14 June 2007
The World Bank is preparing to announce a new $250 million fund aimed at using carbon finance to reduce emissions from deforestation. According to recent news reports, world leaders have encouraged the Bank to move forward with plans to create a Forest Carbon Partnership Facility (FCPF), which would leverage private investor money and donor contributions to help countries develop strategies for avoiding forest degradation and secure payment for forest-related emissions reduction, through the creation of tradable carbon credits.
The facility would initially pilot its activities in five tropical countries.
Deforestation and poor land use management are responsible for approximately 20% of global greenhouse gas emissions each year. Using carbon credits to pay for forest conservation is being touted as "win-win" approach. While many environmentalists recognize the need to provide incentives for the protection of the world's remaining forests, there are concerns that moving too fast with emissions credit trading schemes will enrich Wall Street investors, multilateral banks and elite governments positioning themselves to profit from the burgeoning market, without guaranteeing any real, long-term benefits for the planet and forest-dependent communities.
According to the Bank more than 90% of the 1.2 billion people living in extreme poverty depend in part on forests for their livelihoods. However, given existing land tenure systems in many countries, few communities stand to gain from market-based mechanisms. Groups such as Forest Peoples Programme have flagged concerns about the potential impacts of "avoided deforestation" schemes on indigenous peoples and forest-dependent populations, including likely increased support for exclusionary forest conservation models, heightened conflicts over land, and targeting of marginal communities as drivers of deforestation. (See: "Seeing “RED”? “Avoided deforestation” and the rights of Indigenous Peoples and local communities,A Forest Peoples Programme Briefing Paper")
In recent months, as countries prepare to begin negotiations on a post-Kyoto climate framework, there has
been increased emphasis on the need to incorporate avoided deforestation emissions credit schemes into future climate agreements. Currently, the Kyoto protocol's Clean Development Mechanism only recognizes afforestation or reforestation projects.
The Bank sees big money in the market for credits from avoided deforestation. According to some of the institution's own projections, carbon finance projects related to reduced emissions from deforestation and degradation (REDD) could grow from $250 million in 2012 to over $1 billion in 2015.
Many questions remain about how the Bank's proposed FCPF would operate and how it could guarantee that payments for avoided carbon emissions actually ensure long-term forest protection, rather than short-lived efforts for financial gain. Furthermore, any such system would require considerable background research and agreement on baseline levels of forest degradation in the target countries, increased government capacity to monitor and control forest management, improved land tenure systems that recognize the rights of forest-dependent communities, clarity on the timing of payment for emissions reduction -- upfront or "on delivery" -- and agreement on a reliable, independent verification system, among other measures.
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