This Week In Forest Carbon: Tax Revenue Builds Big PES Scheme In India

For the first time ever, India is including forest cover in its tax allocation formula earmarking $6 billion for results-based forest conservation-more than any other nation in the world. This means state government’s portion of tax revenue is partially dependent on how much forestland it has maintained.

For the first time ever, India is including forest cover in its tax allocation formula earmarking $6 billion for results-based forest conservation-more than any other nation in the world. This means the portion of tax revenue state governments receive is partially dependent on how much forestland they maintain.

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


20 March 2015 | Here at the office we are gearing up for March Madness, ready with our brackets, hoping for Cinderella stories to make it to the final four. Over in India, the central government has geared up its own form of a bracket, allocating $6 billion a year in tax revenue for results-based forest conservation within individual states. This announcement comes after the Narendra Modi government realized its pledge to treat states as partners in long-term development, and will transfer 42% of taxes collected by the Central government to states.

The formula for tax allocation to states will, for the first time ever, include forest cover.

India’s 14th Finance Commission, which is appointed every five years to define the financial relations between India’s central government and states, recommended adding forest cover to the formula because: “In our view, forests, a global public good, should not be seen as a handicap but as a national resource to be preserved and expanded to full potential, including afforestation in degraded forests or forests with low density cover. Maintaining a green cover, and adding to it, would also enable the nation to meet its international obligations on environment-related measures.”


Within the tax formula, forest cover has been given a weight of 7.5% within the overall formula, accompanying population in 1971 (17.5%), population in 2011 (10 %), fiscal capacity  (50%) and land area (15%).  This means that the share of tax revenue that each state receives will depend in part on how much forest they have maintained, as monitored by India’s 2013 Forest Survey.


To put the tax transfer in context, $6 billion is “more results-based finance for forest conservation than any other country in the world, including the current biggest spender Norway,” notes Jonah Busch, Research Fellow at the Center for Global Development, in a recent analysis. Since 2008, Norway has offered around $3 billion for reducing emissions from deforestation (REDD+) through bilateral agreements with Brazil, Indonesia, Guyana, and others.


India reports that its re-growing forests remove more than 200 million tonnes of carbon dioxide (CO2) from the atmosphere every year, which offsets about 15% of its greenhouse gas emissions. Additionally, the tax transfer works out to about $120 per hectare per year, which is a larger payment than many other payments-for-ecosystem services programs provide. For example, carbon finance from offset sales flowing to REDD projects averaged $5.2 per hectare globally in 2013, according to Ecosystem Markplace data.


More stories from the forest carbon market are summarized below, so keep reading.


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Forest Trends and Host Sustainable Brands will launch a new project called Supply Change during a webinar on March 25. The project, resulting from a partnership by the CDP, World Wildlife Fund and Ecosystem Marketplace, will provide up-to-the-minute accounting of corporate actions on deforestation relative to public pledges via the new Supply-Change.Org website. An inaugural report, Commodities, Corporations, and Commitments that Count, will also profile nearly 250 companies with more than 300 specific commitments to sustainable production or use of major forest-risk commodities (palm oil, soy, timber & pulp, cattle). Register here to attend the live web-launch of Supply Change hosted by Sustainable Brands.


Forgive and forget?

Deforestation rates are on the rise again due to an improving global economy, rising commodity prices, and new Brazilian laws that encourage development of the Amazon, according to ecologist Philip Fearnside of the National Institute for Research in the Amazon. After declining deforestation rates from 2004 to 2012, deforestation doubled between September 2014 and January 2015 compared to rates from one year earlier. The new Forest Code is one factor in rising deforestation, because illegal deforesters now assume future amnesty laws will be passed forgiving illegal logging. Another threat is the construction of the BR 319 Highway, which will link Manaus, in the center of the Amazon, with the heavily deforested south and enable people to move into, and around, the Amazon more easily.



Devine intervention

BioCarbon Group and Devine Agribusiness have sold over 300,000 Kyoto-compliant Australian Carbon Credit Units generated from eight forest regeneration projects in eastern Australia. The credits were purchased by a large, multinational, electric company. Director of Devine Agribusiness Carbon Dominic Devine says that “the sale of these carbon credits finally demonstrates that substantial opportunities now exist for Australian landholders to diversify their income through carbon farming.”


Beaten to a pulp

Manufacturer 3M Company reached an agreement with longtime critic ForestEthics to refuse to buy wood, paper, and pulp sourced from threatened forests. 3M will require suppliers to trace and report the original “forest sources” of the supply and to secure informed consent of indigenous peoples prior to logging. ForestEthics first targeted 3M in 2013, attacking the company’s supply-chain policies for products such as post-it notes, Scotch tape products, and labels. The new policy will affect at least 5,000 pulp and paper suppliers in 70 countries, and will cost 3M more time and money to oversee the new program.


Giving them the boot

The Roundtable on Sustainable Palm Oil (RPSO) announced the expulsion of 15 companies and organizations that have failed for three consecutive years to submit annual reports outlining the progress toward certifying palm oil operations or purchasing certified palm oil. The World Wide Fund for Nature (WWF) commended RPSO for removing members who failed to meet their commitment, while drawing attention to the need for more growers to develop certified mills. Currently only 57 of 119 of RSPO members have their own mill. WWF also called for the last one-third of supply chain companies to become certified users of RSPO.



No strings attached

Australia will not be able to dictate where its $200 million contribution to the Green Climate Fund will be spent. Prime Minister Tony Abbott and environment minister Greg Hunt had previously said that engagement and funding were contingent upon support by the Fund for Asia Pacific, a focus on the rainforests, and combating illegal logging. The Fund’s executive director Héla Cheikhrouhou clarified that disbursement decisions concerning the $10 billion fund would be made by the board following a single set of guidelines and priorities, many of which happen to align with Australia’s priorities. Countries will be able to track how the fund is performing overall. Prior to Australia’s financial commitment, Abbott was a vocal critic and claimed Australia would not be contributing.


You got the wrong chief

The Amazon Working Group (GTA), a coalition of 600 associations representing smallholder farms, fishermen, rubber-tappers, and indigenous people in Brazil, accused the powerful Indigenous Missionary Council (CIMI) of slandering elected indigenous leaders who do not agree with CIMI’s stance on forestry management in the Amazon. “We reject [CIMI’s] declarations because they are lies created for the sole purpose of promoting conflict among indigenous peoples,” read a statement by GTA. Much of the criticism focused on CIMI revolves around allegations that CIMI selects indigenous individuals it chooses to work with and promotes them externally as duly-elected leaders. Recently, CIMI falsely identified Henrique Surui as overall chief of the Paiter-Surui, which he is not – Almir Surui is. CIMI has also sought to undermine projects they do not agree with, according to the GTA statement.


Deserting before their eyes

Zimbabwe’s land reform policies and subsequent economic collapse have negatively affected the local environment. Fuelwood is a major source of energy for cooking and heating homes for people who cannot afford electricity, or for when there are electricity shortages. In urban areas, the use of firewood has a larger environmental impact because live trees are harvested, whereas in rural areas people gather dead wood. Marylin Smith, a conservationist based in Zimbabwe and former staffer in the government of President Robert Mugabe, says, “The rate at which deforestation is occurring here will convert Zimbabwe into an outright desert in just 35 years if pragmatic solutions are not proffered urgently and also if people keep razing down trees for firewood without regulation.”



Under the peat sea

Permian Global, Wetlands International, and Silvestrum revised the Verified Carbon Standard’s REDD+ methodology to include projects that address deforestation of tropical peat forests and projects to restore damaged peat lands. The methodology now includes six modules for determination, quantification, and monitoring of the baseline carbon stock changes and project emissions associated with peat land conservation and restoration. Peat forests in Indonesia store, on average, 2,009 tonnes of carbon per hectare.


Borrowing from the past

The Gold Standard has issued a retroactive guideline for land use and forest projects that qualify as additional. The guideline allows a retroactive crediting period for early movers in land use and forest projects to aid them in accessing carbon finance for their projects. Afforestation and reforestation projects may earn carbon offsets for 10 years prior to using the Gold Standard Land Use and Forests framework, and agricultural projects may date their projects back up to five years.



Blue Devils are the top seed

Two Duke University graduate students are working to develop a new technology to measure forest carbon. The students are working to equip small unmanned aerial drones with GPS-guided light detection and ranging (LIDAR) sensors capable of surveying 1,000 acres in a day. They hope that when fully developed, the faster, cheaper technology could help develop carbon offset projects on small family owned parcels that are currently too small to justify more expensive carbon accounting. Last month, the students won a statewide $25,000 prize to help make their idea a reality.


Digital Love

The Global Forest Watch platform developed by the World Resources Institute and supported by over 60 partners, including Google, has brought transparency to the problem of deforestation and provides real-time tracking of tree cover loss and gain on a global level. It also allowed Mongabay to report that United Cacao, a company that promises to produce ethical, sustainable chocolate, had “quietly cut down more than 2,000 hectares of primary, closed-canopy rainforest” in the Peruvian Amazon. Since the launch of the platform, governments, companies, nonprofits, and individuals have layered on additional information such as land ownership details.



Out of sight, out of mind

More incentives are needed to reduce deforestation in the Amazon, according to a new study by the Center for International Forestry Research (CIFOR). Researchers evaluated the optimal policy to balance cost, benefits, and social equity. They determined that the most cost-effective mix of policy is dominated by command-and-control measures, which could conserve 30 hectares of forest for 1,000 Brazilian reals, or about $345 dollars, with an enforcement cost of about R$0.03. However, opportunity cost to land users is large. Between 2004 and 2012 this policy would have caused land users to lose $700 million annually. In addition, remote land users benefit from command-and-control policies because monitoring is difficult, whereas less remote users are subject to closer monitoring.

Food is eating the forest

The expansion of commercial agricultural fields is a leading driver of deforestation in Myanmar, according to a new report on deforestation, conversion timber, and land conflicts in the country by Forest Trends. Land conversion is taking place at an unprecedented rate, losing about 1.2 million acres of forests annually, and the government currently encourages increasing levels of investment for large-scale industrial agricultural expansion. Agricultural expansion has allowed access to high value conversion timber for export markets, the volume of exported timber increased from 2.7 million cubic meters to over 3.3 million cubic meters between 2011 and 2013.


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Based in Washington, D.C., the Research Assistant will be able to commit to 35-40 hours per week to support a range of activities under the Ecosystem Marketplace Carbon Markets Program, including supporting the development of the State of the Forest Carbon/Voluntary Carbon Markets reports. The ideal candidate will have a graduate degree, an interest in conservation finance/payments for ecosystem services and basic knowledge of the carbon markets or another ecosystem service market; excellent writing, verbal communications, research and organizational skills; and excellent working knowledge of Microsoft Excel.

Senior Program Associate – Winrock International

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Director of Policy – Forests and Climate, Climate Advisors

Based in Washington, D.C., the Director will be responsible for accelerating climate action, with a focus on policies that protect tropical forests. Five to fifteen years of practical experience advancing climate and forest-related policy objectives through strategic engagement with policymakers and constituents is necessary. A master’s or another advanced degree is preferred; bachelor’s considered if candidate has exceptionally high-level climate policy experience and political network.


Associate, Forest-Climate Policy and Research – Climate Advisors

Based in Washington, D.C., the Associate will contribute to the development of innovative policy solutions to halt climate change by protecting the world’s tropical forests. The Associate will be responsible for researching and writing high-impact policy briefs, background papers, and arranging and attending meeting with government officials, clients, and climate change stakeholders. One to three years of experience plus graduate degree preferred, bachelor’s considered with three to five years practical experience.

Manager, Landscape – Conservation International

Based in Phnom Penh, Cambodia, the Manager will oversee Conservation International’s support to three remote project sites in Cambodia, supervising planning, day-to-day and long-term management, as well as the financial and administrative aspects of the projects. The Manager will also pursue new possible projects in forest governance and trade, and facilitate multi-stakeholder policy review of Cambodian forestry management. A bachelor’s degree plus five years of practical experience in forest governance is required.

Conservation and GIS Specialist – Rainforest Trust

Based in Warrenton, Virginia, the Specialist will assist with protected area projects from inception to completion, and monitor their effectiveness through remote sensing techniques. A master’s or PhD and/or significant experience in conservation biology, environmental sciences, or a related field is preferable. Experience with Geographic Information Systems (GIS), ArcGIS, and remote sensing skills is required.


Program Manager – European Institute of Marine Studies

Based in Plouzané, France, the candidate(s) will work with the director, Linwood Pendleton, to build an international program on policy, management, and science regarding human uses of the sea and coast, including exploration of blue carbon. A master’s degree in economics, social science, or interdisciplinary studies with a focus on marine and coastal policy preferred (but not required) plus five years of experience, or a doctoral degree and two years of experience.



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