Rainforest protection plan is counterproductive

14 November 2019, by Stephanie Janssen

Photo: UHH/CEN/M. Köhl

In Indonesia, natural forest is converted into plantations for oil palms

When individual countries clear less of their rainforests, they receive a financial reward from the United Nations (UN). In this regard, it is up to each country to prove how much of its local rainforests was preserved. But the costs involved in delivering the proof can be higher than the prospective bonus payments, as Professor Michael Köhl from Universität Hamburg shows in a recently released study. At the same time, other countries, which have been protecting their rainforests for years, are at a disadvantage.

Rainforests store massive quantities of carbon (C), making a major contribution to climate protection. When forests are cleared or degraded by the removal of large quantities of wood, their stored carbon can be released into the atmosphere as CO2, accelerating climate change. According to official figures from the UN, between 2010 and 2015 6.6 million hectares of natural forest were cleared every year, primarily in order to create new areas for agriculture and livestock breeding. In fact, ca. 20 percent of current greenhouse-gas emissions are produced by deforestation. The UN’s REDD+ (Reducing Emissions from Deforestation and Forest Degradation) program is intended to help combat this problem.

Countries that take part in REDD+, e.g. Brazil, Indonesia and Congo, agree to preserve the carbon sinks in their forests. To do so, they will clear and degrade (remove large quantities of wood from) less forest. For every metric ton of carbon that remains stored in their woods as a result, these countries receive a compensation payment of US$ 5. The participating countries have to use satellite data and micro-scale samples gathered in the forests to verify just how much C they saved – and do so at their own expense.

For the recent study, Köhl ran a simulation at Universität Hamburg’s CEN (Center for Earth System Research and Sustainability) to explore various levels of deforestation, together with the related costs and potential bonus payments. The study has just been released in the journal Environmental Economics, and indicates that costs have a major influence on the effectiveness of REDD+. According to Köhl, a forestry expert: “In many cases the costs are higher than the payments the countries are likely to receive.”

These payments are calculated on the basis of how much carbon the respective country released in the past through deforestation, which provides a historical reference value. Using that figure, its future emissions are extrapolated for a scenario with no forest conservation measures. If the country can prove that it has reduced its emission rate, it receives financial compensation.

The paradoxical aspect: those countries characterized by intensive deforestation in the past now have a major advantage. Since they’ve done little to preserve their forests, they can make substantial improvements – and receive correspondingly more compensation. In contrast, those countries that have been protecting their forests for years can only make relatively minor improvements. If they nevertheless want to prove that they’ve made these improvements, it requires much more detailed data, which is more expensive to gather.

“The system essentially punishes countries that preserved their rainforests in the past,” Köhl explains. “The price per metric ton would have to be twice as high – for some countries, even ten times as high – in order for forestry conservation to pay off. Only then will the system maintain and bolster forests’ considerable positive influence on climate protection around the globe.”

Original article: Köhl M, Neupane PR, Mundhenk P (2019): REDD+ Measurement, Reporting and Verification – a Cost Trap? Implications for refinancing REDD+MRV costs by result-based payments; Journal of Environmental Economics and Management; Vol 168, Feb. 2020

https://doi.org/10.1016/j.ecolecon.2019.106513