Beyond Carbon Financing: The Role of Sustainable Development Policies and Measures in REDD

By December 2009 the 191 parties to the UN Framework Convention on Climate Change (UNFCCC) are expected to have drawn up the next global climate agreement. The Bali Action Plan (BAP), on which the UNFCCC parties agreed in December 2007, provides the road map for this new agreement. Under the BAP, both developed and developing countries will need to take nationally appropriate mitigation actions, known as NAMAs, to reduce their greenhouse gas emissions. The parties also agreed that these actions would be measurable, reportable, and verifiable (MRV) and that the developed countries would help with the developing countries’ NAMAs by providing support in the form of financing, technology transfer, and capacity building.

Unlike the Kyoto Protocol, the BAP affirms the importance of reducing deforestation, which accounts for 17 to 20 percent of the world’s annual greenhouse gas emissions, as a strategy for mitigating climate change. It specifies “policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries” (REDD) to be included in the NAMAs that countries can undertake (UNFCCC 2007, 3; FCCC/ CP/2007/6/Add.1 Decision 1).

For many experts, the term REDD has become synonymous with a carbon-financing approach, in which the developing countries’ reduction of emissions from forests is supported by the developed countries’ purchase of carbon credits, which they can use to meet their own emissions reduction or other obligations. In the Bali Action Plan’s REDD (Decision 2 FCCC/CP/2007/6/Add.1), however, the term is defined more broadly to include a range of actions by both developing and developed countries to address the drivers of deforestation (UNFCCC 2007, 8). In this paper we use the term sustainable development policies and measures (SDPAMs) to refer to this broader set of options for REDD actions that can be NAMAs.

Because deforestation and forest degradation account for a significant portion of many developing countries’ greenhouse gas emissions, addressing the drivers of forest degradation and loss could have a major positive impact on the global effort to counter climate change. It therefore is vital that the climate negotiators in Poznan recognize and encourage those countries that undertake sustainable development policies and measures to reduce forest-related emissions in developing countries

Carbon Financing: Not a Panacea

To date, the discussions regarding REDD have been concerned with whether and how a carbon-financing approach could be used to create “positive incentives”—namely, financial flows—for reducing forest loss and degradation in developing countries.

For carbon financing to work, developing countries need to demonstrate that they can quantify market-quality emission reductions at either a subnational or a national level. This includes setting credible baselines (known as reference scenarios) showing that deforestation has not simply shifted from one place to another (known as le akage) and making certain that the emissions reductions will be permanent. These requirements will likely present significant barriers for many developing countries wishing to take NAMAs to reduce forest loss and degradation. For example,

1. In countries with historically low rates of deforestation, it is difficult to predict, for the reference scenario, reliable future rates and their related emissions. Attempts to project rates of deforestation may thus decrease the credibility of a carbon-financing mechanism.
2. In countries where deforestation and forest degradation are caused by highly unpredictable drivers (such as fires, droughts, insects, and external demand for products), setting reliable reference scenarios and defining where activities taken or not taken result in emission reductions may be particularly difficult.
3. In countries where the institutions that govern forests are especially weak, the capability of implementing policies that result in credible and permanent emissions reductions will be limited.

In addition, where the principal driver of deforestation or forest degradation is linked to the global demand for timber, food, or fuel, effective action means that consumer countries would address questions of demand and promote the procurement of sustainably produced products.

Framing the Alternatives: Sustainable Development Policies and Measures

The BAP does not specify that the actions that countries take to achieve REDD have to meet the quantification standards required for a carbon-financing scheme or support a carbon-financing mechanism. Rather, it simply states that these actions must be measurable, reportable, and verifiable.

For many of the policies and measures that developing and developed countries could use to address the drivers of deforestation measuring reductions of greenhouse gas emissions with sufficient certainty for a carbon-financing mechanism may not be appropriate. For instance, building institutional capability to reduce fires or combat illegal logging may be hard to quantify in terms of absolute emissions reductions but will nonetheless have an important positive impact on REDD. The implementation of such measures should therefore be measured, reported, and verified using non–greenhouse gas metrics.

To help developing countries implement such approaches to REDD, developed countries should provide the financial, technical, and capacity-building support for concrete actions taken outside a carbon-financing framework. This support should still be linked to performance metrics, but the metrics should be broader than the tons of carbon dioxide not emitted. Support could be generated by selling allowances in developed countries’ national cap-and-trade programs. Such funding may be applicable to a wider range of actors and actions than possible with carbon financing alone. For instance, support for sustainable development policies and measures could help countries with NAMAs to clarify land tenure, build firefighting capabilities, or track the legality of wood products for REDD.

The governments of both developed and developing countries could take complementary actions that are not related to managing their own forests. For example, they could implement policies to decrease the import and use of illegal products that have resulted in deforestation or forest degradation, which would also create a positive incentive for stronger forest management. The United States has recently taken such a step through an amendment of the Lacey Act that bans the import of illegally sourced timber and wood products. Actions like these support all timber-producing countries seeking to address illegality within their borders, and they increase the value of forests and sustainably produced timber. Indeed, the coordination of such policies by several countries could significantly change the timber market’s dynamics. Furthermore, this approach would lower the risk that less logging in one country would translate into unsustainable practices in another.

Nationally appropriate mitigation actions that the WRI broadly defines as “sustainable development policies and measures” already are part of the climate negotiations for other emitting sectors, such as energy and industry. Adopting such an approach for the forest sector has the added value that it can focus a country’s attention on REDD actions that, once implemented, will have benefits over the long term even without carbon financing.