Part of advancing towards a green, more resource-efficient, equitable and low-carbon, economy is a movement to revalue forests in a more holistic way. UNEP’s new International Resource Panel report states that REDD+ needs to move from a bold pilot project to the mainstream if the world is to significantly reduce emissions that contribute to climate change, ecosystem degradation and loss of biodiversity.
Despite a decoupling of forest loss from population and economic growth, emissions resulting from deforestation and forest degradation are still one of the most important sources of carbon emissions globally. To combat this trend, a Coalition of Rainforest Nations made a submission during the 2005 climate negotiations for the industrialised world to financially reward developing countries through a performance-based payment mechanism for reducing emissions from deforestation and forest degradation. REDD+* has subsequently expanded to include measurable and verifiable reduction of emissions through the enhancement of carbon stocks, while also stimulating sustainable forestry management coupled with conservation.
The picture has changed dramatically, though, since REDD+ emerged almost 10 years ago. A significant part of the financial sector affected during the 2007-2008 crisis was related to subprime mortgage bonds, which saw world-wide financial assets fall by USD 16 trillion†. Many Western governments borrowed heavily to stimulate their ‘real’ economy from being affected, in many cases, to no avail. Now in 2014, governments are even more in debt than they were a couple of years ago and financial institutions in many countries are still in a vulnerable situation.
Against this backdrop UNEP has started to promote the notion of a ‘Green Economy’ given that even in an economic downturn deepening environmental challenges cannot be wished away. Efforts to green our economy are necessary to make it more resilient to shocks related to growing environmental challenges and entails economic development that is low in carbon and other environmental impacts, efficient in the use of natural resources, resilient in managing economic and ecological risks and socially inclusive in benefiting all groups.
For REDD+ to remain an attractive proposition it is important to connect it with broader efforts to green our global economy. The basis should remain to create the conditions necessary to generate the estimated USD 30 billion per year in performance-based payments from 2020 onwards. Given likely constraints in government budgets it is important to see how public funds can be leveraged with private sector investments and how possible changes in our fiscal system can generate longer-term REDD+ finance. Re-directing only 7% of the annual fossil fuel subsidies of USD 480 billion (in 2011) would be sufficient for this.
But also the growing push to internalise environmental externalities and efforts to strip deforestation out of commodity supply chains through certification and other mechanisms, can be effective indirect ways to achieve REDD+. If Governments recognize natural capital as an additional source of wealth through their national accounts and development plans, it will stimulate Ministries of Finance, Agriculture and Development to rethink the value of forest ecosystems. In a similar way, a growing number of companies are focusing on incorporating the value of their environmental impacts and dependence on natural assets in their profit & loss statements and balance sheets, as well as procurement and investment decisions. Initiatives like the Natural Capital Coalition for corporations and the Natural Capital Declaration for financial institutions are working towards this. Similarly, a growing effort to strip deforestation out of soft commodity supply chains by the Tropical Forest Alliance 2020 can be another important catalyst to reduce pressure on forests from agricultural commodities that are a major driver to the annual loss of millions of hectares of forests.
The new report by UNEP’s International Resource Panel is an important document that frames how REDD+ can be connected with a broader push for a Global Green Economy. It concludes by calling for greater private sector engagement and changes in our fiscal system to stimulate demand for REDD+. In addition, given the current limited power of carbon markets it is crucial to also focus on non-carbon benefits, while striving for greater social inclusiveness.
The current economic forces that favour conversion over conservation and sustainable use through the more than USD 500 billion in annual subsidies in fossil and biofuels, dwarf efforts to achieve REDD+ by the public and private sectors. Rebalancing how governments and the private sector value forests in our 21st century economy is necessary if carbon emissions are not to spiral out of control. The coming years require a transformational shift in our economic model that favours efficiency, recycling and sustainable use over extraction, which has been the dominant system in the past centuries, and this needs to begin urgently.
[*] REDD+ refers to “reducing emissions from deforestation and forest degradation in developing countries, and the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks in developing countries”
[†] To put this in perspective, the global equity market’s value (basically the value of all listed companies across the globe) was about USD 53 trillion in 2012.