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The REDD Market Should Not End Up a Subprime House of Cards: Introducing a New REDD Architecture for Environmental IntegrityrXXXX American Chemical Society A dx.doi.org/10.1021/es202841b
|
Environ. Sci. Technol. XXXX, XXX, 000–000
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pubs.acs.org/est
The REDD Market Should Not End Up a Subprime House of Cards:
Introducing a New REDD Architecture for Environmental Integrity
Promode Kant
Institute of Green Economy, C-312, Defence Colony, New Delhi 110024, India
Shuirong Wu*
Research Institute of Forestry Policy and Information,Chinese Academy of Forestry, Wanshoushan, Haidian District,
Beijing 100091, China
A
t Cancun it was decided that “Reducing Emissions from
Deforestation and Forest Degradation and the Role of
Conservation,SustainableManagement ofForestsandEnhance-
ment of Forests Carbon Stocks in Developing Countries”,
commonly called REDD+ or REDD, will have access to both
publicfunding and marketfinance dependingprimarily upon the
state of preparedness of the participating countries. While there
remains a divergence of views between the developed and
developing countries, their aggregated expectations are that the
process should ensure environmental integrity of the carbon
credits generated, enhance equity, ensure that the benefits reach
the primary stakeholders including indigenous people, and
promote efficient use of resources in reaching the mitigation
objectives.
1
It has been suggested that REDD would work only if the
focusisonrestorationofdegradedforests,producingbioenergy
and generating employment.
2
While important in them-
selves, for the REDD market bioenergy and jobs are mere
byproduct with the only commodity on sale being the carbon
credit as a measure of extent of mitigation of climate change
achieved that is additional to what would have happened
anyway, adjusted for carbon leakages and expressed in terms of
carbon dioxide sequestered from the atmosphere and stored
in forests.
There is delay in the emergence of REDD carbon market on
account of serious doubts about the true mitigation value, or the
environmental integrity, of the REDD credits due to high
uncertainties arising out of undetected leakages particularly
those across country borders, and doubtful additionality due to
inaccurateandimprecisebaselines.Theuncertaintiesinbaselines
owe their origin to rapidly changing business environment,
heterogeneity of factors influencing baselines in different regions
of a country with significantly different levels of development,
and economic and political instability among many REDD
candidate countries.
Carbon leakages can wipe away mitigation benefits under
REDD achieved in a country. While those occurring within a
country would be captured under the national monitoring and
accounted for, the leakages across international borders could
escape detection and affect the environmental integrity of the
credits issued. So far no REDD mechanism has been proposed
thatcanseparate goodcreditsoftruemitigation valuefromthose
that could possibly be stained by leakages. The greatest concern
of investors in such a market would be the fear of buying goods
whose real worth is far less than that paid for, much like the
subprime housing crisis of 2008 when goodfinancial products of
low risks were bundled with those with high risks and sold as
composite products for leveraging, a financial innovation that
brought doom to the participating banks.
A critical feature of international leakages is that it occurs only
for commodities that can be accessed economically from
alternate forest areas in some other country. Thus the deforesta-
tion and degradation caused by sustenance agriculture by local
people, shifting cultivation, habitat expansion, forest fires, graz-
ing, firewood collection, small timber and most of nontimber
forest produce (NTFP) is rarely a cause of leakages across
national boundaries. On the contrary, that caused by large scale
production of timber, pulp, oil palm, rubber, beef, soya, bamboo,
and a few nontimber produce could easily translocate to new
custom territories and escape detection.
Received: August 15, 2011
Accepted: August 18, 2011
Revised: August 18, 2011
B dx.doi.org/10.1021/es202841b |Environ. Sci. Technol. XXXX, XXX, 000–000
Environmental Science & Technology
VIEWPOINT
This feature suggests a possible REDD architecture involving
zoning that can help ensure the environmental integrity of REDD
market through physical isolation of areas with possibilities of
international leakage and bundling similar emission causes together
for greater homogeneity and lower errors in baseline estimations,
while also permitting publicly funded nonmarket REDD activities to
functionalongsidethemarketbasedactivities.Forthispurposeseven
sectors are proposed for REDD+ as in the Table below:
Countries could opt for any or all of these seven sectors and
the opted sectors should cover the entire country between them
and be geographically exclusive which would thus also result in
physical zoning of countries. The baselines for these sectors
would be separate and could be aggregates of discrete subna-
tional sector baselines. With national baselines the credits
generated by components that do not have any possibility of
leakages across the national boundaries would be assured of
environmental integrity. Sectors 2 and 4 would include all forest
lands with possibilities of international leakages and will be
subject to specially designed monitoring methodologies and
deferred award of credits by two years to permit surveillance of
delayed leakages across the country borders.
The Sectors 6 and 7 related to conservation of carbon stocks
and sustainable forest management (SFM) should be eligible
only for Public Funding. This is because these activities can not
bemeasured interms ofoutputwhichforSFMisthe total capital
and productivity remaining intact across generations and, in the
case of conservation, it is the carbon stock and biodiversity
remaining constant over a long period. These practices are best
rewarded at appropriate interimpoints in the process rather than
waitingforthefinalproduct.Hencemarketswouldnotbeableto
address the needs of these sectors.
This procedure would ensure that instead of every REDD credit
becoming suspect only the credits generated under specificsectors
that have the possibility of such leakages would require special
monitoring. And the market would discount those credits that have
a higher probability of leakages unless the monitoring system is
consideredrobustenoughtoallaythefearsandwouldthusbeable
to ensure environmental integrity by punishing lapses in specific
cases rather than discounting the entire range of credits produced
under REDD market mechanism. This will also permit simulta-
neous operation of Fund based mechanism within same national
boundaries in distinct geographical areas and enable incorporation
of forestry projects under the CDM within the REDD framework.
’AUTHOR INFORMATION
Corresponding Author
*Phone: +86-10-62888322; e-mail: wushuirong@caf.ac.cn.
’REFERENCES
(1) UNFCCC. Report of the Conference of the Parties on Its Sixteenth
Session, held in Cancun from 29 November to 10 December 2010,
FCCC/CP/2010/7/Add.1, dated 15 March 2011.
(2) White, A. Cash alone will not slow forest carbon emissions.
Nature 2011, 471, 267.
Table 1. Country Wide Zoning of REDD+ Activities by Sector
sector scope identifying features
1 reducing deforestation from causes that have no
international leakages
caused by sustenance agriculture, shifting cultivation, habitat expansion
2 reducing deforestation from causes that may have
international leakages
caused by oil palm, beef production, agricultural exports
3 reducing forest degradation from causes that have no
international leakages
caused by fires, grazing, firewood collection, small timber and locally used ntfp
4 reducing forest degradation from causes that may have
international leakages
caused by timber extraction, paper and pulp, and few identified NTFP
5 enhancement of carbon stocks undertaken through reforestation and afforestation. Excludes enhancement
through forest management which would be a part of Sector 7. Will help
integrate CDM in REDD
6 conservation of carbon stocks undertaken through appropriate forest management and conservation
practices. eligible only for public funding
7 sustainable forest management undertaken through appropriate forest management. includes enhancement of
carbon stocks through forest management. eligible only for public funding
