A week ago, I had promised a short post on the Forest Issue. As promised, here it is:

Nusa Dua: As the UNFCCC World Climate Change Conference crossed the 10,000 attendee mark , delegates braced themselves for what could be one most difficult and divisive issues of what could constitute “The Bali Breakthrough.” “The working group on Reduction of Emissions by Deforestation (and Degradation) in Developing Countries (REDD) was constituted and has begun work today,” stated UNFCCC Executive Secretary Yvo de Boer in his daily press briefing at the World Climate Change Summit today. The working group is tasked with arriving at a mechanism to incorporate deforestation reduction into the framework of the Kyoto Protocol and the carbon market.

At present, forests store about 686 Gigatonnes(GT) of carbon – about 50 per cent more than the atmosphere- and are being cleared at an average rate of about 13 million hectares per year . This makes deforestation responsible for between 20 and 25 per cent of global green house gas emissions.

The risks of exacerbation, and opportunities presented by the possible control of deforestation, has lead delegates to propose several possible models. The debate revolves around the fact that governments across the world have been largely incapable or unwilling to tackle the problem. Recent reports suggest that stopping the destruction of our forests is clearly more than a law and order problem. Estimates vary, but at least one well regarded report, The Stern Report, suggests that tackling deforestation in the 8 countries that account for 70 per cent of the destruction shall cost between 5 and 10 billion dollars a year; a sum that few government can afford.

Accordingly, several possible models are being considered. On the one hand, some have suggests a purely government-centric model where richer Annex-1 countries and donor bodies compensate developing countries for safe-guarding their forests. This would fall under the scope of “Adaptation Measures” under the Kyoto Protocol and could be funded by the Adaptation Fund. However, other countries, such as India, have pointed out that Adaptation Fund is yet to be operationalized, and even then would have only about 5 billion USD by 2012. Thus India proposes that forests be kept separate from the mechanisms of the Protocol and can be financed by separate financial instruments developed by the UNFCCC.

In line with such approaches, The Global Environment Facility – a international financing body devoted to global environment issues – has issued a statement announcing the launch of a fund to prevent de-forestation in 17 countries of the Amazon, Congo basin, New Guinea and Borneo – and area that covers 68 per cent of tropical forest carbon. The GEF proposal also seems to point towards an integration of forest carbon into the global carbon market.

Integration refers to a scenario of dovetailing REDD into existing carbon markets that were valued at 30 Billion dollars in 2006. The idea is to come up with a system of carbon credits for forest cover – thereby allowing developing countries to trade their credits on the carbon market and hence generate funds for conservation. However, experts warned that such a system shall require a considerable amount of deliberation. “Opening up forests to the market in one fell swoop shall have unpredictable effects on the functioning of the carbon market,” explained Bill Hare of Greepeace and the Potsdam Institute for Climate Change Impact, “The sudden supply of credits could result in the price of carbon credits bottoming out.” Hare and Greenpeace have proposed an alternative hybrid model that envisages pivotal roles for both states and markets. They are also problems with compliance, monitoring and permanence. “What happens if you sell forest credits on the market, and then destroy them five years later?” asked a member of the audience in one session. The answers, it seems, are yet to be worked out. First Published in the The Hindu