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Saving a global asset: the rainforest
Local resources and global assets
Saving the rainforest
Jul 22nd 2004
From The Economist print edition
The rich world wants a say in the fate of the world's rainforests. It should put its money where its mouth is
THE world's rainforests are owned by the mainly poor countries they cover�but at the same time they are a global asset. Cutting them down for profit, or to free land for farming, is a tempting source of income for their owners. Left intact, on the other hand, the forests are sinks that withhold carbon from the atmosphere, mitigating the problem of man-made global warming; and they are rich storehouses of biodiversity, another global resource, as well. Plainly, a balance between local and global interests must be struck. How, exactly?
The owner-occupiers consider this question with understandable suspicion. The easiest way to rile Brazilian officialdom is to suggest that the Amazon rainforest belongs more to humanity than to Brazil (and the other countries it covers). The Ministry of Agriculture recently berated The Economist and others for suggesting that agricultural expansion had anything to do with deforestation. The connection is obvious�but the denial highlights the sensitivity.
It all adds up
Deforestation in the Amazon starts with land speculation and logging, but ranching, some of it highly competitive, is the main use to which cleared land is then put. Soya, the most lucrative crop, sometimes arrives later, prompting ranchers to open new fronts in the forest. These and other activities, including slash-and-burn agriculture by small farmers, have levelled about 15% of the Amazon in the past few decades and are carving away about �% of the forest a year. Overall, deforestation in the tropics may account for 10-20% of the carbon released into the atmosphere by human activity during the 1990s. Deforestation in Brazil and Indonesia alone amounts to roughly four-fifths of the annual reduction in carbon emissions mandated by the Kyoto Protocol from 2008 to 2012.
Tropical countries�which are usually poor�should not be denied the benefits of any and all deforestation. Brazil's commodities boom has helped the country to avoid a financial crisis lately, despite enormous foreign debts. Last year, farming was one of the few bright spots in an economy that shrank 0.2%. The United States and Europe chopped down most of their forests over the past few centuries (though in recent decades North America has reforested). Who are they to tell Indonesia, Brazil and Congo to do otherwise?
Self-interest alone does in fact argue for some restraint. Large-scale deforestation has little-understood effects on the local climate, which may well do the deforesters more harm than the rest of the world. Beyond a certain point, deforestation simply doesn't pay. Less than 20% of the Amazon forest is suitable for soya, at least with the current technology. Ranching can go further profitably, but not without limit. Some of the Amazon's defence is, or should be, home-grown.
Yet the deforestation that is optimal for Brazil is still likely to be greater than what would suit humanity as a whole. It makes sense, therefore, to come up with ways to make maintaining forest as rewarding for Brazil as it is for the world, once the broader benefits and opportunity-costs are taken into account. When that calculation has been made, the rest of the world should foot its share of the bill.
Such a system would not aim, as a matter of principle, to stop all tropical deforestation. The right approach would aim to reward carbon sinks anywhere (not just in the Amazon) at a rate equal to the marginal costs of carbon added to the atmosphere. In some cases, reducing carbon with forests will be more expensive than reducing it by other means (for instance, consuming less energy, or extracting carbon from fuel and burying it). So far as global warming is concerned, a well-designed system would not discriminate in favour of preserving the Amazon over other rainforest, or preserving any rainforest over other ways of abating carbon.
At the moment, such mechanisms barely exist. The Amazon Reserves and Protected Areas project, a partnership between Brazil's government and international organisations such as the World Bank, is supposed to invest $400m over ten years in protecting forests. The plan should safeguard 14% of the rainforest, but mainly in areas remote from the front of deforestation. The Clean Development Mechanism of the Kyoto Protocol offers emitters of greenhouse gases a way to offset this pollution by paying for projects that reduce emissions or sequester carbon in new forests. But it does not permit paying for "avoided deforestation". In general, the Protocol, largely at the behest of rich-world greens, frowns on carbon sinks, apparently regarding comparatively painless ways of reducing global warming as insufficiently punitive.
Ways to pay
If conservation of tropical forest offers global benefits, ways must be found to charge beneficiaries globally. These are beginning to emerge. There is a fledgling market for payments for "environmental services", such as sequestering carbon and preserving biodiversity. Peru, for example, offers "conservation concessions" to groups with the means and know-how to manage forest. A proposal for "compensated reduction" of carbon emissions would discourage deforestation and give developing countries, which have few commitments under the Kyoto Protocol, a bigger role in reducing greenhouse gases. Countries that reduce deforestation in 2008-12 below a certain baseline would be able to sell carbon certificates to governments or private investors. Assuming a carbon price of $5 a tonne, such credits would make a hectare of forest more valuable than one of pasture (though not as lucrative as soya). Another proposal is to dodge the Kyoto thicket by dividing forests into large blocks, which could be auctioned off to bidders with an interest in preserving them. Then there is market pressure: consumers can pay a premium for beef, soya and timber from producers certified as obeying environmental standards.
Such initiatives are not the whole answer, which must include developing institutions capable of policing the frontier (see article). Yet the world has begun to recognise that it needs the Amazon and other tropical forests. The time has come to start paying for them.
Source: The Economist
CONTENT COPYRIGHT The Economist. THIS CONTENT IS INTENDED SOLELY FOR EDUCATIONAL PURPOSES.
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