Dollars, Hopes and Controversies - REDD in the Amazon

A Small Guide through a Complex Debate

November 11, 2010
By Thomas Fatheuer

It used to be the case that the abbreviation REDD (Reducing Emissions from Deforestation and Degradation) was only commonly heard among insiders in climate negotiations but it now has entered the lingo of NGOs, indigenous organisations and action groups in the Amazon with breathtaking speed. But REDD has also rapidly become a loaded word.While many have pinned their hopes on REDD to protect forests and the climate, others see the dangers of commercialising nature and habitats. One effect of REDD is already visible: it divides social movements (not only) in Latin America. Why does REDD provoke such different expectations?

REDD – from a plausible idea to a disputed issue

Deforestation causes carbon dioxide emissions (CO2) – according to estimates, approximately 15-20% of global CO2 emissions are the result of deforestation. Since the Stern Report was published in 2006, this idea, which is actually not new, gained new momentum. It was at this point that reducing deforestation became established as an ideal solution in global climate policy: it is affordable, relatively easy to implement and doesn’t conflict with the growth ambitions of the up-and-coming industrial powerhouses, India and China. A key component of the official climate negotiations at the climate conference in Bali in 2007 was reducing emissions associated with deforestation. The abbreviation REDD was born and it began its rapid career. The Bali Roadmap already incorporates a lot under REDD+: the reduction of deforestation, the preservation of forests, sustainable forest management and increasing carbon stocks in forests.

Already at this early stage, REDD revealed itself to be a battlefield in the Bali Roadmap: what officially should and can be considered REDD is still unclear and under dispute. The Bali Roadmap includes, e.g. «sustainable forest management», normally a description for large-scale timber management. The global debates about REDD are particularly evident in South America. The Amazon region and, Brazil in particular, is the largest area of rain forest in the world. The future of REDD is thus critically dependent on this region.

Great expectations

REDD has raised great expectations, not least of all among indigenous organisations and non-governmental organisations (NGOs) in Brazil. For proponents, REDD is a unique opportunity to create an economic basis for forest preservation. According to Paulo Moutinho from the Instituto de Pesquisa Ambiental da Amazônia (IPAM), the CO2 storage in the Brazilian Amazon rain forest is valued at US$ 500 billion. Protecting the forest could thus bring in more money than converting the rain forest to cropland for soybeans or grazing land for cattle. In an article in Science magazine (vol. 326, Dec. 2009), scientists from different countries calculated that totally stopping deforestation in the Brazilian Amazon rain forest would cost somewhere around US$ 7 to 18 billion per year. Daniel Nepstad, one of the authors of this study, thinks that not only is it possible for REDD to raise these enormous sums – he even thinks more is possible. «The goal of our study was not to project what the market can summon up, this could be much more (than 7-18 billion).»

If the huge figures like the ones here are involved, REDD cannot be compared to previous international programs. Billions of dollars every year for forest preservation would radically change the economic and social realities in the Amazon. It is also easy to understand that these figures trigger huge expectations in the social movements in the Amazon. Organisations of the Indigenous Peoples of the Amazon River Basin (COIAB), the rubber tappers (CNS), the Amazon Working Group (GTA) and Brazilian NGOs joined forces to mobilise in support of REDD. One important actor has turned out to be the Amazon Sustainable Forum (Forum da Amazônia Sustentável) which is coordinated by Imazon and includes, along with civil organisations, companies that play an important role in the Amazon such as the mining company Vale or the aluminium company Alcoa. These actors expressed their explicit support for REDD with market-based mechanisms – thus provoking a bitter discussion.

In the meantime, the objections to REDD with market-based mechanisms have added up. In 2009, an open letter, known as a Carta de Belém, was published in Brazil and signed by, among others, NGOs (FASE, Amigos da Terra Brazil), East Amazon Forum (FAOR) and farmer organisations (Via Campesina). The signatories of this statement explicitly reject turning the forest into a commercial good and commodity. The rejection of market-based mechanisms has intensified in other countries in South America with Brazil‘s involvement. The Americas Social Forum, the alternative climate summit of Cochabamba and the government of Bolivia have all written statements against REDD with market-based mechanisms. Lobbying efforts were also effective here. At the beginning, the government of Bolivia was completely in support of all types of REDD financing. Indigenous organisations in South America have signed numerous statements both for and against REDD. The lines drawn between these two camps, pro and contra, however, are increasingly starting to harden.

Why rely on the market?

The strong support for REDD with market-based mechanisms is evidently linked to the financial expectations that have been aroused. It is the belief of advocates that only the market can raise sufficient financial resources to secure the billions of dollars necessary to effectively protect the rain forest. Virgilio Viana, for instance, the former environmental minister of the state of Amazonas and active REDD lobbyist, assumes that an international CO2 market could mobilise «US$ 7 million per year until 2012».

Making these enormous sums available, however, is dependent on the creation of an international emissions trading system in which emissions from the North can be exchanged for forest certificates. The voluntary «CO2 markets» that already exist today can only generate much smaller sums. An international emissions market with forest certificates does not necessarily depend on a global climate treaty but could also be created through a US climate law. According to Viana, the proposals for a climate law currently under negotiation (Wexham/Markey) would alone have the potential to provide US$ 10-12 billion per year for protecting the forest.

The prospect of having access to these huge sums of money has significantly influenced the discussion in Brazil. A broad-based front that spans the governors of the Amazon states to NGOs to indigenous groups lobbied for the Brazilian government – in contrast to its previous position – to support a REDD system with market-based mechanisms prior to the conference in Copenhagen.

Market scepticism

On the other side are the critics. It will only be possible to raise significant amounts of money with market-based mechanisms if they are tied to compensation («offset»). In other words: polluters from the North would achieve their reduction targets by purchasing CO2 certificates from reduced deforestation – only to be able to continue polluting in the North. A trade mechanism structured this way with CO2 certificates does not exist at present. The European emissions trading scheme does currently not allow the use of forest certificates.

The explosive nature of REDD for climate policy is obvious: the failed reduction of CO2 in the North would be offset with forest preservation. No progress would be made in the necessary restructuring of the economy in the North. REDD would become a mechanism to gain time. But, it could also be the only realistic short-term result of the next rounds of negotiations, particularly in light of the current state of climate negotiations.

For the critics of REDD with market-based mechanisms, it would not just mean allowing dubious emissions trading but also taking a step towards commercialising nature. «So begins a new stage of privatisation of nature never seen before, which will extend to water,biodiversity, and what they call «environmental services»,» said the Bolivian president Evo Morales in a statement.

In any case, as a market-based instrument, REDD would tend to transform social actors into service providers in the Amazon region. Regardless of what one thinks of REDD with market-based mechanisms – the consequences of this type of transformation are hard to miss at present: new inequalities would radically change the social structure. Not all social groups have forest (=CO2), for example, traditional fishermen. The ecosystems of the Amazon cannot be reduced to just forest. And despite of all the win-win rhetoric of the biodiversity benefits of REDD – only the measurable CO2 counts on the emissions markets. Indigenous peoples and traditional forest users would have to become providers of a tradeable service in competition with other providers. This would not be possible without becoming dependent on consultants. Already today, a new generation of «experts» has emerged in the Amazon. They have no understanding of ecology or social issues but they can calculate CO2, know how to use a GPS and can develop REDD pjects. New words are entering people’s vocabulary such as «carbon hunters» who conclude non-regulated CO2 deals for a voluntary market with representatives of indigenous peoples.

REDD – Doubt and unanswered questions

But there is also a range of unanswered questions beyond the fundamental dispute about REDD with market-based mechanisms. Many international NGOs who do not object in principle to deploying market-based instruments, see problems and risks in the negotiation process. One stumbling block is the definition of forest, which is still too broad and imprecise. Until now, forest, according to what is known as the Marrakesh definition, was defined as follows in climate negotiations: «Forest is a minimum area of land of 0.5 ha with tree crown cover of more than 10-30 % with trees with a potential to reach a minimum height of 2-5 at maturity in situ.»

This definition explicitly includes plantations and thus encourages fears that REDD could be misused to convert (degraded) forests into plantations or at least would encourage tree plantations. This applies to oil palm trees in particular. This fear unifies advocates, who are thinking about «how», with the basic critics.

In Brazil, the government set up the Amazon Fund which is supporting the first REDD projects and is primarily financed by the Norwegian government. In its rules and standards, it does not clearly distinguish between natural forests and plantations and allows for the following lines of financing:

  • The promotion of forest systems («sistemas florestais»)
  • The development and implementation of models to restore protected zones with a focus on economic use.

Here, much will depend on the structure of the REDD projects in the near future. The pressure to incorporate reforestation into a REDD mechanism under certain conditions is high and strengthened by influential lobby groups.

Reward for deforesters?

A second basic unsolved problem with REDD is how to bring reducing deforestation in line with forest preservation. If REDD, as originally intended, were to concentrate in particular on reducing deforestation, those actors who have destroyed forest until now would stand to gain the most from REDD while indigenous peoples who have preserved their forest would be left largely empty-handed. In the meantime, it has also dawned on REDD advocates that a REDD system with this type of structure would trigger extremely difficult problems with legitimacy. In Brazil, the NGO IPAM came up with a proposal under which REDD certificates could be issued for both the reduction of deforestation as well as forest preservation. There is no guarantee that these proposals will be identical with the results of negotiations.

Virtually all of the civil actors involved in the REDD process, but the World Bank, the UN and many governments as well, emphasise that REDD has to respect the rights of indigenous peoples and traditional forest rs and may even need to strengthen them. The REDD process up to now has cast doubt on whether these types of assertions remain pure rhetoric.

The «free, prior und informed consent» (FPIC) should be the foundation of integrating indigenous peoples. But REDD does not originate from the arsenal of demands of indigenous peoples. There is currently a competition in the Amazon for approval or rejection of REDD in which indigenous peoples and traditional users are treated more as objects than subjects. PowerPoint presentations with the huge numbers also quoted here are omnipresent in seminars and courses. In a short amount of time, the number of financed pro-REDD activities has escalated to reach astounding heights in the Amazon region. All of these activities were and are aimed at gaining approval for REDD – «Readiness for REDD» is the current catchphrase. These processes are not kept open regarding results, they are rather propaganda events to lure «stakeholders». They are missing the element of dialogue which would have also to allow basic discussions about REDD. The discrepancies now visible are the result of a process that aimed at support instead of allowing broad dialogue.

The criticism of the indigenous peoples of Guyana about the REDD contract its government has with Norway which provides payment of US$ 250 million for REDD activities via the World Bank, is symptomatic: «We demand that any official procedures for opting in (and opting out) Low Carbon Developing Strategies or REDD+ ... be based on established principles of FPIC, including our right to develop and adopt our own FPIC and good faith negotiations guidelines.»

The criticism of the REDD agreement with Guyana shows that, until now, the REDD process in the Amazon has been geared toward rapid approval rather than a patient and drawn-out FPIC process (more information).

Without securing the rights of indigenous peoples and traditional users, REDD is a risky undertaking. In Brazil, even though the rights of indigenous peoples in the Amazon are largely protected, ownership titles are unclear or disputed in many parts of the Amazon region. How is REDD supposed to work given these conditions? The first responses to REDD thus stress the need to clarify the issue of land ownership in the Amazon. This is, however, a drawn-out process. The pace at which the «Readiness for REDD» is currently being worked on is not consistent with the complex processes and decisions that a new climate-forest system would involve.

What next?

The REDD partnership formed in May 2010 aims to bring together the various programs under a single roof, particularly the Forest Carbon Partnership Facility (FCPF) of the World Bank and the UN REDD program. But this process has also gotten stuck and the flow of resources pledged for «Readiness for REDD» is slow. Whether a breakthrough will be made at Cancún is now increasingly doubtful. Almost all of the participants have come to understand that the process of achieving a comprehensive, global REDD program is extremely drawn-out. This generally conflicts with the expectation ofREDD as a climate policy instrument that could be implemented in a short period of time. In any case, an unclear process of pilot projects, seminars and consultations that has created a separate REDD universe in the Amazon came quickly into being.

In the meantime, most are convinced that REDD should be implemented in three stages: the «Readiness for REDD» is to lead to a second phase of fund-financed REDD programs at national levels. It will only be in the third phase that an emissions market with compensations («offsets») will be incorporated.

There is a long and hard journey before the quick billions that many hope for from REDD appear. It initially appears easier to mobilise basic, traditional sponsors, such as the World Bank, UN and several governments (like Norway), than the «market». The experiences in Europe teach us that establishing emissions markets is a complex and drawn-out process – particularly when a lot of money is to be moved via «offsets». Because compensation payments will only be made by those who are required to meet far-reaching reduction targets («caps»). The political environment for these types of reduction targets – and if they are also watered down through «offsets» – is currently, however, quite difficult.

Minimum requirements for REDD consensus

The basic idea of anchoring a financial compensation for forest preservation in a financing mechanism is certainly interesting and attractive for the countries and peoples of the Amazon. But to ensure that REDD does not lead to the fragmentation of social groups and new economic inequalities, the following basic requirement should be met:

  • REDD must be designed as a public policy at national level.
  • Limitation to reduction of deforestation and forest preservation is fundamental.
  • REDD may not leave a backdoor open for tree plantations.
  • Protecting the rights of indigenous peoples and traditional users must be guaranteed at all levels (national to local). The dialogue process for an FPIC must be transparent and the results open.

A market-oriented REDD system is dubious at best for climate policy due to its basis in «offsets», creates divisions between the indigenous peoples of the Amazon and brings about great resistance. It is then time that the key REDD players (World Bank, UN, Northern governments, large NGOs) see this as an objective factor and take it seriously.

One thing is clear: REDD will continue to be a controversial issue in the next few years. The widespread prospect for many actors of billions of dollars for indigenous peoples through market-based mechanisms is currently nothing more than wishful thinking. A complex and completely unknown path has to be travelled before mandatory emissions trading can be set up with «offsets» for REDD. It would be fatal if the design of REDD were to be influenced by a market that does not exist today.

 

Thomas Fatheuer was director of the Heinrich Böll Foundation in Brazil Office from 2003 till July, 2010. Before that he was working with projects involved in forest protection in the Amazon. He now works as author and consultant in Berlin.