Reducing Emissions from Deforestation & Forest Degradation

(REDD)Shalmali Guttal, Focus on the Global South, July

31, 2012

Markets??

What is REDD+?

• REDD+ : countries' efforts to  reduce CO2 emissions that arise from deforestation and forest degradation, and foster conservation, sustainable management of forests, and enhancement of forest carbon stocks.

• Deforestation & forest degradation 2nd leading cause of global warming, responsible for about 15% of global greenhouse gas emissions; preventing identified as one of the most cost-effective ways to lower emissions.

• Eighty percent of the Earth’s above-ground terrestrial carbon & forty percent of below-ground terrestrial carbon is in forests

• Most emissions from deforestation take place rapidly, whereas carbon removal from the atmosphere through afforestation and reforestation activities is a slow process.

Source: http://www.forestcarbonpartnership.org/fcp/node/30

What is REDD+?

• First proposed in 2005, Montreal Conference of Parties (COP) to the UNFCCC, by Coalition of Rainforest Nations (PNG and Costa Rica)

• Discussed in subsequent COPs—Bali (Bali Action Plan) and Copenhagen;

• REDD became REDD Plus (+): additional elements added

What is REDD+?

REDD+ adopted at the 16th COP in Cancun in December 2010; encourages developing countries to contribute to mitigation actions in the forest sector through:

a) Reducing emissions from deforestation; b) Reducing emissions from forest degradation;c) Conservation of forest carbon stocks;d) Sustainable management of forests, and;e) Enhancement of forest carbon stocks.

Actors in REDD

• Governments—parties to UNFCCC

• Local communities, IPs, forest communities

• The UNFCCC world of scientists and experts

• Multilateral agencies: UN, World Bank, ADB, etc.

• International experts on forestry, carbon measurement, etc.

• International conservation and other etc.NGOs

• Private sector—carbon traders, market, etc.

What is REDD+?

• According to UN REDD: REDD is an effort to create a financial value for the carbon stored in forests, offering incentives for developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development.

• It is predicted that financial flows for greenhouse gas emission reductions from REDD+ could reach up to US$30 billion a year.

What is REDD+?

Extremely complex: needs many enabling factors to co-exist at the same time and complement one another:

Identify real drivers of deforestation & degradation,& strategy to stop/control them—investment model, consumption, development strategy, corruption, law enforcement, etc.

Security of tenure of local communities to land, forests; secure livelihoods;

Cutting emissions among the wealthy

FREE PRIOR & INFORMED CONSENTsource: AIPP

FPIC is mechanism and a process wherein indigenous peoples undertake their own/independent collective decision on matters that affects them as an exercise of their right to their land, territories and resources, their right to self-determination and to cultural integrity.

• FPIC is a reiterative process to be undertaken in good faith to ensure mutual respect and meaningful participation in decision-making

• FPIC is not merely a procedural process but a substantive mechanism to ensure the respect of indigenous peoples’ collective rights

Principles and substance of FPICsource: AIPP

• The elements of FPIC are inter-related and should be taken holistically as one distinct decision-making mechanism specifically for indigenous peoples ensuring the respect for their collective rights

• The first three elements ( Free Prior and Informed) qualify and set the conditions for a consent decision• Violations to any of this element invalidates a

consent decision

• All the elements should be consistent with the broader framework of respecting IP collective rights

How is REDD+ financed?No agreement at UNFCCC yet. But many interim commitments and several

programmes already exist.

Copenhagen Accord ‘fast start’ funds ‘agreed’• $3.5 billion pledged by 6 countries (Australia, France, Japan, Norway, UK and

US) for REDD. • Global REDD+ Partnership also pledged• Total pledges $4 billion. • 23% of pledged resources are allocated to Asia Pacific countries ($964 million)

Multilateral REDD+ Support Programmes• ($434 m for Asia Pacific (AP)

region)• Forest Carbon Partnership Facility

(FCPF)• UN-REDD Programme (UN-REDD)• Forest Investment Program (FIP) of

the Climate Investment Funds• Global Environment Facility -

Sustainable Forest Management and REDD+ Program (GEF-SFM/REDD+)

Other sources of finance• Bilateral Partners

• ($531 m for Asia Pacific region)

• In-Country Contributions – the governments take on 10-

25 % of project costs.• Voluntary Carbon Market - 22

% of registered forestry projects are part of VCM

How is REDD+ Financed?

• Multiple sources, for REDD Readiness and pilot projects

• UN REDD (FAO, UNDP, UNEP)

• World Bank: FCPF, FIP, Green Climate Fund, etc.

• Bilateral donors—also included in aid packages

• International NGOs, conservation groups, private foundations

• Private sector—carbon markets

How is REDD+ Financed?

• REDD-Readiness is a national strategy to prepare for a post-2012 REDD payment mechanism funded by multi-laterals.

• REDD-Readiness is normally developed in-part to slot within a United Nations system and in-part for integration with private carbon markets. This tends to entail the national-level implementation of REDD, rather than the project level implementation.

How is REDD+ Financed?(Source: http://forest-carbon.org/faq/what-is-redd-readiness/)

Additional capacity support in forest governance to execute REDD activities & handle REDD financing effectively

• National strategies to reduce emissions thru local stakeholder consultations,• Institutional, technical, human capacity building,• Designing/implementing Monitoring, Reporting, &Verification (MRV) systems, & national forest carbon accounting systems,• Developing national systems for determining baselines and Reference Emissions Levels,• Transparent, equitable and accountable benefit sharing mechanisms,• Developing safeguards and grievance mechanisms to protect the interests of forest communities and the poor• Clarify national land, forest and carbon tenure rights.

How is REDD+ Financed?(Source: Bank Information Centre)

How is REDD+ Financed?

Disagreements among many countries in recent meeting in Bonn (14-25 May 2012).

Parties differed in their views on the use of private finance, market mechanisms and offsets for forest-related activities.

Many developing countries insisted that REDD financing should come through public sources and non-market approaches; some rejected the use of offsets.

Recent studies show that forest carbon market not expanding.

Some Important Problems

• Deceptive: guiding logic is: provide financial incentives to governments and forest owners in developing countries prevent deforestation & forest degradation

• But payments are not for actually protecting natural forests, but for reducing emissions from deforestation/forest degradation.

• A government or forest owner must show that a forest is being destroyed/degraded, & that this can be stopped in exchange for money that compensates for earnings from clearing or degrading the forest

Some Important Problems

Offset and carbon trading: REDD will develop markets to sell the capacity of forests to store CO2.Carbon trading does not reduce emissions: for every carbon credit sold, there is a buyer. Trading forest carbon would allow pollution in rich countries to continue, meaning that global warming would continue. High GHG emitters (in wealthy & developing countries) can purchase forest carbon credits and avoid their own ethical responsibilities to cut emissions.Governments or forest owners in developing countries will be encouraged to deforest (or to threaten to do so) so that they can receive payments to prevent it.

Some Important Problems

Forests viewed as stores of carbon rather than as complex eco-systems that support wide varieties of life, biological processes and people.

UN definition of forests does not distinguish between natural forests & plantations, leaving the door open for investors & governments to convert natural forests (even if sparse) to plantations + still get money under REDD+.

“Degraded” forests are often areas valuable to local communities as sources of food, medicinal plants & NTFPs important for local diets and incomes.

Some Important Problems

Many forest conservation programmes have unfortunate histories of evicting local communities from forest areas once they are zoned as national parks and protected areas.

At the same time, logging is permitted in particular forest sections which may be old growth forests, community forests and the ancestral domains of indigenous peoples.

Some Important Problems

Financial risks of carbon markets: create new bubble of financial derivatives

There are already extremely complicated carbon derivatives on the market; adding forest carbon credits to these means exposing forests to market volatility & instability.

Difficulties in measuring and guaranteeing the amount of carbon stored in forests for fixed terms; REDD can bring in new forms of corruption and criminality

Some Important Problems

Tenure, Governance and Rights

Who owns the forests? Who should be rewarded for protecting and not cutting forests?

The rights of rural and indigenous peoples communities to make decisions about forest management not recognised.

Enable new property rights: those who buy REDD credits can own a portion of the capacity of the forest to sequester carbon for a certain period of time.

Alternatives

Protect forests & the environment or create forest carbon & environment markets?

Control the real drivers of deforestation: logging, mining, destructive commercial interests…

Stop conversions of forest and agricultural lands to agro-industrial estates and industrial plantations

Reduce consumption & demands for products sourced from forests (minerals, biofuels, animal feeds, rubber, high value timber, etc.) – low carbon for everyone…

AlternativesUse REDD Readiness funds for programmes & infrastructure to strengthen:

Tenurial rights of local communities to lands, forests & eco-systems

Forest & ecosystem conservation & restoration that respect community rights & participation

Community forestry and fisheries; local livelihoods and economic foundations