9/13/2011 - Effective
measures to tackle the fundamental drivers
of deforestation should be taken - Geneva,
13 September 2011 - A coalition of the world's
foremost financial institutions brought
together by the United Nations warns in
a report released Tuesday against the
huge financial and environmental losses
that could stem from a post-Kyoto climate
change deal that fails to spur private sector
investment into deforestation and forest
degradation reduction efforts.
With the new report,
REDDy-Set-Grow Part II: Recommendations
for international climate change negotiators,
over 200 leading actors of the financial
sector united under a partnership with the
United Nations Environment Programme Finance
Initiative (UNEP FI) call on country negotiators
at the United Nations Framework Convention
on Climate Change (UNFCCC) to follow through
with their previous commitment, incorporated
into the 2010 Cancun Agreements, to an international
policy architecture for deforestation and
forest degradation reduction in developing
countries (a scheme known as REDD+).
The new study asserts
that any post-Kyoto climate convention negotiated
in Durban and beyond must include text that
clarifies the fundamental role of private
engagement and investment in funding REDD+,
as well as effective measures to tackle
the fundamental drivers of deforestation
by shifting behavior in the private sector
towards sustainable land-use. A positive
outcome in Durban would also send an encouraging
signal to Rio+20 in June next year with
one of its two key themes being the Green
Economy in the context of sustainable development
and poverty eradication.
The report highlights
the huge costs for the world economy and
the global environment of policy-makers
coming short of fulfilling these criteria.
An ineffective climate
change regime on forests would entail losses
in the global economy of $1 trillion per
year by 2100, and affect a good portion
of the estimated 1 billion people who rely
on forests for their livelihood, according
to previous research (Eliasch Review, 2008).
In contrast, a healthy
forestry-based carbon market could achieve
to mobilise investment for the protection
and rehabilitation of natural forests in
the order of $10+ billion by 2020 (The Economics
of Ecosystem and Biodiversity - TEEB, 2010).
"The fundamental
reason for current levels of deforestation
worldwide is that cleared forests translate
into economic opportunity for farmers, local
communities and governments while standing
forests do not. There is a price for soybeans,
palm oil, beef and other products grown
on deforested lands, but not for the many
critically important services provided by
healthy forests, including the sequestration
and storing of carbon," said BNP Paribas'
Director - Environmental Markets & Forestry,
Christian del Valle.
"With the possibility
of a global funding mechanism for REDD+
we now have, at the global level, the unprecedented
opportunity to address this imbalance. I
hope we do not miss it so that natural forests
are given the value they deserve,"
he added.
Sufficient funding of
REDD+ mechanisms, if achieved, could be
a key boost to efforts to hold the global
temperature rise below 2 Degrees Celsius
- a target previously agreed by governments
- by scaling up current efforts to protect
carbon-absorbing forests.
The price tag associated
with halving global deforestation and forest
degradation at the required scale and speed
to meet internationally agreed targets is
steep, however, having previously been estimated
to amount to a mammoth $17-$40 billion per
year (Eliasch Review, 2008; UNEP Green Economy
Report, 2010).
With total government
pledges for REDD+ adding up to $7 billion,
REDDy-Set-Grow Part II stresses that plugging
this gaping funding hole will require the
close involvement of private finance, which
has so far been on the margins of the funding
debate.
"The banks, insurers
and investors that are members of the UNEP
Finance Initiative are optimistic that governments,
when meeting in Durban this December, will
realise the importance of mobilising private
capital to help reduce deforestation and
forest degradation," said Abyd Karmali,
Managing Director and Global Head of Carbon
Markets at Bank of America Merrill Lynch,
a member institution of UNEP FI.
"Without the systematic
involvement of the private sector, ranging
from institutional investors to local forest
cooperatives, the REDD+ mechanism agreed
to in Cancun risks being rendered ineffectual."
REDDy-Set-Grow Part
II further articulates the features which
the private financial sector would like
policy-makers to include in a new climate
change treaty to summon sufficient funds.
Recommendations
Among the specific policy
recommendations formulated in the report
are the details of a policy scenario, coined
as the "nested approach," deemed
most likely to close the REDD+ investment
gap.
Under a nested approach,
a future REDD+ funding mechanism would be:
Inclusive: Private entities
(such as forest concessionaries or forest
cooperatives) as well as governments (at
both the national and sub-national level;
such as central governments or municipalities)
would be eligible to develop and implement
forest conservation, rehabilitation or reforestation
activities and to receive payments based
on performance for these initiatives, with
the desired effects of both spurring the
multiplication of REDD+ projects and reducing
possible red tape and risks commonly associated
with weak governments.
Decentralised and reliable:
Payments for REDD+ projects would come from
the generation of REDD+ carbon credits and
their trade on international carbon markets
rather than from currently cash-strapped
donor country budgets. In other words: the
burden of reducing, halting and ultimately
reversing deforestation would not be borne
by tax payers in developed countries, but
by carbon polluters (or emitters). In addition
to increasing the reliability and potential
volumes of performance-based payments, such
a market-based system would provide a strong
real-price signal.
Leakage-proof: Risks
that successful deforestation reduction
efforts in a given region be used to justify
increased deforestation in another one -
a phenomenon commonly known as "leakage"
- will be mitigated by the enforcement of
a national baseline. The baseline will aggregate
project-level performance indicators into
a country-wide performance indicator.
The report also calls
for reforms to forest-based projects under
the Kyoto Protocol's Clean Development Mechanism
(CDM), which the financial sector would
like to see improved - namely with the creation
of permanent carbon credits - in a post-Kyoto
regulatory environment.
"Our position is
simple: our involvement is direly needed,
and we wish to get involved. But we cannot
do so unless it makes basic commercial sense
to us," said Armin Sandhövel,
CEO of Allianz Climate Solutions, another
member institution of UNEP FI.
"With this report,
we wish to state with one voice, as an industry,
that policy-makers must urgently put in
place viable avenues and formats for upscaled
private sector investment and involvement
in REDD+ by, firstly, redoubling efforts
to agree on a climate change deal that will
replace the Kyoto Protocol, and secondly,
making policy decisions that will make investments
in the protection, rehabilitation and creation
of natural forests more competitive against
conventional, unsustainable options. This
report says how that can be done,"
he added.
Part I of REDDy-Set-Grow,
released earlier this year, cast a spotlight
on the abundance of untapped opportunities
in current and emerging forest-carbon markets.
Further Quotes
Paul Clements-Hunt,
head of UNEP Finance Initiative: "The
climate-change mitigation debate has not
kept apace with the finance community's
rapidly growing understanding of its critical
role in enabling and driving the shift to
the green and low-carbon economy, with the
result that the views of one of the world's
most economically influential sectors are
currently largely unaccounted for in international
climate change negotiations."
"Private banks
and investment funds can contribute to the
global struggle to mitigate climate change.
Our detailed recommendations on financing
forest-based mitigation hopefully bode the
beginning of a new dialogue between the
finance community and governments,"
he said.
Notes to Editors: REDDy - Set - Grow Part
II: Recommendations for climate change negotiators
is available online at http://www.unepfi.org/publications/index.html.
About the United Nations Environment Programme
Finance Initiative (UNEP FI)
UNEP FI is a unique
global partnership between the United Nations
Environment Program (UNEP) and the global
financial sector. UNEP FI works closely
with over 200 financial institutions who
are signatories to the UNEP FI Statements,
and a range of partner organizations to
develop and promote linkages between sustainability
and financial performance. Through peer-to-peer
networks, research and training, UNEP FI
carries out its mission to identify, promote,
and realize the adoption of best environmental
and sustainability practice at all levels
of financial institution operations.
www.unepfi.org
About the UN-REDD Programme
The UN-REDD Programme
is the United Nations Collaborative initiative
on Reducing Emissions from Deforestation
and forest Degradation (REDD) in developing
countries. The Programme was launched in
September 2008 to assist developing countries
prepare and implement national REDD+ strategies,
and builds on the convening power and expertise
of the Food and Agriculture Organization
of the United Nations (FAO), the United
Nations Development Programme (UNDP) and
the United Nations Environment Programme.
www.un-redd.org
About the UNEP Green
Economy Report
UNEP's Green Economy
Report and subsequent, Forests in a Green
Economy: A Synthesis, confirm the critical
links between forests and the transition
to a low-carbon, resource-efficient green
economy. In particular, Forests in a Green
Economy, shows that investing an additional
US$40 billion a year in the forestry sector
could halve deforestation rates by 2030,
increase rates of tree planting by around
140 per cent by 2050, and catalyse the creation
of millions of new jobs. Backed by the right
kinds of enabling policies, an investment
of about two-thirds more than is spent today
could also sequester or remove an extra
28 per cent of carbon from the atmosphere,
thus playing a key role in combating climate
change.
