Carbon trading: Saving forests and communities Michael Bengwayan

Carbon trading: Saving forests and communities

Michael A Bengwayan
BALI

BY ALL indications after all the rhetoric from the international environmental meet here, carbon trading is now looking more and more as the “winningest option” to save forests and communities.

Carbon trading deals involving tree growing in developing countries will provide greater benefits than just improving the environment. It could sharply reduce poverty among the rural poor and provide businesses with an inexpensive way to offset their carbon emissions.

A report entitled Forest carbon and Local Livelihoods: Assessment and Policy Recommendations argues that the use of forests to reduce carbon emissions is financially viable, and brings considerable benefits to people in rural communities.

The research counters the view that most carbon-trading deals between industry and tree growers in developing countries will have negative environmental and social consequences.

Carbon trading allows industries in developed countries to off-set their emissions of carbon dioxide by investing in reforestation and clean energy projects in developing countries.

The report, prepared by the Centre for International Forestry Research (Cifor) and Forests Trends, are seeking major changes to the carbon trading rules under the Kyoto Protocol.

Both authorities say that community-friendly forest carbon projects are unlikely to take root without proactive changes in the Kyoto Protocols Clean Development Mechanism rules, and in the approaches that developing countries and project designers are taking.

The report seeks action in four main areas.

Make all types of forestry and agroforestry projects with significant benefits for local communities eligible for the Clean Development Mechanism (as long as they also meet rigorous requirements for carbon benefits). For example, draft rules omit forest rehabilitation as an approved activity despite its enormous social benefits and significant carbon-sequestration potential.

Reduce risks for local communities. The rules should require assessments of the social impact of projects to ascertain how local people have benefited or been harmed. National governments will need to protect and formalise land tenure rights of communities, or carbon deals will be riddled with conflict, increasing their financial risk for investors.

Reduce the cost of managing community projects. Private businesses and NGOs can act as intermediaries to combine the carbon offsets produced by multiple farmers or communities and sell them jointly to buyers. For example, in Mexico, a local environmental organisation helped to organise 400 small-scale farmers in 20 communities to sequester carbon by planting trees around their crop fields. With the NGO acting as the intermediary, the farmers sold carbon credits equal to 17,000 tonnes of carbon to the International Federation of Automobiles for between US$10 ($14.5) and $12 per tonne of carbon. The CDM rules should make community-based forestry projects eligible for the low-cost “fast-track” approval process.

Reduce risks and costs for investors. The report notes that there are new players in the carbon-trading field who can simplify deal making and reduce the costs of organising and marketing community tree-growing projects. For example, industry buyers are now able to purchase carbon offsets from investors who have portfolios of projects, which spreads risk. The independent, non-profit Face Foundation has developed a portfolio of five projects in five countries, affecting 135,000 hectares that sequester 21 million tonnes of carbon.

The report estimates that many community-based projects could sell carbon credits for $US 15 to $US 25 per tonne of sequestered carbon. This could mean a potential private financial flow of $US300 million per year to some of the world’s poorest people — more than the current annual flows of official overseas aid for forestry development in poor countries.

The writer is based in Manila covering environment and community development issues.

The Brunei Times