Policy Analysis And Proposals

Having reviewed how measurement, markets and money enable forestry to join the fight against global warming, the actual policies being followed by some developed countries are investigated. Countries that are advanced in their policies, or that have announced their policies, are chosen for this exercise in Chapter 7. Forestry has no role in the EU Emission Trading Scheme. In contrast, in the US, Australia and New Zealand, afforestation and reforestation is likely to emerge as a very important instrument in mitigation and in reducing compliance costs. In practice, the significance of the contribution of forestry will depend on the price of emission allowances, which will depend in turn on the deepness of emission cuts. Domestic policies governing the acceptance of emissions allowances from forestry projects and constraints applied to the use of forestry offsets will also determine the importance of forestry's role.

The impact on global food prices of the subsidization of biofuels mainly derived from annual crops in the United States and the European Union is an issue that surfaced in 2008. These subsidies were found to be perverse incentives in that they had the indirect effect of increasing emissions from tropical forests in Brazil and south-east Asia. Large-scale diversions of land from food crops to carbon-capturing plantations will be likely to cause food prices to rise, with consequences for the poor. It is argued that the type of socioeconomic impact analysis that has been done for biofuels needs to be extended to include the impact of the future establishment of extensive forests for their carbon.

Deforestation is rapid and is being driven by powerful forces, yet there is no global market for emissions abated by avoiding deforestation and degradation. Now there is a renewed interest in saving the tropical forests, not just because this promises immediate and major reductions in greenhouse gas emissions but also because of the rich biodiversity and the other unpriced services they deliver. Innovative mechanisms are now being trialed and introduced, outside the Kyoto Protocol, to reward the retention of standing forests.

Devising schemes for prevention of deforestation in tropical developing countries raises the same set of marketing problems as afforestation and reforestation, that is defining the product and permanence of the forest. There is also a new set of complications that needs to be dealt with before the market will channel funds to prevent the main cause of deforestation, which is the conversion of land to agriculture. The process of conversion has been going on for millennia, enabling an increasing world population to be fed (Williams, 2003). But in the case of preventing deforestation in tropical countries, the buyer of carbon needs to be sure that the avoidance of deforestation being paid for would not have happened anyway. Even when the investor is satisfied that a forest has genuinely been saved from clearing, a doubt may remain about whether the deforestation avoided has not simply been transferred to another location.

There are many beneficiaries of tropical deforestation and conversion to agriculture from humble growers to industrial giants and illegal loggers. Governments are also large beneficiaries through taxes on logs and on agricultural commodities. The burning question addressed in the last chapter is: given the social, economic and political implications of reducing deforestation (not to mention technical requirements), can markets be harnessed to make it an effective climate change strategy and, if not, what are the alternatives?

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