Forest Trends page will also accept donations. That’s where all the money ultimately ends up.

You have been a part of the journey that has put ecosystem services on the map,. We are writing to invite you to help us win a “crowd source” fundraising challenge launched by the Skoll Foundation and the Huffington Post. And ask you to consider donating to this effort! Every donation will help us reach our goal and will leverage additional funding to support our word and mission!

George Shultz Calls for GOP “Climate Insurance Policy”

Former US Secretary of State George Shultz has long been a lonely (but not lone) proponent of climate action within the Republican Party. Bill Shireman of Future 500 says that Shultz’s proposal could win support among young Republicans, leading to a climate solution that the right and left can both agree on.

14 October 2013 | Former Secretary of State George Shultz proposed that the U.S. adopt a “Climate Insurance Policy” to simultaneously bolster the economy and reduce the risk of global warming.

In a recent interview with reporters, Shultz suggested that Republican leaders follow a Reagan-era strategy that would drive innovation while also cutting carbon emissions.

Shultz’s approach would also deliver a political benefit to the Republican Party, which is struggling to redefine itself after losing two national elections to Democrats, and failing to capture a majority in the Senate, as most analysts had expected.

His plan would emulate the GOP’s leadership on ozone protection during the Ronald Reagan administration, which resulted in a “no regrets” approach that was beneficial to the economy, whether or not ozone science was borne out.

“There were ozone skeptics back then, just as there are climate skeptics now,” said Shultz. “But we all agreed that, if what some scientists feared were to happen, it would be disastrous. So we took out an insurance policy.” The Montreal Protocol quickly led to innovations that vastly reduced ozone depleting substances. “In retrospect, the non-skeptics turned out to be right, and the Montreal Protocol came around just in time.”

On climate, Shultz’s policy preference combines sound policy with deft political strategy. It would tend to reduce federal tax and spending levels over time, by shifting taxes from forms of prosperity that tend to go up, to forms of pollution that tend to go down.

Tax cuts or dividends would reduce taxes on income, profits, savings, or payroll under the proposal. The difference would be made up by a price on carbon or other pollutants. While the switch would start off revenue neutral, shifting taxes to pollution would lead to gradual reductions over time.

Carbon emission rates generally decline about 1% each year. A tax shift to carbon would drive an average annual tax cut of at least that amount, reversing historic trends.

The tax swap is supported by conservative economists, including Greg Mankiw of Harvard, Kevin Hassett of American Enterprise Institute, Luigi Zingales of the University of Chicago, and Arthur Laffer, father of the supply side economic theories associated with President Reagan.

Retailers and consumer product companies would also benefit. This puts more money in the pockets of WalMart moms. Prices for energy would go up just as much, but consumers could choose whether to use their dividends to buy the same amount of energy, and come out even, or shift their spending elsewhere, and save.

Economically, many economists believe the shift would help increase jobs, income, technology and innovation. It would smooth the transition toward natural gas and renewables, and away from coal. The dividend approach would also enable a higher share of tax cuts to go to coal states, where that sector’s decline has been steady.

Despite its economic and environmental benefits, selling a tax swap in the GOP won’t be easy. Carbon, unfortunately, has become an ideological litmus test on both the left and right. The hard left uses it to advocate economy-wide regulation – and the hard right resists the science because they fear the regulations the hard left thinks are needed.

The problem is, with no alternatives proposed, the regulatory approach is the only option offered.

Some GOP strategists argue that by offering a market-based solution on the climate issue, the party would lose a wedge issue that can mobilize the base against the Democrats. But as a lifelong Republican, I disagree. This is a one-time opportunity to achieve a long-term GOP priority: to drive taxes down and growth up. Why would we not take that?

More attractive than a carbon-focused approach might be a pollution tax shift that covers a “market basket” of contaminants, rather than just carbon. Unlike other taxes, pollution taxes are supported by a plurality of GOP voters.

According to Shultz, even if some GOP lawmakers remained skeptical, the party would seize the issue from Democrats, and regain its historical conservation leadership. “All of the most important federal environmental actions were taken by Republican presidents,” Shultz said.

The new GOP approach would appeal to young voters, including conservatives, who reject the idea that to grow the economy you have to damage the environment. This is not the coal age. This is three generations into the information economy. Environmental protection is fully compatible with economic growth. It’s expected – it’s assumed.

When forced to choose between the economy and environment, young voters split about evenly, giving a slight edge to the environment. A March 2013 Gallup survey of American adults showed more 18- to 29-year-olds saying environmental protection should take priority (49%) than those saying economic growth should take priority (45%).

Yet in terms of urgency, the economy needs help right now. People need jobs to put food on the table today. They need the environment to live for the long term. So 45% want political leaders focused on the economy as their top priority, while only 8% want them focused first on climate change, according to polls by the Conservative Republican National Committee (CRNC).

Republican climate “skeptics” use that data to argue that young voters don’t care much about the environment. Yet a majority of young conservatives under age 35 – some 30% of whom doubt climate change is real – still favor action on climate. They are simply not convinced government action will work.

But if nothing else is on the table, they favor government action. About 80% of voters under 35 support “President Obama’s climate change plan” – even though most have no idea what’s in that plan. But they favor action. If the GOP doesn’t offer an action plan, they won’t expend a lot of effort to figure out a better approach – they will take what’s on the table that the Democrats set.

The failure of the GOP so far to offer a climate policy of its own makes a big government approach a self-fulfilling prophecy. GOP leaders rightly worry that a Democrat-led climate policy will lead to more regulations, higher costs, and higher taxes. Strategic Republicans could seize the high ground on the issue, and offer a no-regrets alternative that’s good for the economy and provides insurance against the risk of climate change.

Bill Shireman is the coauthor of the upcoming book “Engaging Outraged Stakeholders: How-to Guide for Uniting the Left, Right, Capitalists, and Activists” and president and CEO of the Future 500. He is also coauthor of the book “What We Learned in the Rainforest: Business Lessons from Nature.”

Restoration vs. Renewable Energy: Amateurism Doesn’t Pay

Good land stewardship and energy efficiency both support our economy, but governments don’t pay nearly as much attention to the economic benefits of investment in environmental restoration as they do to investments in energy efficiency. Damon Hess of Sitka Technology argues that they should.

10 October 2013 | We invest public funds into environmental restoration and renewable energy with similar goals in mind: developing a sustainable economy and conserving common property resources. So why is it that when rating their quality, renewable energy projects are run through a professional combine while restoration projects receive a trophy just for playing?

Critics of renewable energy investments usually focus on the relatively high cost of the power they generate. New project proposals require sophisticated financial models that compare permitting, manufacturing, and operating costs against projected power generation rates and pricing over time. Once a project is in production, those initial projections are held up against actual outputs so that the models on which they were based get adjusted based on real data.

Environmental restoration proposals are rarely assessed using return on investment calculations. In fact, project developers may need only a before-and-after illustration and a willing land owner to receive funding for a new project. Restoration investments may face criticisms, but not due to their estimated output being more expensive than alternatives. Output is rarely measured using metrics that the public can understand and thus frequently not valued at all.

So why is it that the requirements for funding renewable energy are so much more onerous than those for environmental restoration? Public investments in renewable energy projects are meant to spur larger private investments and thus are held to a higher standard. Public investments in environmental restoration are meant to make us feel good about our commitment to “mother nature” and thus are given treated with kid gloves.

Let’s use Oregon as an example: From 2009-11, Oregon invested $100M/year via the Business Energy Tax Credit in renewable energy projects. Those investments led to additional private investments that by early 2013 had reached $9B according to the Renewable Northwest Project.

From 2011-13, the Oregon Watershed Enhancement Board reported spending around $150M in environmental restoration. That’s in the same ballpark as renewable energy. Yet there is no data on any private investment leveraging that spending.

Because environmental restoration funding never gets evaluated via return on investment, the private sector doesn’t leverage its public funding. Why would they without some quantification of the value? The costs of restoration are well known — riparian planting runs $10-15k/acre – but the returns are not. Metrics are esoteric and measurements non-standard, and thus monitoring data is typically wasted.

As long as environmental restoration is given a free pass when it comes to measuring results, it will be forever relegated to tenuous public funding and charitable contributions – not unlike sports. Until we monitor the output produced by an amateur planting program the way we monitor the output of a professional wind energy project, new turbines will continue to outpace trees.

Damon Hess is Director of Business Development at Sitka Technology Group. He can be reached [email protected].

Can NAMAs Overcome The CDM

The Kyoto Protocol’s Clean Development Mechanism has failed to deliver the kind of sustainable development benefits that many believed it would, and many now look to Nationally Appropriate Mitigation Actions to succeed where the CDM failed. Carbon Market Watch says that NAMA proponents can learn plenty from the CDM’s successes and its failures.

NOTE: This article originally appeared in the Carbon Market Watch newsletter. The views are those of Carbon Market Watch and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates. You can view the original here.

9 October 2013 | At the UNFCCC negotiations in Bali in 2007, developing countries agreed to develop nationally appropriate mitigation actions (NAMAs). NAMAs aim to reduce greenhouse gas emissions while also achieving sustainable development and poverty reduction objectives. NAMAs have been loosely defined and can include individual mitigation projects and actions or comprehensive sector-wide mitigation programs.

NAMAs are often divided into three broad categories:

  • Unilateral NAMAs implemente and financed by the host country itself
  • Supported NAMAs: implemented by the host country with financial aid from a developed country
  • Credited NAMA: implemented by the host country with financial aid from a developed country who received carbon credits in return. This third category is controversial because it raises numerous double counting issues and it is unclear how such credited NAMAs would be different from the CDM

Both NAMAs and the CDM aim to deliver sustainable development benefits. However, an important difference is that the CDM focuses mainly on the mitigation potential of projects because carbon credits are only issued for emissions reductions achieved and do not depend on the contribution to sustainable development. The understanding for NAMAs on the other hand is a primary focus on sustainable development with greenhouse gas reduction rather a secondary goal.

Given that the NAMA implementation is still at early stages, NAMAs provide an opportunity to better implements requirements for sustainable development than has been the case in the CDM.

Why the CDM has Failed to Deliver

Numerous studies and anecdotal evidence show that many CDM projects fail to deliver sustainability benefits. The reasons for this are manifold. Sustainability benefits have no financial value in the current system, as only greenhouse gas benefits result in monetary compensation through the generation of offset credits. Another reason is that host countries define their own sustainability criteria. Developing countries rejected attempts to establish an international sustainability assessment process, arguing that it would violate their national sovereignty. It is in the interests of the host country to secure as many CDM projects as possible because of the investment they bring. This means that host countries have little incentive to require strong sustainability criteria that could dampen investment. The sustainability criteria therefore usually lack specificity, transparency and stringency.

Also, the assessment process that is performed by the host country Designated National Authorities (DNAs) is usually perfunctory. Even in the few countries that have well developed sustainability requirements, the requirements are undermined by the lack of monitoring, reporting, and verification of claimed sustainability benefits. Experience shows that for these reasons, the majority of offsets are coming from projects with arguably little or no sustainable benefits, such as industrial gases and large hydro projects and sometimes even negative impacts of registered projects.

Missing: Where is the voluntary sustainable development reporting tool?

tools

As a response to demands to improve the contribution of CDM projects to sustainable development, the CDM Executive Board adopted a voluntary tool to highlight sustainable development (SD) co-benefits of CDM projects in 2012.

The tool has been heavily criticized for being ineffective because of the absence of monitoring and verification, the voluntary nature of the tool, and the fact that only project participants and coordinating/managing entities (CMEs) are able to use the tool undermine the legitimacy of the SD tool and limit its utility as a reporting tool. The absence of any third party verification or for the lack of opportunity for local communities to provide comments limits its utility as a reporting tool and undermines the legitimacy of the SD tool.

Although the SD tool was adopted almost a year ago, there is no information about whether the tool has been made operational or whether project participants are actually using it. This delay in implementation could suggest that there is little demand from project participants to use the voluntary reporting tool. It seems that the only stakeholders interested in the tool are civil society organisations that have an interest in CDM projects delivering sustainable development benefits and not having negative impacts. Unfortunately this is not something that the SD tool is able to monitor.

Lessons From the CDM for NAMA’s Contribution to Sustainable Development

Over the last two years, developing countries have started to develop NAMAs. Numerous developing countries have started to develop proposals and a number of developed countries, including Germany, Denmark, Canada and Norway, are providing funding to support the development of NAMAs.

The NAMA Partnership was established to share information and knowledge and to deliver know-how in support of developing countries. It includes multilateral organizations, bilateral cooperation agencies and think tanks.

The NAMA Partnership has set up a working group on sustainable development that focuses on identifying and developing clear links between mitigation actions and sustainable development. It works on developing tools and approaches to assess the contribution of the NAMAs to sustainable development, the link of sustainable development with national development objectives and the contribution of NAMAs to achieve national emission targets.

Carbon Market Watch welcomes the focus on sustainable development of this working group. If done well, the tools that will be developed may help overcome some of the shortcomings and challenges faced by the CDM. Issues that need to be addressed by the working group include setting criteria and indicators for sustainable development, how to monitor and report on these indicators and how to involve stakeholders, especially local communities in the process.

Lessons from the CDM for NAMAs to Alleviate Poverty

Waste management is a key area for NAMA development. In many parts of the developing world, collecting and sorting waste informally provides a livelihood for large numbers of the urban poor, especially women and children. People working in the informal recycling sector often suffer from harsh working conditions and are exposed to many health hazards. There is evidence that where waste collectors are organized, and operate within a more favorable policy climate, they are able to achieve a decent standard of living and improve their health and social standing. In sectors where local communities are typically active, it is therefore essential to involve them in the development and implementation phases of the NAMA.

Experience from the CDM shows that the absence of social safeguards and weak rules, such as the current CDM rules for local stakeholder consultation can lead to the registration of harmful projects. Given the priority objectives of NAMAs to achieve sustainable development and to reduce poverty, it is therefore crucial to take into account the lessons learnt from the CDM and to establish a set of guidelines to ensure thorough public participation process. This must include consultation with indigenous and tribal peoples and local communities before adopting measures that may affect them. A public participation process is essential for individual mitigation project NAMAs as well as for sector-wide mitigation NAMA initiatives.

NAMAs provide unique opportunities to achieve emissions reductions, sustainable development and poverty alleviation at the same time. It is therefore essential to look at the lessons learnt from the CDM. Many challenges the CDM is facing are relevant for NAMAs. These include first and foremost a designing and implementing effective public participation processes and rules and guidelines on how to quantify, verify and monitor sustainable development benefits. If NAMAs achieve to address these issues, they may help to deliver the triple benefit of climate mitigation, sustainable development and poverty alleviation.

Eva Filzmoser is the Director of Carbon Market Watch, which she founded as CDM Watch in 2009. Before that, she worked at the European Commission, as a consultant on EU and UN climate policy and for several non-profit projects in developing countries. She can be reached at [email protected].
Additional resources

Key Companies Have Stepped Up on Climate Change. Will Governments Leave Them in The Lurch?

Voluntary REDD projects are actively protecting more than 14 million hectares of endangered forest, but most multilateral funding looks destined for countries with no history of REDD and no local expertise. This makes sense from a capacity-building perspective, but is it the right approach?

NOTE: This story originally appeared on the Huffington Post, where Forest Trends is participating in the Social Entrepreneurs’ challenge. You can view the original here. If you’d like to see more of this sort of content, feel free to support us in the challenge here.

23 October 2013 |For three years now, the people of Kenya’s Kasigau Corridor have been protecting 500,000 acres of endangered dryland forest to prevent 54 million tons of carbon dioxide from soaring into the atmosphere. That’s good for all of us, and as a reward they hope to earn REDD+ (reduced emissions from deforestation and degradation) carbon offsets for keeping greenhouse gasses locked in trees.

Our research shows they’re far from alone. Voluntary carbon projects like these are actively protecting more than 14 million hectares of endangered forests around the world (see “Leveraging the Landscape: State of the Forest Carbon Market“) — a figure that has certainly grown in the past year.

Not only are these private-sector actors protecting millions of hectares of endangered forest, but they are doing so in a way that creates rigorous methods for measuring the amount of carbon captured in forests — methods that others can learn from and implement themselves.

And that, in fact, is exactly what’s happening, with state and regional governments around the world harvesting lessons learned in the voluntary carbon markets to develop their own home-grown programs (a trend we identified in “Bringing it Home: Taking Stock of Government Engagement with the Voluntary Carbon Market“).

So, why are these green-minded entrepreneurs risking hundreds of millions of dollars to save the forest and develop new methods that the rest of us can use? Partly because governments told them to — as Conservation International (CI) highlighted in a September white paper called “REDD+ Market: Sending Out an SOS.”

Drawing on research from our Ecosystem Marketplace initiative and elsewhere, CI recounts in clear language how governments signaled green-minded entrepreneurs that they’d be rewarded for taking action on climate change by saving endangered forest, but how these same governments are now leaving some of the most productive projects in limbo.

The Pact
The paper shows how the private sector began stepping up as early as 2007, when the United Nations Framework Convention on Climate Change (UNFCCC) formally recognized the idea of creating a REDD mechanism. It explains how entrepreneurs ramped up their activities after the 2009 Copenhagen Accord and federal cap and trade legislation in the US promised support for REDD+, which meant that entrepreneurs who developed REDD projects would be able to sell their offsets into government programs iwhen those programs materialized. It also offers this summary of results so far, based just a handful of projects:

What REDD Has Wrought
2013-10-07-Impacts.JPG

Beyond the three big projects highlighted above, the paper points to a review of 41 projects that created thousands of jobs, built schools, and funded scholarships. It points, in other words, to a mechanism that is working — and is delivering results with limited resources from voluntary buyers.

And now governments are finally stepping up, with more than $30 billion in “fast-start” financing (as tracked by the World Resources Institute, our own REDDX initiative, and others) for projects that get rolling early. Almost none of that funding, however, is flowing to projects that are already rolling and have already delivered results. Instead, it’s going mostly to new pilots that have little transparency and no track record whatsoever.

It’s a problem we’ve covered extensively in the past, and one that CI illustrates with this chart, showing where World Bank money being deployed under the Forest Carbon Partnership Facility (FCPF) is going.

The Private-Public Disconnect
2013-10-07-Mismatch.JPG

To be fair, the FCPF and other such funds weren’t created to support small, individual pilots, but rather to support national-level accounting mechanisms. That’s well and good, but those small, individual projects add up to a lot of forest already saved and scores of important lessons already learned, and countries that have nurtured them are in danger of being short-changed.

Voluntary carbon projects have already earned the trust of US companies like Microsoft and Disney and developing country companies like Brazil’s Natura Cosmetics, which are more than willing to voluntarily buy REDD offsets that conform to standards that they know and trust.

But these voluntary buyers are the minority, and private-sector funding won’t begin to flow on the kind of scale needed to slow climate change until governments impose global caps on greenhouse gas emissions, enacting policies that reward conservation with an adequate price on carbon. Until that happens, governments that choose to support REDD need to make sure that they are not leaving the good projects already underway in the lurch. Otherwise, not only will we lose the progress made to date, but we will dampen the enthusiasm of green entrepreneurs to take on risk to do the right thing.

How Can You Keep the Info Flowing?
This post is built on research generated by Forest Trends, a nonprofit environmental organization founded by foresters and economists to explore the interplay between economy and ecology. It’s part of our participation in the Social Entrepreneurs Challenge, which was launched on September 30 by the Skoll Foundation and Huffington Post. It’s a CrowdRise campaign designed to raise awareness and funding for social entrepreneurs, and we can certainly use it.

If you like our posts, be sure to shout us out on Huffington Post or to share us with your friends. If you really like them, be sure to help us out with a small donation here.

Thanks!

 

Additional resources

REDD+ Finance: Where Next?

Previous Coverage

Last year, we launced another series built on the findings of REDDX alone. Learn more about the initiative HERE

Part One: Tracking REDD+ Finance: Separating The Payers From The Posers provides an overview of the project and laysout its objectives.

Part Two: REDD Funding: The Horror Story That Isn’t examines the cumbersome accounting behind international aid in general and REDD finance in particular.

Part Three: Germany Beats Fast Start Finance But Sees Need For More Scale reviews the results of Germany’s Fast Start Finance period and reasons why they failed to meet their REDD+ commitment targets but succeeded in other areas.

Part Four: REDD+ Finance Leaves Pilot Projects In Limbo tells the story of a Ghanaian businessman seeking to launch a pilot project but is struggling to find funding from both international donors and private investors.

Part Five: The World Bank And The UN-REDD: Big Names, Narrow Focus provides a detailed overview of the biggest funding efforts of REDD+ as well as their interactions with each other.

Part Six: The Congo Basin Forest Fund Steps Up For REDD+ Piloting in DRC describes how the Congo Basin Forest Fund functions, who are the funders and lessons learned.

Part Seven: Brazil, Indonesia, And DRC Cooperate On Deforestation, See Future In REDD takes a high-level view of the impact of multilateral financing efforts on Brazil, Indonesia, and the Democratic Republic of Congo to date, and examines the prospects for REDD moving forward.

Over the past six weeks, Forest Trends’ REDDX and ODI’s Climate Funds Update have been exploring the state of REDD+ finance with input from Transparency International, the Tropical Forest Group, Ecosystem Marketplace and UNEP Finance Initiative. Here’s how these organizations can work together in the future to shine more light on this critical process.

29 August 2013 | In bringing together the views of a number of initiatives tracking REDD+ finance, this series has highlighted why there isn’t a single aggregate figure for global REDD+ finance flowing. Despite this, we are increasingly able to assess where finance is coming from, how it flows through different channels and funds to recipient countries and eventually to REDD+ projects and activities on the ground. But knowledge remains incomplete and we are still faced with challenges and gaps that make it difficult to make comprehensive and conclusive remarks about the state of REDD+ finance.

Continued concerted efforts are needed to change this and we identify three steps that can pave a way forward to a better understanding of REDD+ finance:  

1. Develop capacity and expertise for in-country REDD+ finance tracking to improve reporting and effective REDD+ finance spend.
Monitoring REDD+ finance allows us to evaluate REDD+ and REDD+ spend. Funding gaps become more obvious as a more comprehensive picture emerges; as it is possible to see which regions in-country and REDD+ activities are underfunded and where money can be more strategically spent. It is also important to link expenditures to actual impacts to evaluate successes and failures and help determine how REDD+ finance can be effectively scaled up in the medium to long-term.

Few countries have centralised systems for tracking climate finance that arrives through a number of channels and instruments. REDD+ finance is no exception. Supporting the appropriate institutions for REDD+ finance tracking could include determining the right combination of civil society, academic and governmental institutions for this role as well as stronger collaborations with in-country REDD+ Focal Points to consolidate and report national data to the REDD+ Partnership’s Voluntary REDD+ Database (VRD). Forest Trends’ REDDX initiative, for example, has started to do this by working with local civil society partner organizations and REDD+ Focal Points to promote longer term in-country tacking capacity and more comprehensive data reported back to the REDD+ Partnership’s VRD.


2. Establish broader discourse and develop a protocol through which private finance for REDD+ can be better understood and tracked.
It is increasingly clear that we must involve a variety of private sector actors in discussions on REDD+ finance if we are to develop a better idea of how to attract private sector capital at scale, while also more effectively tracking private sector finance. Improvements can be made through aligning with wider existing climate finance tracking efforts which have made more progress than in the REDD+ space.
3. Take proactive steps towards understanding needs to track REDD+ finance under a globally integrated REDD+ mechanism, as well as understanding how REDD+ fits within emerging climate finance funds such as the Green Climate Fund.
The long term success of REDD+ (in terms of policy and leveraging additional finance) will depend on more standardized approaches to monitoring, reporting and evaluation which link expenditure to actual impact. Looking towards a potential United Nations Framework Convention on Climate Change (UNFCCC) REDD+ mechanism, the potential inclusion of REDD+ in the Nationally Appropriate Mitigation Action (NAMA) Registry, or a possible REDD+ window under the Green Climate Fund, there will be a clear need for a common reporting framework for REDD+ finance. Taking proactive steps and encouraging contributor and recipient countries to track what actually happened with REDD+ finance helps measure impacts and evaluate successes in a comparable way, and is likely to facilitate these future possibilities for REDD+ activities.

The road ahead

No REDD+ finance tracking institution or initiative is, or claims to be, comprehensive on its own. This series has been a first attempt to bring together a community of practice tracking aspects of REDD+ finance. It is critical that we continue to expand this community to learn from one another and work together to more effectively track and record the global state of REDD+ finance.

In addition to improving the way that REDD+ finance is monitored and tracked, more emphasis should be placed on sharing experiences and lessons with wider efforts to track climate finance and development aid. Gaining clarity over where money is going, through whom and how fast, is a first step to ensuring that the money does what it should, where it should. If donors and recipients of climate finance design transparent, comparable and accessible financial accounting systems, we will be able to more effectively track and monitor for accountability at a global or national level, by government or civil society.

This series of blogs on REDD+ finance intends to create a forum for debate and exchange of ideas. It should not be understood to reflect the views of Forest Trends, REDDX, ODI or Climate Funds Update.

Marigold Norman is Program Manager for Forest Trend’s Forest Trade and Finance Program. Her work focuses on tracking public and private funding delivered for Reducing Emissions from Deforestation and Degradation (REDD+) activities in thirteen REDD+ partner countries. Charlene Watson is a Research Officer at the Overseas Development Institute; her work focuses on the flows, sources and instruments of climate finance at both the national and international level.

REDD+ Finance:
Private Lessons For The Public Sphere

Previous Coverage

Last year, we launced another series built on the findings of REDDX alone. Learn more about the initiative HERE

Part One: Tracking REDD+ Finance: Separating The Payers From The Posers provides an overview of the project and laysout its objectives.

Part Two: REDD Funding: The Horror Story That Isn’t examines the cumbersome accounting behind international aid in general and REDD finance in particular.

Part Three: Germany Beats Fast Start Finance But Sees Need For More Scale reviews the results of Germany’s Fast Start Finance period and reasons why they failed to meet their REDD+ commitment targets but succeeded in other areas.

Part Four: REDD+ Finance Leaves Pilot Projects In Limbo tells the story of a Ghanaian businessman seeking to launch a pilot project but is struggling to find funding from both international donors and private investors.

Part Five: The World Bank And The UN-REDD: Big Names, Narrow Focus provides a detailed overview of the biggest funding efforts of REDD+ as well as their interactions with each other.

Part Six: The Congo Basin Forest Fund Steps Up For REDD+ Piloting in DRC describes how the Congo Basin Forest Fund functions, who are the funders and lessons learned.

Part Seven: Brazil, Indonesia, And DRC Cooperate On Deforestation, See Future In REDD takes a high-level view of the impact of multilateral financing efforts on Brazil, Indonesia, and the Democratic Republic of Congo to date, and examines the prospects for REDD moving forward.

Governments have pledged billions of dollars to programs designed to slow climate change by saving endangered rainforests, but the real results to date have come from the private sector and civil society. Here’s a brief look at what policymakers designing tomorrow’s public-sector programs can learn from today’s private-sector projects.

22 August 2013 | Kenya’s Kasigau Corridor Project that Reduces Deforestation and forest Degradation (“REDD”) protects 200,000 hectares of endangered forest between the Tsavo East and Tsavo West National Parks. The Surui Forest Carbon Project protects 32,000 hectares of endangered forest in the Brazilian Amazon. Cambodia’s Oddar Meanchey REDD+ Project protects 64,000 hectares of endangered forest in the northwest province of the same name. The world’s largest REDD project – the Mai Ndombe REDD+ Project in the Democratic Republic of the Congo – will protect almost 250,000 hectares and dispatch with approximately 175 million tonnes of carbon over its lifetime.

Beyond the fact that each of these endeavors harness carbon markets to reduce greenhouse gas emissions by saving endangered rainforest, each of them has been spearheaded by private initiatives working closely with national, state, and local governments, which means each has managed to identify risk mitigation tools – that appeal to both the private and public sectors.

Each, therefore, is ripe with lessons for anyone looking to develop REDD interventions that will make the leap from “project” to “program” – i.e. from private and local, to public and jurisdictional. Admittedly, there are still gaps in information on finance and activities at the project level, but, Ecosystem Marketplace has been tracking private sector projects since 2005, reporting forest carbon data on the Forest Carbon Portal and in Ecosystem Marketplace’s annual State of the Forest Carbon Markets reports designed to explore these lessons and results.

Through focusing tracking on the project level we have found that the private sector was more likely to support projects that reported at least one revenue stream other than carbon offset sales, like sustainably commodity (including Fairtrade-certified) sales revenue or donor government contributions. The presence of additional non-carbon revenues suggests to private sector actors that the project is more likely to be financially viable in the case that carbon markets are not a long-lived source of project financing. Our more recent findings illustrate that private dollars are also “mobile” – with businesses preferring to catalyze new activities in new locations, which is not inherently conducive to large-scale, long-term REDD activities.

Based on these findings, is the profit motive alone too capricious to support and expand REDD efforts? Should the burden of forest conservation instead rest solely with forests’ traditional public sector custodians? In reality and as reported last week by UNEP FI, seasoned stakeholders conclude that both public and private actors must be at the table if the world is to support existing forestry and land use carbon projects (total of $2.2 – $5.4 billion over an unspecified timeframe, according to Ecosystem Marketplace’s 2012 survey data; cut deforestation in half between 2015 and 2020 ($75 – $300 billion according to Resources for the Future estimates); or protect the world’s hectares that are currently under threat ($1 trillion, based on 55.5 million hectares that will be lost between 2010 and 2020, as estimated by WWF, multiplied by average price per hectare paid for REDD offsets in 2011 [$20/ha] based on Ecosystem Marketplace data). Regardless of your metric of choice, the price tag is too high to ignore anyone with insights into how a significant source of finance can be incentivized to act.            

To this end, private project developers that have honed their business models to become market “survivors” provide proof of concept for the idea of internationally-financed conservation forestry. They have an inherent understanding of why the private sector steps in – or backs out of – forest finance, learned over now-decades of direct experience with private sector stakeholders. They also boast first-hand experience with national and regional government approval processes and gaps in capacity – often including a deep understanding of the extent of local governments’ capacity for enforcement.  
 
Many actors already understand the value of lessons gleaned from these private pilot actions, which is why the Verified Carbon Standard and the American Carbon Registry are working with national governments on Jurisdictional Nested REDD (JNR) that ensure existing projects can be absorbed into national accounting programs. It’s why the Norwegian government is even helping to pilot nested programs around the world.

And it’s why Forest Trends’ Ecosystem Marketplace and REDD Expenditures Tracking initiatives are tracking payments – both public and private, top-down and bottom-up – to uncover “sweet spots” where emerging government REDD programs have successfully engaged the private sector as investor, implementer, or (in an ideal world) both. Private lessons for the public sphere to increase private investment, therefore, include (but are not limited to):

  • Due consideration and recognition of private actors’ early action via public support of credited project-level activities. Indications that governments will support early action REDD projects (via “buyer of last resort” credit purchase guarantees or other purchase programs) would help de-risk new investment or projects in need of re-financing, and could be implemented to reward those already exploring REDD implementation on the ground, in tandem with the development of up-scaled REDD approaches. Such approaches have successfully been taken in other sectors in some countries, as explored in this report.
  • Enacting policies that favor “zero-deforestation” or low carbon products/commodities by recognizing products sourced from verified REDD projects, activities or areas.
  • Engaging with private actors to explore “carbon-linked” funding mechanisms, like REDD/carbon revenue bonds, developing new types of public-private contract structures to deliver low cost REDD emissions reductions. Such efforts would leverage the early experience of project developers managing relationships with donor governments supporting emerging jurisdictional nested REDD programs.              

Unless policymakers are willing to incorporate more lessons from the companies that are already buying REDD project offsets or from the developers who are creating them, they run the risk of re-creating the Kyoto Protocol’s sub-optimal treatment of forest carbon offsets. The world needs a mechanism that incorporates tested methods that work. And that requires more funding for pilot projects and more efforts to harvest existing projects for insights that can be broadcasted from the boardroom to Bonn.    

 

Molly Peters-Stanley is the Co-Managing Director of Ecosystem Marketplace. These views are hers alone and do not represent those of Ecosystem Marketplace, ODI, or the Climate Funds Update.

REDD+ Finance:Private Lessons For The Public Sphere

Previous Coverage

Last year, we launced another series built on the findings of REDDX alone. Learn more about the initiative HERE

Part One: Tracking REDD+ Finance: Separating The Payers From The Posers provides an overview of the project and laysout its objectives.

Part Two: REDD Funding: The Horror Story That Isn’t examines the cumbersome accounting behind international aid in general and REDD finance in particular.

Part Three: Germany Beats Fast Start Finance But Sees Need For More Scale reviews the results of Germany’s Fast Start Finance period and reasons why they failed to meet their REDD+ commitment targets but succeeded in other areas.

Part Four: REDD+ Finance Leaves Pilot Projects In Limbo tells the story of a Ghanaian businessman seeking to launch a pilot project but is struggling to find funding from both international donors and private investors.

Part Five: The World Bank And The UN-REDD: Big Names, Narrow Focus provides a detailed overview of the biggest funding efforts of REDD+ as well as their interactions with each other.

Part Six: The Congo Basin Forest Fund Steps Up For REDD+ Piloting in DRC describes how the Congo Basin Forest Fund functions, who are the funders and lessons learned.

Part Seven: Brazil, Indonesia, And DRC Cooperate On Deforestation, See Future In REDD takes a high-level view of the impact of multilateral financing efforts on Brazil, Indonesia, and the Democratic Republic of Congo to date, and examines the prospects for REDD moving forward.

Governments have pledged billions of dollars to programs designed to slow climate change by saving endangered rainforests, but the real results to date have come from the private sector and civil society. Here’s a brief look at what policymakers designing tomorrow’s public-sector programs can learn from today’s private-sector projects.

22 August 2013 | Kenya’s Kasigau Corridor Project that Reduces Deforestation and forest Degradation (“REDD”) protects 200,000 hectares of endangered forest between the Tsavo East and Tsavo West National Parks. The Surui Forest Carbon Project protects 32,000 hectares of endangered forest in the Brazilian Amazon. Cambodia’s Oddar Meanchey REDD+ Project protects 64,000 hectares of endangered forest in the northwest province of the same name. The world’s largest REDD project – the Mai Ndombe REDD+ Project in the Democratic Republic of the Congo – will protect almost 250,000 hectares and dispatch with approximately 175 million tonnes of carbon over its lifetime.

Beyond the fact that each of these endeavors harness carbon markets to reduce greenhouse gas emissions by saving endangered rainforest, each of them has been spearheaded by private initiatives working closely with national, state, and local governments, which means each has managed to identify risk mitigation tools – that appeal to both the private and public sectors.

Each, therefore, is ripe with lessons for anyone looking to develop REDD interventions that will make the leap from “project” to “program” – i.e. from private and local, to public and jurisdictional. Admittedly, there are still gaps in information on finance and activities at the project level, but, Ecosystem Marketplace has been tracking private sector projects since 2005, reporting forest carbon data on the Forest Carbon Portal and in Ecosystem Marketplace’s annual State of the Forest Carbon Markets reports designed to explore these lessons and results.

Through focusing tracking on the project level we have found that the private sector was more likely to support projects that reported at least one revenue stream other than carbon offset sales, like sustainably commodity (including Fairtrade-certified) sales revenue or donor government contributions. The presence of additional non-carbon revenues suggests to private sector actors that the project is more likely to be financially viable in the case that carbon markets are not a long-lived source of project financing. Our more recent findings illustrate that private dollars are also “mobile” – with businesses preferring to catalyze new activities in new locations, which is not inherently conducive to large-scale, long-term REDD activities.

Based on these findings, is the profit motive alone too capricious to support and expand REDD efforts? Should the burden of forest conservation instead rest solely with forests’ traditional public sector custodians? In reality and as reported last week by UNEP FI, seasoned stakeholders conclude that both public and private actors must be at the table if the world is to support existing forestry and land use carbon projects (total of $2.2 – $5.4 billion over an unspecified timeframe, according to Ecosystem Marketplace’s 2012 survey data; cut deforestation in half between 2015 and 2020 ($75 – $300 billion according to Resources for the Future estimates); or protect the world’s hectares that are currently under threat ($1 trillion, based on 55.5 million hectares that will be lost between 2010 and 2020, as estimated by WWF, multiplied by average price per hectare paid for REDD offsets in 2011 [$20/ha] based on Ecosystem Marketplace data). Regardless of your metric of choice, the price tag is too high to ignore anyone with insights into how a significant source of finance can be incentivized to act.            

To this end, private project developers that have honed their business models to become market “survivors” provide proof of concept for the idea of internationally-financed conservation forestry. They have an inherent understanding of why the private sector steps in – or backs out of – forest finance, learned over now-decades of direct experience with private sector stakeholders. They also boast first-hand experience with national and regional government approval processes and gaps in capacity – often including a deep understanding of the extent of local governments’ capacity for enforcement.  
 
Many actors already understand the value of lessons gleaned from these private pilot actions, which is why the Verified Carbon Standard and the American Carbon Registry are working with national governments on Jurisdictional Nested REDD (JNR) that ensure existing projects can be absorbed into national accounting programs. It’s why the Norwegian government is even helping to pilot nested programs around the world.

And it’s why Forest Trends’ Ecosystem Marketplace and REDD Expenditures Tracking initiatives are tracking payments – both public and private, top-down and bottom-up – to uncover “sweet spots” where emerging government REDD programs have successfully engaged the private sector as investor, implementer, or (in an ideal world) both. Private lessons for the public sphere to increase private investment, therefore, include (but are not limited to):

  • Due consideration and recognition of private actors’ early action via public support of credited project-level activities. Indications that governments will support early action REDD projects (via “buyer of last resort” credit purchase guarantees or other purchase programs) would help de-risk new investment or projects in need of re-financing, and could be implemented to reward those already exploring REDD implementation on the ground, in tandem with the development of up-scaled REDD approaches. Such approaches have successfully been taken in other sectors in some countries, as explored in this report.
  • Enacting policies that favor “zero-deforestation” or low carbon products/commodities by recognizing products sourced from verified REDD projects, activities or areas.
  • Engaging with private actors to explore “carbon-linked” funding mechanisms, like REDD/carbon revenue bonds, developing new types of public-private contract structures to deliver low cost REDD emissions reductions. Such efforts would leverage the early experience of project developers managing relationships with donor governments supporting emerging jurisdictional nested REDD programs.              

Unless policymakers are willing to incorporate more lessons from the companies that are already buying REDD project offsets or from the developers who are creating them, they run the risk of re-creating the Kyoto Protocol’s sub-optimal treatment of forest carbon offsets. The world needs a mechanism that incorporates tested methods that work. And that requires more funding for pilot projects and more efforts to harvest existing projects for insights that can be broadcasted from the boardroom to Bonn.    

 

Molly Peters-Stanley is the Co-Managing Director of Ecosystem Marketplace. These views are hers alone and do not represent those of Ecosystem Marketplace, ODI, or the Climate Funds Update.

Why Disney, BP And Rio Tinto
Are Exploring Ecosystem Services

Sissel Waage of BSR (Business of Social Responsibility) discusses reasons why ecosystem services thinking is on the rise as the number of governments investing in ecosystem services and companies incorporating their environmental impacts into existing business models continue to grow.

This article was originally published on GreenBiz. Click here to view the original.
Note: The views are those of Sissel Waage and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.

16 July 2013 | Disney, BP, Rio Tinto and Weyerhaueser represent vastly different sectors. Yet these companies see an increasingly persuasive business case for tracking the impacts and dependencies on biodiversity and ecosystem services (BES).

Simply put, the case for corporate action on BES has solidified, with internal and external dimensions that are more and more compelling.  Ecosystem services are essential to businesses, as well as to some 450 million people whose livelihoods depend upon their ongoing flow.

Ecosystem services refers to the benefits that humans enjoy from functioning ecosystems. That includes goods or products that ecosystems produce, and the natural processes that ecosystems regulate.

The internal business case

The foundation of the internal business case is about improving how companies identify risks and opportunities. If poorly done, the result can be project delays and supply chain challenges.

To improve current risk and opportunity identification processes, corporate decision-makers now have the opportunity to expand existing protocols slightly to include assessment of their dependencies and impacts on ecosystem services.

Early corporate pilot testers and adopters say that BES insights can reveal new risks and help to avoid and mitigate impacts. It also can help corporate decision-makers to understand unintended consequences, cumulative impacts and trade-offs. For example, one corporate leader said that an ecosystem services analysis highlighted issues likely to occur in the coming months and years that otherwise wouldn’t have been identified,  such as saltwater intrusion into coastal freshwater aquifers.

Because ecosystem services is about the benefits that people derive from functioning natural systems, a big portion of this work includes stakeholder engagement around social and environmental issues. Integrating social and environmental factors within analytical frameworks can help to better understand local residents’ reliance on the environment and how corporate activities may affect them.

At its best, this work offers another way to maintain industry leadership positions and reputations as investors, competitors and corporate ranking organizations factor in biodiversity and ecosystem services impacts.

A growing list of stakeholders

This uptake of ecosystem services thinking is underway among a growing range of key corporate stakeholders as well as governments, as documented in a series of reports by BSR’s Ecosystem Services Working Group.

For example, more than 16 government agencies around the world either are investing in ecosystem services initiatives or developing related policies. This includes Brazil, Canada, China, Colombia, the European Union, India, Israel, Japan, Nepal, Peru, South Africa, Spain, Tanzania, the United Kingdom, the United States and Vietnam.

It is also clear that the investor and financial services sector is interested in new, integrated and ecologically accurate ways of understanding and avoiding environmental risk. Companies will need to demonstrate robust risk management practices that are in line with investor due diligence and corporate ranking approaches that now include consideration of ecosystem services, such as the World Bank’s International Finance Corporation (IFC), the 79 Equator Banks and the Dow Jones Sustainability Index.

Thought leaders, NGOs, academics and other stakeholders are expecting more from companies on understanding their dependencies and impacts on ecosystem services. This uptick in interest is exemplified by emerging NGO initiatives around the world, including in Brazil, China, Colombia, Costa Rica and Ecuador.

For companies, all of this interest in ecosystem services means that a new bar is being set on international best practice. In response, the number of private sector players engaged on this issue is rising, with more than 35 companies  publicly naming ecosystem services as an issue under consideration. And more are considering natural capital, as the  Corporate EcoForum‘s 2012 report on the subject documents.

There are also a growing number of touch points between biodiversity, ecosystem services and business risk. It is also clear that BES is coming of age and becoming a corporate risk, with more than 24 nations deploying some form of natural capital accounting.

Sissel Waage is the director of biodiversity and ecosystem services at BSR.

Habitat Banking In Spain:
Moving Towards The Future

Spain has a shortage of public funds for nature and an overabundance of environmentally valuable land in private hands. It could, therefore, benefit greatly from conservation banking if the legal landscape can be adapted to recognize it. Here’s a look at the landscape and its pitfalls.

18 June 2013 | High Biological Value sites are regions where a wide variety of ecosystems concentrate, and Spain may have more of them in private hands than any other European country.

Most of the money dedicated to the conservation of natural areas in Spain, however, comes from public funding sources, and these sources are dwindling rapidly. It is, therefore, necessary to explore new ways of funding the land management activities that owners develop in rural areas and encourage them towards the conservation of nature. Habitat banking is one logical alternative.

Habitat Banking

The concept of Habitat Banking, as recently used in Spain, is a mechanism that can bring many new features to the Spanish environmental landscape, as it has done in other countries. However, understanding of the concept is limited, not only among the general population, but also in those specific sectors that are involved in its development.

Confounding this is a general confounding of habitat banking with more standard Command and Control models.

In addition, the lack of an agreed-on name for such mechanisms also helps to create confusion regarding the habitat banking concept. Even here, we will use different terms for different iterations of the same concept: mitigation banking and conservation banking, or even, as shown later in this article-biodiversity banking.

The Origin of the Concept of Habitat Banking in Spain

We must have a look back over the last few years to find some reference about habitat banking in Spain. This concept appeared in Spain as a result of the transposition of an EU environmental liability directive in 2007. The new regulatory framework provided the possibility of new instruments for the compensation of environmental damages signaling significant changes. The new framework established for the first time a mechanism that quantified damages requiring full reparation of environmental damage in ecological terms, leaving compensation in economic terms only for a little number of cases, in which ecological restoration is not possible.

At the same time, the European Commission entrusted a full study to examine the feasibility of introducing habitat banking existing in the European environment, according to both legal and environmental objectives and its compliance. Meanwhile, simultaneously, in Europe, market-based policies directed at the conservation of the natural environment are beginning to be promoted, such as the development of the European trade emission allowances (European Trading Systems , EU ETS).

The introduction of these changes showed up in references to habitat banking in Spain. The new legal framework aims to introduce this concept under the regulatory implementation of the new legislation as a mechanism to allow the repair of environmental claims. In early 2008, one of the provisions included in the draft read as follows: “…may be used to realize the compensation for the damage caused to the environment, market mechanisms previously made of natural resources. In this sense, Habitats Banking will be established.”

For various reasons, habitat banking lost the chance to appear in Spanish legislation. However, looking at it from a much more hopeful point of view, the door to debate over the preservation of our natural areas has been opened. This debate continues today, and also has been reinforced by the interest of the administration in order to protect habitat banking in a Spanish legal framework.

Interest in New Mechanisms Begins

The need for a larger debate on market-based mechanisms for conservation-like payments for environmental services-as well as on habitat banking was revealed at the 10th National Environmental Congress in Spain in November, 2010. At this meeting, possibly the most relevant forum in Spain related to the environment, the Forestry, environmental services and market mechanisms working group was formed. This working group brought together many of the top professionals in Spain to reach agreements and draw conclusions on the matter, awakening interest in these mechanisms.

Almost simultaneously, the first publication in Spain dedicated exclusively to innovative financial mechanisms saw the light. This publication, edited by EUROPARC-Spain, showed several alternative market-based mechanisms for conservation, protection and improvement of the environment, including habitat or conservation banking.

Subsequently, forums between stakeholders in development, land stewardship entities, professionals from different areas (finance, insurance, securities, legal …) and the Spanish government were held to launch a development proposal. This included events organized by the Engineers College, held in June 2011, regarding the prospects of habitat banking in Spain.

These developments culminated with two important events. First, in November 2011, the International Conference of Territorial Governance and Adaptive Management of Global Change brought together the main stakeholders along with international experts from the United States, the Netherlands and Germany to discuss the most crucial aspects in developing habitat model banks. This meeting generated rich discussions and diverse opinions. This allowed for the formation of a working group to develop needed tools.

The second milestone was the conclusion in the last and latest edition of the National Congress of Environment (CONAMA 2012), highlighting the technical session named Land Stewardship and Financing Mechanisms for Nature Conservation: Habitat Banking. This session analyzed the implementation phase of habitat banking, adding a new aspect to the debate: new sources of additional demand damage compensation, because of the economic adjustment that is taking place in Spain nowadays. The concept of biodiversity banking arises from this.

Furthermore, in the mentioned session, the Spanish Ministry of Agriculture, Food and Environment presented a proposal to include habitat banking in Spanish legal framework. Moreover, a Spanish region proposed the inclusion of habitat banking in its regional policy, under the concept of biodiversity banking. It’s also likely that later this year, the concept “conservation banking” will come to the fore in a modification of the Environmental Impact Assessment National Act. That’s what we are working for.

Some companies have examined developing habitat banking in the Spanish scenario. According to the tool, Mercados de Medio Ambiente (Environmental Markets), some publications, such as Bancos de hí¡bitat: Una solucií³n de future, ( Habitat Banking: a solution for the future) have been launched according to specific habitat banks.

The Situation Today

Everyone knows about the economic dififculties in Spain today. Despite signs of recovery in the coming years, progress will be slow, especially when it comes to the growth of habitat banking. Natural demand of habitat banking is mainly determined by the need to offset impacts and damages from infrastructure and new urban development. These needs have been reduced almost completely making it necessary to find a new scenario that will promote new conservation strategies.

It is also necessary to develop the appropriate valuation tools in order to ensure the ecological and economical worth of the environment into the future. These tools will be necessary in creating a regulatory framework that covers habitat banking.

Practice Will Guide You…

Meanwhile, the stage is perfect for developing the methodology and operations required.

Governments are putting in their two cents as well. At Ecoacsa, we are trying to implement pilot experiences that make the model viable. Ecoacsa acquires knowledge and experience from models developed in other countries allowing them to learn from mistakes and develop an agile, effective, coherent and constructive model.

… and Help us to Move Into the Future

Habitat banking faces many challenges. Disclosure of these mechanisms is critical and necessary to generate a social agreement that will support a commitment to new conservation tools. We need a change in the current paradigm that allows everyone to quantify environmental impacts in ecological terms and not in economic terms but with little ecological effectiveness. In Europe, some countries have already laid the foundations with recognized experiences mostly led by governments. However, most countries still don’t have a regulatory framework.

But the right settings to present biodiversity legislation needs to be in place. Habitat banking will be, without a doubt, an essential aid to comply with the requirements imposed by the new European initiative in the field of “net biodiversity loss”, as envisaged for 2015 in the Europe 2020 strategy.

We are now at a turning point for the evolution of this mechanism in Spain. We will continue discussing the advances that occur, which helps to improve Spain’s conservation models.

David ílvarez Garcí­a and Isabel Gonzalez Alcalde are Executive Director and Director of business development of Ecoacsa Reserva de Biodiversidad and promoter of the initiative in Spain “Mercados de Medio Ambiente”

Why Disney, BP And Rio Tinto Are Exploring Ecosystem Services

Sissel Waage of BSR (Business of Social Responsibility) discusses reasons why ecosystem services thinking is on the rise as the number of governments investing in ecosystem services and companies incorporating their environmental impacts into existing business models continue to grow.

This article was originally published on GreenBiz. Click here to view the original.
Note: The views are those of Sissel Waage and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.

16 July 2013 | Disney, BP, Rio Tinto and Weyerhaueser represent vastly different sectors. Yet these companies see an increasingly persuasive business case for tracking the impacts and dependencies on biodiversity and ecosystem services (BES).

Simply put, the case for corporate action on BES has solidified, with internal and external dimensions that are more and more compelling.  Ecosystem services are essential to businesses, as well as to some 450 million people whose livelihoods depend upon their ongoing flow.

Ecosystem services refers to the benefits that humans enjoy from functioning ecosystems. That includes goods or products that ecosystems produce, and the natural processes that ecosystems regulate.

The internal business case

The foundation of the internal business case is about improving how companies identify risks and opportunities. If poorly done, the result can be project delays and supply chain challenges.

To improve current risk and opportunity identification processes, corporate decision-makers now have the opportunity to expand existing protocols slightly to include assessment of their dependencies and impacts on ecosystem services.

Early corporate pilot testers and adopters say that BES insights can reveal new risks and help to avoid and mitigate impacts. It also can help corporate decision-makers to understand unintended consequences, cumulative impacts and trade-offs. For example, one corporate leader said that an ecosystem services analysis highlighted issues likely to occur in the coming months and years that otherwise wouldn’t have been identified,  such as saltwater intrusion into coastal freshwater aquifers.

Because ecosystem services is about the benefits that people derive from functioning natural systems, a big portion of this work includes stakeholder engagement around social and environmental issues. Integrating social and environmental factors within analytical frameworks can help to better understand local residents’ reliance on the environment and how corporate activities may affect them.

At its best, this work offers another way to maintain industry leadership positions and reputations as investors, competitors and corporate ranking organizations factor in biodiversity and ecosystem services impacts.

A growing list of stakeholders

This uptake of ecosystem services thinking is underway among a growing range of key corporate stakeholders as well as governments, as documented in a series of reports by BSR’s Ecosystem Services Working Group.

For example, more than 16 government agencies around the world either are investing in ecosystem services initiatives or developing related policies. This includes Brazil, Canada, China, Colombia, the European Union, India, Israel, Japan, Nepal, Peru, South Africa, Spain, Tanzania, the United Kingdom, the United States and Vietnam.

It is also clear that the investor and financial services sector is interested in new, integrated and ecologically accurate ways of understanding and avoiding environmental risk. Companies will need to demonstrate robust risk management practices that are in line with investor due diligence and corporate ranking approaches that now include consideration of ecosystem services, such as the World Bank’s International Finance Corporation (IFC), the 79 Equator Banks and the Dow Jones Sustainability Index.

Thought leaders, NGOs, academics and other stakeholders are expecting more from companies on understanding their dependencies and impacts on ecosystem services. This uptick in interest is exemplified by emerging NGO initiatives around the world, including in Brazil, China, Colombia, Costa Rica and Ecuador.

For companies, all of this interest in ecosystem services means that a new bar is being set on international best practice. In response, the number of private sector players engaged on this issue is rising, with more than 35 companies  publicly naming ecosystem services as an issue under consideration. And more are considering natural capital, as the  Corporate EcoForum‘s 2012 report on the subject documents.

There are also a growing number of touch points between biodiversity, ecosystem services and business risk. It is also clear that BES is coming of age and becoming a corporate risk, with more than 24 nations deploying some form of natural capital accounting.

Sissel Waage is the director of biodiversity and ecosystem services at BSR.

A Critical Moment To Harness Green
Infrastructure To Secure Clean Water

The 18th Katoomba Meeting begins Thursday in Beijing, and will focus on the interaction between forests and water. Todd Gartner of WRI says it couldn’t come at a better time. Here he explains the benefits of investing in natural ecosystems rather than gray infrastructure to treat our water.

This article was originally published on the WRI webiste.   Click here to read the original.
Note:The views are those of Todd Gartner and James Mulligan and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.

15 May 2013 | Natural ecosystems provide essential services for our communities. Forests and wetlands, for example, filter the water we drink, protect neighborhoods from floods and droughts, and shade aquatic habitat for fish populations.

While nature provides this “green infrastructure,” water utilities and other decision-makers often attempt to replicate these services with concrete-and-steel “gray infrastructure”—usually at a much greater cost. Particularly where the equivalent natural ecosystems are degraded, we build filtration plants to clean water, reservoirs to regulate water flow, and mechanical chillers to protect fish from increasing stream temperatures. And even though healthy ecosystems can reduce the operational costs of these structures, investing in restoring or enhancing various types of green infrastructure is rarely pursued—either as a substitute for or complement to gray infrastructure.

Despite America’s history of reliance on gray infrastructure, now is a critical time to tip the scales in favor of a green infrastructure approach to water-resource management. Investing in the conservation and improved management of natural ecosystems to secure and protect water systems can keep costs down and create jobs. Green infrastructure can also provide a suite of co-benefits for the air we breathe, the places we play, the wildlife we share our landscapes with, and the climate we live in.

The Time Is Now

In the United States, most gray infrastructure was built 40-50 years ago with large federal grants and few provisions for maintenance. This aging infrastructure needs significant investment to keep pace with population growth and to repair wear and tear.

Yet funds for investment in water infrastructure are drying up in an era of fiscal austerity. Naturally, water utilities, reservoir managers, and storm water managers are seeking lower-cost solutions to meet water demands of the 21st century.

That’s where green infrastructure can play a significant role.

Success Stories

Since the landmark green infrastructure investment in New York City’s Catskill-Delaware watershed in the late 1990s, there have been several similar breakthroughs across the United States. These cases illustrate how green infrastructure can secure clean water and other services at a lower cost and with greater benefits than traditional gray infrastructure. Just a few examples include:

 

 

Game Changer: The Mitigation Analyst Tool

The National Mitigation Banking Association (NMBA) has a new tool in the works that swiftly turns mounds of data into high quality information that bankers can use when assessing the mitigation industry and making investment decisions. The tool will be available on smartphones, tablets and computers and is available only to NMBA members.

14 May 2013 | A new tool developed for the National Mitigation Banking Association (NMBA) will transform the way our members organize, view and interpret mitigation market data. The NMBA, in collaboration with member Trout Headwaters, Inc. and cloud software company Socrata, has designed and built a members-only data analyzer that is reliable, fast, and wholly interactive.

Meet Mitigation Analyst – available at mitigationanalyst.org – a new website available exclusively to NMBA members that takes hundreds of thousands of lines of raw data and transforms that data into useable information. This powerful system enables rapid ‘mash-ups’ of multiple databases, including U.S. Army Corps of Engineers ORM, RIBITS, and others. Rapid visualizations like graphs, charts, and maps take only seconds to produce, enabling a quick analysis of market conditions in a selected service area.

“Mitigation Analyst will truly facilitate better decision-making for our members by bringing together market data which has been historically very challenging to access,” says Randy Wilgis, the former President of the NMBA. “This tool enables our banking level members to compile and analyze market data to guide their investment decisions, and our affiliates can easily determine credit availability for their clients. The NMBA is excited to be working with Trout Headwaters and Socrata to develop this innovative and valuable tool for our members.”

With his first executive order, the Memorandum on Transparency and Open Government, President Obama ushered in a new era of open and accountable government. The President then backed up the order with the Open Government Directive, requiring federal agencies to take immediate, specific steps to achieve key milestones in transparency, participation, and collaboration.

“The increasing availability to public data has presented challenges, as these data sets become larger and more unwieldy,” says THI President and mitigationanalyst.org developer Michael Sprague. “While access to various government data is an important first step, making this data intelligent and useful represented a significant challenge. In that challenge, the NMBA found a significant opportunity to work with Socrata to build an interface that will create useful information from mounds of raw data.”

Seattle-based cloud software company, Socrata, focuses exclusively on democratizing access to government data. The company helps organizations improve transparency, and fact-based decision-making by efficiently delivering data in a user-friendly experience on web, mobile and machine-to-machine interfaces. Socrata’s innovations will make it easier for the NMBA to publish and manage both public and private data, and maximize the utility of data assets to make them universally accessible.

“I’m certain we’d all agree that getting ‘on the same page’ is a critically important step in finding solutions,” said Sprague. “I’d argue it’s almost impossible to derive a common understanding from large, dense data sets that cannot be easily and quickly analyzed and understood.”

Because data delivery capabilities will be simple and rapid, with easily shared outputs, going forward the NMBA will be able to spend more time acquiring new, better, and updated data sets, and significantly less time creating useful summaries and reports from the collected data.

MitigationAnalyst.org is currently in the beta testing phase. The NMBA will soon be providing our members access to these capabilities through devices including smartphones, tablets and computers.

A Critical Moment To Harness Green Infrastructure To Secure Clean Water

The 18th Katoomba Meeting begins Thursday in Beijing, and will focus on the interaction between forests and water. Todd Gartner of WRI says it couldn’t come at a better time. Here he explains the benefits of investing in natural ecosystems rather than gray infrastructure to treat our water.

This article was originally published on the WRI webiste.   Click here to read the original.
Note:The views are those of Todd Gartner and James Mulligan and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.

15 May 2013 | Natural ecosystems provide essential services for our communities. Forests and wetlands, for example, filter the water we drink, protect neighborhoods from floods and droughts, and shade aquatic habitat for fish populations.

While nature provides this “green infrastructure,” water utilities and other decision-makers often attempt to replicate these services with concrete-and-steel “gray infrastructure”—usually at a much greater cost. Particularly where the equivalent natural ecosystems are degraded, we build filtration plants to clean water, reservoirs to regulate water flow, and mechanical chillers to protect fish from increasing stream temperatures. And even though healthy ecosystems can reduce the operational costs of these structures, investing in restoring or enhancing various types of green infrastructure is rarely pursued—either as a substitute for or complement to gray infrastructure.

Despite America’s history of reliance on gray infrastructure, now is a critical time to tip the scales in favor of a green infrastructure approach to water-resource management. Investing in the conservation and improved management of natural ecosystems to secure and protect water systems can keep costs down and create jobs. Green infrastructure can also provide a suite of co-benefits for the air we breathe, the places we play, the wildlife we share our landscapes with, and the climate we live in.

The Time Is Now

In the United States, most gray infrastructure was built 40-50 years ago with large federal grants and few provisions for maintenance. This aging infrastructure needs significant investment to keep pace with population growth and to repair wear and tear.

Yet funds for investment in water infrastructure are drying up in an era of fiscal austerity. Naturally, water utilities, reservoir managers, and storm water managers are seeking lower-cost solutions to meet water demands of the 21st century.

That’s where green infrastructure can play a significant role.

Success Stories

Since the landmark green infrastructure investment in New York City’s Catskill-Delaware watershed in the late 1990s, there have been several similar breakthroughs across the United States. These cases illustrate how green infrastructure can secure clean water and other services at a lower cost and with greater benefits than traditional gray infrastructure. Just a few examples include:

 

 

Habitat Banking In Spain: Moving Towards The Future

Spain has a shortage of public funds for nature and an overabundance of environmentally valuable land in private hands. It could, therefore, benefit greatly from conservation banking if the legal landscape can be adapted to recognize it. Here’s a look at the landscape and its pitfalls.

18 June 2013 | High Biological Value sites are regions where a wide variety of ecosystems concentrate, and Spain may have more of them in private hands than any other European country.

Most of the money dedicated to the conservation of natural areas in Spain, however, comes from public funding sources, and these sources are dwindling rapidly. It is, therefore, necessary to explore new ways of funding the land management activities that owners develop in rural areas and encourage them towards the conservation of nature. Habitat banking is one logical alternative.

Habitat Banking

The concept of Habitat Banking, as recently used in Spain, is a mechanism that can bring many new features to the Spanish environmental landscape, as it has done in other countries. However, understanding of the concept is limited, not only among the general population, but also in those specific sectors that are involved in its development.

Confounding this is a general confounding of habitat banking with more standard Command and Control models.

In addition, the lack of an agreed-on name for such mechanisms also helps to create confusion regarding the habitat banking concept. Even here, we will use different terms for different iterations of the same concept: mitigation banking and conservation banking, or even, as shown later in this article-biodiversity banking.

The Origin of the Concept of Habitat Banking in Spain

We must have a look back over the last few years to find some reference about habitat banking in Spain. This concept appeared in Spain as a result of the transposition of an EU environmental liability directive in 2007. The new regulatory framework provided the possibility of new instruments for the compensation of environmental damages signaling significant changes. The new framework established for the first time a mechanism that quantified damages requiring full reparation of environmental damage in ecological terms, leaving compensation in economic terms only for a little number of cases, in which ecological restoration is not possible.

At the same time, the European Commission entrusted a full study to examine the feasibility of introducing habitat banking existing in the European environment, according to both legal and environmental objectives and its compliance. Meanwhile, simultaneously, in Europe, market-based policies directed at the conservation of the natural environment are beginning to be promoted, such as the development of the European trade emission allowances (European Trading Systems , EU ETS).

The introduction of these changes showed up in references to habitat banking in Spain. The new legal framework aims to introduce this concept under the regulatory implementation of the new legislation as a mechanism to allow the repair of environmental claims. In early 2008, one of the provisions included in the draft read as follows: “…may be used to realize the compensation for the damage caused to the environment, market mechanisms previously made of natural resources. In this sense, Habitats Banking will be established.”

For various reasons, habitat banking lost the chance to appear in Spanish legislation. However, looking at it from a much more hopeful point of view, the door to debate over the preservation of our natural areas has been opened. This debate continues today, and also has been reinforced by the interest of the administration in order to protect habitat banking in a Spanish legal framework.

Interest in New Mechanisms Begins

The need for a larger debate on market-based mechanisms for conservation-like payments for environmental services-as well as on habitat banking was revealed at the 10th National Environmental Congress in Spain in November, 2010. At this meeting, possibly the most relevant forum in Spain related to the environment, the Forestry, environmental services and market mechanisms working group was formed. This working group brought together many of the top professionals in Spain to reach agreements and draw conclusions on the matter, awakening interest in these mechanisms.

Almost simultaneously, the first publication in Spain dedicated exclusively to innovative financial mechanisms saw the light. This publication, edited by EUROPARC-Spain, showed several alternative market-based mechanisms for conservation, protection and improvement of the environment, including habitat or conservation banking.

Subsequently, forums between stakeholders in development, land stewardship entities, professionals from different areas (finance, insurance, securities, legal …) and the Spanish government were held to launch a development proposal. This included events organized by the Engineers College, held in June 2011, regarding the prospects of habitat banking in Spain.

These developments culminated with two important events. First, in November 2011, the International Conference of Territorial Governance and Adaptive Management of Global Change brought together the main stakeholders along with international experts from the United States, the Netherlands and Germany to discuss the most crucial aspects in developing habitat model banks. This meeting generated rich discussions and diverse opinions. This allowed for the formation of a working group to develop needed tools.

The second milestone was the conclusion in the last and latest edition of the National Congress of Environment (CONAMA 2012), highlighting the technical session named Land Stewardship and Financing Mechanisms for Nature Conservation: Habitat Banking. This session analyzed the implementation phase of habitat banking, adding a new aspect to the debate: new sources of additional demand damage compensation, because of the economic adjustment that is taking place in Spain nowadays. The concept of biodiversity banking arises from this.

Furthermore, in the mentioned session, the Spanish Ministry of Agriculture, Food and Environment presented a proposal to include habitat banking in Spanish legal framework. Moreover, a Spanish region proposed the inclusion of habitat banking in its regional policy, under the concept of biodiversity banking. It’s also likely that later this year, the concept “conservation banking” will come to the fore in a modification of the Environmental Impact Assessment National Act. That’s what we are working for.

Some companies have examined developing habitat banking in the Spanish scenario. According to the tool, Mercados de Medio Ambiente (Environmental Markets), some publications, such as Bancos de hí¡bitat: Una solucií³n de future, ( Habitat Banking: a solution for the future) have been launched according to specific habitat banks.

The Situation Today

Everyone knows about the economic dififculties in Spain today. Despite signs of recovery in the coming years, progress will be slow, especially when it comes to the growth of habitat banking. Natural demand of habitat banking is mainly determined by the need to offset impacts and damages from infrastructure and new urban development. These needs have been reduced almost completely making it necessary to find a new scenario that will promote new conservation strategies.

It is also necessary to develop the appropriate valuation tools in order to ensure the ecological and economical worth of the environment into the future. These tools will be necessary in creating a regulatory framework that covers habitat banking.

Practice Will Guide You…

Meanwhile, the stage is perfect for developing the methodology and operations required.

Governments are putting in their two cents as well. At Ecoacsa, we are trying to implement pilot experiences that make the model viable. Ecoacsa acquires knowledge and experience from models developed in other countries allowing them to learn from mistakes and develop an agile, effective, coherent and constructive model.

… and Help us to Move Into the Future

Habitat banking faces many challenges. Disclosure of these mechanisms is critical and necessary to generate a social agreement that will support a commitment to new conservation tools. We need a change in the current paradigm that allows everyone to quantify environmental impacts in ecological terms and not in economic terms but with little ecological effectiveness. In Europe, some countries have already laid the foundations with recognized experiences mostly led by governments. However, most countries still don’t have a regulatory framework.

But the right settings to present biodiversity legislation needs to be in place. Habitat banking will be, without a doubt, an essential aid to comply with the requirements imposed by the new European initiative in the field of “net biodiversity loss”, as envisaged for 2015 in the Europe 2020 strategy.

We are now at a turning point for the evolution of this mechanism in Spain. We will continue discussing the advances that occur, which helps to improve Spain’s conservation models.

David ílvarez Garcí­a and Isabel Gonzalez Alcalde are Executive Director and Director of business development of Ecoacsa Reserva de Biodiversidad and promoter of the initiative in Spain “Mercados de Medio Ambiente”

Dear President Obama: For Clean Air,
Do We Dial 111, Boxer, Or Waxman?

The EPA is slated to pass regulations on power plants this year under the Clean Air Act, while Senators Boxer and Waxman work to inject a carbon price back on to the federal agenda. Here are a few reflections on the undercurrent of discussion on how tradable mechanisms for climate mitigation might figure into federal GHG regulations down the line.

This piece originally appeared on the EKO-ECO blog moderated jointly by Ecosystem Marketplace and EKO Asset Management Partners. Read the original here.

25 March 2013 | We’ve seen the United States achieve significant emission reductions for the transportation sector through the Clean Air Act, but power plant emissions – representing almost 70% of US emissions – require a unique fix. Last week in Washington, DC, I attended a symposium hosted by Senator Tom Carper (D-DE) where panelists explored possibilities for achieving meaningful reductions of power plant emissions under Section 111 of the Clean Air Act – and without hurting the US economy.

Through the Clean Air Act, the US Environmental Protection Agency is slated to finalize New Source Performance Standards for GHG emissions from new power plants this year under Section 111(b), and expected to propose standards for existing power plants under Section 111(d).

What would meaningful reductions at reasonable cost look like under Section 111? Conrad Schneider from the Clean Air Task Force walked through calculations by the Northbridge Group for different levels of GHG reduction targets, invoking the most stringent example – 28% reductions by 2020 compared to 2005 levels – as a strawman argument. Costs to run the program would approximate $23/tCO2e. Schneider said that if phased in properly, increases in natural gas prices could be limited to 1% a year.

David Doniger from the Natural Resources Defense Council argued that these emission reductions could be achieved at a lower cost than Schneider proposes – thus it really comes down to the model and set of assumptions used.

While I can’t pass judgment on these models per se, what interests the Ecosystem Marketplace Carbon Program of course is how GHG regulations might leverage market mechanisms to make these numbers more favorable for compliance and ultimately for political and industry buy-in.

Because there it is – legislatively elusive yet referenced everywhere these days: President Obama’s State of the Union address call to Congress to pass a “bipartisan, market-based solution to climate change.” What enabling power does this phrase really have? What’s the federal legislative hook that might enable the US to achieve greater emissions reductions at reasonable cost and with legal certainty?

Against all political odds, if and when Congress stops dragging its feet, the US could see passage of a new climate bill – perhaps in the form of a federal carbon tax as promoted by Senators Barbara Boxer (D-CA) and Henry Waxman (D-CA) through their respective new carbon tax plans. But in the interim, Congress has the potential to provide clarity on how markets could fit into existing Clean Air Act legislation, which Monday’s panelists believe could create a clearer pathway for market-based solutions at a federal level.

Expanding existing EPA regulation:

Within Section 111’s regulation of power plants, there are a couple of grey areas relevant to markets. Kyle Danish – who advises companies from energy and other sectors at Van Ness Feldman – explained these at Monday’s symposium:

  1. The EPA has yet to clarify whether compliance activities can include “beyond-the-fence” reductions outside of the power plant. There is no case law yet on compliance options for 111(b). Using industry preferences as the litmus test for legislative outlook, assuming regulations will require some level of GHG emission reduction target, it seems that industry members prefer to have flexibility in how they meet their compliance requirements. As Danish put it, “All companies in the industry place a high priority on having requirements that are at modest cost, provide for some flexibility all other things being equal, and have legal certainty.” Following on this, the business case seems to point in favor of use of a market-based approach that allows some level of flexibility through trading. The aggressiveness of emission reduction targets could in turn vary depending on the level of flexibility provided.
  2. There is a lack of legal clarity on how much discretion states would have in determining their own plans in relation to the federal EPA directive. Industry’s receptiveness to GHG regulations varies by state, depending on how much companies rely on coal or natural gas for power generation. Already, many states feature market-based mechanisms – California’s cap-and-trade scheme, the Regional Greenhouse Gas Initiative, and the 35+ US states operating mandatory or voluntary renewable portfolio standards to name just a few. How these would plug into federal legislation is still up for discussion.

What about a fresh climate bill?

Beyond the Clean Air Act, the carbon tax candle is still burning. Sen. Barbara Boxer and Sen. Henry Waxman – historically cap-and-trade proponents – are both incubating carbon tax plans with the intention of restarting the conversation and pushing their plans through Congress.

The quick and dirty:

The bill backed by Sen. Barbara Boxer (D-CA) and Sen. Bernie Sanders (I-VT) seeks to regulate upstream GHG emissions from coal mines and oil refineries rather than power plants (and so could theoretically complement any legislation covering power plants).
  • Price tag: $20/tCO2e, +5.6% annually for 10 years
  • Revenues: $1.2 trillion over 10 years, with 60% rebated to US residents and 40% to incentives for clean energy and research
  • Emission reductions: 20% from 2005 levels
  • Next steps: hearings this spring in the Environment and Public Works committee, Senate floor vote this summer

The plan (see discussion draft) backed by Sen. Henry Waxman (D-CA) and Sen. Sheldon Whitehouse (D-RI), like Section 111, hones in on power plants.

  • Price tag: $15/$25/$35/tCO2e, +2-8% annually
  • Revenues: TBD, possibly going toward mitigating energy costs for consumers, reducing Federal deficit, protecting jobs of workers at trade-vulnerable, energy intensive industries, reducing tax liability for individuals and businesses, and/or investing in other carbon mitigation activities
  • Emission reductions: TBD
  • Next steps: Public comments on draft due April 12


How Boxer and Waxman relate to 111

Going into the Q&A, I asked the panel to provide their frank assessment of the prospects for these new bills compared to working within Section 111 legislation. Dirk Forrister, head of the International Emissions Trading Association, said that based on his conversations with those involved with the new carbon tax plans, “Part of the interest in these new carbon tax plans is to allow discussion on options or proposals that might follow a path like Australia’s, which began as a fixed price that looks like a tax and then shifts into an emissions trading program.”

Forrister noted that a new carbon tax bill would have advantages in terms of providing legal stability (compared to patchwork provisions for markets using Section 111) and some basis for harmonization with carbon markets abroad, but that it’s probably “a long, slow path.”

Van Ness Feldman’s Danish shared two views on the interplay between the EPA moving forward with legislation this year and how that might affect Congressional willingness to act. “On one hand, some people take the position that the EPA moves forward to regulate this area and then Congress can take a pass because they won’t have to act,” he explained.

“On the other hand,” Danish continued, “some folks find that for the EPA to move forward with legislation will create the kind of friction needed for Congress to act. So it depends on which side you fall down on in that debate.”

Banking on Change: Rethinking Wetland Mitigation in the State of New York

20 March 2013 | Wetland Mitigation Banking is one of the great environmental successes of the past forty years. A $3 billion industry, it is credited with restoring and protecting 960,000 acres of wetlands, streams, and associated upland habitat across the United States. The National Research Council and Environmental Law Institute both credit it as the most successful type of compensatory mitigation for wetland and stream impacts, while the US Army Corps of Engineers (Corps) and US Environmental Protection Agency have identified it as the the federally preferred form of compensatory mitigation.

Many states, however, remain “mitigation banking deserts” – and not always with good reason. States that have few wetlands and/or little development may naturally have fewer opportunities to build mitigation banks.

But what about New York? The state has abundant streams and wetlands and one of the highest per-capita state gross domestic products, but there are currently just three mitigation banks within the entire state. In contrast, leading states such as California, Texas, Maine, and Virginia each have more than 50 wetland and stream banks. Ohio and New Jersey, which both fall within Corps regulatory districts that also cover New York, have over three times as many mitigation banks as New York. The barriers to mitigation banking, therefore, do not appear to lie within the regional or district levels, but rather fall within New York’s borders.

his raises a number of questions: What is keeping mitigation banks out of New York? What can be done to remove these barriers? And is it worth doing?

US Mitigation Banks as of January 2012

photo of mitbank map


Source: http://www.restorationsystems.com/wetland-mitigation-bank/

Impetus for Change

The State of New York is in the midst of two major energy infrastructure initiatives. The first initiative, the New York Energy Highway, was launched by Governor Cuomo early in 2012. It is intended to enhance electric system reliability and efficiency, encourage economic growth, and create jobs primarily through the construction of an improved transmission link between the ample generation capacity and wind power potential in upstate and western New York and the tremendous demand for electric power downstate. This initiative also aims to advance the renovation and replacement of older power plants with new cleaner technologies. The second initiative was launched by Governor Cuomo in November 2012, in the aftermath of Hurricane Sandy and the widespread power outages that devastated New York City and the surrounding region. This initiative seeks to identify priority projects that will strengthen the state’s electric power infrastructure to better withstand future severe weather events.

Both of these initiatives are significant. Together, they could result in the most infrastructure construction work that the state has seen in decades. The Energy Highway Blueprint, issued in October 2012, calls for the construction of transmission and generation projects totaling $5.7 billion during the next five to ten years. While no specific weather-related projects have yet been identified, electric industry experts estimate that the cost of meaningful improvements will be substantial. Adding to all of this are the potential impacts associated with fracking (i.e., natural gas extraction) development within the state, pending state approval.

Mitigation banking would help the state achieve these initiatives in a manner that is consistent with New York’s firmly established commitment to strict environmental protection. Banking will allow for more efficient permitting and ecologically sound mitigation of these projects. While there are currently several obstacles to the effective use of mitigation banking in New York, these obstacles are either overstated or are within state regulators’ capabilities to address.


Identifying Barriers to Banking in New York

Three explanations are commonly given for the absence of a thriving mitigation banking industry in New York: insufficient demand, small service areas, and/or restrictive state regulations. Let’s look at each in turn.

Demand for compensatory aquatic mitigation – though historically lower in New York than in some other states – exists within New York. From 2006 to 2008, there was an average of nearly 350 acres of required wetland mitigation per year generated by federally-permitted development in three upstate cities alone. In 2009, the Corps’ Buffalo District noted that the private market demand for a mitigation bank in one county in New York was “moderate to high.” The State Department of Environmental Conservation (DEC), which regulates wetlands 12.4 acres or larger, reviewed an annual average of more than 1,400 freshwater wetlands permits from 2002-2011 (actual permitted impacts or mitigation acres are not tracked by the DEC, according to a spokesman). Moreover, demand is likely to increase considerably due to the anticipated large-scale energy infrastructure projects noted above.

The size of service areas used for mitigation banks is another potential obstacle. New York regulatory agencies currently prefer using the HUC-8 for service area size. There are 59 HUC-8s in New York, representing areas ranging from less than 200 to more than 2,000 square miles. In some cases, the HUC-8 may be too small to generate adequate demand or present desirable siting options for mitigation banks, particularly those serving linear projects such as transmission lines, highways, and pipeline corridors.

This problem has been encountered elsewhere and has been addressed by providing larger service areas and/or establishing primary and secondary service areas to allow flexibility when needed. In 2007-2008, discussions with state transportation personnel responsible for wetland mitigation in North Dakota, Montana, Utah, Colorado, and Nebraska identified that all were either using or negotiating service areas larger than the HUC-8. Many states with successful mitigation banking programs – including Texas, Virginia, Ohio, and New Jersey – allow banks to group contiguous HUC-8s to form larger service areas or use adjacent HUC-8s as secondary service area options under certain circumstances. According to the Environmental Law Institute, while 14 of the 38 Corps districts use the HUC-8 as the primary service area boundary for compensatory mitigation, another 14 districts use HUCs in combination with other watershed or ecoregion classifications. In New York, discussions are presently ongoing regarding service area sizing for a single user bank being developed by the Federal Highway Administration and the New York State Department of Transportation; both HUC-8 and the larger HUC-6 classification are on the table. There is no blanket requirement that the HUC-8 must be used in New York, and federal guidance allows for flexibility in service area sizing – it even suggests that a HUC-6 may be more appropriate for rural areas, a category that applies to most of New York State. So there is both opportunity and precedent for increasing flexibility in New York with respect to service area sizing.

Then we have DEC’s mitigation regulations, which do not specifically address mitigation banks and do state that “mitigation must occur on or in the immediate vicinity of the site of the proposed project.” DEC has not offered any formal interpretation for “immediate vicinity.” In fact, it appears that DEC itself has felt constrained by this outdated language. Despite being a member of the interagency review team tasked with the consolidated review of proposed mitigation projects in New York, DEC has given reason to believe it would not sign the final instrument authorizing use of a proposed mitigation bank to offset all impacts within a specified service area. Instead, the agency would review each proposed permit transaction to determine whether its “immediate vicinity” criteria would be satisfied. This type of project-by-project review defeats the purpose of a planned, watershed-based mitigation program that is implemented in advance of impacts – which are primary benefits of mitigation banking. The resulting uncertainty drives prospective bankers to focus only on smaller (< 12.4 acres) wetlands that are outside of DEC’s jurisdiction when evaluating market opportunities and deciding where to make investments, even when unavoidable impacts are expected to occur in larger wetlands. Operating within these narrow confines, it is difficult for bankers to find opportunities with a favorable cost-benefit. This results in the visible trend of wetland banking investments being made outside of New York.


Moving Toward Mitigation Banking

The State of New York would clearly benefit from a robust private mitigation banking market, and the required actions to facilitate such a market are well within the hands of the state’s policymakers.

First, DEC, the Corps, and other regulatory agencies overseeing CWA permitting in the state might consider expanding service areas beyond the HUC-8. DEC’s watershed maps represent a logical starting place in this effort. DEC uses these maps, which group contiguous HUC-8s together to form 17 watersheds in the state, for watershed management, monitoring, and assessment. Recognition of these watersheds as service areas for mitigation would not require a significant departure from existing policy.

Second, either DEC or the state General Assembly could formally rescind the “immediate vicinity” requirement and move toward a watershed approach to mitigation. This could be implemented by the legislature via statute or by DEC through an amended rulemaking. Such action would ensure that the state’s approach to compensatory mitigation is brought in line with current scientific data and practice, while opening the door to mitigation banking in the state.

Finally, the DEC, in collaboration with the interagency review team, could develop state guidance for mitigation banking. Such action would finally make good on a promise DEC made in its 1993 publication Freshwater Wetlands Regulation – Guidelines on Compensatory Mitigation to develop specific guidance on mitigation banking in New York. Through such guidance, the state could immediately reduce the constraints imposed by its “immediate vicinity” requirement by establishing a clear definition of this term – one that would incorporate and promote the use of mitigation banks. If, for example, DEC were to clarify that “immediate vicinity” should be interpreted broadly to mean within the same watershed, the barriers to banking previously imposed by this regulatory provision would be significantly reduced.

New York’s policymakers should take action to embrace mitigation banking. This will align the state with current scientific data demonstrating the ecologically preferable results where mitigation banking is used to offset wetland and stream impacts, make state policy consistent with the established regulatory preference for mitigation provided under federal law, expand business opportunities within the state, and provide another tool to enhance New York’s ecological resiliency. All of these are worthy goals, and the barriers that exist can be addressed now through reasonable action.

 

Dear President Obama: For Clean Air, Do We Dial 111, Boxer, Or Waxman?

The EPA is slated to pass regulations on power plants this year under the Clean Air Act, while Senators Boxer and Waxman work to inject a carbon price back on to the federal agenda. Here are a few reflections on the undercurrent of discussion on how tradable mechanisms for climate mitigation might figure into federal GHG regulations down the line.

This piece originally appeared on the EKO-ECO blog moderated jointly by Ecosystem Marketplace and EKO Asset Management Partners. Read the original here.

25 March 2013 | We’ve seen the United States achieve significant emission reductions for the transportation sector through the Clean Air Act, but power plant emissions – representing almost 70% of US emissions – require a unique fix. Last week in Washington, DC, I attended a symposium hosted by Senator Tom Carper (D-DE) where panelists explored possibilities for achieving meaningful reductions of power plant emissions under Section 111 of the Clean Air Act – and without hurting the US economy.

Through the Clean Air Act, the US Environmental Protection Agency is slated to finalize New Source Performance Standards for GHG emissions from new power plants this year under Section 111(b), and expected to propose standards for existing power plants under Section 111(d).

What would meaningful reductions at reasonable cost look like under Section 111? Conrad Schneider from the Clean Air Task Force walked through calculations by the Northbridge Group for different levels of GHG reduction targets, invoking the most stringent example – 28% reductions by 2020 compared to 2005 levels – as a strawman argument. Costs to run the program would approximate $23/tCO2e. Schneider said that if phased in properly, increases in natural gas prices could be limited to 1% a year.

David Doniger from the Natural Resources Defense Council argued that these emission reductions could be achieved at a lower cost than Schneider proposes – thus it really comes down to the model and set of assumptions used.

While I can’t pass judgment on these models per se, what interests the Ecosystem Marketplace Carbon Program of course is how GHG regulations might leverage market mechanisms to make these numbers more favorable for compliance and ultimately for political and industry buy-in.

Because there it is – legislatively elusive yet referenced everywhere these days: President Obama’s State of the Union address call to Congress to pass a “bipartisan, market-based solution to climate change.” What enabling power does this phrase really have? What’s the federal legislative hook that might enable the US to achieve greater emissions reductions at reasonable cost and with legal certainty?

Against all political odds, if and when Congress stops dragging its feet, the US could see passage of a new climate bill – perhaps in the form of a federal carbon tax as promoted by Senators Barbara Boxer (D-CA) and Henry Waxman (D-CA) through their respective new carbon tax plans. But in the interim, Congress has the potential to provide clarity on how markets could fit into existing Clean Air Act legislation, which Monday’s panelists believe could create a clearer pathway for market-based solutions at a federal level.

Expanding existing EPA regulation:

Within Section 111’s regulation of power plants, there are a couple of grey areas relevant to markets. Kyle Danish – who advises companies from energy and other sectors at Van Ness Feldman – explained these at Monday’s symposium:

  1. The EPA has yet to clarify whether compliance activities can include “beyond-the-fence” reductions outside of the power plant. There is no case law yet on compliance options for 111(b). Using industry preferences as the litmus test for legislative outlook, assuming regulations will require some level of GHG emission reduction target, it seems that industry members prefer to have flexibility in how they meet their compliance requirements. As Danish put it, “All companies in the industry place a high priority on having requirements that are at modest cost, provide for some flexibility all other things being equal, and have legal certainty.” Following on this, the business case seems to point in favor of use of a market-based approach that allows some level of flexibility through trading. The aggressiveness of emission reduction targets could in turn vary depending on the level of flexibility provided.
  2. There is a lack of legal clarity on how much discretion states would have in determining their own plans in relation to the federal EPA directive. Industry’s receptiveness to GHG regulations varies by state, depending on how much companies rely on coal or natural gas for power generation. Already, many states feature market-based mechanisms – California’s cap-and-trade scheme, the Regional Greenhouse Gas Initiative, and the 35+ US states operating mandatory or voluntary renewable portfolio standards to name just a few. How these would plug into federal legislation is still up for discussion.

What about a fresh climate bill?

Beyond the Clean Air Act, the carbon tax candle is still burning. Sen. Barbara Boxer and Sen. Henry Waxman – historically cap-and-trade proponents – are both incubating carbon tax plans with the intention of restarting the conversation and pushing their plans through Congress.

The quick and dirty:

The bill backed by Sen. Barbara Boxer (D-CA) and Sen. Bernie Sanders (I-VT) seeks to regulate upstream GHG emissions from coal mines and oil refineries rather than power plants (and so could theoretically complement any legislation covering power plants).
  • Price tag: $20/tCO2e, +5.6% annually for 10 years
  • Revenues: $1.2 trillion over 10 years, with 60% rebated to US residents and 40% to incentives for clean energy and research
  • Emission reductions: 20% from 2005 levels
  • Next steps: hearings this spring in the Environment and Public Works committee, Senate floor vote this summer

The plan (see discussion draft) backed by Sen. Henry Waxman (D-CA) and Sen. Sheldon Whitehouse (D-RI), like Section 111, hones in on power plants.

  • Price tag: $15/$25/$35/tCO2e, +2-8% annually
  • Revenues: TBD, possibly going toward mitigating energy costs for consumers, reducing Federal deficit, protecting jobs of workers at trade-vulnerable, energy intensive industries, reducing tax liability for individuals and businesses, and/or investing in other carbon mitigation activities
  • Emission reductions: TBD
  • Next steps: Public comments on draft due April 12


How Boxer and Waxman relate to 111

Going into the Q&A, I asked the panel to provide their frank assessment of the prospects for these new bills compared to working within Section 111 legislation. Dirk Forrister, head of the International Emissions Trading Association, said that based on his conversations with those involved with the new carbon tax plans, “Part of the interest in these new carbon tax plans is to allow discussion on options or proposals that might follow a path like Australia’s, which began as a fixed price that looks like a tax and then shifts into an emissions trading program.”

Forrister noted that a new carbon tax bill would have advantages in terms of providing legal stability (compared to patchwork provisions for markets using Section 111) and some basis for harmonization with carbon markets abroad, but that it’s probably “a long, slow path.”

Van Ness Feldman’s Danish shared two views on the interplay between the EPA moving forward with legislation this year and how that might affect Congressional willingness to act. “On one hand, some people take the position that the EPA moves forward to regulate this area and then Congress can take a pass because they won’t have to act,” he explained.

“On the other hand,” Danish continued, “some folks find that for the EPA to move forward with legislation will create the kind of friction needed for Congress to act. So it depends on which side you fall down on in that debate.”

Stacking And Unstacking:
The Conservation And The Conversation

To build ecosystem markets, we’ve tended to break holistic nature into incomplete but measurable chunks of nature – and then we wonder why it’s difficult to bundle those chunks into something holistic. Maybe instead of stacking existing credits, we should be creating more holistic instruments.

12 March 2013 | Common sense would dictate that properties generating the greatest environmental benefit should also command the highest price in the ecosystem marketplace, and that one way to do that might be to let people stack different ecosystem values on the same patch of land. Attempts to implement this idea, however, often bog down on technicalities and charges that the user is trying to double-dip rather than earn fair compensation for ecosystem services delivered.

This is unfortunate, because we now have enough real-world examples to launch a real-world discussion about stacking and unstacking – as well as about whether the entire system needs to be reformed and rethought.

Wayne White of mitigation banking group Wildlands, Inc, and Jemma Peneloped of W2Consulting recently launched that discussion in an article in the National Wetlands Newsletter. We asked White to recap some of the issues they explored in that piece.

EM: We’ve discussed stacking before in Ecosystem Marketplace, why does it continue to be a topical issue? What’s happened on this topic since the term was first coined?

WW: I think it’s important to remind ourselves of the potential in stacking, and make progress elevating the idea of unstacking to next on the agenda. We wanted to refresh the dialogue and better capitalize or re-focus on those opportunities we were searching for decades ago when stacking was first discussed. By this I mean more comprehensive conservation, more private sector investment in mitigation, with greater ecosystem services. We feel that with more bankers credibly unstacking credits we’ll see greater investment and conservation – more than is currently flowing to stacked credits alone right now.

First you deal with the jargon used – what are some of the key terms within this discussion?

Bundling equals stacking: both refer to only the act of having approved credits occurring on the same unit of land or water. Now, conversely, unbundling equals unstacking. Here, bundled or stacked credits on the same unit of land or water are separated out and critically sold to separate buyers. Nothing actually explicitly forbid stacking credits, but when these credits come to being sold separately there are often concerns over double-dipping. This is where one unit of mitigation action is sold once, and then sold again, whereby that second buyer doesn’t actually compensate for their impact. And it’s this fear of double dipping – impacts going unmitigated – that has made unstacking so contentious.

We’re seeing stacked credits for sale on occasion, so the existing regulations have been able to allow this. What do the regulations say about unstacking?

In my/our article in National Wetlands Newsletter (NWL), I/we discuss how our early Californian trials with stacking assumed an indivisible ecological link. Even under separate regulatory authorities (ie CWA 404 and Endangered Species Act – ESA) there was an irrefutable overlap between the wetlands and the species’ habitats we were dealing with, so selling credits separately would be selling the same thing twice. These projects in California were carefully developed with accounting rules credits so both wetland mitigation and species could be conserved in a single bank. This overcame any double dipping risk, but also preventing any unstacking, which both Steve Martin and Valerie Lane discuss in their previous NWL articles.

Currently, RIBITS (Regulatory In-Lieu Fee and Bank Information Tracking System) records do show several stacked credits for sale out of banks in California and Florida, but in areas with ‘emerging markets’ for wetland and species mitigation such as the mid-west – we aren’t seeing the same kinds of banks being set up. The majority of credits being listed aren’t stacked, despite the benefits being well communicated within the industry. Given you’ve been able to watch this for a few years now, can you comment why we aren’t seeing it picking up the way some thought it would?

I think one component is that the typical example with wetland and Endangered Species just can’t be used everywhere. As you say, the newest markets for mitigation currently are in the South or the Midwest where few wetland-dependent species naturally occur, so even with the regulatory or economic tools in place from California or Florida simple biology can be a bit of a barrier. Some feel looking at wetland/species overlay is interesting, but that maybe California just got “lucky,” and it’s harder to take those lessons elsewhere than originally thought.

Fox’s 2008 Survey was somewhat of a benchmark within the mitigation industry as it demonstrated a consensus of recognition – legitimate stacking is possible (as desirable), with double-dipping being inappropriate, but clearly distinct from each other. What is likely to be the next stage of this debate?

More stacked credits on the market now means more examples to draw from so I think we’re now able to have a more critical, sophisticated discussion. We can talk specifically about policy, regulation and implementation and this will be key to identify where there are indeed real opportunities to take the next step and unstack, without double dipping.

We need to look at some of the assumptions that were made when interpreting the regulations during the early Californian trials. The agencies established the necessary accounting assures that stacked credits are not over-sold or sold to offset more than one impact, and these have shown to be as strong as they need to be so we know we can safely stack credits now.

By looking carefully at intent of the regulations, we’ll be able to move towards legitimately unstacking credits when the right ecological and regulatory conditions occur and allowing bankers to create stacked credits on more potential bank sites.

Your article suggests there hasn’t been the growth many have expected. With policies still evolving in many areas it seems the idea of stacking ecosystem credits hasn’t yet reached full potential as many people and companies continue to be very interested in stacking components such as carbon sequestration and water nutrient reduction. Why do you believe that despite the motivation, no-one has yet gone on to sell commercially-viable credits?

I think we’ll need to broaden the outlook and in the article I mention the different ecosystem elements people are becoming interested in stacking – forest species and carbon, water quality or streams and associated watershed species. Others are quietly looking at these other resources such as water quality or carbon as well and we can see how much interest and potential there could be in water-quality trading with the new Ohio Basin River Trading System, and the Chesapeake Bay programs. Even so we’re still waiting for the legal framework to make it possible in many places. Carbon credits are a good example – currently only the voluntary carbon offset market is quantifiable plus the economic value for a carbon credit is much less than wetlands, water quality or species/habitat credit.

While recognizing potential limits of biological suitability some have suggested a template or clear stacking protocol could offer the certainty to regulators and investors, and encourage more to create stacked banks? You mention how Layne’s article demonstrates that the accounting is technically feasible, but there is a level of potential complexity and technicality that you think needs greater consideration.

In the article we/I wanted to encourage readers to recognize the challenges involved when trying to implement a generalized-enough approach accessible to all regions and ecosystems, while being specific enough to adequately demonstrate double dipping hasn’t occurred. The accounting depends on the biology of the species involved, but then there is a conflict between consistency in policy across agencies and authorities, and the biological diversity across regions. Even with a resolution to that challenge, the economic argument is also important – there’s danger we design guidelines or templates that are simply too expensive to develop, implement or regulate compared to the biological or financial gain at the end. There are many more elements to balance in a ‘template’ approach, which might be why it has yet to be fully pursued.

Earlier stacking articles have discussed that a stack of credits can be marketed and sold to a wider range of buyers, lending a certain economic stability to project finance and ideally, this kind of diversity can flow through to mitigation project developers investing in a wider range of ecological services to restore and conserve.

The original thesis was that when stacked credits were legitimately generated from the same acre, then that single acre would generate a higher return, so attracting more investment, but also greater interest in restoring more components of that ecosystem. More, better restoration might result if stacking was mainstream.

But you’re quite clear in your article that despite this driving interest in stacking credits to date, it is the UN-stacking that is the most important part of really achieving the diversity required – for investment and for conservation alike. Can you explain this distinction you make a little more?

When it comes to selling credits, we can see that in the marketplace stacked credits give bank owners an opportunity to diversify. But with a few years of observation the economic benefit has proved a little more complex and it’s becoming clearer that we need to be able to unstack to tap into the true economic benefits.

Your article describes how when stacking in California, both credit types within a stacked bank may be purchased as one mitigation unit. If only one of the available types is needed, the other is retired and this avoids double dipping. From watching these transactions take place, your article talks about how this could be updated, to expand the market.

In California, until now we’ve typically seen that stacked credit sell for about as much as the most expensive credit. You could say this is really only marketing – it gives the bank access to that other mitigation market and greater potential buyers but it doesn’t seem to offer ability to price a credit to truly encourage greater investment. And by investment I mean both financially, and in the range of ecological services restored.

In the article you describe stacking as theoretically “creating larger conservation pie overall” but that in practice stacking might instead only be slicing the pie in a different way?

Yes, stacked credits may lend a competitive advantage in that there are two kinds of mitigation covered (species and wetlands, for example), to attract buyers with, but looking at sales overall, it could just mean dividing up the sale of that acre, not adding to it. We see bankers less willing to invest more in a stacked credit as they are unsure they can price any differently, and that competitive advantage isn’t enough to tip the balance.

You make some suggestions, and highlight some ideas being circulated as to how to make the change and take the industry into Phase II: Un-stacking. The idea of an “ecological” credit has been discussed in a number of contexts – i.e. one credit metric encompassing the ecological attributes and functions of the area concerned. How does this relate to stacking and unstacking?

Introducing an ecological credit might be able to expand the ecological restoration within mitigation and conservation credits. If such a new credit type could identify all the ecological aspects within one ecosystem metric credit from the outset, then appropriate aspects could be reliably ‘unstacked’ and sold to buyers according to their specific impact. Ideally, this would be a more tangible incentive to invest more and restore more, because you can sell more when you do. That’s the key to an effective incentive – aligning more restoration with more return.

Recognising that ecosystem metric credits would be very expensive to develop and require unprecedented interagency collaboration, as well as a highly sophisticated tracking system, your article introduces another approach, can you describe it?

Yes, efforts were made towards the Ecosystem Credit Metric in Oregon to better account for the ecological layers, but it had difficulty achieving this level of coordination. Learning from this, some of us have been investigating the possibility of establishing credits by separating out ecosystem services based on interpretation of each governing regulations, under each agencies natural resource authority. This could allow crediting of ecosystem services more specifically and make it possible to both properly account overlapping credit attributes and prevent risk of double dipping. We’ve started this discussion with such examples as the 404 CWA water quality regulation, and a possibility for additional Carbon Crediting.

One example would be a nutrient loading credit with a stacked species credit. If the nutrient credit is used to offset a point-source discharge that had no impact on the species with the stacked credit then unstacking and using the species credit to offset an impact elsewhere would not be double dipping.

As you put it, the “success stories and cautionary tales behind ecosystem services” have grown over the past decade or more, and you feel it is time to move past conserving multiple ecosystem services on one piece of land and onto the next stage with unstacking.

Yes, it’s time to discuss unstacking as the path to ensuring each aspect of the ecosystems we deal with gets optimum investment and so optimum ecological outcomes. We wanted to emphasize that the opportunity to really expand both conservation and financial backing necessitates that all this remain an important discussion.

Additional resources

Engaging With Indigenous
Peoples On REDD+

Over 30 representatives of Indigenous Peoples worldwide have gathered at a Forest Carbon Partnership Facility’s (FCPF) workshop on REDD+ which, Benoit Bosquet of the FCPF says was less focused on the possible worrying impacts and more on how Indigenous communities can benefit and become active participants in the REDD+ process.

This article was originally published on the World Bank’s blog page. Click here to read the original.
The views are those of Benoit Bosquet and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.

6 March 2013 | A little while ago, I blogged about an unprecedented meeting of Indigenous Peoples’ representatives from 28 countries that took place on the idyllic islands of Guna Yala, Panama, in September 2011.

One and a half years later, it is fair to say that we have come a very long way as we welcome over 30 representatives of Indigenous Peoples and southern civil society organizations from Latin America, Africa, and Asia-Pacific for a workshop on the Carbon Fund of the Forest Carbon Partnership Facility (FCPF) here in Washington, DC this week. The Bank serves as the Trustee and the Secretariat of the FCPF, a global partnership that is helping countries draft REDD+ readiness plans and will provide carbon payments to countries that meet certain targets.

Since our initial meeting in Panama, Indigenous Peoples’ representatives adopted an Action Plan, travelled the world to meet, dialogue and learn, and gathered in regional follow-up meetings to build capacity and prioritize demands.

When I look back at the beginning of the series of dialogues with Indigenous Peoples, I remember that discussions mainly revolved about the role of Indigenous Peoples in REDD+ (which stands for Reducing Emissions from Deforestation and Forest Degradation). Indigenous Peoples were concerned that REDD+ could become a means for pushing them off their ancestral lands. With their livelihoods and cultural identity deeply connected to the forest and the land, losing access to them would mean losing everything. At the time, our engagement centered on broad questions such as, How do we ensure that REDD+ will not undermine customary rights to land?

While the complete response to these questions is bound to evolve slowly as countries implement REDD+, and in-step with the development of the global negotiations on REDD+, the focus of the discussions has matured tremendously. They no longer revolve around the basic question of whether there should be REDD+ or not, but of how Indigenous Peoples can participate fully and effectively in REDD+ design and benefit from implementation. Indigenous Peoples have turned from critics of REDD+ to critical actors for REDD+. And they are now fully engaged in the FCPF at various levels.

Yesterday and today, representatives provided their inputs into highly technical aspects of the FCPF’s work, such as how to assess a country’s REDD+ readiness and how to develop the methodological framework for the FCPF Carbon Fund, one of the leading multilateral results-based REDD+ financial mechanisms.

This shows just how much has been achieved at the regional dialogues held in Arusha, Tanzania, in Lima, Peru, in Chiang Mai, Thailand, and finally in Doha, Qatar at the margins of the annual UNFCCC gathering. Immense capacity has been built to enable Indigenous Peoples’ representatives to proactively engage in relevant discussions, rather than merely being on the receiving end of information dissemination.

However, the process of engaging Indigenous Peoples is still far from perfect – in particular in countries with large, often heterogeneous and difficult-to-reach indigenous populations, where the question of the “representativeness” often arises.

At the World Bank, a newly appointed Senior Advisor for Indigenous Peoples and Ethnic Minorities, Luis Felipe Duchicela, a former National Secretary of Indigenous Affairs of Ecuador who is of Quechua descent, will tackle these and other related challenges as he embarks on a number of ambitious projects. These will include a public consultation process with Indigenous Peoples on our safeguard policies and developing the idea of an Indigenous Peoples Advisory Council at the World Bank. With these tasks at hand, he reached out to the audience to ask for their support and input.

I would like to cite his wise words as I could not have formulated better the importance of involving Indigenous Peoples in the REDD+ agenda as we continue the partnership of the FCPF:

“I truly believe that our engagement as Indigenous Peoples in matters related to climate change, biodiversity, conservation and social development is critical to the wellbeing of our communities and our own livelihoods. Our ancestral knowledge, wisdom and deep relationship with Mother Earth are treasures that will help all of humanity in its quest for a better future for the generations to come”.

A self-introduction and speech from Luis Felipe Duchicela at the FCPF workshop can be found here.

More on Engaging Indigenous Peoples and Forest-Dependent People in the FCPF can be found here.

Benoit Bosquet is a Lead Carbon Finance Specialist and Coordinator of the FCPF at the World Bank’s Environment Department.

Stacking And Unstacking:The Conservation And The Conversation

To build ecosystem markets, we’ve tended to break holistic nature into incomplete but measurable chunks of nature – and then we wonder why it’s difficult to bundle those chunks into something holistic. Maybe instead of stacking existing credits, we should be creating more holistic instruments.

12 March 2013 | Common sense would dictate that properties generating the greatest environmental benefit should also command the highest price in the ecosystem marketplace, and that one way to do that might be to let people stack different ecosystem values on the same patch of land. Attempts to implement this idea, however, often bog down on technicalities and charges that the user is trying to double-dip rather than earn fair compensation for ecosystem services delivered.

This is unfortunate, because we now have enough real-world examples to launch a real-world discussion about stacking and unstacking – as well as about whether the entire system needs to be reformed and rethought.

Wayne White of mitigation banking group Wildlands, Inc, and Jemma Peneloped of W2Consulting recently launched that discussion in an article in the National Wetlands Newsletter. We asked White to recap some of the issues they explored in that piece.

EM: We’ve discussed stacking before in Ecosystem Marketplace, why does it continue to be a topical issue? What’s happened on this topic since the term was first coined?

WW: I think it’s important to remind ourselves of the potential in stacking, and make progress elevating the idea of unstacking to next on the agenda. We wanted to refresh the dialogue and better capitalize or re-focus on those opportunities we were searching for decades ago when stacking was first discussed. By this I mean more comprehensive conservation, more private sector investment in mitigation, with greater ecosystem services. We feel that with more bankers credibly unstacking credits we’ll see greater investment and conservation – more than is currently flowing to stacked credits alone right now.

First you deal with the jargon used – what are some of the key terms within this discussion?

Bundling equals stacking: both refer to only the act of having approved credits occurring on the same unit of land or water. Now, conversely, unbundling equals unstacking. Here, bundled or stacked credits on the same unit of land or water are separated out and critically sold to separate buyers. Nothing actually explicitly forbid stacking credits, but when these credits come to being sold separately there are often concerns over double-dipping. This is where one unit of mitigation action is sold once, and then sold again, whereby that second buyer doesn’t actually compensate for their impact. And it’s this fear of double dipping – impacts going unmitigated – that has made unstacking so contentious.

We’re seeing stacked credits for sale on occasion, so the existing regulations have been able to allow this. What do the regulations say about unstacking?

In my/our article in National Wetlands Newsletter (NWL), I/we discuss how our early Californian trials with stacking assumed an indivisible ecological link. Even under separate regulatory authorities (ie CWA 404 and Endangered Species Act – ESA) there was an irrefutable overlap between the wetlands and the species’ habitats we were dealing with, so selling credits separately would be selling the same thing twice. These projects in California were carefully developed with accounting rules credits so both wetland mitigation and species could be conserved in a single bank. This overcame any double dipping risk, but also preventing any unstacking, which both Steve Martin and Valerie Lane discuss in their previous NWL articles.

Currently, RIBITS (Regulatory In-Lieu Fee and Bank Information Tracking System) records do show several stacked credits for sale out of banks in California and Florida, but in areas with ‘emerging markets’ for wetland and species mitigation such as the mid-west – we aren’t seeing the same kinds of banks being set up. The majority of credits being listed aren’t stacked, despite the benefits being well communicated within the industry. Given you’ve been able to watch this for a few years now, can you comment why we aren’t seeing it picking up the way some thought it would?

I think one component is that the typical example with wetland and Endangered Species just can’t be used everywhere. As you say, the newest markets for mitigation currently are in the South or the Midwest where few wetland-dependent species naturally occur, so even with the regulatory or economic tools in place from California or Florida simple biology can be a bit of a barrier. Some feel looking at wetland/species overlay is interesting, but that maybe California just got “lucky,” and it’s harder to take those lessons elsewhere than originally thought.

Fox’s 2008 Survey was somewhat of a benchmark within the mitigation industry as it demonstrated a consensus of recognition – legitimate stacking is possible (as desirable), with double-dipping being inappropriate, but clearly distinct from each other. What is likely to be the next stage of this debate?

More stacked credits on the market now means more examples to draw from so I think we’re now able to have a more critical, sophisticated discussion. We can talk specifically about policy, regulation and implementation and this will be key to identify where there are indeed real opportunities to take the next step and unstack, without double dipping.

We need to look at some of the assumptions that were made when interpreting the regulations during the early Californian trials. The agencies established the necessary accounting assures that stacked credits are not over-sold or sold to offset more than one impact, and these have shown to be as strong as they need to be so we know we can safely stack credits now.

By looking carefully at intent of the regulations, we’ll be able to move towards legitimately unstacking credits when the right ecological and regulatory conditions occur and allowing bankers to create stacked credits on more potential bank sites.

Your article suggests there hasn’t been the growth many have expected. With policies still evolving in many areas it seems the idea of stacking ecosystem credits hasn’t yet reached full potential as many people and companies continue to be very interested in stacking components such as carbon sequestration and water nutrient reduction. Why do you believe that despite the motivation, no-one has yet gone on to sell commercially-viable credits?

I think we’ll need to broaden the outlook and in the article I mention the different ecosystem elements people are becoming interested in stacking – forest species and carbon, water quality or streams and associated watershed species. Others are quietly looking at these other resources such as water quality or carbon as well and we can see how much interest and potential there could be in water-quality trading with the new Ohio Basin River Trading System, and the Chesapeake Bay programs. Even so we’re still waiting for the legal framework to make it possible in many places. Carbon credits are a good example – currently only the voluntary carbon offset market is quantifiable plus the economic value for a carbon credit is much less than wetlands, water quality or species/habitat credit.

While recognizing potential limits of biological suitability some have suggested a template or clear stacking protocol could offer the certainty to regulators and investors, and encourage more to create stacked banks? You mention how Layne’s article demonstrates that the accounting is technically feasible, but there is a level of potential complexity and technicality that you think needs greater consideration.

In the article we/I wanted to encourage readers to recognize the challenges involved when trying to implement a generalized-enough approach accessible to all regions and ecosystems, while being specific enough to adequately demonstrate double dipping hasn’t occurred. The accounting depends on the biology of the species involved, but then there is a conflict between consistency in policy across agencies and authorities, and the biological diversity across regions. Even with a resolution to that challenge, the economic argument is also important – there’s danger we design guidelines or templates that are simply too expensive to develop, implement or regulate compared to the biological or financial gain at the end. There are many more elements to balance in a ‘template’ approach, which might be why it has yet to be fully pursued.

Earlier stacking articles have discussed that a stack of credits can be marketed and sold to a wider range of buyers, lending a certain economic stability to project finance and ideally, this kind of diversity can flow through to mitigation project developers investing in a wider range of ecological services to restore and conserve.

The original thesis was that when stacked credits were legitimately generated from the same acre, then that single acre would generate a higher return, so attracting more investment, but also greater interest in restoring more components of that ecosystem. More, better restoration might result if stacking was mainstream.

But you’re quite clear in your article that despite this driving interest in stacking credits to date, it is the UN-stacking that is the most important part of really achieving the diversity required – for investment and for conservation alike. Can you explain this distinction you make a little more?

When it comes to selling credits, we can see that in the marketplace stacked credits give bank owners an opportunity to diversify. But with a few years of observation the economic benefit has proved a little more complex and it’s becoming clearer that we need to be able to unstack to tap into the true economic benefits.

Your article describes how when stacking in California, both credit types within a stacked bank may be purchased as one mitigation unit. If only one of the available types is needed, the other is retired and this avoids double dipping. From watching these transactions take place, your article talks about how this could be updated, to expand the market.

In California, until now we’ve typically seen that stacked credit sell for about as much as the most expensive credit. You could say this is really only marketing – it gives the bank access to that other mitigation market and greater potential buyers but it doesn’t seem to offer ability to price a credit to truly encourage greater investment. And by investment I mean both financially, and in the range of ecological services restored.

In the article you describe stacking as theoretically “creating larger conservation pie overall” but that in practice stacking might instead only be slicing the pie in a different way?

Yes, stacked credits may lend a competitive advantage in that there are two kinds of mitigation covered (species and wetlands, for example), to attract buyers with, but looking at sales overall, it could just mean dividing up the sale of that acre, not adding to it. We see bankers less willing to invest more in a stacked credit as they are unsure they can price any differently, and that competitive advantage isn’t enough to tip the balance.

You make some suggestions, and highlight some ideas being circulated as to how to make the change and take the industry into Phase II: Un-stacking. The idea of an “ecological” credit has been discussed in a number of contexts – i.e. one credit metric encompassing the ecological attributes and functions of the area concerned. How does this relate to stacking and unstacking?

Introducing an ecological credit might be able to expand the ecological restoration within mitigation and conservation credits. If such a new credit type could identify all the ecological aspects within one ecosystem metric credit from the outset, then appropriate aspects could be reliably ‘unstacked’ and sold to buyers according to their specific impact. Ideally, this would be a more tangible incentive to invest more and restore more, because you can sell more when you do. That’s the key to an effective incentive – aligning more restoration with more return.

Recognising that ecosystem metric credits would be very expensive to develop and require unprecedented interagency collaboration, as well as a highly sophisticated tracking system, your article introduces another approach, can you describe it?

Yes, efforts were made towards the Ecosystem Credit Metric in Oregon to better account for the ecological layers, but it had difficulty achieving this level of coordination. Learning from this, some of us have been investigating the possibility of establishing credits by separating out ecosystem services based on interpretation of each governing regulations, under each agencies natural resource authority. This could allow crediting of ecosystem services more specifically and make it possible to both properly account overlapping credit attributes and prevent risk of double dipping. We’ve started this discussion with such examples as the 404 CWA water quality regulation, and a possibility for additional Carbon Crediting.

One example would be a nutrient loading credit with a stacked species credit. If the nutrient credit is used to offset a point-source discharge that had no impact on the species with the stacked credit then unstacking and using the species credit to offset an impact elsewhere would not be double dipping.

As you put it, the “success stories and cautionary tales behind ecosystem services” have grown over the past decade or more, and you feel it is time to move past conserving multiple ecosystem services on one piece of land and onto the next stage with unstacking.

Yes, it’s time to discuss unstacking as the path to ensuring each aspect of the ecosystems we deal with gets optimum investment and so optimum ecological outcomes. We wanted to emphasize that the opportunity to really expand both conservation and financial backing necessitates that all this remain an important discussion.

Additional resources

Five Early Lessons In Mobilizing
The Private Sector For Climate Finance

Although there is currently little information available on how public finance has mobilized private support for climate finance, the Overseas Development Institute (ODI) aims to change that starting with an online database that reviews the private climate finance investments of four developed nations. Here, Shelagh Whitley, a research fellow at ODI, provides an overview of the resource’s early findings.

This article was originally published on the ODI website. Click here to read the original.
The views are those of Shelagh Whitley and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.

19 February 2013 | In 2009, developed countries committed to mobilise $100 billion in climate finance per year by 2020 to address the needs of developing countries in the face of climate change. Meeting this target will require transformational change in the scale and pace of financing. Public sector resources can play a pivotal role in catalyzing private sector investment. However, there is very little information on how public finance has, to date, mobilized private support for climate compatible development.

Examples of what has worked in the past are needed to achieve significantly scaled up investment in the future. As a first step, ODI has compiled an online resource of 73 investments totaling $8.5 billion, which draws on our reviews of Japanese, US, UK, and German private climate finance support from 2010 to 2012.

So, what does our early research reveal?

1) Most funding targets efficiency in middle-income countries

Over 99% of the investment identified goes to programmes and projects to mitigate climate change, with efficient fossil fuel-fired power (22%) and solar power (17%) receiving the most support across the $8.5 billion provided. With the exception of a small number of interventions to support insurance instruments, there was virtually no direct investment involving the private sector that targeted adaptation to climate change. This may be because of challenges in defining what constitutes an adaptation intervention, and the fact that many countries are still at the relatively early stage of including adaptation in their national planning processes.

Few activities targeted poor countries. Where the recipient countries for investment could be identified (which can be a challenge, particularly in the case of funding through intermediaries), 84% of investment is directed toward middle-income countries. This focus on middle-income countries may well be a result of the greater opportunities that exist to invest in mitigation in these countries, the existence of a policy and regulatory environment that fosters private investment more easily, and a reasonable level of readiness to absorb finance.

In terms of the biases of specific donors towards particular technologies and sectors, the US is channeling over 40% of its investment to the solar sector in India, and Germany is targeting 40% of its investment toward Turkey. It remains to be seen if these technology and/or regional foci are based on the investment climates in these countries, or domestic interests on the part of donors (or both). For instance, the US focus on India may be the result of that country’s National Solar Mission and regional programmes to promote the related technology.

2) Private sector intermediaries are being used to channel funds

Across the $8.5 billion in support reviewed, 17 private intermediaries were identified as playing a role in channeling funds to end recipients, projects and programmes. There have been several recent announcements on the deployment of climate finance through private equity (PE) funds. In 2012, for example, the UK launched two new privately-managed funds under its Climate Public Partnership (CP3) Platform, while the US Overseas Private Investment Corporation (OPIC) announced $500 million in loans and guarantees for five privately-managed funds. These fund managers may offer some benefits in terms of investment track record, regional and sector expertise, and ability to crowd in co-financing by other public sector actors. However, the extent to which these investments are attracting additional private sector finance and participation is unclear – the result, in part, of a lack of information and transparency.

3) Loans are most commonly used to mobilize the private sector

While there is significant debate on the potential for innovative tools to mobilize private climate finance, much of the support identified (35%) is currently in the form of loans. Private intermediaries (including PE funds) are playing an increasingly important role in climate finance, but equity only represents 5% of support, with most support to local private financial institutions taking the form of loans and guarantees to support on-lending to renewable energy end energy efficiency projects. One innovation appears to be that donors are providing multiple instruments to support the same interventions, using loans combined with insurance and guarantees, or equity matched with grants for technical assistance.

4) Public Sector Support Flows to Donor Country Industries

In the case of Japan, all public sector flows support private entities in developing countries that either deploy Japanese technologies and expertise or that receive co-financing from Japanese private banks. The US is also providing a significant portion (49%) of support directly or indirectly to US companies, a result, in part, of the remits of the main actors deploying financial support to the private sector (OPIC and the US Ex-Im Bank). In the case of Germany, only 19% of investment appears to be supporting domestic (German owned) companies, while in the case of the UK, no ‘tied’ support could be identified.

5) Little private finance has been mobilized to date

Of the total of $8.5 billion across the 73 investments reviewed, we found that only 20% came from the private sector. This may be an under-estimate: there may be more investment from the private sector, but details on transaction structures and participants are not readily available in the public domain.

The recent report of the UNFCCC Work Programme on Long Term Climate Finance has emphasized that additional information needs to be disclosed on private flows at the project and investment level, in order for governments to apply specific lessons learned to the design of future interventions. Current barriers to disclosure include commercial confidentiality, regulatory requirements and the fact that many interventions are in their early phases of implementation.

One solution may be for investors to ensure that data is anonymous or aggregated when reporting within or across interventions. If supported by universally agreed definitions and methodologies for tracking private flows, collection of this information could be facilitated, in part, by the new common tabular format agreed at COP 18 in Doha. Examples of early best practice in transparency, and aggregation across investments include the Global Climate Partnership Facility (GCPF) and the Green for Growth Fund (GGF), which disclose detailed information on: their fund’s institutional structure; shareholder structure; investors and donors; investment portfolio of financial institutions; and the approach for, and data from, impact monitoring (greenhouse gas emissions, energy savings etc.).

To further facilitate disclosure and lesson learning, in addition to the ODI database, there is an emerging body of work by Climate Policy Initiative (CPI) on in-depth case studies of private climate finance. In addition, at the request of several member countries, the OECD Secretariat has agreed to facilitate and coordinate the development of an international Research Collaborative project on tracking private climate finance, which will convene its first meeting this week.  

Shelagh Whitley is a Research Fellow at ODI and Vice-Chair of the Technical Advisory Committee of the Gold Standard.
Additional resources

Through Almir’s Eyes:
A Day In The Life Of A REDD Pioneer

This story has been adapted from Rachael Petersen’s blog. You can view the original here.

31 January 2013 | Cacoal | Rondí´nia | Brazil | Here are three things you should never leave home without in the Amazon: water, insect repellent, sunscreen.

And if you’re Chief Almir Narayamoga of the Surui, make sure to remember your high-tech video recording sunglasses.

New field sites often require weeks of cultivating trust, understanding, and the relationships to yield interesting work. Which is why when I first arrived at the Associacao Metareilí¡ headquarters outside the city of Cacoal in the state of Rondí´nia, Brazil, clad in a long flowing skirt and Chaco sandals, I expected a calm day of office humdrum: researching, talking to my Surui colleagues, reading over their 50-year plan. But when Almir invited me to track down reported illegal logging in the territory, I couldn’t say no.

Hours and kilometers into the jungle, I realize: the Amazon itself is now my office. And I should never leave home unprepared to face it.

Things in the territory are tense. Loggers continue to lodge death threats against Almir, the leader of the indigenous Paiter Surui people, due to his efforts to protect the forest in his territory, La Sete de Setembro. As I write this, one of Almir’s ever-present personal bodyguards from the Brazilian Força Nacional sits to my left polishing his automatic weapon with a pink toothbrush.

IMG_1363

How absurd, I thought to myself as we trekked together through the oppressive humidity of the Amazon, that preserving nature has become a matter of life or death, the source of animosity and aggression. The situation speaks to the specific importance of exploiting natural resources to the local economy as well as to the general human tendency to overvalue immediate gains and underestimate long-term costs.

“People think the forest will never end, like they think water will never end,” Almir says. “But one day, the forest could end. We need to have that vision.”

At a distance- from planes and satellites imaging-the Sete de Setembro territory looks like an island of trees amid a sea of historical deforestation. So for many local loggers, the Surui sit on a pot of gold to be exploited at all costs. But for Almir, the forest- of priceless importance to the Surui life and culture- can be protected by stimulating economic alternatives to logging. This vision’s supported by countless partners like USAID and Google and strengthened by the use of digital tools-has earned the Surui international attention. Their visionary 50-year life plan calls for an end to the unsustainable logging that serves as the historical financial lifeline in the territory and proposes economic alternatives such as commercialization of agricultural and artisanal goods and payment for ecosystem services. The Surui hope that others will pay them for preserving the forest in the form of carbon credits for avoided deforestation. This money will enter a locally administrated fund that will support an environmentally and socially-sustainable future in the territory.

It is a high-stakes game of indigenous peoples, governments, international NGOs and investors. It is a game that requires extensive monitoring of the forest to document illegal incursions that compromise this sustainable vision. Traditional knowledge of their territory must be writ digital through photographs and gmapping to render public forest conservation progress. So when the Metareilí¡ office received an anonymous tip last week that someone cut down trees in the territory, Almir and team had to conduct the due diligence that puts such incidents on the literal and figurative map.

Our trip from the Metareilí¡ office to the territory’s border lasted a grueling hour and a half. The Força Nacional truck shook as it passed over pocked dirt roads. A cocktail of antibiotics, antimalarial medication, and coffee stirred in my stomach; I was sure I would vomit. “Don’t do it don’t don’t do it,” I chanted to myself, acutely aware that such a sign of fragility could mark me as a woman incapable of tolerating Amazonian conditions. Surprisingly, I deep-breathed my way through the journey and we reached the village of chief Almir’s family, Lapetanha. After a short conversation, we were on our way again, off to search out the loggers.

Almir's village

We ran into trouble when our two trucks reached a bridge, or really, two deteriorating logs aligned with the wheels of the truck. Almir’s truck crossed first, but the front left wheel quickly fell between the logs. Using a cable mounted on the front of the Força Nacional truck, we towed the fallen truck from out between the logs. Deciding we could not cross, we-Almir, two guards, myself, and four other Surui-continued on foot.

The uncrossable bridge

Which is how I found myself ankle-deep in reddish clay mud last Friday with Chief Almir and other Paiter-Surui colleagues, hiking fifteen kilometers on the tails of illegal loggers. The sun beamed threats at my fair skin, made even more sensitive by a daily dose of antimalarials. The humidity rivaled a Houston summer. Almir joked about my sweat-soaked hair; others would later express surprise that a young American girl made it through the exhausting hike.

The path we traced through the territory was fresh, recently trampled by loggers. Two hours into the walk, we encounter freshly-cut logs, their shameless tan nakedness a startling interruption in the surrounding deep-green abyss. I waited behind talking with a colleague while others followed a small path to find a patch of stumps. Having found the evidence we sought, we returned to our abandoned trucks a few hours later, exhausted, having gone without food or water for hours. We stop in Almir’s aldea for water, chica, and bananas before making the long return to Cacoal.

The next evening, Almir invited me to his house for roasted wild boar. On the way, we also picked up Steve Zwick, an American journalist and the managing editor for Ecosystem Marketplace, who had arrived to work on his biography of Almir, to be published this year.

Steve asked if Almir video recorded our mission the previous day. “Yes,” he responded. But I was certain I saw no video cameras on our trek.

“Uh, he didn’t record anything in my presence,” I interjected.

“I recorded it all with my eyes, with my glasses,” Almir insisted. He must be joking, I thought, speaking metaphorically, or perhaps making light of his lapse.

But after dinner, he retrieved a pair of Oakley-style sunglasses from his living room. “I recorded everything with these,” he stated, indicating a small, unmistakable camera lens in the middle of the nose bridge. He had bought them during a trip to Switzerland, he confessed, aware they could aid in documenting the forest.

I launched into laughter. “You had no idea I was filming?” Almir asked me. “No!” I said, half afraid he caught embarrassing footage of my mud-covered huffing and puffing from the previous day. He modeled the sunglasses for us and began recording,joking that he was creating an informational video about Americans.

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He removed a small memory card from the sunglasses and inserted it into his computer. The video from our trek-of surprisingly high quality- revealed the destruction of the forest we witnessed, including the roads, freshly cut wood, and stumps bespeaking invasion. Indeed, Almir had captured our jungle trek through his eyes, branded in memory but packaged in MegaBytes.

“This shows that indigenous peoples are doing their job,” Steve admired, “they’re doing the work.”

Almir has witnessed tremendous turmoil within his tribe, which was first contacted in 1969. He now hopes to witness a brighter future- one in which his peoples financial riches do not depend on depleting their remaining natural riches. And with the help of technology, the Surui will not witness this change alone. Their traditional knowledge and surveillance of their lands can be transmitted to the world via videos and maps. But Steve is right: it is not the technology or fancy camera-sunglasses that do the work in the territory, it is the people. And despite being the subject of flashy headlines ( Tribe saves the forest using internet), the Surui have a lot of work ahead of them. I certainly have the sunburn, insect bites, and muscle aches to prove it.

Rachael, Chief Almir, Steve Zwick (from left to right)

Engaging With Indigenous Peoples On REDD+

Over 30 representatives of Indigenous Peoples worldwide have gathered at a Forest Carbon Partnership Facility’s (FCPF) workshop on REDD+ which, Benoit Bosquet of the FCPF says was less focused on the possible worrying impacts and more on how Indigenous communities can benefit and become active participants in the REDD+ process.

This article was originally published on the World Bank’s blog page. Click here to read the original.
The views are those of Benoit Bosquet and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.

6 March 2013 | A little while ago, I blogged about an unprecedented meeting of Indigenous Peoples’ representatives from 28 countries that took place on the idyllic islands of Guna Yala, Panama, in September 2011.

One and a half years later, it is fair to say that we have come a very long way as we welcome over 30 representatives of Indigenous Peoples and southern civil society organizations from Latin America, Africa, and Asia-Pacific for a workshop on the Carbon Fund of the Forest Carbon Partnership Facility (FCPF) here in Washington, DC this week. The Bank serves as the Trustee and the Secretariat of the FCPF, a global partnership that is helping countries draft REDD+ readiness plans and will provide carbon payments to countries that meet certain targets.

Since our initial meeting in Panama, Indigenous Peoples’ representatives adopted an Action Plan, travelled the world to meet, dialogue and learn, and gathered in regional follow-up meetings to build capacity and prioritize demands.

When I look back at the beginning of the series of dialogues with Indigenous Peoples, I remember that discussions mainly revolved about the role of Indigenous Peoples in REDD+ (which stands for Reducing Emissions from Deforestation and Forest Degradation). Indigenous Peoples were concerned that REDD+ could become a means for pushing them off their ancestral lands. With their livelihoods and cultural identity deeply connected to the forest and the land, losing access to them would mean losing everything. At the time, our engagement centered on broad questions such as, How do we ensure that REDD+ will not undermine customary rights to land?

While the complete response to these questions is bound to evolve slowly as countries implement REDD+, and in-step with the development of the global negotiations on REDD+, the focus of the discussions has matured tremendously. They no longer revolve around the basic question of whether there should be REDD+ or not, but of how Indigenous Peoples can participate fully and effectively in REDD+ design and benefit from implementation. Indigenous Peoples have turned from critics of REDD+ to critical actors for REDD+. And they are now fully engaged in the FCPF at various levels.

Yesterday and today, representatives provided their inputs into highly technical aspects of the FCPF’s work, such as how to assess a country’s REDD+ readiness and how to develop the methodological framework for the FCPF Carbon Fund, one of the leading multilateral results-based REDD+ financial mechanisms.

This shows just how much has been achieved at the regional dialogues held in Arusha, Tanzania, in Lima, Peru, in Chiang Mai, Thailand, and finally in Doha, Qatar at the margins of the annual UNFCCC gathering. Immense capacity has been built to enable Indigenous Peoples’ representatives to proactively engage in relevant discussions, rather than merely being on the receiving end of information dissemination.

However, the process of engaging Indigenous Peoples is still far from perfect – in particular in countries with large, often heterogeneous and difficult-to-reach indigenous populations, where the question of the “representativeness” often arises.

At the World Bank, a newly appointed Senior Advisor for Indigenous Peoples and Ethnic Minorities, Luis Felipe Duchicela, a former National Secretary of Indigenous Affairs of Ecuador who is of Quechua descent, will tackle these and other related challenges as he embarks on a number of ambitious projects. These will include a public consultation process with Indigenous Peoples on our safeguard policies and developing the idea of an Indigenous Peoples Advisory Council at the World Bank. With these tasks at hand, he reached out to the audience to ask for their support and input.

I would like to cite his wise words as I could not have formulated better the importance of involving Indigenous Peoples in the REDD+ agenda as we continue the partnership of the FCPF:

“I truly believe that our engagement as Indigenous Peoples in matters related to climate change, biodiversity, conservation and social development is critical to the wellbeing of our communities and our own livelihoods. Our ancestral knowledge, wisdom and deep relationship with Mother Earth are treasures that will help all of humanity in its quest for a better future for the generations to come”.

A self-introduction and speech from Luis Felipe Duchicela at the FCPF workshop can be found here.

More on Engaging Indigenous Peoples and Forest-Dependent People in the FCPF can be found here.

Benoit Bosquet is a Lead Carbon Finance Specialist and Coordinator of the FCPF at the World Bank’s Environment Department.

Five Early Lessons In Mobilizing The Private Sector For Climate Finance

Although there is currently little information available on how public finance has mobilized private support for climate finance, the Overseas Development Institute (ODI) aims to change that starting with an online database that reviews the private climate finance investments of four developed nations. Here, Shelagh Whitley, a research fellow at ODI, provides an overview of the resource’s early findings.

This article was originally published on the ODI website. Click here to read the original.
The views are those of Shelagh Whitley and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.

19 February 2013 | In 2009, developed countries committed to mobilise $100 billion in climate finance per year by 2020 to address the needs of developing countries in the face of climate change. Meeting this target will require transformational change in the scale and pace of financing. Public sector resources can play a pivotal role in catalyzing private sector investment. However, there is very little information on how public finance has, to date, mobilized private support for climate compatible development.

Examples of what has worked in the past are needed to achieve significantly scaled up investment in the future. As a first step, ODI has compiled an online resource of 73 investments totaling $8.5 billion, which draws on our reviews of Japanese, US, UK, and German private climate finance support from 2010 to 2012.

So, what does our early research reveal?

1) Most funding targets efficiency in middle-income countries

Over 99% of the investment identified goes to programmes and projects to mitigate climate change, with efficient fossil fuel-fired power (22%) and solar power (17%) receiving the most support across the $8.5 billion provided. With the exception of a small number of interventions to support insurance instruments, there was virtually no direct investment involving the private sector that targeted adaptation to climate change. This may be because of challenges in defining what constitutes an adaptation intervention, and the fact that many countries are still at the relatively early stage of including adaptation in their national planning processes.

Few activities targeted poor countries. Where the recipient countries for investment could be identified (which can be a challenge, particularly in the case of funding through intermediaries), 84% of investment is directed toward middle-income countries. This focus on middle-income countries may well be a result of the greater opportunities that exist to invest in mitigation in these countries, the existence of a policy and regulatory environment that fosters private investment more easily, and a reasonable level of readiness to absorb finance.

In terms of the biases of specific donors towards particular technologies and sectors, the US is channeling over 40% of its investment to the solar sector in India, and Germany is targeting 40% of its investment toward Turkey. It remains to be seen if these technology and/or regional foci are based on the investment climates in these countries, or domestic interests on the part of donors (or both). For instance, the US focus on India may be the result of that country’s National Solar Mission and regional programmes to promote the related technology.

2) Private sector intermediaries are being used to channel funds

Across the $8.5 billion in support reviewed, 17 private intermediaries were identified as playing a role in channeling funds to end recipients, projects and programmes. There have been several recent announcements on the deployment of climate finance through private equity (PE) funds. In 2012, for example, the UK launched two new privately-managed funds under its Climate Public Partnership (CP3) Platform, while the US Overseas Private Investment Corporation (OPIC) announced $500 million in loans and guarantees for five privately-managed funds. These fund managers may offer some benefits in terms of investment track record, regional and sector expertise, and ability to crowd in co-financing by other public sector actors. However, the extent to which these investments are attracting additional private sector finance and participation is unclear – the result, in part, of a lack of information and transparency.

3) Loans are most commonly used to mobilize the private sector

While there is significant debate on the potential for innovative tools to mobilize private climate finance, much of the support identified (35%) is currently in the form of loans. Private intermediaries (including PE funds) are playing an increasingly important role in climate finance, but equity only represents 5% of support, with most support to local private financial institutions taking the form of loans and guarantees to support on-lending to renewable energy end energy efficiency projects. One innovation appears to be that donors are providing multiple instruments to support the same interventions, using loans combined with insurance and guarantees, or equity matched with grants for technical assistance.

4) Public Sector Support Flows to Donor Country Industries

In the case of Japan, all public sector flows support private entities in developing countries that either deploy Japanese technologies and expertise or that receive co-financing from Japanese private banks. The US is also providing a significant portion (49%) of support directly or indirectly to US companies, a result, in part, of the remits of the main actors deploying financial support to the private sector (OPIC and the US Ex-Im Bank). In the case of Germany, only 19% of investment appears to be supporting domestic (German owned) companies, while in the case of the UK, no ‘tied’ support could be identified.

5) Little private finance has been mobilized to date

Of the total of $8.5 billion across the 73 investments reviewed, we found that only 20% came from the private sector. This may be an under-estimate: there may be more investment from the private sector, but details on transaction structures and participants are not readily available in the public domain.

The recent report of the UNFCCC Work Programme on Long Term Climate Finance has emphasized that additional information needs to be disclosed on private flows at the project and investment level, in order for governments to apply specific lessons learned to the design of future interventions. Current barriers to disclosure include commercial confidentiality, regulatory requirements and the fact that many interventions are in their early phases of implementation.

One solution may be for investors to ensure that data is anonymous or aggregated when reporting within or across interventions. If supported by universally agreed definitions and methodologies for tracking private flows, collection of this information could be facilitated, in part, by the new common tabular format agreed at COP 18 in Doha. Examples of early best practice in transparency, and aggregation across investments include the Global Climate Partnership Facility (GCPF) and the Green for Growth Fund (GGF), which disclose detailed information on: their fund’s institutional structure; shareholder structure; investors and donors; investment portfolio of financial institutions; and the approach for, and data from, impact monitoring (greenhouse gas emissions, energy savings etc.).

To further facilitate disclosure and lesson learning, in addition to the ODI database, there is an emerging body of work by Climate Policy Initiative (CPI) on in-depth case studies of private climate finance. In addition, at the request of several member countries, the OECD Secretariat has agreed to facilitate and coordinate the development of an international Research Collaborative project on tracking private climate finance, which will convene its first meeting this week.  

Shelagh Whitley is a Research Fellow at ODI and Vice-Chair of the Technical Advisory Committee of the Gold Standard.
Additional resources

Will Biodiversity Proponents
Embrace Business in 2013?

Last year’s Biodiversity COP once again failed to engage the private sector on any meaningful level, let alone embrace market-based financing mechanisms for addressing habitat loss – largely because the private sector, as the leading destroyer of habitat, is largely seen as the enemy in all this. Failure to engage, however, is not a solution, says Joost Bakker of the Global Nature Fund.

 

3 January 2013 | In late October of last year, roughly 5,000 participants gathered in Hyderabad, India to protect biodiversity during the UN Convention on Biological Diversity’s 11th Conference of the Parties. After the previous conference in Nagoya, Japan, this was to be the “implementation conference”.

It was clear from the start that this would not be easy, because the main issue to be discussed was where the additional money for the protection of biodiversity should come from. To facilitate the discussion, it was calculated how much money is needed for the protection of biodiversity. The numbers only provide a first estimation but still amount to US$ 150 billion and US$ 440 billion per year. Although it is not exactly known what amount is currently spent on biodiversity (less than twenty countries reported on their current biodiversity spending) it is probably much more than is spent at the moment.

Some of the actions to protect biodiversity are relatively cheap but can have large effects, such as subsidies. Many of the markets are geared towards practices that can have a negative effect on biodiversity because of harmful subsidies. Fossil fuels for example, are so heavily subsidised that with it, biodiversity can be protected for one year and at least US$ 117 billion would be left.

In an attempt to make the challenge of financing biodiversity more appealing, the report rightly said that the benefits outweigh spending. To hammer this message into the heads of the negotiators, almost every other day a side-event seemed to focus on The Economy of Ecosystems and Biodiversity (TEEB) series of reports that have have been published periodically since 2009.

Although the headline-grabbing reports wrapped up in 2011, the process is continuing with country specific and biodiversity target specific TEEB analyses. Every one of these side-events showed that part of the problem is the invisibility of biodiversity in accounting systems.

Finding the Money

During the negotiations in Hyderabad, it became clear that government money alone would not be enough and that market mechanisms were needed to raise additional funds. Market mechanisms still remained a contentious issue as was shown by the fact that market mechanisms were always mentioned in the same sentence as safeguards: biodiversity should not be left to the will of the market.

With so much talk about business, it was surprising to see that the most important actor for business decisions was missing: business itself. Only a few companies were present and the majority came from India. Luckily, there were some initiatives that represented the business sector but compared to some of the other large international conferences such as the Rio+20 conference in June 2012, the business involvement was very low.

At the end of the conference, governments agreed to double the biodiversity related aid for developing countries by 2015 to US$ 12 billion and keep that level at least until 2020. At the COP11 in India, it was too early to decide upon the extent of the involvement of the sector. This was left for the COP12 in South-Korea in 2014 where the negotiators have to draft a plan how to bridge the huge funding gap. Any decisions on the subsidies were also postponed until 2014: countries were simply invited to phase out or to reform harmful subsidies and to conduct studies on the amount of these subsidies.

On the one hand, one can conclude positively that the international negotiation process is not dead. On the other hand, it remains to be seen if the international community can mobilise the required funds quickly enough. Any decisions that will be taken will have less than six years to be implemented and to yield results. However, it is certain that a part of the funding gap has to be covered by the private sector. As business is one of the largest destroyers of biodiversity, it is understandable that many of the parties of the CBD are reluctant to engage with business. However, one has to be realistic and admit that since the CBD came into force about 20 years ago, the government induced action did not halt the loss of biodiversity. Partly, this is because of a lack of ambition from the side of some of the negotiating parties, but mostly, this is because business is not included in the process. To enable an effective participation of business to protect biodiversity, the incentives, such as the reduction of harmful subsidies, have to be set right. If business activity is one of the main causes of biodiversity loss, then it should be an integral part of the solution that can only be reached if they are included in the negotiation process. It can therefore only be supported that business and markets are coming into focus to bridge the funding gap to protect biodiversity. Hopefully, this will soon be reflected by biodiversity coming into focus of the business sector.

The views are those of Joost Bakker and not necessarily those of Ecosystem Marketplace, Forest Trends, or its affiliates.