Rhett Butler, writing at Yale's Environment 360 last week, talked about using the finacial markets to help preserve tropical rainforests (see As Rain Forests Disappear, A Market Solution Emerges, December 11th).
"The key question today is whether new models of conservation — including an increasingly popular, market-based program known as REDD — will be able to reverse the steady loss of tropical forests, not only in the Amazon, but also in Indonesia, Borneo, and Africa’s Congo basin, where virgin woodlands continue to be razed at an unprecedented rate."
Butler highlights a number of examples in Sumatra, Borneo, Guyana and involving financial players such as Merrill Lynch. In each case the premise is that REDD (reducing emmissions from deforestation and degredation) deals can make financial markets pay for the environmental services offered by healthy forests, including preservation of biodiversity, water supply and carbon sequestration.
The biggest REDD deal is undoubtedly the sustainable development fund announced by Brazil's president, Lula da Silva on December 1st (see Brazil Pledges to Cut Amazon Destruction in Half, Reuters, December 1st). Coinciding with the opening of the Poznan climate change discussions, President da Silva committed Brazil to reducing deforestation from 19,533 square kilomtres per year to 5,850 square kilometres by 2014.
Brazil is proposing to fund the change with a US $21 billion fund to be raised from developed countries, companies and others (Norway has already committed US $1 billion). A review of the plan at mongabay.com points to some questions: How will Brazil actually make significant changes in land use - the commitment remains vague, with money to be spent on "sustainable development and protected areas". And most of the changes are not scheduled to occur until after President da Silva's term in office ends in 2011.
Despite the negative view of forest based carbon sequestration among many players in todays carbon markets (e.g. Vancity: "we decided to use only offsets from projects that directly reduce energy consumption and/or create some kind of renewable energy"), the IPCC reports that more than 20% of current man-made emissions originate as a result of deforestation. If 20% of the problem relates to deforestation, approaches like REDD, that apply market based tools to slowing the pace of forest destruction, are essential to addressing the climate change problem. There are limits to how many protected areas can be created.
