Tag: Geographic Latin America

If signed into law by President Dilma, Brazil’s newly-amended forest code will give farmers the right to chop down more trees than they’ve had at any time in the last 50 years.   That might, however, not bring the economic boom many are hoping for, as evidence suggests short-term economic gains will give way to long-term degradation and poverty.

27 April 2012 | Brazil’s agribusiness sector scored an apparent victory this week when the lower house of Congress passed sweeping changes to the Cí³digo Florestal (Forest Code), which for decades restricted the amount of privately-owned rainforest that can be cleared for development.

Indeed, the lower house scaled back protection even more than the upper house had.   The version passed Wednesday leaves it up to states to decide how they deal with Permanent Preservation Areas (PPAs), which established the protection of forest along riverbanks, hills, and meadows – areas prone to erosion and landslides that leave land degraded and rivers full of mud and agricultural fertilizers.

President Dilma Rousseff has long vowed to veto the bill if it provides amnesty for farmers, as the current version provides amnesty for farmers who cut more than their share before July 2008.   Under Brazilian law, she can veto all or part of the Bill, and must do so within 15 days of Wednesday’s vote.

What Changes?

The new code replaces the earlier 1965 Forest Code, which established for the first time the concept of Legal Reserve (RL). It stated that private landowners had to conserve 80% of their forested land if they were in the Amazon region, 35% in the Cerrado region within the Amazonian states, and 20% in other regions of the country.

Supporters of the new law say the current Forest Code has never worked: it has too many loopholes, too many rules and lacks adequate supervision or enforcement. The research, however, calls this into question.

Deforestation

Brazil is the world’s fourth biggest emitter of greenhouse gas (GHG), and 75% of its GHG emissions come from deforestation.   That number is sure to increase under the new forest code – continuing the reversal of a trend identified by Dan Nepstad et all in “
The End of Deforestation in the Brazilian Amazon”.   They found that an average of nearly 20 thousand square kilometers of forests were cleared in the Brazilian Amazon annually from 1996 to 2005, but that deforestation rates plummeted after peaking in 2004. One of the main reasons for this plunge has been the increase of the Amazon Protected Areas from 1.26 to 1.82 million square kilometers, which accounts for 51% of the region’s remaining forests.

The Economic Argument: Fact or Fallacy?

Brazil’s economy is expected to outpace the average among countries belonging to the Organization of Economic Cooperation and Development (OECD), but only if its agriculture sector delivers. Agribusiness employs roughly one-third of the working population, and Brazil is a leading exporter of soybeans, orange juice, sugar, coffee and meat. In 2010, Brazil became the world’s-third largest exporter of agricultural products, behind the United States and European Union.

The more flexible Forest Code is designed to feed that economic beast, but here, again, the evidence is lacking.

Indeed, when Giulio Volpi collected data from deforestation, agricultural surveys and demographic censuses in the Amazon and the Atlantic Forest for a paper called “Climate Mitigation, Deforestation and Human Development in Brazil”, he found that economic benefits and costs from deforestation balanced each other out, leaving the Human Development Index in deforested areas no better or worse than it was before – even though they were environmentally impoverished.

Ecosystem Services

In the long term, this robs the land of ecosystem services, according to Carlos Eduardo Young of the Federal University of Rio de Janeiro (UFRJ).

He contributed to a recent paper entitled “The Contribution of Brazilian Conservation Units to the National Economy”, which examined the economic value of Conservation Units that Brazil established under its obligations as part of the Convention on Biological Diversity (CBD)

The paper showed, among other things, that the cost of treating water soars once the forest is gone – something people in US cities like Denver and New York have also learned.   Both cities are using water fees to pay for forest preservation because of the role that forests play in filtering and regulating water.

In addition to watershed services, Young’s paper identifies the following ecosystem services on Conservation Units:

• The production of timber in the Amazon’s national and state forests, from areas managed according to the model forest concession, has the potential to generate between $ 1.2 billion to $ 2.2 billion per year, more than all of the native timber currently extracted in the country;
• Rubber production in the 11 Extractive Reserves identified as producers, results in R$ 16.5 million per year, whereas the production of Brazil nuts has the potential to generate R $ 39.2 million per year, considering only 17 of the Extractive Reserves analysed. In both cases, these gains can be increased significantly if the conservation units receive investment to develop their productive capacity;
• Visitors in the 67 existing National Parks in Brazil have the potential to generate between R$ 1.6 billion and R$ 1.8 billion per year, based on estimates of the projected flow of tourists (approximately 13.7 million people, including Brazilians and foreigners) by 2016, the year of the Olympic Games;
• The sum of estimates of public visitation in federal and state conservation units considered by the study indicates that if the potential of the units are adequately exploited, some 20 million people will visit these areas in 2016, with a potential economic impact of approximately R$ 2.2 billion that year;
• The creation and maintenance of Brazilian conservation units has prevented the emission of at least 2.8 billion tonnes of carbon, with a monetary value estimated of at least R$ 96 billion;
• The estimated value for the annual “rental” of the carbon stock whose emissions were prevented by conservation units totals ranges from R$ 2.9 billion and R$5.8 billion per year. This amount exceeds the current spending and investment needs for further consolidation and improvement of these units;
• In relation to the different uses of water by society, 80% of the country’s hydroelectricity comes from sources that have at least one tributary downstream of a conservation unit, 9% of drinking water is directly collected in conservation units, 26% is collected from sources downstream of conservation units, and 4% of the water used in agriculture and irrigation is taken from sources inside or downstream of protected areas;
• In 2009, the actual revenue of Ecological VAT passed on to municipalities by the existence of protected areas in their territory was R $ 402.7 million. The potential revenue for the 12 states that do not yet have legislation on Ecological VAT would be $ 14.9 million, assuming a rate of 0.5% for the criterion “conservation unit” that the municipalities are entitled to.

Additional resources

If signed into law by President Dilma, Brazil’s newly-amended forest code will give farmers the right to chop down more trees than they’ve had at any time in the last 50 years.   That might, however, not bring the economic boom many are hoping for, as evidence suggests short-term economic gains will give way to long-term degradation and poverty.

27 April 2012 | Brazil’s agribusiness sector scored an apparent victory this week when the lower house of Congress passed sweeping changes to the Cí³digo Florestal (Forest Code), which for decades restricted the amount of privately-owned rainforest that can be cleared for development.

Indeed, the lower house scaled back protection even more than the upper house had.   The version passed Wednesday leaves it up to states to decide how they deal with Permanent Preservation Areas (PPAs), which established the protection of forest along riverbanks, hills, and meadows – areas prone to erosion and landslides that leave land degraded and rivers full of mud and agricultural fertilizers.

President Dilma Rousseff has long vowed to veto the bill if it provides amnesty for farmers, as the current version provides amnesty for farmers who cut more than their share before July 2008.   Under Brazilian law, she can veto all or part of the Bill, and must do so within 15 days of Wednesday’s vote.

What Changes?

The new code replaces the earlier 1965 Forest Code, which established for the first time the concept of Legal Reserve (RL). It stated that private landowners had to conserve 80% of their forested land if they were in the Amazon region, 35% in the Cerrado region within the Amazonian states, and 20% in other regions of the country.

Supporters of the new law say the current Forest Code has never worked: it has too many loopholes, too many rules and lacks adequate supervision or enforcement. The research, however, calls this into question.

Deforestation

Brazil is the world’s fourth biggest emitter of greenhouse gas (GHG), and 75% of its GHG emissions come from deforestation.   That number is sure to increase under the new forest code – continuing the reversal of a trend identified by Dan Nepstad et all in “
The End of Deforestation in the Brazilian Amazon”.   They found that an average of nearly 20 thousand square kilometers of forests were cleared in the Brazilian Amazon annually from 1996 to 2005, but that deforestation rates plummeted after peaking in 2004. One of the main reasons for this plunge has been the increase of the Amazon Protected Areas from 1.26 to 1.82 million square kilometers, which accounts for 51% of the region’s remaining forests.

The Economic Argument: Fact or Fallacy?

Brazil’s economy is expected to outpace the average among countries belonging to the Organization of Economic Cooperation and Development (OECD), but only if its agriculture sector delivers. Agribusiness employs roughly one-third of the working population, and Brazil is a leading exporter of soybeans, orange juice, sugar, coffee and meat. In 2010, Brazil became the world’s-third largest exporter of agricultural products, behind the United States and European Union.

The more flexible Forest Code is designed to feed that economic beast, but here, again, the evidence is lacking.

Indeed, when Giulio Volpi collected data from deforestation, agricultural surveys and demographic censuses in the Amazon and the Atlantic Forest for a paper called “Climate Mitigation, Deforestation and Human Development in Brazil”, he found that economic benefits and costs from deforestation balanced each other out, leaving the Human Development Index in deforested areas no better or worse than it was before – even though they were environmentally impoverished.

Ecosystem Services

In the long term, this robs the land of ecosystem services, according to Carlos Eduardo Young of the Federal University of Rio de Janeiro (UFRJ).

He contributed to a recent paper entitled “The Contribution of Brazilian Conservation Units to the National Economy”, which examined the economic value of Conservation Units that Brazil established under its obligations as part of the Convention on Biological Diversity (CBD)

The paper showed, among other things, that the cost of treating water soars once the forest is gone – something people in US cities like Denver and New York have also learned.   Both cities are using water fees to pay for forest preservation because of the role that forests play in filtering and regulating water.

In addition to watershed services, Young’s paper identifies the following ecosystem services on Conservation Units:

• The production of timber in the Amazon’s national and state forests, from areas managed according to the model forest concession, has the potential to generate between $ 1.2 billion to $ 2.2 billion per year, more than all of the native timber currently extracted in the country;
• Rubber production in the 11 Extractive Reserves identified as producers, results in R$ 16.5 million per year, whereas the production of Brazil nuts has the potential to generate R $ 39.2 million per year, considering only 17 of the Extractive Reserves analysed. In both cases, these gains can be increased significantly if the conservation units receive investment to develop their productive capacity;
• Visitors in the 67 existing National Parks in Brazil have the potential to generate between R$ 1.6 billion and R$ 1.8 billion per year, based on estimates of the projected flow of tourists (approximately 13.7 million people, including Brazilians and foreigners) by 2016, the year of the Olympic Games;
• The sum of estimates of public visitation in federal and state conservation units considered by the study indicates that if the potential of the units are adequately exploited, some 20 million people will visit these areas in 2016, with a potential economic impact of approximately R$ 2.2 billion that year;
• The creation and maintenance of Brazilian conservation units has prevented the emission of at least 2.8 billion tonnes of carbon, with a monetary value estimated of at least R$ 96 billion;
• The estimated value for the annual “rental” of the carbon stock whose emissions were prevented by conservation units totals ranges from R$ 2.9 billion and R$5.8 billion per year. This amount exceeds the current spending and investment needs for further consolidation and improvement of these units;
• In relation to the different uses of water by society, 80% of the country’s hydroelectricity comes from sources that have at least one tributary downstream of a conservation unit, 9% of drinking water is directly collected in conservation units, 26% is collected from sources downstream of conservation units, and 4% of the water used in agriculture and irrigation is taken from sources inside or downstream of protected areas;
• In 2009, the actual revenue of Ecological VAT passed on to municipalities by the existence of protected areas in their territory was R $ 402.7 million. The potential revenue for the 12 states that do not yet have legislation on Ecological VAT would be $ 14.9 million, assuming a rate of 0.5% for the criterion “conservation unit” that the municipalities are entitled to.

Additional resources

9 December 2011 | DURBAN | Representative from Pueblos Indí­genas de la Cuenca Amazí³nica frente al Cambio Climí¡tico (Indigenous Peoples of the Amazon Basin to Combat Climate Change) have announced more details of a program that aims to help indigenous groups in the Amazon Basin develop REDD projects.   Initially announced in May, the program was developed through an agreement between the Coordinator of Indigenous Organizations of the Amazon Basin (COICA) and the Inter-American Development Bank (IDB).   Additional partners include the Woods Hole Research Center, the Environmental Defense Fund and, most recently, the Yale School of Forestry.

Focusing on the Amazon basin region of Brazil, Peru, Bolivia, Ecuador and Colombia, the focus of this project is to plan for and execute indigenous-led pilot projects to reduce deforestation.   In recent years, the Amazon basin’s ecosystems are increasingly being destroyed and the indigenous people are a witness to this negative changes.

“We indigenous people, we are dependent on the forest,” says COICA economic coordinator Juan Carlos Jintiach.   “This is one of the most important projects that we are going to be apart of.”

The project will have three components:

1. 50 community-based training workshops in the five participating countries;
2. Participation and Networking for the Indigenous leaders; and
3. The development of two REDD+ pilot projects.

COICA first began discussing the possibility of this project in 2008, consulting with the leaders of the indigenous organizations of these different countries to develop a plan of action.   Then, at the end of 2009, they submitted a proposal.

The next year was spent in negotiations, with COICA taking a bottom-up approach as they worked directly with the indigenous peoples to understand their thoughts.   At the end of 2010, IDB and COICA signed an agreement, with IDB funding the COICA directed project.

The initiative that COICA took as well as their leadership as the implementation partner is essential to the innovative approach of the project.   “Indigenous people play the key role in all this process,” says Jintiach.

And for many indigenous groups, the fight against climate change has not always been positive.

REDD offers a number of benefits for indigenous groups, including securing legal and territorial rights and financial rewards.   In addition, REDD is benefitted by the involvement of indigenous people because, historically, they are some of the world’s best forest managers.

However, though it should be a win-win for everyone, the indigenous people have been exploited by so-called carbon cowboys in the past, as Theodore Varns of the Yale School of Forestry pointed.

For Varns, this is why it is so important that COICA is involved: “By having COICA, an indigenous organization, implement this program, they can help build trust and capacity to counter the negative experiences of the past.”

In addition, Varns see this project implementation as an opportunity to learn from COICA and the indigenous groups.

“We see learning as a two-way street,” says Varns.   “Yale, IDB, Environmental Defense and Woods Hole can offer technical expertise, but they lack the situated knowledge and understanding of the environment where these trainings are to take place.”

The involvement of COICA has also ensured that indigenous groups have their voice heard during every step of the process.   “COICA has an initiative approach and they approached us,” says Gonzalo Griebenow of the IDB.   “The project was designed together so it has a lot of buy-in because it is the indigenous people organization who came and designed the project.”

In addition to the securing rights and combating climate change, one of the motivations of the indigenous peoples was to increase their involvement with Multilateral Development Banks (MDB), according to Jintiach.     They will gain the experience – and exposure – needed as the executor agency in their work with IDB.

“That is important because that will allow them to build internal capacities to become real players, big players in the development of indigenous peoples,” says Griebenow.

Bringing in Rights

The need for COICA to have a prominent role in this REDD project essentially boils down to protecting rights—and practicing their traditional knowledge.

Jintech says the indigenous people never want to lose their understanding of traditional knowledge, which they can utilize in these REDD projects.

COICA’s initiation of this project is a fight for the rights of the land.   Through the collaboration on this project, indigenous groups were also able to discuss the context of rights within REDD+.

“We have defined the policy lines about REDD+ and climate change,” says Jintech.   “Among these things, we are working on a regional strategy to defend the rights of our territories.

The Yale School of Forestry was asked to identify issues that might arise during the project implementation and opportunities for improvement.   Since REDD is a controversial issue, one of the first stops for Yale was safeguards.

“We decided to look at how the project should incorporate a broader respect for safeguards and indigenous rights,” says Varns.   “We went about this by evaluating several key areas of information, drawing on the existing academic and institutional knowledge, current efforts on safeguards, and existing experiences on REDD+ as well as speaking with experts in the field.”

Based on this as well as an understanding of Indigenous peoples’ concerns, the school recommended that the training include a strong curriculum on understanding the legal context for REDD projects to ensure that traditional practices are not interrupted or restricted.   In addition, the indigenous groups should be taken through the Free Prior and Informed consent process.

Developing Capacity

Beyond rights, the training will involve a basic curriculum on climate change as well as building capacity to assess carbon stocks and greenhouse gasses in a metric.

Currently, IDB is developing monitoring reporting and evaluation plan that will coincide with COICA’s leadership in the training, allowing indigenous groups to understand and be trained in all aspects of a carbon project.

The capacity of the indigenous groups to monitor the carbon is part of emphasizing the rights over the territory.   Instead of an outside group coming in, the indigenous people will be in control of this aspect.

“This also means participation and collecting data on what the project and processes are addressing and complying with safeguard protections,” says Varns.

As these pilot projects get underway, Varns said that the partnership is looking at ways to share these experiences and information about practices and livelihoods.   Understanding this will allow the project to respond to their needs and share the experience with the broader world.

Implementing the Project

The agreement between IDB  and COICA was officially announced in May of this year.   However, EDF had been working with COICA since 2009 to meet IDBs pre-conditions to become an executing agency.

COICA has completed these pre-condition documents and submitted them to IDB.   Now they are waiting to be formarly declared eligible for the funding.   Soon, they will recieve their first disbursement to begin implementing the project on the ground – beginning one of the first times that an indigneous organization is the implementing partner in a REDD project.

25 May 2011 | A prominent anti-logging activist was murdered along with his wife in Brazil on Tuesday, just hours before the country’s Chamber of Deputies overwhelmingly voted to let farmers destroy more of the Amazon.

The 410-63 vote defangs the 75-year-old C³digo Florestal (Forest Code), which has long required that farmers who own a piece of the Amazon preserve 80% of the land they own and farm only on the remainder. The new bill exempts small-scale farmers from the Forest Code and opens environmentally sensitive patches of land – such as hilltops, slopes, and watersides – to cultivation. It also grants amnesty to small-scale farmers who violated the law before July, 2008.

The bill has not yet passed to the Senate, and Brazilian President Dilma Rousseff has vowed to veto it if the amnesty provision remains, but that hasn’t stopped farmers from preemptively chopping and burning forested portions of their property, leading to a sixfold surge in deforestation, with the greatest increase coming in Mato Grosso.

Death of an Activist

Also on Tuesday, anti-logging activist Jos Claudio Ribeiro “Ze Claudio” da Silva was gunned down along with his wife, Maria do Esp­rito Santo da Silva, in rural Para inside the Praialta-Piranheira, a nature reserve where they had spent the last two decades as rubber-tappers.

Environmental Fallout

First passed in 1934 and strengthened intermittently thereafter, the Forest Code is considered one of the world’s most progressive forest policies. Supporters of the Forest Code say it has played a major role in the rapid deceleration of deforestation rates in the Amazon over the last decade.

Before surging this past year, deforestation rates had fallen dramatically in Brazil. From a ten-year high of 2.7 million hectares in 2004, the rate dropped to 0.70 million hectares by 2009.

In a letter in the July 16, 2010, issue of Science, six Brazilian scientists wrote that the new rules “will benefit sectors that depend on expanding frontiers by clear-cutting forests and savannas and will reduce mandatory restoration of native vegetation illegally cleared since 1965.”

The scientists warn that CO₂ emissions “may increase substantially”, and as many as 100,000 species might be put at risk of extinction if the proposal becomes law. “Under the new Forest Act,” the scientists said, “Brazil risks suffering its worst environmental setback in half a century, with critical and irreversible consequences beyond its borders.”

Opponents of the Forest Code

Behind the current proposal for Forest Code reform is an unlikely but imposing alliance: leftist politicians like Communist Party federal deputy Aldo Rebelo, who led the bill through committee last year, and the traditionally conservative ruralista coalition, which has close ties to traditional agriculture.

The Forest Code: Recent Additions

In 1988, the New Constitution bolstered federal and state environmental agencies, enabling them to put the law in the field – and to give some effectiveness to the law.

But it is more recent measures strengthening the Forest Code that had proven to be very effective. And it is these same measures that have galvanized its opponents.

“In 2008, new policies were put in place to strengthen the Forest Code,” explains Raul Silva Telles do Valle, Assistant Coordinator of the Policy and Law Program at Instituto Socioambiental. “For example, the government limited state bank credits to farmers who didn’t respect the Code in the Amazon. Second, there was a change in a decree and for the first time since 1965, landowners who didn’t have the legal reserve could be fined.”

What Changes?

The new bill will change Brazil’s forest, conservation, and land-use policies in many significant ways. For one thing, there would be a reduction in hectares for mandated legal reserves in privately owned land in the Amazon, Atlantic Forest and Cerrado (mixed-Savanna type) biomes. In addition, larger areas could be designated for small landholdings, which are subject to less stringent conservation requirements.

Under the current Forest Code, APPs include riverbanks, steep slopes and hill tops. The proposed reforms, however, would move APP jurisdiction from the federal to the state level, effectively allowing states to cut them in half.

Other changes include expanded public interest definitions that allow for land utilization; reduced areas of conserved riparian buffer zones; increased states’ prerogatives in protected areas policies; and a retroactive amnesty for deforestation that is linked to eliminating restoration directives.

In the Atlantic Forest, a small landholding with minimal conservation requirements consists of about 30 hectares. Under the proposed reforms, this would be increased to approximately 80 hectares. The legal reserve requirement for forested areas would decline from 80 to 50 percent in the Amazon and from 35 to 20 percent in the Cerrado. Spurred on by these changes, many landowners might also re-demarcate or re-divide their land in order to fall under the small landholder provisions. The amnesty and riparian buffer changes would also have a major impact.

Farmer Amnesty Provisions

“Worst of all, from my point of view, are the amnesty provisions to farmers that haven’t respected the protected areas inside their lands,” do Valle says. “Under the current Forest Code, someone that doesn’t have the legal reserve or the fragile areas protected has the obligation to restore them, even if he wasn’t the one who cut the forest.  In the reform proposal, they can be exempted from this obligation.

He adds that if amnesty is approved, respect for the law will continue to deteriorate. “Everybody will know that if they broke the law, there will be another amnesty some day forgiving all the irregularities,” he says.

For more details on the Forest Code, please visit “Will Brazil Change its Forest Code – and Kill the Amazon?”, from which parts of this article have been excerpted.

Additional resources

22 September 2010 | “Farms Here, Forests There!”

It’s a catchphrase that was recently rolled out by Avoided Deforestation Partners (ADP) to drum up support for carbon payments that reduce greenhouse gas emissions from deforestation and forest degradation (REDD) in the now-sidelined American Power Act.

We can help to stop deforestation in the Amazon, the campaign argued, while bettering the situation for farmers here in the US.

That same sloganeering recently found its way to Brazil, where people like Communist Party federal deputy Aldo Rebelo picked it up. For Rebelo and his allies, however, “Farms Here, Forests There” has an altogether different meaning: to them, the phrase means “rainforest conservation at the expense of Brazilian farmers.”

In fact, Rebelo and his allies in the ruralista bloc are determined to weaken the C³digo Florestal, Brazil’s environmentally progressive Forest Code. Ironically, Rebelo and his supporters have used ADP’s pro-conservation slogan to whip up support for their anti-conservation campaign.

And their efforts have paid off: By recasting their attack on the Forest Code as a nationalist response to unfair international pressures for conservation in Brazil, the opponents of the Forest Code have been winning the public relations war. In July, they managed to push a far-reaching reform proposal through the Special Committee on the Forest Code in the Chamber of Deputies.

Forest Code Under Fire

Passage of the amendment caused an uproar among both environmentalists and scientists in Brazil. First passed in 1934, Brazil’s Forest Code has been strengthened in recent years and is considered one of the world’s most progressive forest policies. Supporters of the Forest Code say it has played a major role in the rapid deceleration of deforestation rates in the Amazon over the last decade.

In a letter in the July 16 issue of Science, six Brazilian scientists wrote that the new rules “will benefit sectors that depend on expanding frontiers by clear-cutting forests and savannas and will reduce mandatory restoration of native vegetation illegally cleared since 1965.”

The scientists warn that carbon CO2 emissions “may increase substantially,” and as many as 100,000 species might be put at risk of extinction if the proposal becomes law. “Under the new Forest Act,” the scientists said, “Brazil risks suffering its worst environmental setback in half a century, with critical and irreversible consequences beyond its borders.”

Will the Reform Bill Become Law?

Advocates for reducing deforestation say the proposed changes run counter to Brazil’s recent successes and officially promulgated goals for reducing Brazil’s green house gas emissions. But the reform bill still has some way to go before it actually becomes law.

First, the full Chamber of Deputies would need to pass it. After that, the Senate, which is the second body in Brazil’s bicameral legislature, would also need to vote on it.

If passed in the legislature, however, the bill would then move forward to President Lula, who is constitutionally barred from seeking a third term in this October’s presidential and national elections. The post-election lame-duck session would make it difficult for Lula to oppose the reform bill, especially if opponents of the Forest Code gain seats in the legislature. If not vetoed, Lula’s successor could then implement the bill.

Opponents of the Forest Code

Behind the current proposal for Forest Code reform is an unlikely but imposing alliance: leftist politicians like Rebelo, the rapporteur who led the bill through committee, and the traditionally conservative ruralista coalition, which has close ties to traditional agriculture.

Moreover, the combination of an election season followed by a lame-duck session may create a perfect storm in which the Forest Code reform bill might actually pass.

Raul do Valle Silva Telles, Lawyer and Forest Code Expert at Brazil’s Socio-Environmental Institute, points out this is not just public relations: “This does have a chance of passing, and this is serious, ”  Silva Telles says.

The Forest Code: Reducing Deforestation

In the last decade, deforestation rates have fallen dramatically in Brazil. From a ten-year high of 2.7 million hectares in 2004, the rate dropped to 0.70 million hectares by 2009.

“Deforestation in Brazil has dropped by two-thirds in the last few years,” explains William Laurance, conservation and tropical biologist at James Cook University in Australia. “We are not sure if this is a permanent reduction, but it is good news.”

Laurance, who worked on the Amazon for fifteen years on behalf of the Smithsonian Institution, points to various factors for this reduction, including improved satellite monitoring and, more significantly, a drop in commodity prices that reduced the incentive to convert forests and other areas of biodiversity into agricultural lands.

But the recent strengthened enforcement of the Forest Code is certainly another factor, according to Laurance. “When commodity prices go back up, there’s concern that deforestation rates will rise too; the strength of the Forest Code will certainly figure in the answer here.”

Raul do Valle Silva Telles also highlights the central role of the Forest Code.

“It is a very modern law,” Telles says. “Since the 1930s, it has told farmers that they have to respect some protected areas inside their own land.” In particular, the Forest Code has provisions for both legal reserves (Reserva Legal  (RLs)), which stipulate conservation measures within private property, and protected areas (area de Preservao Permamente (APPs)), which also directly affect privately owned land and expansion opportunities.

For many years, the Forest Code simply was not respected, according to Telles. In 1988, however, the New Constitution bolstered federal and state environmental agencies, enabling them to put the law in the field—and to give some effectiveness to the law.

The Crux: Recent Changes to the Code

But it is the most recent measures strengthening the Forest Code that have proven to be very effective. And it is these same measures that have galvanized its opponents.

“In 2008,” Valles explains, “new policies were put in place to strengthen the Forest Code. For example, the government limited state bank credits to farmers who didn’t respect the Code in the Amazon. Second, there was a change in a decree and for the first time since 1965, landowners who didn’t have the legal reserve could be fined.”

Valles calls the pressure to reform the Forest Code a predictable conservative backlash to recent enforcement efforts.

What’s in the Package?

The proposed Forest Code reforms would change Brazil’s forest, conservation, and land-use policies in many significant ways. For one thing, there would be a reduction in hectares for mandated legal reserves in privately owned land in the Amazon, Atlantic Forest and Cerrado (mixed-Savanna type) biomes. In addition, larger areas could be designated for small landholdings, which are subject to less stringent conservation requirements.

Under the current Forest Code, APPs include riverbanks, steep slopes and hill tops. The proposed reforms, however, would move APP jurisdiction from the federal to the state level, effectively allowing states to cut them in half.

Other changes include expanded public interest definitions that allow for land utilization; reduced areas of conserved riparian buffer zones; increased states’ prerogatives in protected areas policies; and a retroactive amnesty for deforestation that is linked to eliminating restoration directives.

In the Atlantic Forest, a small landholding with minimal conservation requirements consists of about 30 hectares. Under the proposed reforms, this would be increased to approximately 80 hectares. The legal reserve requirement for forested areas would decline from 80 to 50 percent in the Amazon and from 35 to 20 percent in the Cerrado. Spurred on by these changes, many landowners might also re-demarcate or re-divide their land in order to fall under the small landholder provisions. The amnesty and riparian buffer changes would also have a major impact.

Farmer Amnesty Provisions

“Worst of all, from my point of view, are the amnesty provisions to farmers that haven’t respected the protected areas inside their lands,” Valles says. “Under the current Forest Code, someone that doesn’t have the legal reserve or the fragile areas protected has the obligation to restore them, even if he wasn’t the one who cut the forest—if it was a former owner, for example. In the reform proposal, they can be exempted from this obligation.”

To Valles, this is very bad social policy. “First of all, there are huge areas all around the country needing restoration, areas where some environmental services have to be restored,” Valles says. “In the Atlantic Forest, for example, only seven percent of the original forest cover remains, and because of it every year people face floods and landslides in the wet season and water shortage in the dry season. The Forest Code is the only law that could lead to restoration.”

Valles adds that if the amnesty were approved, respect for the law would deteriorate. “Everybody will know that if they broke the law, there will be another amnesty some day forgiving all the irregularities,” he says.

Riverbank Vegetation Conservation

For Laurance, the changes to the riparian provisions are especially ominous for keeping the Amazon biome intact. The proposed reforms would, among other allowances, reduce mandated riverbank vegetation conservation from 30 to 15 meters.

“The riparian provisions of the current Forest Code greatly reduce ecosystem fragmentation—when it is enforced,” Laurance explains. “In the Amazon, you have a complex system of river and streams, and when forest is retained along these, it forms a network of corridors that helps to link forests together and greatly reduces forest fragmentation.”

When forests are fragmented, plant and animal species disappear. “They become locally extinct,” Laurance says, “because the fragment is too small to sustain their populations.”

Laurance also underscores the importance of current riparian criteria that protect against ediment loads falling into streams. In addition, they guard against the destabilization of aquatic oxygen levels that result from excess sunlight falling on waters. This occurs due to the loss of riverside forest cover. This is, as Laurance puts it, a “lethal combination” for the many endemic fish and aquatic species in the Amazon that need cool, highly oxygenated water.

“There are lots of reasons to favor riparian protection,” Laurance says.

Domestic and International Leadership

Both Brazilians and non-Brazilians also feel that the proposed changes would undercut the nation’s constructive leadership in climate change talks, especially among tropical and heavily forested nations.
Prior to the December 2009 Copenhagen UN Framework Convention on Climate Change (UNFCCC), President Lula declared that Brazil would aim for a greenhouse gas emissions reduction just shy of 40 percent from expected 2020 levels. Shortly after the negotiations were completed on December 29, 2009, the goal became policy, with Lula signing into law Brazil’s goal of reducing emissions by 36 to 39 percent of expected 2020 levels.

“The proposed reforms would have great bearing on Brazil’s international stature,” Valles says. “In Copenhagen, Brazil presented its national policy on climate change. It was one of the best things to come out of Copenhagen. Now, 80 percent of our goal for reducing emissions is from avoided deforestation. If this reform is passed, we have no chance to meet the goal. If the reform is passed, deforestation will not decrease.”

The next UNFCCC talks will take place in Cancun, Mexico, at the end of 2010. Before that, however, the Convention on Biological Diversity will hold its 10th Conference of the Parties in Nagoya, Japan in October. Some are hoping that the Nagoya Conference will be the site of a major declaration by Brazil on reducing deforestation. Moreover, the buzz building around the 2012 Rio + 10 Conference in Rio de Janeiro is just one more example of how the rest of the world is looking to Brazil for leadership on the greatest sustainable development challenge of this generation.

The proposed reforms to the Forest Code have created a certain uneasiness. They have also raised questions as to how commitments, responses and common positions will be forged in the next two years.

Change – But Which Change?

Valles does see a need for Forest Code reform, but not the type currently proposed by Rebelo and his partners.

“We know we have to have some changes in the policy,” Valles explains. “The law did not have enough enforcement. We know more than 70 to 80 percent of farmers have some problems with the Forest Code. We need other tools, economic tools, and other supportive policies, such as ecosystem service payments.”

Offering an example of what should change, Valles says, “More than 50 percent of the credit that goes to agriculture is from state banks, from public money. We should have a distinction in the credit policies for those who respect the Forest Code and those who don’t.”

Others who are concerned over the proposed changes to the Forest Code also express the desire for new policies that promote prosperous agriculture as well as effective conservation. Addressing this, the Brazilian scientists who wrote to Science asked, “Is it possible to combine modern tropical agriculture with environmental conservation? Brazilian agriculture offers encouraging examples that achieve high production together with adequate environmental protection.”

In a similar vein, Bill Laurance points to the possibility of moving away from an expansion model that is marked by cheap land prices and inefficiency to more intensive and higher yielding practices on land that has already been cleared. In the Amazon, farmers often burn and clear forests for inefficient livestock farming. Tree plantations and fruit crops are two good examples of how farmers can “invest in more intensive and sustainable types of farming,” Laurance says.

If both sustainable farming and forest conservation manage to not only coexist but thrive, the next slogan to hit the rainforest might just be “Farms and Forests Here.”

Additional resources

11 August 2010 | LIMA, Peru| South America’s Southern Interoceanic Highway links 2,603 kilometers of new and old roads stretching from the Brazilian Amazon to the coast of Peru.   Heralded as a much-needed link to connect some of the more remote areas of Peru to population centers, it is also feared as the kind of venture that could spark runaway development in the vast swathes of megadiverse tropical rainforest of Madre de Dios, a remote province in southeastern Peru.

That threat, however, may now be mitigated by the potential for payments for REDD (reduced emissions from deforestation and degradation) allowing companies and environmental groups to fund forest conservation by earning carbon credits for saving trees.

“Yes, the Interoceanica is a threat,” says Augusto Mulanovich, of the Association for the Conservation of the Amazon Basin, the nonprofit administering the Los Amigos Conservation Concession. “But it is also an opportunity.”

But as early REDD projects scramble to get off the drawing board and, initially at least, into the voluntary carbon market, they also face a major challenge; the Peruvian government is still an estimated two years away from finalizing the country’s national REDD framework. The risk is that these projects could be punished for their early success through discrepancies with an eventual national REDD methodology.

As a result, they could be deemed to be facilitating less avoided deforestation than first calculated, or even to have collectively failed to prevent “leakage”, as the lack of a strategic, targeted REDD network results in deforestation prevented in one place simply moving elsewhere. Either way, the projects could lose many of the carbon offsets they hope to market.

Nested Approach

The good news is that the government appears to be listening. Augusto Castro, a REDD specialist at Peru’s Environment Ministry, says the government is clearly moving towards some form of the “Nested Approach”, an innovative framework that allows for sub-national   systems within national REDD schemes, combining the best of both approaches without threatening incentives for individual project developers who are already reducing forest carbon emissions.

Under the Nested Approach, REDD payments can be made directly to national governments but also, in parallel, sub-nationally, both to local governments and to individual project developers. All payments are, however, predicated on countries meeting their national targets.   This approach presents significant downsides for individual projects which risk losing REDD payments through no fault of their own should national REDD targets be missed.

In a country like Peru, where weary distrust of the state is deeply entrenched, a way will have to be found around that huge roadblock. In a recent study by The Nature Conservancy and Baker & McKenzie, “A Nested Approach to REDD+” proposed solutions include project insurance and a REDD reserve fund that could be dipped into as necessary to reward successful projects in countries which have been unable to halt net deforestation.

According to Lucio Pedroni, CEO of Carbon Decisions, a Costa Rica-based consultancy working with Peru’s Environment Ministry, the government is planning on building its REDD methodology upwards and downwards from the regions, potentially using the framework adopted by Madre de Dios’ regional government or another region as the basis for the national carbon stocks and emissions accounting systems.

“It is extremely important that the process is transparent to encourage projects to join,” he warns.

Working Groups

As a stepping stone towards participation in eventual international compliance markets, many of the Peruvian REDD projects are initially aiming to have their carbon sequestration validated under the Voluntary Carbon Standard (VCS) and their added benefits validated under the Climate, Community and Biodiversity Project Design Standards (CCB), although some have been considering other methodologies. The danger of an emerging patchwork of REDD projects, each using its own baseline and methodology, is being kept at bay through regional and national REDD roundtables, bringing together project developers and regional and national governments.

The Madre de Dios roundtable has divided up responsibilities among its members for research into accounting methods and standards. Its input is expected to be pivotal in the regional government’s eventual REDD approach.

And in another Amazonian region of Peru, San Martí­n, with the highest historical rates of deforestation in the country, the regional government and a variety of NGOs are working together in a regional roundtable and in developing a shared regional baseline.

“By developing a shared information infrastructure for baselines and project accounting, San Martin should be able to produce more credible REDD credits, and bring down the costs for organizations and communities wanting to develop projects,” says Jacob Olander, Director of the Katoomba Incubator, who has been active in supporting this effort.

Likewise, selected members of the national REDD group, from both NGOs and private developers, formed a technical group which played a major role in helping Peru’s Environment Ministry draw up its Readiness Preparation Proposal submitted to the Forest Carbon Partnership Facility. The document sets out the process and goals, including heavy liaison between project developers and the government, for Peru to finalize its national REDD strategy, which Castro expects to take another 24 months. One of the first steps will be to update the satellite mapping of the quality and state of Peru’s rainforests, a process which has not taken place for 10 years.

The Environment Ministry wants to incorporate REDD into a broader conservation strategy that will cover 54 million of Peru’s estimated 64 million hectares of rainforest, with a final goal of eliminating all emissions from deforestation and degradation from the protected areas.

Leakage

Despite the teamwork, there is concern about the potential for leakage from the first generation of REDD projects. “Leakage is always a big issue when you are talking about individual REDD projects rather than a national REDD scheme,” warns Sandra Brown, Director and Chief Scientist at Winrock International’s Ecosystems Services Unit.

However, Gonzalo Castro de la Mata, Executive Vice Chairman of Bosques Amazonicos, a Peruvian company with four REDD projects in Madre de Dios, including Los Amigos, which it finances, says leakage is not a major issue for projects along the Southern Interoceanic. Any leakage would have to have the same deforestation driver, namely the highway, and would by definition have to crop up elsewhere along it, he notes. Yet all the unprotected forest along the road is expected to be deforested anyway.

“The area that can be deforested is finite,” adds Castro de la Mata. “If you protect a million hectares along the road, then that is a million hectares that would have been deforested and that has not been deforested. You have taken it out of circulation.”

More generally, with limited large-scale agriculture in the Peruvian Amazon so far, arguably the biggest deforestation threat comes from colonization by Andean migrants with little or no knowledge of sustainable tropical horticulture and who can have devastating ecological impacts. The consensus seems to be that leakage from them is unlikely to travel far and can be reduced by working with communities to develop new sources of income based on sustainable exploitation of the forests.

“It is not about building a barrier and stopping people coming into the protected area but addressing the drivers of deforestation by working with communities to create alternative livelihoods,” says Toby Janson-Smith, Senior Director for Climate and Land Use: Markets and Policy at Conservation International’s Center for Environmental Leadership in Business. “You don’t start on a project unless you can tackle these drivers. It doesn’t make sense to put all those resources into a project that is not viable.”

And although Carbon Decision’s Pedroni is clear that the government needs to move fast to direct future projects towards deforestation hotspots, he also insists that the first crop of REDD projects should not be forced to wait months or years until the national government completes its REDD strategy. “I would prefer to have 100 projects happening but with maybe a few not being pure and having leakage than only have five projects happening,” he adds.

Indigenous Participation

But as the REDD rubber hits the road in Peru a major question mark hangs over the participation of indigenous communities.

In May, AIDESEP, the largest organization representing the Peruvian Amazon’s native peoples, issued a position statement vehemently opposed to market mechanisms and, in particular, outsiders profiting from rainforest conservation. That development surprised few observers given the highly-politicized backdrop of the government’s push to exploit the Amazon’s natural resources and perceived tendency to ride roughshod over social concerns, which reached a nadir in May 2009 with the Bagua massacre.

Nevertheless, AIDESEP is a long way from representing all of the Peruvian Amazon’s native inhabitants. There was strong indigenous attendance at a payment for ecosystems services workshop for community leaders organized by Forest Trends in May in Puerto Maldonado, the capital of Madre de Dios.

Indeed, one of the main challenges for project developers looking to work with indigenous peoples may be to manage expectations, with some communities having unrealistic ideas about the sums on offer for forest carbon. According to Beto Borges, who attended that workshop as Director of Communities and Markets at Forest Trends, most communities will need to partner with well-resourced NGOs or commercial developers to have any chance of accessing the necessary legal and technical expertise not to mention the six figure sums required to launch REDD projects. “It is very difficult for them but the interest is there,” he says.

Jorge Torres, Technical Director of Bosques Amazonicos, believes that AIDESEP may not fully understand that REDD is still a work in progress and potentially could be highly beneficial to indigenous peoples: “REDD as a sub-national project will give rights to natives. When we have meetings with indigenous peoples we try to explain that REDD is many things.”

For now though, indigenous involvement remains one of many missing pieces in the jigsaw that will have to be fitted together as Peru’s REDD boom matures. And as the national government scrambles to catch up with projects on the ground, some version of the Nested Approach increasingly looks like the best bet to square the circle of incorporating early initiatives into a national REDD set up without punishing them for their success.

Simeon Tegel is an environmentalist and journalist based in Peru. He can be reached at [email protected].
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Additional resources

Rainforest nations want to earn carbon credits by reducing greenhouse gas emissions from deforestation and forest degradation (REDD), but to do so they have to prove that forest destruction halted in one part of the country doesn’t just move to another part. The Brazilian state of Acre is experimenting with a “nested approach” that links individual projects with the state’s evolving strategy.

22 July 2010   | In the March edition of SinergiA, a quarterly newsletter on environmental services in Latin America, Jacob Olander, Director of The Katoomba Ecosystem Services Incubator (a project of Ecosystem Marketplace publisher Forest Trends), takes a long, hard look at the future of REDD projects.

He emphasizes a recent trend in finance models for forest preservation and a growing consensus in the international community: local projects linked to regional or national government emissions accounting frameworks limit the risk for leakage and increase the security of reductions.   In particular, Olander notes, “The urgent task at hand is for projects and regional authorities to share the work of developing technical, legal, and financial mechanisms that allow for links between projects, national models, and diverse sources of international financing.”

One regional authority in western Brazil has responded to this urgency. The Government of Acre State, Brazil, has developed an innovative regional REDD model articulated in the state’s draft “Plan for Valuing Forest Assets, Payment for Environmental Services – Carbon Project Guidelines.”   (recently renamed “Program of Incentives to Environmental Services: A REDD+ proposal to Acre State”). This plan, referred to hereafter as the ‘PES-Carbon Program’, is an example of how regional and project-level coordination can look in practice.

What’s at Stake

The state of Acre, Brazil is located on the far west side of the country, entirely situated within the Amazon Basin, and with 88% of its territory covered with tropical forest.   Since 1998, Acre has seen more than a 200% increase in production of native latex and a 400% increase in the net value of forest production.

Acre’s less than 700,000 residents share their territory with 30% of all the species of toads occurring in Brazil, 50% of all birds, 40% of mammals, and 10% of all fish. Seventy percent of the diversity of palm trees of the Amazon can be found here; and government data shows that a new species of plant is discovered almost every month.

In spite of the alarming extent of deforestation in the region, nearly ninety percent of Acre’s territory consists of conserved forest assets. History would argue that this is no accident. In addition to developing successful management protocols for 21 non-timber forest products, Acre has worked for the past three years to define strategies for the provision of incentives and payments for REDD and for environmental services (PES) more generally. How is it that this small and remote Amazonian state has become a regional leader in innovative finance mechanisms for forest and biodiversity protection?

Putting Down Some REDD Ink

In 2007, Acre commissioned an assessment related to climate policy, immediately followed by an analysis of the potential for a state-level REDD program with the support of donor organization GTZ.   Next, partners such as WWF, IUCN, the Federal University of Acre (UFAC), IPAM, The Woods Hole Research Center, Embrapa, and GTZ began working in collaboration with the government; Acre was now poised to move forward.

A task force co-lead by civil society representative Luis Meneses Filho, and government representative Monica Julissa De Los Rios from the Global Climate Change Department of the State Secretary of Environment in Acre worked from March until September of 2009 to outline the necessary elements of a REDD program. The result was a shared vision of integrated forest management in Acre, and the draft guidelines for the PES-Carbon Program.

From October, 2009 until April, 2010 the civil society task force (lead by Luis Meneses Filho) and the Acre government (lead by Monica De Los Rios) ran parallel consultations on the draft guidelines. Feedback was encouraged through a series of meetings and workshops.    

Beto Borges of Forest Trends’ Communities and Markets Program attended one of the workshops, and concluded that Acre is, “The most advanced of all Amazonian states in Brazil to develop and implement PES policy… a state with a proven track record of forest conservation and involvement of traditional communities.”

Amy Rosenthal, former Deputy Director for Projects, Amazon Conservation Association (and a participant in Katoomba Group’s newly launched Rapid Response Team, see related links at right), believes the guidelines show a “strong intellectual understanding of the social, economic, and environmental considerations for REDD internationally and at the local level…The world would do well to use Acre’s plan as a model for other developing states that count on this kind of intellectual prowess and conservation value.”

Moving From Design to Implementation

The draft PES-Carbon Program seeks to affirm the value Acre’s forests and ensure the ongoing provision of environmental services throughout the state.   The Guidelines were created to leverage both public and private financial resources to generate sustainable income for constituents who conserve, preserve, and recover forest assets such as carbon, biodiversity and water. The implementation strategy for the PES-Carbon Guidelines is twofold: defining priority areas and creating structured Incentives for Environmental Services (IES).

Acre identified six areas under the greatest risk of deforestation and degradation to provide a geographic focus for initial investment.   Totaling 5.8 million hectares, the priority areas contain fifty percent of the state’s most threatened forests and nearly twenty percent of the total resource-extraction-based population. The priority areas also contain more than 400,000 hectares of Indigenous Lands.

The Incentives for Environmental Services (IES) will connect the financial flows to the providers of environmental services in these priority areas, and are proposed to cover some or all of the costs to:   (i) increase productivity of degraded areas, (ii) generate income through sustainable forest use, (iii) protect and conserve standing forest, (iv) recuperate degraded areas through reforestation and restoration.

To support successful implementation of this Program, four new institutions must be created to carry out necessary governance.

• The Science Committee evaluates performance of the PES Carbon Program, approves operational plans, evaluates implementation reports, verifies and validates carbon emissions.  
• The State’s Regulation, Control and Registry Office regulates the PES – Carbon Program law, registers carbon projects, verifies reduced emissions, and shares data with the national registry system.
• Environmental Services Development Agency: responsible for the execution of the PES Program, raising public and private resources to support projects, and distributing resources to individual service providers and organizations supporting Acre’s goals.  
• State Commission for Validation:   civil society and government members responsible for overseeing the Regulation, Control and Registry Office.
• Hearing Board:     receives suggestions and claims related to the PES Carbon Program; suggests to the Government the adoption of correction measures and mediates conflict among stakeholders.

Pillars for success

What makes the Acre PES-Carbon Program so different from the other regional – level sustainable development plans?

“The government has taken the role of a coordinator, rather than a regulator,” explains Monica De Los Rios, “This is not a law – it is a program designed to generate opportunities for voluntary activity; flexibility is the most important aspect.”

The government plans to rely on the technical capacities and organizing skills of civil society to increase project-level participation, and allow the government time to improve monitoring capacity and establish necessary governance mechanisms. From the point of view of Meneses Filho, lead designer of the draft guidelines, “Counting on the government to implement a new sustainable development paradigm is not effective. It is important to count on the civil society initially, which has more ability and skilled staff.”

The program is embedded within a new local and regional policy matrix for socio-environmental development. So while the Program adds some new institutions, it also embeds them within a coordinated policy framework of Acre, other states in the region, and the federal government including The Sustainable Amazon Plan, the Plan for Prevention and Control of Deforestation in the Amazon, the National Plan of Climate Change, and The Amazon Fund.

De Los Rios elaborates, “The project looks to build the level of impact of the policies that are already developed – it is a project within a political framework of actions of the state for sustainable development.”

Another unique feature is that the government will not be directly compensating forest conservation.

Confronting challenges of evolving offset standards along with the fact that payments from carbon markets have been slow to arrive, Acre will be postponing the discussion of directly buying carbon for a couple of years. The government will instead be providing incentives for reducing deforestation based on costs to keep forest standing. “The use of the word ‘payments’ insinuates that when people are remunerated for leaving their forest standing, they are compensated for the profit they would have made if they did something else,” says Meneses Filho. De Los Rios explains the government’s reasoning: “The project has a vision of producers relating to the forest differently – not as a rent, not as an obstacle – but as part of the system.”

Acre plans to weave REDD+ into a broader land-use context by incentivizing increased production on degraded or altered lands. Meneses Filho continues, “The goal is to bring the landowner to a level of satisfaction that he will not expand his business over the forest.”

How to Pay For it

The new public-private Environmental Services Development Agency combines   the abilities of a private sector entity with the social controls of a government structure and is charged with the task of raising private funds to supplement those of the state.

The Agency is also designed to distribute benefits to relevant stakeholders, build capacity through rural extension services, strengthen community organizations in priority areas, register and certify rural properties in priority areas, license priority activities, and fund better research into carbon stock and emissions.

The total amount of incentives being offered by the government is initially set for $260 million. To produce the up-front money needed for projects, The Environmental Services Development Agency strategy is to solicit private sector buyers in need of emissions reductions to buy carbon credits at approximately $3 per ton. Based on current market estimate these credits will be valued in ten years time at $15 or $20 per ton. The company which finances verified emissions reductions at $3 per ton now might be able to save future expenditures (particularly in the event of a global cap-and-trade system) or turn a 500% profit in a little over a decade. The Agency then collects the investments from interested private sector participants, and distributes them as incentives to local level participants.

For now, the Program’s incentives are slated for 15 years. With expectations for rising carbon prices and market maturity over that same period, the discussion is anticipated to ultimately move from incentives to payments through international REDD or PES markets.   This shift requires government capacity, rural landowner capacity, stable carbon markets, and public/ private financial support.

The Goalposts

The current goal of the PES Carbon Program is to reduce deforestation rates eighty percent in the first decade. This implies:  

• reduction of 62.5 million tons of CO2 emissions
• conservation of over 5.5 million hectares of forest
• -costs of more than US$260 million

Through mobilization and communication to rural populations, strengthening of community organizations (finance/ structure), and capacity building for community leaders, the project seeks to involve a total of 7,500 families, 3,500 families living in settlement projects.

Acre’s initiative integrates project and regional level activity into a national accounting framework. Local, regional, and national level governments and projects are intended to simultaneously and independently account, generate, and market emissions reductions on the international level.

The four main institutions created by Acre’s PES-Carbon Program provide governance controls while allowing transactions to be made without direct government involvement. The combined effect of these institutions is anticipated to create larger overall emissions reductions in the long run.

Next Steps…

The draft PES-Carbon Program guidelines demonstrate the interest and ambitious commitment of the Acre government, but there remains much to be done before the PES-Carbon Program is incorporated into official Acre policy.
 
Since the public consultation period closed in April an extensive revision process has been underway. De Los Rios has been working to articulate the final proposal, and the government is currently working on a bill which will establish the necessary governance structures such as the Environmental Services Development Agency and State Regulation, Control and Registry Office. Ratification and implementation of the final draft of the PES-Carbon Project Guidelines is dependent on government timelines – the original target date was the end of August.

In the meantime, both Meneses Filho and De Los Rios acknowledge the big tasks facing the State Secretary of Environment in Acre, Brazil: building government capacity for MRV, and gaining access to the appropriate public and private funding streams.  

In regards to MRV, Acre working to establish a central geo-processing unit, UCEGEO, responsible for monitoring deforestation and forest degradation, maintaining the database of carbon stock, and monitoring production units at the state level and in priority areas.

Public funding will provide the majority of the initial cash flow to the program’s implementation, yet funds from the private sector must soon follow. Acre intends to seek and implement support from The Amazon Fund, grants, money pledged from national governments after the Copenhagen Accord, the UN-REDD program, and the Forest Carbon Partnership Facility.   Various public and private partnerships are already in discussion.  

The state is not working in a political or market vacuum.   As Meneses Filho describes, the balance between public and private funds “depends on how and when investors want to get into the project… and how REDD is going to be advanced in the UNFCCC.”

Conclusion

Circling back to the question posed by Jacob Olander , are we nearing ‘The End of REDD Projects?’ The answer as indicated by the influx in proposals to the Forest Carbon Partnership Facility and United Nations Framework Convention on Climate Change, and the increased attention to innovative REDD financing models such as the initiative described in Acre, Brazil gives a resounding ‘no’.

The proposals to the FCPF are all about national-level REDD readiness. I’m not sure what the proposals to the UNFCCC refers to .   Neither has been a particularly hospitable forum for project-level REDD.   At this point the answer looks more like ‘who knows?’ but efforts like Acre’s are important in working through some of the practical issues about how these things might work, and may be on a fast-track to generate some interesting answers – and some reall, near-term reductions in deforestation and emissions.

Instead of the end of REDD projects, we are entering a new stage where credits are generated both by projects and governments, maximizing the potential of our world’s forests to sequester carbon and provide environmental services.   A first mover in this arena, all eyes will be on the state of Acre, Brazil as it begins to mobilize its PES-Carbon Program.

Tommie Herbert is a Program Associate with the Tropical America Katoomba Group (TAKG) and the Business and Biodiversity Offsets Program (BBOP). She can be reached at therbert (at) forest-trends.org.

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16 July 2010 | Colombia’s ecosystems – and particularly its forests – have suffered like those across Latin America. Unlike its neighbors, however, Colombia has historically failed to leverage resource conservation to earn voluntary carbon credits by reducing greenhouse gas emissions from deforestation and forest degradation (REDD).

Recognizing that Colombia’s forest stocks present a wealth of untapped carbon mitigation potential for voluntary markets and a future UN REDD mechanism, partners Fundacion Natura, the Ministry of Environment, Housing and Territorial Development and the Inter-American Development Bank (IADB) this week launched their plan of attack on Colombia’s underwhelming carbon market presence.

Their weapon of choice is more carrot than stick – the “Mechanism for Voluntary Mitigation of Emissions Greenhouse Gasses in Colombia.” The “Mechanism” features an exchange-like platform to facilitate the flow of carbon credits and finance between Colombian projects and international and domestic buyers of voluntary emissions reduction (VER) credits.

Focusing foremost on driving domestic demand for VERs, Fundacií³n Natura’s Roberto Leí³n Gí³mez explains that the Mechanism’s platform is the best tool to engage Colombian businesses in the carbon market.

“We needed to find a tool that was efficient, transparent and would give participating companies confidence in a market mechanism, something they understand,” he says.

But to overcome the challenges that have traditionally stunted Colombia’s role in the REDD market, from high transaction costs to low technical capacity, the Mechanism requires more than just a physical exchange.

Its proponents therefore take a three-pronged approach to market development: build the platform, educate participants and develop land-based projects with cross-cutting benefits to conservation and communities – that ultimately appeal to buyers in the voluntary marketplace.

The Glass Half Full

Deforestation and agriculture are among Colombia’s largest sources of national emissions, and Fundacií³n Natura hopes to tap into the forestry sector’s potential for voluntary emissions reductions. In its initial phase, only land-based credits will be facilitated through the Mechanism, including credits from REDD, agro-forestry and other forest carbon project types.

The partners will approve at least five pilot projects generating forest carbon credits from two different regions in Colombia. Noting that the project’s “greatest condition to fulfill” is building market capacity among Colombian communities and ethnic groups, the Mechanism will finance the projects from baseline assessment through credit registration – while also providing training in measurement, monitoring, software training and maneuvering existing market structures.

Gí³mez believes that many existing programs will easily translate into carbon reduction projects, from biodiversity and conservation corridors to sustainable agriculture and cattle-ranching initiatives.

“We have a big potential to develop this kind of project because many of the conservation activities we do here in Colombia could become carbon projects very easily,” he says.

Fundacií³n Natura is the Mechanism’s executing agency and, with financial support and direction from the Global Environment Facility (GEF), infuses the Mechanism with its own focus on conservation, particularly biodiversity. The Fundacií³n Natura finds that forestry is well-suited to promoting projects’ co-benefits.

“We and the Ministry of Environment are interested in incorporating biodiversity and social criteria into the projects that will be part of this mechanism,” explains Gí³mez. “We don’t want carbon mitigation to be separate from conservation activities or vulnerability reduction and adaptation, but to find a way to link these criteria.”

Solidifying the Relationship Between Standards and Exchanges

Whether these conservation criteria will be enforced by mandating the use of third-party standards with strong co-benefits or through membership requirements remains to be seen. During the Mechanism’s preparatory phase – which they’re currently in – the program’s partners will decide which third-party standards to adopt for use on the exchange.

As the Mechanism’s primary ingredient, the exchange will host only domestic projects but will court both domestic and international buyers. Fundacií³n Natura and partners initially considered developing an exchange-specific offset standard but were concerned about its international appeal.

“We decided that was a big mistake because no one in the world would know what the standard was. We will instead use an internationally recognized standard like the VCS or VER+ so everybody will want to buy Colombian VERs,” says Gí³mez. While the Mechanism’s platform was inspired by the Chicago Climate Exchange, its platform will therefore differ from CCX in the use of a variety of standards.

Also unlike the CCX, exchange participants will not be required to commit to a cap on emissions – partly because a rigid program may turn off prospective participants but also because of Colombian companies’ perspective on the carbon markets.

Gí³mez explains, “We don’t want a mechanism that’s so tight, so rigid that the actors involved in the market will be constrained to act the same way from year to year.”

“In Colombia, businesses perceive the carbon markets as an opportunity rather than an obligation or a tool.”

Re-Tooling Domestic Demand

To outsiders, the idea of developing from scratch a viable domestic market for VERs may seem farfetched. In reality, the Mechanism was conceived to respond to large Colombian companies that approached Fundacií³n Natura about offsetting their emissions.

The problem, Gí³mez explains, is that while a few companies are carbon neutral savvy, for most the carbon market remains a source for selling credits rather than a tool for measuring and offsetting their carbon footprint.

It’s not often that one wants to be seen as a “tool.” In the case of this program, however, the Mechanism’s multilateral approach to market education it is intended as a tool to educate Colombian buyers about the benefits of participating in the voluntary carbon market – by and for Colombia.

Though Gí³mez expects that demand will initially be low, he proposes incentives for private sector participation – “not the tax kind” – including finance industry alliances to aid in funding mitigation strategies and technical teams to help companies inventory their emissions and devise strategies for achieving mitigation goals.

This effort will no doubt be aided by supporters like the Colombia Stock Exchange (Bolsa de Valores de Colombia) and the Colombian Business Council for Sustainable Development (Consejo Empresarial Colombiano para el Desarrollo Sostenible).

Right Time and Place

Still, the question remains, “Why the voluntary carbon market?” Historically, Colombia’s presence in the UN’s Clean Development Mechanism (CDM) market eclipses its voluntary market activity. According to Luisa Lema, IADB’s Global Environment Facility (GEF) Consultant, the government advocates strongly for the country’s participation in the CDM. As a result of its diligence, in Latin America Colombia falls only behind Brazil, Mexico and Chile in the number of CDM projects the country hosts.

While the government was busy advocating and building capacity for CDM projects, Gí³mez suggests that voluntary market development was lost in the shuffle, “maybe because they didn’t have a lot of trust in the voluntary market at the time or didn’t understand it that well.”

“It seems they just forgot about the voluntary market,” he concludes.

Until now, that is. Despite the fact that last year was defined by uncertainty and sluggishness in both markets, the voluntary market – often less rigid and so a source of market innovation – has made progress in the forest carbon sector ahead of a UN mechanism for REDD.

For this reason, Fundacií³n Natura and partners see the voluntary market as the most viable option for their forestry-based Mechanism. “In the voluntary carbon markets you have dozens or maybe hundreds of forestry projects all over the world,” Gí³mez explains, “but in the CDM you have three or four that actually generate CERs. So the voluntary market is the best option for this program.”

He has a point. In Building Bridges: State of the Voluntary Carbon Markets 2010, Ecosystem Marketplace and Bloomberg New Energy Finance reported that voluntary offset volumes from Latin America experienced significant growth in 2009, with 80% of these credits sourced from forestry projects. Moreover, the market also saw an increase in the volume of credits transacted through non-CCX exchanges, valued at US$12 million in 2009. In other words, the Mechanism appears to be well-positioned.

For this reason, Gí³mez asserts that the risks are worth the reward in the pursuit of carbon and conservation finance: “The voluntary carbon market is the most viable way to bring these kinds of projects to the carbon markets – especially because we want to create a local market for companies in Colombia to really get involved.”

Molly Peters-Stanley is the Voluntary Carbon Associate in the Ecosystem Marketplace’s Carbon Program. She can be reached at [email protected].

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Less than 2% of Brazil’s indigenous tribes have undertaken projects that reduce greenhouse gas emissions from deforestation and forest degradation (REDD), but more than 40 indigenous leaders are now getting ready to change that.   In the process, they’re turning “free prior and informed consent” into more than just a vague concept – and perhaps providing a model for the rest of the world.

7 July 2010 | Hardly a day goes by that we don’t hear about mechanisms designed to slow climate change by paying people to capture carbon in trees and reduce greenhouse gasses from deforestation and forest degradation (REDD) combined with conservation and forest management actions (REDD+).  

Then, before the day is done, we hear ominous warnings that REDD could spark a land grab that destroys the livelihoods of indigenous people like Brazil’s Suruí­, whose forests suddenly have value as carbon sinks.

Suruí­ Chief Almir Narayamoga Suruí­ says the warnings aren’t unfounded – but, while many indigenous rights organizations are fighting to keep REDD at bay until new international agreements offer more clarity on the rights of indigenous peoples, Almir is urging other indigenous leaders to bone up on laws and mechanisms that already exist and to use that knowledge to their advantage.

“The communities need to understand what these markets are really about and the compensation logic,” he says. “That is, they must learn that their relation with the use of land results in preserved forests and that there is a voluntary market that recognizes this acting role”.

The Fifty-Year Plan

In fact, he’s using REDD to jump-start his fifty-year plan for synching the tribe with the high-tech global economy while preserving age-old traditions.

That jump-start comes in the form of REDD-funded schools and health care, which will build the foundation for a sustainable tribal economy once the REDD money is used up.   He’s already persuaded his fellow Suruí­ to forego income from logging and hold out for carbon money, and earlier he worked with environmental non-governmental organization (NGO) Forest Trends (publisher of Ecosystem Marketplace) and the Baker & MacKenzie law firm to clarify his tribe’s legal claim to the land.   That legal clarity should, he says, make it easier for other tribes to also earn income by preserving their forests and their traditions.

Untapped Potential

Those tribes, however, aren’t biting.   Environmental NGO Idesam (The Institute for Conservation and Sustainable Development of Amazonas) says only three other Brazilian tribes have undertaken REDD projects so far, and none are nearly as far along as the Suruí­.   That’s four out of roughly 230 tribes identified by the Social Environmental Institute (ISA) NGO, or less than 2% of the nearly 13% of Brazilian territory controlled by indigenous people.  

Almir says it’s not because they don’t want to.

“I know of no indigenous people who have turned down participation in REDD projects,” he says. “Quite the contrary, I have been called on by many peoples to help them develop their works.”

Rather, he says, too many tribes simply don’t understand REDD or its potential – not to mention business basics.

“Indigenous people need knowledge,” Almir explains.   “They need to be qualified in order to make clear decisions.”

How Almir Built Consensus

That knowledge, he adds, must permeate the tribe, and the tribe must maintain ownership of the project.

He achieved these goals by first forming an entity called the Associaçí£o Metareilí¡ do Povo Paiter-Suruí­ (Metareila Association), which acts as a conduit between the Suruí­ and the larger world.  

Within the tribe, the Metareilí¡ Association worked within the social and political organization structure of the Suruí­ people to discuss project development issues and priorities with the local communities, working with all four clans that represent the Paiter-Suruí­, namely Gameb, Gamir, Kaban and Makor. As a result, the Suruí­ embraced the carbon project, believing that it can provide continuation for their reforestation efforts and because of its consistency with the priorities established by their leadership, representing a real potential to support the implementation of their Fifty-Year Development Plan. Therefore, the initiative to start the project was their autonomous decision, culminated in the signing of a cooperation agreement document in June of 2009 by all 4 clans, through their respective associations. The agreement establishes that the clans will be working together to implement the carbon project, in alignment with their Fifty-Year Plan, and that all economic benefits will be shared in a just and equitable way among the Suruí­ communities.

There were several internal meetings of the Suruí­ leadership without the participation of project partners, technical meetings with project partners, as well as community assemblies.   In addition, an extensive process of 10 village-level information sessions covering 14 villages, led by ACT-Brasil and local Suruí­ promoters also provided the opportunity in detail to discuss the nature of REDD and climate change mitigation finance, and the types of commitments they would be likely to entail. This process has been documented through an extensive archive of video footage as well as a detailed summary report prepared by ACT-Brasil.

The signing of the cooperation agreement between the clans was a milestone in an extensive and carefully constructed, highly participative consultation process, that embodied the principle of free prior informed consent, an important standard for respecting indigenous rights established in the United Nations Declaration on the Rights of Indigenous Peoples acknowledged in the ILO 169 Convention, as well as a recommended best practice by the international indigenous rights’ community.

Mechanisms of Understanding

Now Almir is sharing his REDD experience with representatives from traditional communities, NGOs, social movements, and other indigenous tribes in workshops that Forest Trends is hosting in various Brazilian locations.   His goal is not only to help people understand what he’s learned, but to harvest that understanding for the creation of a Document of Social and Environmental Principles and Criteria of REDD, which will establish minimum social and environmental standards for REDD projects in Brazil.

Beto Borges, who runs the Communities and Markets Program at Forest Trends, says the next step is to develop ways of certifying that these communities really do understand the process, and that they are conscious of their own responsibilities with regard to the preservation of natural resources.

“It is not a simple process,” he says. “We have already been working for two years now with the Suruí­ to reach our present achievement.”

The idea for the guide was hatched at the 14th Katoomba Meeting – an event held by the Katoomba Group in the State of Mato Grosso in April, 2009. At this meeting, traditional and indigenous communities showed concern about perceived risks associated with REDD projects and other programs they feared might disregard their traditional rights and generate social conflicts.

The REDD Scare

When REDD is mentioned in Amazonian communities, the main concern is that the community will neither get   access to funding resources nor be able to make decisions about projects to be implemented. Their main desire is to guarantee that their voices are heard in the process of formulating public policies and of new market mechanisms regarding REDD.

In this context, the Katoomba Meeting spawned a Multisector Committee responsible for the elaboration of these principles and criteria for REDD in the country where it was created. In addition to social movements and family farmers, the group was composed of representatives of the different sectors involved with the subject, like the rural and forest producers, research institutions, and environmental NGOs.

After eight months of work, the Multisector Committee established the foundation of the document and began the second construction phase:   public consultations to the communities and private sectors.

“To be a comprehensive national document, recognizable by the Brazilian society, this elaboration process must embrace the different sectors involved or affected by the REDD issue and be transparent and open to public participation,” the document reads.

Routes to Participation

Three meetings were held in March and April with 40 indigenous leaders, extractive communities, such as rubber tappers and family farmers, in addition to technicians from local non-governmental organizations. Each meeting lasted three days. During the first day and half of the second, time was spent leveling the knowledge of the participants in climate change and greenhouse gas emissions. The remainder of the second and third day was dedicated to the study of the document.

According to Mauricio Voivodic, researcher from Imaflora NGO – the assisting organization in the elaboration process of Principles and Criteria – it was a real challenge to level the various representatives’ knowledge in only a day and a half. Aiming at effectiveness, REDD concepts were not presented only in its theoretic form, but rather from the already existing experiences.

“The meetings have been very good,” Voivodic says. “The community representatives really dealt with the text analyzing each and every word.”

During the whole process, representatives from the federal government or from local governments participate only as observers. Their opinions will not be considered at this moment because the organizations involved wanted the document to be exclusively an expression of opinions and yearnings from civil society.

In addition to the meetings with the traditional and Indian communities, another was held at the end of April with the organizations established at the north of Mato Grosso state, location of the ‘arc of deforestation’, from where the agricultural frontier and deforestation head forward, and also where there are already advanced discussions about REDD.

In April, meetings took place in Sí£o Paulo with representatives from the private sector in hopes of enhancing new contributions. In all, five presence meetings were held and 560 comments from Indians, traditional communities and the private sector were added to the document.

All comments are now being considered by the Multisector Committee, which is responsible for the final version of the document. According to Voivodic, the comments propose only adjustments in the text, meaning that there will be no concept changes. Launching of the final version of Principles and Criteria is scheduled for the second half of August.

Global Model

According to Paulo Moutinho, from   the Amazon Environmental Research Institute (Instituto de Pesquisa Ambiental da Amazí´nia, IPAM), an NGO also participating in the process, this construction model of Principles and Criteria, based on effective civil society participation, will surely be able to be adopted by other countries.

“The systematization of information, the transfer of information to people who know what is being discussed is what guarantees participation,” he says. “Sometimes when you are asked about a given subject you may even give an answer due to the amount of information you have acquired. But the answer will surely be another one if you promote a debate preceded by quality information about what is being discussed.”

He says the basic requirement for such a process to work out is by leveling knowledge of all the participants involved and total exemption on the subject.

“It is necessary to have clearness about what is being discussed and if there are guarantees that the process is exempt from ideologies and personal or political interests on behalf of those who help or lead the process”, Moutinho explains.

Cristiane Azevedo is a Brazilian reporter based in Sí£o Paulo.   She can be reached at [email protected].

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14 April 2010 |   After their Peace Corps service in Panama, Chris Meyer and a few colleagues saw an opportunity to offer socially and environmentally minded investors growth opportunities in sustainably-managed timber projects and began to explore   how carbon revenue could play a part in their model.   The result is Planting Empowerment, one of a growing number of companies that earn money by sustainably managing trees and are dipping their toes in the carbon markets.  

Unlike many forestry businesses, however, PE doesn’t buy land outright from local inhabitants.   Instead, the group establishes reforestation/afforestation projects on deforested or degraded land that belongs to local Panamanians.   PE provides a lease payment to these partners that exceeds the opportunity cost from the land, along with profit sharing and educational opportunities.

*A correction was made to this introduction since it was first published on Ecosystem Marketplace to reflect the fact that Planting Empowerment currently does not have any projects “reducing greenhouse gas emissions from deforestation and forest degradation” (REDD).*

The podcast will soon be available in Spanish for our Latin American and other Spanish speaking audience both here and at www.mercadosambientales.com.

Left-click below to listen in streaming content; right-click to download as mp3 podcast.

Or Click here for the mp3 url of the interview in English

Click here for the mp3 url of the interview in Spanish

Maria Bendana is a research fellow at the Pinchot Institute for Conservation.

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Project developer Planting Empowerment earns carbon credits by leasing – rather than buying – degraded forest so that local owners can share more fully in the benefits of restoration.   Maria Bendana speaks with co-founder Chris Meyer about the future of REDD, the challenges of small-scale restoration, and the benefits of leaving forests in local hands.

13 April 2010 | After their Peace Corps service in Panama, Chris Meyer and a few colleagues saw an opportunity to offer socially and environmentally minded investors growth opportunities in sustainably-managed timber and carbon projects.   The result is Planting Empowerment, one of a growing number of companies that earn money saving patches of the rainforest to earn money by reducing greenhouse gas emissions from deforestation and forest degradation (REDD).

Unlike many forestry businesses, however, PE doesn’t buy land outright from local inhabitants.   Instead, the group establishes REDD and reforestation/afforestation projects on deforested or degraded land that belongs to local Panamanians.   PE provides a lease payment to these partners that exceeds the opportunity cost from the land, along with profit sharing and educational opportunities.

The podcast will soon be available in Spanish for our Latin American and other Spanish speaking audience both here and at www.mercadosambientales.com.

Left-click below to listen in streaming content; right-click to download as mp3 podcast.

Maria Bendana formerly managed the  Forest Carbon Portal, a project of Ecosystem Marketplace.

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10 December 2009 | When Chief Almir Narayamoga Suruí­ needed money to plant trees on his tribal lands in 2007, he called Beto Borges.

The two had met in the early 1990s, when Almir was a student at a Brazilian university for indigenous people, and Borges was director of the Amazon program for the Rainforest Action Network.   By 2007, Borges had become director of the Communities and Markets Program of environmental non-profit organization Forest Trends (publisher of Ecosystem Marketplace), and Almir was chief of the Suruí­ people.

“Almir had come up with this 50-year development plan for his tribe,” says Borges.   “He thought Forest Trends was a giant foundation with lots of money for that sort of thing.”

After setting him right, Borges explained that the Suruí­ and other indigenous people could, in theory, earn carbon credits by acting as guardians of the rainforest under schemes that reduce greenhouse gas emissions from deforestation and forest degradation (REDD). Almir decided that REDD fit in perfectly with his 50-year plan, and the two embarked on a partnership that has been testing the limits of environmental finance ever since.

On Thursday, that partnership yielded a landmark legal opinion from international law firm Baker & McKenzie, who Borges enlisted to carry out a detailed analysis of Brazilian laws and legal decisions to determine who owns the rights to carbon credits from trees that are either planted or preserved under various scenarios.

The firm concluded that current Brazilian law gives the Suruí­ and other indigenous people who save and manage existing rainforests the rights to carbon credits generated under future global warming deals.

“This really is a landmark opinion,” says Michael Jenkins, President and CEO of Forest Trends. “What we have been able to demonstrate here is that there will be opportunity and a path forward for indigenous groups to participate in emerging markets from a global warming deal. In fact, the indigenous groups would now be part of the solution.”

Although not yet tested in court, the opinion has global repercussions and enjoys the tacit approval of influential Brazilian policymakers and officials.

Last year, for example, Forest Trends requested a similar study from Baker & McKenzie to determine who owns the rights to carbon credits from the same reforestation project that brought Almir and Borges together (as opposed to the study released Thursday, which examines credits from existing trees that the Suruí­ guard and maintain under a REDD program).   That earlier study reached a similar conclusion, and FUNAI (Fundacao Nacional do Indio, the federal agency in charge of indigenous issues across Brazil) then asked Forest Trends to convene a meeting in February of this year Brasilia to review the implications of that finding.

The meeting helped shape evolving FUNAI policy on REDD, which has so far given indigenous peoples a green light to explore carbon trading.

Under the REDD scheme currently being hammered out, the Suruí­ will work together with the government to police their forest, measure and monitor carbon stocks, and prevent illegal logging.

Long-Term Implications

If the new finding leads to a bona fide legal opinion in a court of law, it could have significant implications in broader climate-change talks because many REDD opponents fear such schemes could promote a land-grab that decimates tribes like the Suruí­ and others.

The finding said the conclusion was based on the Brazilian Constitution and legislation, which “provides for a unique proprietary regime over the Brazilian Indians land…which reserves to the Brazilian Indians…the exclusive use and sustainable administration of the demarcated lands as well as…the economic benefits that this sustainable use can generate.”

Another important element raised by the opinion is the need for the Suruí­ to secure financial returns that are compatible with the environmental services provided by managing the vast forest on Suruí­ land, and to provide transparent and price competitive proceedings for the commercialization of the credits, which will be in alignment with Brazil’s overall national sovereign interest.

“This study confirms that we have the right to carbon, and is also an important political and legal instrument to recognize the rights of indigenous people for the carbon in their standing forests,’’ said Chief Almir. “It helps in our dialog with the government, businesses, and other sectors, strengthening the autonomy of indigenous peoples to manage our territories.”

The market for REDD offsets from Brazil received a boost after governors from Amazonian states and leading stakeholders endorsed the Cuiaba Declaration following last year’s Katoomba Meeting in Cuiaba, the capital of the Brazilian state of Mato Grosso.

That declaration called on the federal government to embrace direct payments from emitters in the developed world to REDD projects in Brazil.   The finance ministry has since embraced a hybrid approach to administering REDD payments that combines the fund approach with direct payments for ecosystem services.

Indeed, the Suruí­ have asked the Brazilian Biodiversity Fund (FUNBIO) to present a 50-year plan for managing payments for REDD and other ecosystem services.   FUNBIO already oversees the administration of a massive environmental fund in the state of Rio de Janeiro as well as other projects across Brazil.

A Brief History of the Suruí­ People

No one’s really sure how long the Suruí­ people have occupied their patch of the Amazon Rainforest, but everyone agrees on what happened after the outside world made contact with them in 1969.

First, disease wiped out most of the people.   Then, land speculators took most of the territory.   Later, after the Brazilian federal government and the state of Rondí´nia enacted laws to protect the remaining territory, the Suruí­ themselves began striking deals with illegal loggers and selling the wood for a pittance – largely because, in economic terms, the forest was worth more dead than alive.

That began to change with the ascent of Chief Almir, who has shifted the focus to long-term sustainability, winning major support from the Brazilian national government, conservation organizations such as Forest Trends, and through a major mapping project with the Amazon Conservation Team and Google Maps that, in rich detail, documented the natural and human history of the land over the years.

Chief Almir, who has received several assassination threats in the past and for a time fled to the United States for his safety, has been one of several Suruí­ leaders trying to win national and international support on environmental issues.

Today, the Suruí­ own 248,000 hectares of nearly intact rainforest – which, seen from above, stand out like a shock of cool, green moss on dusty stone against the ranchlands that have replaced surrounding forests over the past half-century.

The young chief’s action plan aims to keep that shock from shrinking, and to ensure that it pays for itself over the long haul.   That’s what led him to contact Borges in 2007 – and led Borges to bring in another Forest Trends project, the Katoomba Ecosystem Services Incubator.

The Katoomba Incubator

Like the Communities and Markets Program, the Incubator helps local providers of payments for ecosystem services get up to speed and earn what’s coming to them.

Headed by Jacob Olander, the Incubator complements Borges’s program by placing more attention on finding and fostering the general in the specific – usually with the goal of identifying solutions that can be replicated elsewhere.

“Our basic approach is to ask if we can harness this abstract global carbon market to finance conservation and in a way that creates a roadmap and a plan for others to follow,” says Olander.   “We don’t take control of a project, but instead try and create the tools that decision-makers need to succeed or fail on their own merits – such as finding out who has the rights to payments for ecosystem services and how you can get information about these new and completely untested markets into the hands of communities so they can understand what they’re committing to and weigh that against what they can receive.”

The Incubator began working with the Suruí­ in 2008 and is helping to structure the REDD deal.

“We’re offering our expertise, but we’re also learning a lot, ” says Olander. “The lessons we learn here will help us to help others down the road. ”

The incubator recently began operating in Western Africa, and is now working with ten indigenous groups around the world.

Steve Zwick is Managing Editor of Ecosystem Marketplace.   He can be reached at [email protected].

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Norwegian forestry and carbon offset group Green Resources last week became the first carbon offset project developer to register a reforestation project under the Voluntary Carbon Standard’s guidelines for reducing greenhouse gas emissions from agriculture, forestry, and land use. This week, a second project was also verified – and plenty of others are sure to follow.

22 July 2009 | On Friday, July 17, German carbon offset project verifier TÃœV Sí¼d wrapped up a two-year audit and gave its stamp of approval to the first-ever carbon offset project recognized under the Voluntary Carbon Standard‘s (VCS) guidelines for agriculture, forestry, and land use (AFOLU), which were finalized in 2007.

The project, which covers two locations (Uchindile and Mapanda) in the Southern Highlands of Tanzania, was launched in 1997 by Green Resources, a Norwegian company focused on carbon offsets and forest products. It will reforest 10,814 hectares of degraded land and conserve 7,565 hectares for local biodiversity.

On a broader level, the project offers an opportunity to test the market’s acceptance of forestry credits that aim to achieve credibility by applying the VCS’s “buffer” approach – essentially allowing for the potential loss of forest by planting more trees than they sell credits for, and basing that set-aside on the perceived risk of damage.

“This is the first forestry-sector project to be validated under the VCS, and thus marks a tremendous milestone,” says VCS Association CEO David Antonioli. “Kudos to Green Resources for helping to demonstrate that by using the VCS one can generate permanent removals from the forestry sector that are perfectly fungible with other emission reductions.”

Long-Time Coming

The project was initially launched to fund reforestation by generating carbon credits under the Kyoto Protocol’s Clean Development Mechanism. When the protocol was finalized in 1997, however, the only afforestation and reforestation projects it recognized were those that began after 2000.

Green Resources then turned to the voluntary market, but found their efforts to sell offsets from the Tanzanian project hampered by the lack of standards. In 2008, the project was certified under the Forest Stewardship Council’s (FSC) standard for sustainable forest management, but still lacked the kind of pedigree that companies interested in voluntarily offsetting their greenhouse gas emissions look for.

As standards evolved, it became clear that only the VCS could offer that kind of assurance.

“One of the great things about VCS is that it has provisions for early start,” says Jenny Henman, Carbon Offset Certification Manager for Green Resources. “You basically have to prove that carbon income was considered from the beginning and that you had an independent review prior to 2002.”

Buffering for Long-Term Credits

In negotiations leading up to the Kyoto Protocol, critics of forestry offsets argued that any credits generated by capturing carbon in trees should only be given temporary status because of forests’ susceptibility to fires, pests, and illegal logging. Offset buyers, however, have been lukewarm to-called tCERs (temporary Certified Emission Reduction certificates), preferring instead permanent offsets that don’t expire.

The VCS has chosen to deal with the permanence issue by recognizing forestry credits as permanent if project developers meet certain criteria and then agree to plant a buffer of more trees than they sell credits for.

The Tanzanian project will generate permanent Voluntary Emission Reductions (VERs) over a period of 99 years, with a reserve buffer of 40%.

“This is the first time the risk buffer has been applied,” says Henman. “It’s an interesting process, and the final buffer is linked to things like the certainty of land tenure, measures that you have in place to deal with things like fire and pest control, your relationship with the local community, and the political stability in the country.”

The Pipeline

Green Resources submitted its project for validation almost as soon as the VCS guidelines for AFOLU were released in 2007. It’s not clear how many others did the same, but those that did will be coming to light over the next few months.

TÃœV Sí¼d has already validated a second reforestation project, and Sebastian Hetsch, the TÃœV Sí¼d auditor who validated the Tanzanian project, says others are in the works.

“This shows that the voluntary market is attractive for project developers, and that it works,” he says – adding that it’s still more profitable for reforestation and afforestation projects to go the CDM route if they can.

“There are six affforestation/reforestation (A/R) projects registered under CDM right now, and around 50 have started the validation process,” he says. “I wouldn’t be surprised to see 15 CDM A/R projects registered by year-end, but only expect another four or five to be registered under VCS.”

Henman agrees.

“We have other forestry projects, but they started after 2000, so we are going for CDM,” she says. “We would, however, definitely look to VCS for other categories of forest project type – like REDD (Reduced Emissions from Deforestation and forest Degradation) or Improved Forest Management, which allows for enrichment-planting and forest restoration.”

The second reforestation project to be verified under VCS is in Pucallpa, Peru, and was developed by Sustainable Forestry Management (SFM Ltd), which owns the emission reduction rights and manages the carbon, along with SFM-BAM, a joint venture between SFM and a local Peruvian company that owns the land and is in charge of implementing the project, together with local non-governmental organization Asociacií³n para la Investigacií³n y Desarrollo Integral (AIDER), which provides technical support.

Both projects have applied for additional validation under the Climate, Community, and Biodiversity Standards, which ensure that projects not only sequester carbon but provide support to local communities and promote biodiversity.

Steve Zwick is Managing Editor of Ecosystem Marketplace. He can be reached at [email protected].

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22 June 2009 | Andrew Mitchell finds inspiration in Mad Cow Disease – or, more accurately, in part of our response to it.

“We showed you could track a piece of beef from a farm in the country, through a slaughterhouse, to a butcher,” he says. “It’s not hard to do once people are properly motivated.”

Mitchell, who heads the Global Canopy Programme, also chairs the steering committee for a new endeavor called the Forest Footprint Disclosure Project (FFDP). He hopes the FFDP will make it possible to label the deforestation impact of beef that comes from tropical areas – as well as for four other “forest risk” commodities (timber, soya, palm oil and biofuels). The FFDP takes a cue from the nearly ten-year-old Carbon Disclosure Project (CDP), which has built the world’s largest database of corporate climate-change information by asking companies to come clean about their greenhouse gas emissions. The FFDP hopes to build a database of deforestation impacts by asking companies to come clean about where they get their raw materials, with the goal of identifying which companies have the most exposure to “deforestation risk” and which have the lowest.

To entice companies into participating, investors worth £1.3 trillion have signed a letter urging FTSE 100 companies to fill out the disclosure documents FFDP will be sending them between now and the middle of July. “By demonstrating their sustainable business model, the intention is that they will attract more confidence and – eventually – more investment from the financial community,” says project manager Steven Ripley.

The Benefits of Transparency

Companies will have until October to respond, and FFDP will announce the names of companies that are signed up to the project early next year. The goal is eventually to divide companies into three categories: those that are best in class, those that have adopted innovative policy and practice, and those that ignored the survey. Abyd Karmali, who is Global Head of Carbon Markets for Bank of America Merrill Lynch and a member of the FFDP steering committee, believes the mere act of doing a forest carbon inventory will motivate some companies to reduce their forest carbon footprint. “We’ve seen what sort of a transformation the CDP has been able to have on reporting of risks by listed companies,” says Abyd Karmali, who is Global Head of Carbon Markets for Bank of America Merrill Lynch and a member of the FFDP steering committee. “It’s also improved engagement with investors and raised awareness about what kind of climate risks and opportunities exist for companies going forward.” In some cases, he says, it’s resulted in emission reductions that wouldn’t have happened otherwise because companies realized they could slash emissions, win public support, and in some cases even cut costs.

Financial Instruments

Before merging with Bank of America, Merrill-Lynch was a lead global sponsor for the CDP, but it has not yet invested in the FFDP. Karmali says that’s partly because the merger has taken the bulk of their attention, but also because they’re waiting to see if the team develops number-crunching methodology that yields trustworthy numbers. “We’re at a very early stage of understanding about just what kinds of impacts participation in the forestry commodity area has on rates of deforestation,” he says. “Companies that are involved across the value chain in timber, palm oil, soya, beef, and biofuels know very little overall about the links between their activities and deforestation.” If the project brings those links into the light of day, the next step would be to create financial instruments like those based on the CDP’s Carbon Disclosure Leadership Index (CDLI) or Merrill Lynch’s Carbon Leaders Europe Index, both of which aim to channel investment funds into low-emitting companies by highlighting their carbon risk. “With the CDP, we have launched financial products that try to distinguish between companies that we expect to be winners and those we expect to be losers in terms of their differing carbon risks and responses to those carbon risks,” he says. “It’s too early to know whether we’ll be able to develop similar products for distinguishing among companies’ forestry-related risk.” Data from the FFDP would likely be a key input into such a product, but the challenge of creating reliable indexes based on forest carbon is significantly more complex than developing an index based just on carbon alone. “Activities in the forestry value chain include impacts on carbon emissions, biodiversity, indigenous peoples, and rural income,” says Karmali. “There is also the challenge of understanding the links to land use planning and the degree to which options selected now preserve or close off other choices for utilizing land.” The scheme is being funded by the UK Department for International Development, The Prince’s Rainforest Project, and other non-profit organizations.

Steve Zwick is Managing Editor of Ecosystem Marketplace. He can be reached at SZwick (at) ecosystemmarketplace.com. Please see our Reprint Guidelines for details on republishing our articles.

As forests convert carbon dioxide in the air to carbon stored in woods, leaves and roots, a range of organizations are, in turn, working to convert forests into carbon offsets. The ‘exchange rate’ of this conversion is determined by specific standards’ methodologies — technical, but critical, tools shaping the rules of the game.

18 August 2009 | Richard Wineberg is rhapsodizing about trees. His firm, Terra Firma Carbon, owns several hundred acres of timberland in Indiana and North Carolina in hopes of managing it as a healthy forest. Browsing the bookshelf in his Chicago office, crammed with classics on silviculture, Wineberg describes teaching himself forestry over the last few decades.

“It’s more art than science,” he says. “Forestry comes from looking over your woods very carefully. You can see the forces at work in the woods when you look at it.”

From reforestation and afforestation (A/R) to reduced emissions from deforestation and degradation (REDD), more land-use methodologies have been submitted to voluntary standards in the last twelve months than were approved under the Kyoto Protocol’s Clean Development Mechanism (CDM) since the CDM Executive Board was formed in 2003, based on a review of standards’ websites. At least nine have been approved under the CDM since 2005, but more than a dozen are taking shape under voluntary standards such as the Voluntary Carbon Standard, Climate Action Reserve (CAR – formerly CCAR, the California Climate Action Registry) and others vying to become the standard for a new generation of voluntary carbon projects.

Wineberg, 57, plans to be an early adapter. After decades preaching and practicing sustainable forest management, he’s negotiating his first avoided deforestation project in Brazil. While optimistic that he can apply the new methodologies, he’s concerned forest management will not conform to rigid protocols.

“There’s no simple answer to anything in forestry,” says Wineberg who seems as likely to consult a walk in the woods as a yield table for decisions about forestry. “Every piece of land is different. You don’t want to make the perfect the enemy of the good in this business.”

Forest Carbon Methodologies

For now, business remains uncertain. The majority of forest carbon credits have been transacted in the voluntary carbon markets. As the primary source of demand for forest-related sequestration credits (and the only one for REDD), voluntary markets have had an historical affinity for charismatic projects like A/R – still the single largest category of biological carbon sequestration projects.

The market for voluntary offsets is expanding at an unprecedented rate: global voluntary markets more than tripled between 2006 and 2007 reaching a value of $331 million in 2007, according the 2008 State of the Voluntary Carbon Markets report. Yet the relative number of forest carbon credits that were traded last year declined from the year before. Representing 36% of over-the-counter transactions in 2006, forestry credits, which maintaining transaction volumes, dropped to 18% of such trades in 2007. Why? The reason may in part be due to skittishness about evolving rules of the game and long-term demand.

That may soon change. The pending US climate bill, known informally as Waxman-Markey, currently includes land based offsets. New Zealand and Australia are considering them, and even the EU has softened its stance on REDD. The worry, it seems, is that the credits must be real and fungible with the rest of the carbon market to win global acceptance.

At the same time, New project methodologies are arriving to guide the conversion of stored carbon to credits.

Standards such as the US Regional Greenhouse Gas Initiative (RGGI), the Environmental Protection Agency’s Climate Leaders, CAR, Chicago Climate Exchange (CCX), the Government of Alberta, American Carbon Registry, the Voluntary Carbon Standard, and CarbonFix, among others, have published forest-carbon methodologies (also called protocols), with revisions on the way. The number of projects is on the rise as well. Although the CDM has only registered 6 forestry projects out of 1,750 registered projects – mostly reforestation – at least 52 projects are registered or in the pipeline in the voluntary markets according to the Forest Carbon Portal.

The world, it seems, is finally awakening to Wineberg’s vision of managing forests for ecosystem services, especially the carbon in its biomass – so long as it can be measured, monitored and verified. When the UNFCC convenes it’s the next Conference of Parties in Copenhagen this December, REDD and other forms of terrestrial carbon credits will be a central element of the international climate agenda. Negotiators are set on curbing some of the 18% of the world’s greenhouse gasses (GHG) emitted by land use change and tropical deforestation each year. It is almost certain that whatever mechanism emerges, in some way it will rely on rigorous, science-based carbon methodologies to finance forest carbon credits.

What’s So Great about Methodologies?

Methodologies, like roadmaps, give project developers specific routes to achieve creditable emission reductions. Some are tied to specific scenarios such as reforestation of species in the tropical pasturelands. Almost all of them share measures to ensure the environmental integrity of emission reductions through the use of baselines, additionality, permanence, monitoring, verification and transparent accounting. These principles guide rules articulated in the methodologies’ detailed equations and procedures.

Yet methodologies do more than serve as technical blueprints. They underlie trust in markets for forest carbon offsets, says Derik Broekhoff, policy director at CAR, which is busy developing its own GHG reduction project protocols in the United States, including forestry.

“They’re important primarily because anytime you’re talking about carbon offsets, an intangible commodity, it’s really hard for buyers to know what they’re getting if you don’t have a methodology,” says Broekhoff.

Standards organizations like CAR ensure the quality of their credits, but methodologies theoretically guarantee the level of standardization so buyers and sellers know they are exchanging a real asset: additional, verifiable, and permanent GHG offsets. Without this, buyers would be forced to research the quality of every credit, and poor quality projects would blend in with credible one.

This rigor comes at a price.

A major complaint voiced by project developers is a tendency to favor perfectionism over practicality. Even authors of the methodologies agree. In the early days of the CDM, says Lucio Pedroni of Carbon Decisions, who has co-authored CDM-approved methodologies for AR projects, “a lot of effort was spent to capture minimal changes in carbon stocks, just to give the impression that we are perfect in a world that is never perfect.” This led to methodologies where, as CDM rules dictate, almost every carbon source was considered – from gasoline use to fence posts.

“Projects have to be perfect beyond what is needed for a credible market,” he argues. While this was feasible in industrial projects, this approach simply doesn’t work in forestry.

To simplify the methodologies, Pedroni has joined a recent effort to draft ‘modular methodologies’ for REDD under the VCS. If validated (posted for review here), the modules will represent a new approach: simplified, modular methodologies that can be rearranged or modified if projects differ slightly from one another. In the past, forest carbon methodologies (costing upwards of $100,000 to create) were so specific that applied to only a handful of potential projects, and developers were unable to restrict and license the use of their methodologies to recoup their investment. This hardly provided incentives for standardized and ongoing innovation.

By contrast, the REDD modules are split into the essential components of a viable forest carbon project – baseline, additionality, measuring and monitoring and other categories – that can be amended without revalidating the entire methodology.

“In the end,” claims Pedroni, “simpler methodologies are better for the climate. It’s better to have 1200 projects and ten that are not additional, than to have two that are perfectly additional.”

Financing the Future

Paying for these methodologies is still a challenge. While firms are poised to pour millions into the promise of the new market, large investors have traditionally steered away from forestry offset projects (only two of the 50 projects publically listed by EcoSecurities are in the sector). Yet a recent study by EcoSecurities found that forestry offsets purchased in the last ten years are comparable to volumes transacted in 2008 alone, and that projected demand is igniting a global search for credible projects, as well as close scrutiny of the potential of methodologies.

Eron Bloomgarden, president of environmental markets at Equator, a firm investing in timberlands and environmental assets, says the market has taken a wait-and-see approach to investing in forest carbon credits.

“The goal posts are still moving with many of the forest protocols,” he says. “It’s important these protocols need to be rigorous, yes, but they need to be workable and flexible to incentivize action.”

Bloomgarden’s reading of CAR’s recently-revised protocols highlights issues like permanence, which could extend monitoring liability for up to 100 years, as promising but potentially problematic.

“Overall, they’re pretty good protocols,” he says. “But I’m not sure how workable they are for large volumes of credits. The practicality of the protocols remains to be seen. The jury is still out.”

There will soon be no lack of choices. Various protocols address the same major issues, but in different ways, and offer project-specific frameworks. The CDM, for example, which approved its first A/R additionality and baseline methodology in 2005, now lists nine forest carbon methodologies and 13 ‘tools,’ or guidelines for specific project tasks, as well as two ‘consolidated methodologies’ combining all of it into a streamlined package.

Of the voluntary standards, RGGI has approved carbon sequestration through afforestation activities following its own “Model Rule”. The EPA’s Climate Leaders Program released its A/R methodology in 2008; the CCX has a “rulebook” governing afforestation, long-lived wood products, and sustainably managed forests; and the Voluntary Carbon Standard has at least one methodology approved, as well as eight undergoing validation, not to mention acceptance of CAR and CDM methodologies making it one of the most comprehensive sets of methodologies available.

Picking a Winner

So, how to choose? Voluntary market developers will find their choice of methodologies dictated by standards that certify certain activities. The CDM is limited to A/R in developing countries, while the VCS credits four categories – Afforestation, Reforestation and Revegetation (ARR), Agricultural Land Management (ALM), Improved Forest Management (IFM) and REDD – under its land-use methodologies. After clearing the eligibility hurdle, methodologies (and the standards that certify them) must be marketable. A 2008 survey of project developers found that public credibility and the permanence of CO2 storage were most important issues for forest carbon project, followed by the practicality of carbon accounting and transparency.

Which methodologies, and standard, will win out is not clear. Competition and market demand are driving the latest round of innovation, and project proponents are advancing new methodologies around the world. A few innovative ideas are taking root: more default values are being considered to streamline accounting; permanence measures like risk discounting and buffer pools are replacing unpopular temporary credits used by the CDM; performance standards that set a target for an industrial process are gaining favor under standards like the VCS; and the modular approach to methodologies promises to make modifications easier and less expensive. There’s even momentum toward crediting based on sectoral benchmarks or performance (CDM and VCS) under UNFCCC negotiations.

What works depends on their performance over the next few years and decades.

“We still have a lot to learn,” says Alexia Kelly in the World Resources Institute’s (WRI) Climate and Energy Program who is following the development of the US climate bill’s treatment of offsets. “In my mind, that’s the one thing that is missing: 20 years of project data to know the actual emission reductions that will occur [from methodologies]. That’s what we really need to really judge the effectiveness of a given protocol. We’re still groping in the dark.”

In the meantime, the voluntary market continues to push innovation as international negotiators advocate for methodologies to ensure the integrity of their crediting scheme. But Pedroni, who has seen this process before at the CDM, warns against sacrificing needs of the market for the comfort of strict but unworkable methodologies. Entering the UN climate negotiations in Copenhagen this December, the world has yet to make decisions about the tradeoff between certainty and pragmatism.

“What’s the right balance?” he asks. “We have not found that yet.”

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Additional resources

It’s expensive to develop carbon offset projects that reduce emissions by capturing carbon in trees, and one reason is that every project has to develop its own methodologies for measuring results. The UNFCCC is asking for help in streamlining that process.

30 July 2009 | The United Nations Framework Convention on Climate Change (UNFCCC) has released a technical paper on the cost of implementing methodologies and monitoring systems related to estimates on greenhouse gas emissions from deforestation and forest degradation – as well as the assessment of carbon stocks and greenhouse gas emissions from changes in forest cover and the enhancement of forest-carbon stocks.

The technical paper is available from the following link: UNFCCC Quick Guide to REDD.

The UNFCCC REDD Web Platform requests comments and information sharing from Parties at the country level, organizations and other stakeholders to share relevant information regarding their experiences, lessons learned, cost estimates, case studies and other resources such as step-by-step guides to establishing national monitoring systems in different developing country contexts.

The UNFCCC REDD Web Platform has created a space where this information will be posted. Please submit information to the following e-mail address: [email protected].

Technical Paper: The Summary

The technical paper provides the following:

For further details, visit the Forest Carbon Portal‘s Methodology Watch and Standards Update.

13 April 2009 | Mario Monzoni says the idea of drafting the Cuiabí¡ Declaration hit him while he was moderating a panel on public policies for avoiding deforestation on day two of the 14th Katoomba Meeting, in Mato Grosso, Brazil.

“I looked out and saw 1400 people – among them governors from Amazonian states, consumers, representatives of social movements and non-governmental organizations (NGOs), major producers – all reaching consensus agreement that we had to push forward with a Brazilian position in Copenhagen,” he says – referring to the 15th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 15), which is supposed to yield a new global climate-change regime to replace the Kyoto Protocol, and takes place this December in Copenhagen, Denmark.

“I realized that never before had we had such momentum,” he says. “I thought, ‘Let’s grab this.'”

Two days later, delegates from these disparate and often contentious groups were hammering out the fine points of the two-page document, which urges Brazil’s federal government to reverse its opposition to direct payments from abroad to people and entities that reduce greenhouse gas emissions from deforestation and forest degradation (REDD), and to involve more stakeholders in the process of forming climate-change policy.

The declaration will soon be circulated among the organizations that attended the Katoomba Meeting for official endorsement, and will then be presented to governors of Amazonian states, and finally delivered to President Luiz Iní¡cio Lula da Silva. It can also be endorsed online here

Who Has Jurisdiction?

The declaration states that “the elaboration of Brazil’s national position should be the result of an agile process, yet one that is open, participatory and transparent, through dialog with the interested stakeholders,” and later adds, “The targets for reduced deforestation should be shared between the federal government and each state in the Brazilian Amazon, in the context of the State Plans for Prevention and Control of Deforestation.”

It does not directly address which federal ministry should administer climate-change policy, but delegates to the Katoomba meeting clearly advocate a change from the current practice of leaving it up to the Ministry of External Relations (MRE, Ministério das Relaçíµes Exteriores) and the Ministry of Science and Technology (MCT, Ministério da Ciíªncia e Tecnologia), which critics say are overly concerned with issues of sovereignty and energy.

“Right now, all of the decisions regarding climate-change policy are made by five people – in general, officials from the Ministry of External Relations and the Ministry of Science and Technology,” says Monzoni, who runs the Center for Sustainability Studies at Brazilian university Fundaçí£o Getulio Vargas. “That’s just not acceptable in a country of 200 million people.”

Building Consensus

Monzoni says it was necessary to keep the language broad, and stressed the need to move forward quickly.

“In Copenhagen, there will most likely be decisions that will cover how we’re going to deal with avoided deforestation, and these will likely be irreversible,” he says. “If we aren’t taking the lead right now and coming up with a position that conforms to the wishes of most of society, it’s going to be too late.”

The result is a lean document that focuses on broad principles – and is limited to REDD.

“We have to focus on REDD at this point,” says Mozoni. “The other biomasses are important, but if we lose focus, we might not reach our objectives.

Representatives from several state environmental agencies have already lent support to the Declaration, which is being administered by local NGO Instituto Centro de Vida (ICV).

Steve Zwick is Managing Editor of Ecosystem Marketplace. He can be reached at [email protected].

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Additional resources

If you want to sell carbon offsets in exchange for action that reduces greenhouse gas emissions, you first have to prove that the money you’re earning is what makes the action you’re taking possible. That, in a nutshell, is “additionality” – a simple concept, but one that’s proving difficult to put into practice.

13 July 2009 | Additionality is a cornerstone of environmental finance – and one of the sector’s most contentious issues.

Without it, carbon offset projects have no credibility, and thus no value. Billions of dollars in carbon revenue thus hinge on the definition of additionality and the debate over how to establish methodologies for determining whether additionality has been achieved.

To date, the most common methodology for measuring additionality has been the project-by-project or “bottom up” approach, but a growing number of practitioners complain this approach is inconsistent and ultimately unworkable. They advocate a “top-down” approach using industry-wide benchmarks.

Project-by-Project Approach

Whether or not a carbon offset project is additional can be measured in a few different ways using a project-by-project approach:

Financial/Investment: Would the carbon offset project have been possible without the use of carbon finance? In other words, is the return-on-investment from the project too low, or would the project owner have been unable to provide upfront financing for the project without carbon financing? If yes, then the project can be considered additional.

Legal and Regulatory: Does the carbon offset project go beyond compliance requirements? If yes, is it also occurring in addition to other practices that might have occurred anyway? For instance, if the project is beyond ordinary compliance but is part of a cost-cutting exercise, then it cannot be considered additional. If the project is occurring outside of obligatory compliance and would not have been considered for other strategic reasons, then the project is additional.

Barriers: Does the project overcome non-financial barriers (technical, skill-based, institutional) that would not have been an issue under a business as usual scenario? If yes, then the project can be considered additional.

Common Practice: Are the technologies that are being employed through the project commonly used? If not, then the project could be considered additional.

Benchmark Approach

Recently, however, in response to concerns over the integrity of many carbon offsets approved under the UN Clean Development Mechanism (CDM), experts such as Ken Newcombe, the founding head of the World Bank’s Carbon Finance Unit, have promoted the use of a “top down” approach based on industry-wide benchmarks.

Under this approach, an emissions benchmark is established for a sector, and emissions reductions are then evaluated on the basis of their deviation from that benchmark in order to determine whether or not an additional reduction in emissions has occurred.

Because the top-down approach has pre-established parameters for determining what is additional, many believe it is much more objective and therefore less likely to be manipulated than the project approach. The US Regional Greenhouse Gas Initiative (RGGI) currently uses the benchmark approach in the administration of its program and the California Climate Action Registry (CCAR) also plans on adopting sector-based protocols.

Concerns with Measuring Additionality

Measuring and proving the additionality of a carbon offset project can be a difficult feat, at times resulting in harsh criticism of the carbon offset market, its incentive structures, and its regulation. For instance, under the current system, auditors are tasked with providing objective analysis of project additionality for the CDM executive board, but at the same time are being paid by project developers. Some might find parallels between carbon offset auditors and the financial ratings agencies tasked with objectively evaluating the investment potential of various debt instruments.

The Road to Copenhagen: New Approaches for Additionality

It is uncertain exactly how the rules around offset additionality will shape up in the next Climate Treaty and in country level rule-making, though it is clear that the mistakes made under the Kyoto Protocol must be addressed in order to truly begin to mitigate the climate change problem.

Avril David conducts research on the terrestrial carbon sector for Ecosystem Marketplace’s Forest Carbon Portal. She may be reached at [email protected].

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Deforestation accounts for 20% of all greenhouse gas emissions, and the UN bodies charged with mapping out the role of forestry offsets in a post-Kyoto climate-change regime are meeting in Bonn, Germany, this week and next to continue the process of hammering out their differences. The groups will meet at least three more times before gathering in Copenhagen at the end of the year.

2 June 2009 | Delegates from 182 nations are beginning to arrive in the former German capital of Bonn to hammer their preferences into a 53-page negotiating text that will be kicked around ad nauseum between now and December, when the final version is set to be presented to high-level negotiators UN Framework Convention on Climate Change’s (UNFCCC) Conference of the Parties in Copenhagen.

On Monday, the working groups charged with hashing out sticky policy issues (see The UNFCCC Process, right) approved their agendas for the next two weeks, and not surprisingly Reducing Emissions from Deforestation and Forest Degradation (REDD) figures prominently.

Over the next few days, the various contact groups will be taking shape, and we may soon have a decision on whether or not to break REDD into a separate negotiating stream. As the negotiations develop, Ecosystem Marketplace will be keeping tabs on them for you.

For now, here is a summary of the negotiations to date (slightly adapted from Tracking Trees on the Road to Copenhagen, which ran last month):

Financing REDD

It is an axiom of life that money complicates everything, and so it is for REDD. Over the course of the last Bonn meetings, the debate continued regarding how to finance the reduction of deforestation in developing countries. Should REDD be financed in the model of traditional government-to-government development funding, or should it be linked to a market, and should it generate credits that can be used by industrialized countries to meet their emissions targets?

No consensus was reached on these questions in previous Bonn meetings, but there was a general trend in the discussions towards developing a hybrid approach combining the various funding options.

A proposal from Norway helped focus earlier discussions around the idea of a multi-phased process for REDD implementation that would be customizable, to fit the circumstances of each participating country. Correspondingly, each phase would be funded through a different finance mechanism, beginning with direct government assistance, and culminating in the generation of credits that developed countries could use to meet their emission targets. The Government of Norway released a report that elaborates this approach.

Land Use, Land-Use Change and Forestry (LULUCF)

Leaving REDD aside, carbon emissions and sequestration from changing land use are already a part of the Kyoto Protocol, where industrialized countries must account for their LULUCF emissions. During a meeting of another of the working groups referred to above, the AWG-KP, a carbon accounting option suggested by the European Union caused quite a stir. The accounting method, known as the “bar approach”, proposes that a country would have a reference level of LULUCF emissions (or reductions), based on some agreed-upon historical baseline. If the country went below that emission level, it would be credited; if it went above, it would be debited.

The influential Climate Action Network viewed this proposal with a healthy dose of skepticism, suggesting in its ECO newsletter that the method might be susceptible to ‘gaming’. Without a doubt, however, the issue will reappear at the next AG-KP meetings, set for early June in Bonn.

Indigenous Rights

The rights of Indigenous Peoples in the development and implementation of REDD also continued to be a contentious issue at previous Bonn meetings, with a number of organizations contending that little was being done to enable the participation of indigenous communities, or to protect the right to free, prior and informed consent (FPIC), as provided in the UN Declaration on the Rights of Indigenous Peoples.

Copenhagen: The End of the Beginning for REDD?

While the addition of two new working group meetings on the UNFCCC schedule indicates a true commitment on the part of the working groups to bring substantial and specific text to Copenhagen for negotiation, it is still too early to tell how much progress can honestly be made in the next six months. Referring to the REDD negotiations, AWG-LCA chair Zammit Cutajar urged prudence from the participants. He reminded them that the famously complicated Clean Development Mechanism (CDM) is only covered in one small article in the Kyoto Protocol, and suggested that participants focus on sending the right ‘signal’ in Copenhagen, with the details being hashed out later.

Perhaps REDD will be a mere sentence in the Copenhagen document, leaving the details for yet another day?

Reporting and Summaries

At each UNFCCC meeting, organizations and institutions offer their perspective on the events, either through reporting or analysis. Here we have highlighted a few we found particularly useful.

Earth Negotiations Bulletin

For those that want to follow the events of the Bonn meeting in detail, the International Institute for Sustainable Development (IISD) reporting service provides the most consistent and impartial reportage throughout the various climate negotiations. You can download the wrap-up from the Bonn meetings, or you can view the index of their daily Bonn reporting. A word of caution: These summaries are laden with acronyms and arcane terminology.

Carbon Finance

In an insightful piece, Andrei Marcu, a senior advisor on emissions trading at the Canadian law firm Bennett Jones and negotiator for Panama, reads the tea leaves on the REDD discussions at Bonn, to try to divine what might happen in Copenhagen. He also offers insights into what it all might mean for businesses and investors.

Global Canopy Program Blog

With two bookend postings from the Bonn meetings, Charlie Parker of the Global Canopy Program provides a quick summary of what could have happened and what did happen with regards to REDD in the various policy negotiating streams, and offers a another perspective the ultimate outcome Copenhagen.

ECO Newsletter

The Climate Action Network, which we alluded to above, represents 450 non-governmental organizations (NGOs) and provides daily coverage and (often witty) commentary from the NGO perspective through its ECO Newsletter.

Statements and Outputs

To coincide with the Bonn meetings, a number of organizations and institutions released reports to inform, and in some cases influence, the discussions. Here are a few of the relevant publications.

The International Institute for Environment and Development (IIED) released two briefings by Virgilio Viana, director general of the Amazonas Sustainable Foundation which helped to pioneer a system of REDD payments in Amazonas. In the briefings, Viana makes the argument for funding approach for REDD that combines market access (carbon credits) with funding from governments.

Greenpeace released a report proposing that including forest offset credits in carbon markets would cause a 75 percent collapse in the price of carbon, triggering a subsequent reduction in clean technology investments. The report, however, highlights findings of an unconstrained scenario as opposed to the more likely one with politically constrained supply.

Additionally, the recent draft US climate bill evidences a strong US demand projection for credits and thus the likelihood of international forestry credits causing global carbon prices to crash also decreases significantly. Moreover, revenue from the strategic reserve auctions and allowance set asides in the supplemental pollution reduction program to retire forestry credits should mitigate the deflationary price pressure as well.

A number of organizations are attempting to work the issue of agriculture into the negotiations, both in terms of adaptation and mitigation. The International Food Policy Research Institute (IFPRI) released a brief summarizing the main arguments for doing so.

UNFCCC Resources

As with any major UNFCCC meeting, there are a host of official documents to sort through. These are all available at the UNFCCC website for that particular meeting. There, one can find the documents that various stakeholders and observer organizations submitted in advance of the meeting, to see where they stand on the issues.

Of unique interest is the focus document for the working group on long-term cooperative action, written by the Chair of the working group. Released in two parts (one and

Evan W. Johnson is a Forest Carbon Consultant based in the US State of California. He can be reached at [email protected].

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Additional resources

UN negotiators meeting in Bonn, Germany, made progress on Reducing Emissions from Deforestation and Forest Degradation (REDD), while delegates to the Katoomba Meeting in Cuiabí¡, Brazil, broadly endorsed the use of REDD financing to save the Amazon Rainforest. Ecosystem Marketplace examines the best coverage of both proceedings.

8 April 2009 | The destruction of tropical rainforests accounts for roughly 20% of all greenhouse gasses, and is arguably the easiest cause to remedy: simply stop chopping down the trees.

That’s the logic behind allowing carbon offsets in the industrialized world for projects that reduce greenhouse gas emissions from deforestation and degradation (REDD) in the developing world, a concept that took a step closer to global acceptance at this week’s global climate change talks in Bonn, Germany.

If you’re already familiar with the vagaries of climate change negotiations, you’ll find a detailed analysis of the week’s results on the blog that blog that Charlie Parker of the Global Canopy Programme has been posting from the event.

If you’re new to REDD – or if you understand the REDD concept but can’t make heads or tails of UN negotiations surrounding it, see our December coverage of the Poznan Climate Change Talks and New York Times has posted a jargon-free summary.

The Debate Players

REDD has become one of the more controversial greenhouse gas mitigation strategies, and the conference opened with Greenpeace presenting the argument that allowing forestry offsets into a post-Kyoto accord would flood the regulated market with cheap offsets, thus reducing the incentives for industrial emitters to reduce their emissions. It’s a controversial argument and, we would argue, a weak one (some studies show that the cost of REDD projects will increase over time, and that there are plenty of less expensive industrial-reduction alternatives, for example, while others argue that the problem can easily be solved by simply pushing for deeper cuts than the current 20% by 2020 and then include forestry – arguments we will be examining in the weeks ahead).

On Tuesday, a high-level body charged with defining offset policies (the so-called “Ad Hoc Working Group on Long-term Cooperative Action under the Convention“, or AWG-LCA) is met to discuss the role of REDD.

If the AWG-LCA can set a clear policy agenda, the matter will be passed to another body that provides guidance on scientific and technical matters (the so-called “Subsidiary Body for Scientific and Technological Advice“, or SBSTA).

Taking Stock of Bonn and Mato Grosso

Charlie’s blog covers the latest developments in the AWG-LCA, and in the weeks ahead, we will be piecing together news out of Bonn with news flowing from the recent Katoomba Meeting in Mato Grosso, which ended in a draft letter urging Brazil’s federal government to endorse REDD.

The draft was put together by representatives from non-governmental organizations (NGOs) attending the Katoomba Meeting, and it will be polished and endorsed this week and then presented to governors of states in Brazil, Bolivia, and Peru across whose states the Amazon Rainforest spreads. Then the endorsed letter will presented to Brazilian President Luiz Iní¡cio Lula da Silva.

Growing Support for REDD

As became clear in Bonn and Mato Grosso, support for REDD is growing from the bottom up, even if it faces opposition from a few NGOs and politicians. Indeed, a new study about to be released by EcoSecurities and GreenBiz is expected to reveal increased demand among potential buyers, tempered by uncertainly over the direction regulators are expected to take.

EM’s Kate Hamilton, who co-authors the annual State of the Voluntary Carbon Market (and therefore knows a thing or two about what’s happening beyond the headlines) caught up to Johannes Ebeling of Ecosecurities on day three of the Katoomba Meeting. You can hear the two comparing notes here:

Steve Zwick is Managing Editor of Ecosystem Marketplace. He can be reached at [email protected].

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