Thomas White Global Investing
Green Reports

May 11, 2011

The Green Report

UN REDD: Can the program save our tropical forests?

UN REDD: Can the program save our tropical forests?

The UN’s Reducing Emissions from Deforestation and Degradation (REDD) program will raise funds for developing countries to preserve their tropical rainforests.


Almost a year back on a wintery day in December 2009, more than 100 of the world’s most powerful leaders hailing from all parts of the globe gathered in Copenhagen, Denmark. The list of the popular leaders included U.S. President Barack Obama, the then Prime Minister of U.K., Gordon Brown, and Chinese Premier Wen Jiabao, among others. All of them had gathered on fulfilling one ambitious mission: to reach a consensus and work out a deal to slow down climate change and mitigate its effects on earth over the course of the next century.

But as the day wore on and as the leaders caught a glimpse of the sacrifices and emission-cuts their countries had to make in order to save the planet, the will to reach a deal suddenly flagged. As the leaders’ lofty ideals gave way to more practical concerns such as economic growth and saving jobs, both emerging and industrialized countries developed cold feet over who would share the burden of emission cuts.

Notwithstanding the sleepless nights and frantic efforts of the world leaders to reach a deal, the UN-directed Copenhagen summit ended without a decisive plan. But just before the leaders packed for home, they agreed on a less-noticed plan called Reducing Emissions from Deforestation and Degradation (REDD), a system where developed countries would pay to protect and preserve tropical forests in developing countries.

REDD was first conceived in 2008 as collaboration between the UN and various developed and developing nations to prevent the deforestation of forests. Forests are important to humankind for various reasons. However, REDD values them most for their ability to store carbon and act as carbon sinks, because the world’s forests are estimated to be holding nearly 25% of all the carbon present in the terrestrial biosphere.

The UN’s Reducing Emissions from Deforestation and Degradation
(REDD) program aims to bring down deforestation by paying developing
countries to preserve their forests. The world is losing nearly 200 square km
of forests everyday and REDD plans to bring this number down by a third
before 2015.

Cutting down these forests would result in large amounts of greenhouse gases escaping into the atmosphere. Currently, the destruction of forests, especially in the tropical regions, accounts for nearly 15% of all the greenhouse gases emitted across the globe. This is second only to emissions from the energy sector. Consequently, the prevention of destruction of forests produces value by reducing carbon emissions. So there is a strong case for the preservation of forests.

But it is not that simple. Many poor and developing countries that view forests as a source of timber and as a source of land for further development, cannot afford to preserve their forests. After all, by preserving their forests the developing countries might be alleviating the world’s climate problems but stand to lose precious revenues for themselves. In turn, someone has to pay the developing countries to preserve their forests.

And this is what REDD plans to do. REDD assigns a financial value to a forest primarily based upon the amount of carbon stored. It then collects funds from a number of industrialized donor countries and pays developing countries what it takes to preserve the forest. Many industrialized countries have shown great interest in supporting the cause. In 2009, Norway became the first founding donor of the program, contributing $52 million, and has further pledged $1 billion to reduce emission to protect tropical forests in Indonesia. Denmark and Spain too contributed a significant amount of funds to the program in 2010.

From the receiving side as well, the response has been quite impressive for this preservation program. Within two years of the REDD, nearly 14 developing countries received funds to protect their forests and a further 17 countries are expected to benefit from the funds.

Encouraged by the response to its efforts, the UN subsequently developed REDD Plus (denoted REDD+) in 2010. In addition to preventing deforestation and forest degradation, REDD+ expands its scope to increasing forest cover through afforestation and the sustainable management of forest resources.

According to the UN, nearly 200 sq km of forests is being lost through deforestation every day. One of the initiative’s primary goals is to reduce this kind of deforestation by a third before the year 2015, and by doing so, REDD plans to save nearly 70,000 sq km of forests by 2015. By various estimates, the initiative will need nearly $17-$30 billion to achieve this target. And this is where the problem starts for the program. Currently, REDD has a few hundred millions of dollars in its cache, but raising another $10 to $15 billion over a period of four years could be an uphill task.

Apart from financing issues, REDD also faces a number of other problems in its attempt to preserve forests in developing countries. Land records and land-use decrees are not easy to obtain in many of the developing countries. For instance, even after two years of planning, Indonesia is yet to bring its Tanjung Putting national park under the REDD program.

Furthermore, in many cases, businesses with licenses to log timber in tropical forests over a number of years will lawfully challenge any plan to preserve forest land. What’s more, the preservation of forests under REDD could prohibit certain tribal people access to the forests that historically support their livelihood. Although the plan says it would take the plight of the tribal people into account, these traditional hunters and gatherers have largely been unable to take up other activities such as cultivation.

Some non-governmental organizations (NGOs) have also expressed concern over the way the program estimates the value of the carbon in these forests. Furthermore, they question the ability of REDD to monitor the progress in the preservation of this forest land.

But despite all the criticism, few alternatives to REDD exist and who could find a more credible authority than the UN to implement this initiative? And the benefits of the program seem to outweigh the disadvantages by a huge margin. For instance, the costs of avoiding one ton of carbon emission through REDD ranges between $4 and $30. Currently, even the cheapest method of storing and capturing carbon emissions through industrial sequestration processes is estimated to fall in the range of $75 and $115. The industrialized world is likely to gain from investing in preserving forests. Furthermore, certain REDD pilot projects in Brazil’s Amazonas have shown success in enabling tribal people to maintain their traditional activities even while preserving the forests.

The UN’s REDD may not be the most ideal program available to preserve our forests. But as long as our leaders come to terms with the enormous environmental challenge that the planet faces, it might be those small steps such as REDD that can buy time to find a lasting solution. In hindsight, REDD not only seems to be a saving grace amidst the shortcomings of the Copenhagen Summit, but one that promises to help fight the challenge of climate change as well.



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