Engaging the market to reduce land-based emissions
Toby Janson-Smith, Senior Director, Climate and Land Use: Markets and Policy, Conservation International (CI)
9 April 2013 | Carbon management, Cities & the Built Environment, Forestry, Africa
We cannot solve the climate crisis without changing the way forests and other lands are valued and used around the world, and the private sector must play a critical role in driving this transformation. The key lies in shifting to a new sustainable development paradigm that fundamentally values and conserves the natural capital and ecosystems upon which human well-being depends – a true green economic model. The author describes some promising initiatives and new market responses.
Quantifying nature’s value
Tropical forests continue to be cleared at the alarming rate of 14 million hectares annually, contributing about 16 per cent of global greenhouse gas emissions – more than the entire transport sector. Effectively tackling this problem would pay huge dividends. In fact, protecting and restoring these forests, along with the sustainable management of forest and agricultural lands, could contribute more than a third of the emission reductions needed through 2020. But there is a long way to go!
To help close the gap, and armed with its mission to conserve nature’s assets for the well-being of humanity, CI is working with governments, the private sector and other partners to establish effective, scalable market mechanisms and demonstration models for conserving the ecosystems that underpin healthy, sustainable economies.
The economic value of ecosystems and the services they provide (including climate regulation, water conservation, soil production and pollination)is staggering– some estimates put it somewhere between the entire US and global GDP. Government and industry leaders are increasingly recognising that new development and business paradigms must be created and supported if the natural capital that provides these valuable services is to be maintained.
Reducing emissions through sustainable supply chains
Tropical deforestation is being driven by the resource needs of a growing global population. Addressing such threats will not be easywith two billion more people being added to the middle class over the next 40 years – along with a doubling in demand for food, water and energy. Isolated solutions that ignore the connections between these human needs and land-use change are unlikely to be successful at scale and over the long term.
Fortunately, corporate leaders are realising that the sustainability of their supply chains, not to mention the economies upon which their businesses depend, can best be supported by considering the broader impacts and benefits of sustainable land management that conserves and restores natural capital instead of depleting it.
A growing number of companies are insisting that the key commodities they buy – such as palm oil, soy, beef and timber – are produced sustainably and without associated forest loss. For example, Walmart is requiring that by 2015 all palm oil in its branded products be sustainably sourced. For their US and UK products alone, this move should cut 5 million tonnes of greenhouse gas emissions over the next few years. Furthermore, recognising that about 60 per cent of deforestation in the Brazilian Amazon is related to cattle ranching expansion, Walmart will make sure that any beef it buys does not contribute to such land-use change.
Industry groups are alsocoming together to tackle these issues. At the UN climate conference in Cancun last year, the Consumer Goods Forum – a CEO-led organisation of hundreds of the largest consumer goods manufacturers and retailers – committed to mobilising its collective resources to help achieve zero net deforestation by 2020. At CI we’re working with these industry leaders to put their commitments into practice and establish demonstration models that can be scaled up and replicated around the world.
For example, CI and Starbucks are working together in Mexico and Indonesia to develop new frameworks and opportunities for providing carbon market access to smallholder farmers who produce coffee in ways that conserve and restore native forests. Such carbon revenue streams would improve farmer livelihoods and diversify their income sources, while incentivising farming practices that are friendly to climate and biodiversity – good for the environment as well as for maintaining high quality coffee supplies.
Another area where great progress is being made is through sustainable commodity certification schemes. CI co-chairs the Greenhouse Gas Working Group for the Roundtable on Sustainable Palm Oil, and is working with buyers and producers to reduce the environmental and climate impacts of the industry, which has been a major driver of deforestation, particularly in Asia. More work needs to be done, especially to support smallholder farmers seeking to make the shift to sustainable practices.
In addition to positively leveraging market forces and the power of supply chain commitments, it is also necessary to create policy frameworks and incentive mechanisms to pay for the carbon values in standing forests. It is likely that market-based approaches will be essential to complement public funds and effectively mobilise the tens of billions of dollars needed annually to tackle forest loss at a global scale.
Reducing emissions from deforestation and forest degradation, along with tree planting and sustainable forest management (collectively referred to as REDD+) is seen by many as one of the most important and underutilised tools in our fight against climate change. While REDD+ discussions have made steady progress within the UNFCCC negotiations, the uncertainty over reaching agreement on a global climate deal means we must look to other pathways for advancing these activities.
Fortunately, there are a number of efforts around the world that are helping to prove out various models for reducing forest emissions and providing valuable lessons to inform the development of emerging climate policy regimes, including the UNFCCC.
One promising example is taking place at the subnational level, where California is partnering with the Brazilian and Mexican states of Acre and Chiapas to establish the world’s first REDD+ compliance market – expected to be worth about a billion dollars over the next eight years. Californiahas taken bold leadership steps in capping its emissions while taking advantage of flexible mechanisms, including international forest conservation activities, to reduce economic burdens while maximising co-benefits. As a member of the REDD Offset Workgroup, CI is advising California on its REDD+ policy design. CI is also building on its 17-year field presence in Chiapas to help the state develop and implement its climate change action plan for generating verifiable emissions reductions.
REDD+ standards setting
Robust compliance and voluntary markets are underpinned by standards that generate high quality marketable assets around which investor confidence is built. With this in mind, CI has played a leadership role in helping to establish the world’s pre-eminent forest carbon standards, specifically the Verified Carbon Standard (VCS) and the Climate, Community and Biodiversity (CCB) Standards.
The emergence of groundbreaking VCS forest carbon accounting methodologies and its buffer approach allowing the issuance of permanent credits have been major contributors to the rapid growth of REDD+ within the voluntary carbon market – driving the sector’s market share from 1 per cent to 29 per cent over the past three years.
But REDD+ is much more than just about the carbon. Intact native forests are home to many of the world’s most threatened and rare plants and animals, and support the livelihoods of millions of local subsistence communities by providing critical ecosystem services such as maintaining water supplies and soil productivity. Five years ago, CI worked with a group of leading NGOs and companies to found the Climate, Community and Biodiversity Alliance (CCBA) to create new tools for promoting forest carbon activities that maximise social and environmental co-benefits. The CCB Standards are now being used by the majority of REDD+ projects around the world – often driven by investors, who recognise the strong links between social and environmental outcomes and project and reputational performance.
Building on their successes at the project scale, the VCS and CCBA are now working with national and state governments to develop new carbon, social and environmental standards that can be applied to REDD+ policies and measures undertaken at the jurisdictional scale, and showing how projects can fit or ‘nest’ within such broader accounting frameworks. These emerging standards are already generating interest from donors and regulators looking to set up compliance markets for REDD+.
Corporate climate leadership
REDD+ can play a valuable role in complementing internal emissions reductions to achieve aggressive (often carbon neutral) corporate climate leadership goals. CI has partnered with companies such as the Walt Disney Company and Dell to develop REDD+ demonstration projects in Latin America and Africa, collectively conserving more than a million hectares of threatened forests while generating impressive benefits for local communities. Such REDD+ investments can make good business sense by, for example, allowing companies to address multiple socially responsible objectives (e.g. poverty alleviation, fresh water access, biodiversity conservation); engage customers and employees around the climate issue with compelling, place-based stories; and enhance relations with host governments, communities and other local stakeholders in countries important from an operations or market perspective.
Public-private partnerships and green economies
Given that it may be years before a global climate deal can be agreed, how can the various leadership efforts, such as those mentioned above, be leveraged into a larger, cohesive whole that will enable governments and agencies to tackle tropical deforestation in the near term and at scale?
It is important that the way societies value and use natural capital is fundamentally changed. To make this happen, clear demonstrations will be needed of how human well-being at the local and global levels depends upon, and is enhanced by, the critical services provided by healthy ecosystems. With this in mind, CI is supporting the efforts of a few pioneering governments to build healthy, sustainable economies and demonstrate their effectiveness for achieving local development objectives through wise land use decision-making and planning.
Moreover, in collaboration with the US Agency for International Development, CI is launching the Sustainable Landscape Partnership to catalyse investment in REDD+ activities and low-carbon enterprises concentrated in select landscapes in Indonesia. This innovative partnership model seeks to change business practices and land use policies, while strengthening community participation, as foundations to holistic district-level development plans. We expect to replicate this public-private model for supporting green development in other key geographies around the world.
Given the magnitude of the climate, ecosystem depletion and sustainable development challenges we face, governments, NGOs and the private sector must work together to develop and prove new economic and market models that enhance human well-being over the long term through the conservation of irreplaceable natural capital. The fate of our planet and future generations depends upon it.
Toby Janson-Smith is Senior Director, Climate and Land Use: Markets and Policy, Conservation International. He leads CI’s Forest Carbon Markets programme, which develops standards, shapes policies and secures major investment deals that support multiple-benefit forest carbon activities. In this role, Toby recently managed the development of the forestry rules for the new Voluntary Carbon Standard. Toby previously directed the Climate, Community and Biodiversity Alliance (CCBA). He also co-edited the book Climate Change and Forests – Emerging Policy and Market Opportunities (Brookings/RIIA, 2008). Toby has consulted to a number of NGOs and companies on carbon forestry issues, and co-founded the World Resources Institute’s SafeClimate.net venture.
Conservation International (CI)
Conservation International (CI) works to ensure a healthy and productive planet for everyone. Yet economic and infrastructure development, which are so necessary for human well-being, can also have serious impacts on nature. That is why CI is working at every level – from remote villages to the offices of presidents and premiers – to help move whole societies toward a smarter development path.