Forest carbon finance fails root and branch

| 10th February 2009
Forest carbon finance, through avoided deforestation, is at best a sticking plaster solution that fails to get to the roots of the problem, argues Harriet Williams

In the time it takes to read this article, more than 600 acres of tropical forest will be destroyed. In the next 24 hours, another 137 forest species will become extinct. The rest is vanishing at a rate of 13 million hectares a year – an area six times the size of Wales.

The spoils will be carried off in the form of vegetable oils, minerals, beef and other commodities, harvested from the scorched plantations of South America and Asia, destined for the tables and fuel tanks of rich first world consumers. In Africa, the proceeds are often taken in non-monetary form by the poor, as food, fuel and building materials required to eke out subsistence lifestyles.

This chainsaw massacre compromises the forest’s ability to fulfil its most important roles – as home to indigenous peoples and the world’s richest biodiversity, protector of regional watersheds and regulator of the global atmospheric system. Indeed, deforestation contributes about one-fifth of anthropogenic carbon emissions – more than the world’s transport sector combined.

The rainforests’ myriad ecological and cultural services are literally priceless, in both senses of the word. As far as conventional economics go, sustainable management, which offers only a few shade-grown coffee beans for income between excruciatingly slow timber yields, is an unattractive prospect. Far better to fell trees for timber and convert the land to more lucrative use. This maxim has held true since humans first became capable of organising large-scale deforestation.

Indeed, by late medieval times, Europeans were on the brink of a fuel and nutritional crisis, such was their efficiency at clearing trees and eliminating vast numbers of wild game.

The great forests of Europe and North America are long-gone, of course, and the developed world now finds itself in the position of entreating forested nations of the South to preserve what’s left. Every few years, the international community comes together to conjure up a cure, though none of these solutions have succeeded thus far.

Developed nations are wary of interfering with special interests, such as the mining, agricultural and finance sectors whose operations often lead to new swathes of deforestation.

There is a preference for centrally managed schemes with a starring role for the World Bank, itself a long-term sponsor of forest-wrecking infrastructure projects. This often precludes the active involvement of communities who actually live in the forest. No government, rich or poor, has much appetite for tackling the political failures that underlie deforestation – chronic corruption, weak institutions and uncertain land rights among them. And any question of managing demand is off limits. Consumers must be entitled to as many palm oil cosmetics or rainforest beefburgers as they like – developing countries must supply all this and supply it sustainably.

With so many core issues related to the supply and demand of forest products swept aside, the history of international attempts to stop deforestation is one of well-funded failure. The Tropical Forestry Action Plan, hatched by UN agencies and the World Bank, is a case in point. Launched in 1985, TFAP promised sustainable development but in reality looked more like a welfare plan for the tropical timber industry. Despite throwing millions of dollars at the problem, deforestation rates continued to soar.


Fast forward two decades and calls to curb deforestation have acquired ever greater urgency thanks to climate change. So it was that action on forest loss took centre stage when governments gathered in Bali in December 2007 to discuss a post-Kyoto climate deal under the auspices of the UN.

For market-minded pundits of all stripes, the re-definition of forests as a climate problem is a dream come true. The trouble has always been that forest is worth more dead than alive. By attaching a price tag to trees as sticks of carbon, living forest can be ushered into the safety of the market-place via the growing international trade in carbon emissions. So long as carbon is more profitable than palm oil or timber, the trees will remain standing, or so the theory goes.

At face-value, turning carbon into a tradeable commodity would seem an elegant cure, and has powerful fans in governments, financial institutions and carbon consultancies. Thus the stage is set for the UN climate summit in Copenhagen this December, when negotiators will look to strike a global deal on reducing forest emissions, with richer northern countries to pay the poorer south for income foregone by avoided deforestation.

But not everyone welcomes forests into carbon markets. Brazil, for instance, rankles at the implication that rich countries will be able to balance carbon budgets by buying up foreign forest, instead of cleaning up their own homes, transport and industry. The European Commission worries about the integrity of the EU Emissions Trading Scheme, which could be destabilised by a sudden influx of cheap forest carbon. Proposals for alternative sources of finance abound, including aviation taxes and public funds.

With the clock ticking towards Copenhagen, governments have proven willing to talk up new sources of finance, but reluctant to ditch the old formulas for spending it. The World Bank is positioning itself as a major conduit of forest carbon finance, although questions remain over its ability to manage such funds equitably and sustainably. Forest peoples are once again marginalised. And the whole process remains perilously disconnected from many factors outside the forest sector – the world of perverse subsidies, trade policy and low-cost consumption – that actually drive demand for deforestation.

Monies for curbing deforestation need to do more than flush straight through the system. Environmental and development groups must be supported in the next crucial months, as they push for the final deal to recognise political realities via strong criteria on the structure and allocation of avoided deforestation funds.

Raising the money is likely to prove the easy part. The far greater challenge, lies in spending it wisely.

Harriet Williams is an environmental consultant and freelance journalist

This article first appeared in the Ecologist February 2009

More from this author


The Ecologist has a formidable reputation built on fifty years of investigative journalism and compelling commentary from writers across the world. Now, as we face the compound crises of climate breakdown, biodiversity collapse and social injustice, the need for rigorous, trusted and ethical journalism has never been greater. This is the moment to consolidate, connect and rise to meet the challenges of our changing world. The Ecologist is owned and published by the Resurgence Trust. Support The Resurgence Trust from as little as £1. Thank you. Donate here