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Comparability of Annex I Emission Reduction Pledges

Tim Herzog — Mon, 01 Feb 2010 16:13:59 -0500

Significant commitments to reduce developed country greenhouse gas emissions (GHGs) will be central to the realization of the Copenhagen Accord.

As negotiated in December 2009, the Copenhagen Accord provides a mandate for Annex I Parties that choose to associate themselves with the Accord to register their emission reduction pledges by 31 January 2010. Many pledges have already been put forward by major industrialized countries and economic blocs. These include the European Union (EU), Japan, Canada, and Australia, and the US.

In this analysis, we assess Annex I pledges under the Copenhagen Accord, as well as pledges by Parties that have yet to associate themselves with the Accord (namely Belarus and Ukraine). We do so with the expectation that these countries will associate themselves with the Accord in the near future.

This Working Paper presents a comparative analysis of these pledges, which was performed with two key aims:

To enable negotiators from all countries to compare the emission reduction outcomes that would result from industrialized countries’ pledges; and
To facilitate efforts to aggregate emission reduction pledges in order to calculate the global impact on the atmosphere.

The absence of details regarding some countries’ mechanisms to achieve emission reductions present hurdles to measuring comparability. Countries will need to clarify how they plan to fulfill their pledges, especially with regard to the use of international offsets and inclusion of land use, land use change, forestry (LULUCF) emissions and reductions, if aggregate effort and comparability are to be effectively measured.

Nevertheless, this analysis provides a preliminary picture of where the world is post Copenhagen. Our key conclusions and recommendations are listed below. Most importantly, we found that while developed country emission reduction pledges could have an important and potentially substantial impact, they will not be enough to meet even the lower range of emission reductions required for stabilizing concentrations of CO2e at 450 ppm and certainly fall very short of goals to reduce concentrations below that level.

Key Findings

Conclusion: Existing pledges by developed countries, when added together, could represent a substantial effort for reducing Annex I emissions by 2020 – a 12 to 19% reduction of emissions below 1990 levels depending on the assumptions made about the details of the pledges. But they still fall far short of the range of emission reductions – 25 to 40% – that the IPCC notes would be necessary for stabilizing concentrations of CO2e at 450 ppm, a level associated with a 26 to 78% risk of overshooting a 2ºC goal (Meinshausen 2005). If the pledges are not ratcheted up even beyond the highest pledges, this analysis shows that the additional reductions required between 2020 and 2050 would be significant, with emissions dropping roughly 2.5% annually to reach a goal of 80% below 1990 levels by mid-century.

Recommendation: Developed countries should implement emission cuts consistent with the higher ranges of their pledges. Second, while the Copenhagen Accord has provided for a periodic science review, if global emission pathways continue to misalign themselves with the science, the review process should mandate more ambitious commitments as the science dictates.

Conclusion: In assessing comparability, the choice of metrics can have profound implications on a given country’s ambition.

Recommendation: There is no single perfect way to assess comparability. Factors such as population growth and the use of offsets (as well as their integrity) will impact the effort and environmental effectiveness of a target. While comparability is best assessed by considering multiple dimensions of a target as we do here, we need to bear in mind that absolute emission reductions are ultimately what matters for reducing our impact on the climate.

Conclusion: In our analysis, we make the assumption that emission reductions achieved via international offsets contained in pledges will be real and additional. These assumptions make an enormous difference for the scale of some country’s emission reductions, such as that of the United States. Therefore, if international emission reductions play a major role in national targets, and they prove not to be real and additional, then some pledges, such as that in the emerging US bill, will fall far short of how they appear at face value.

Recommendation: The implementation of high regulatory standards and the design of robust accounting rules are critical to ensuring that emission reductions are real and additional.

Conclusion: This analysis demonstrated the importance of resolving how LULUCF emissions are to be estimated before final commitments are determined. Emissions from the land use sector can vary significantly from year to year and the choice of including them, as well as the choice of a base year, can make a significant difference in defining the stringency of a given country’s target. For example, when Canada’s pledge is calculated below a 1990 base year and LULUCF is included, the pledge allows for significant emissions growth.

Recommendation: High and uniform standards for estimating and accounting for land use emissions will be essential if targets set by developed countries are to deliver the ambition and impacts that they claim. If LULUCF emissions are excluded in pledges, it will be necessary to examine the net impact of pledges as well as emissions and sinks from LULUCF in order to provide an accurate measurement relevant to the state of the global climate.

Conclusion: In this analysis, we assume consistent emissions measurement and accounting rules. The Copenhagen Accord calls for accounting for targets that is “rigorous, robust and transparent.” If accounting is not also consistent (e.g. if US domestic legislation accounts for emissions from domestic agriculture in a manner that differs from that used by other Parties), comparability exercises will be more difficult and contentious. Furthermore, it will be difficult to assess effort.

Recommendation: Parties should agree to rigorous and consistent estimation and accounting methodologies.

Emission Reductions Under Cap & Trade Proposals In The 111th Congress

John Larsen — Thu, 17 Dec 2009 18:08:43 -0500

This analysis provides an assessment of net reductions in greenhouse gas (GHG) emissions relative to total U.S. emissions that could be achieved by pollution reduction proposals currently under consideration in the 111th Congress. This assessment is an update to previous analyses (available above), and includes an analysis of S. 2877, the Carbon Limits and Energy for America’s Renewal Act (CLEARA), introduced on December 11, 2009 by Senators Cantwell and Collins. The CLEARA bill is compared against other proposal from the Senate during the 111th Congress, and HR 2454 as passed by the House of Representatives June 26, 2009.

To account for the effects of different design elements among the analyzed bills, GHG reduction estimates are divided into three scenarios, which are consistently applied as appropriate to all proposals in this analysis:

Total emission reductions achieved solely by the proposed emissions caps.
Total emission reductions achieved by proposed caps and all other complementary requirements, such as emission performance standards for uncapped sources, allowances set asides for cost-containment, and required components of supplemental reduction programs, as applicable.
A range of potential additional reductions that could be achieved through incentives and other measures, such as domestic supplemental reductions and requirements for the use of more than one offset for compliance, as applicable.

To summarize, this analysis depicts reductions within the cap and the measures that will achieve emissions reductions through the passage and implementation of each proposal. Reductions that would require additional Congressional action to be realized are not included in the analysis.

Key findings

The emissions cap in the CLEARA achieves reductions of 1 percent relative to 2005 levels in 2020. By 2050, the CLEARA achieves reductions of 63 percent relative to 2005 levels. These figures do not include potential increases in emissions above the cap that may occur if the safety valve is triggered.
The CLEARA reduction targets are initially set at projected 2012 levels. Thus, if projected emissions are higher than those included in this analysis, there would be fewer total emission reductions; similarly, if emissions are lower, there would be greater total emission reductions relative to 2005 and 1990 than reported here.
The CLEARA creates a framework to reduce emissions beyond the cap by setting targets (For example, 20 percent reduction from 2005 levels by 2020) and establishing a fund to finance additional emission reductions and for other purposes. However, any potential reductions achieved through this mechanism are contingent on additional actions by future Congresses through the appropriations process. Therefore, the only emission reductions required solely by the CLEARA are those achieved by the cap.

Net Emission Reductions Under Cap-and-Trade Proposals in the 111th Congress, 2005-2050 graphically presents total net GHG reductions achieved by S. 2877, S. 1733 and H.R. 2454 relative to U.S. historical and projected emissions under the three reduction scenarios.

Estimates of Total Net GHG Emissions and Emission Reductions Achieved by Cap-and-Trade Proposals in the 111th Congress, 2005-2050 presents a table of total net GHG reductions that could be achieved by these proposals for selected years.

Download the PDF above for a full description of the methods and assumptions behind this analysis.

Table 1. Estimates of Total Net GHG Emissions and Emission Reductions Achieved by Cap-and-Trade Proposals in the 111th Congress
Absolute Emissions (Million Metric Tons CO₂)	2010	2012	2020	2030	2040	2050
Business as usual emissions	7,120	7,185	7,390	7,765	8,102	8,379
Short-term projected emissions	6,685
S. 2877 Emissions caps only		7,185	7,051	5,711	3,981	2,645
H.R. 2454 Emissions caps only		6,987	6,109	4,557	3,269	1,963
H.R. 2454 Caps plus all complementary requirements		6,940	5,134	4,294	3,043	1,778
H.R. 2454 Potential range of additional reductions		6,940	4,759	3,816	2,624	1,383
S. 1733 Emissions caps only		6,987	5,925	4,557	3,269	1,963
S. 1733 Caps plus all complementary requirements		6,894	5,059	4,451	3,200	1,932
S. 1733 Potential range of additional reductions		6,809	4,697	4,027	2,833	1,595
Percent change from 2005 emissions	2010	2012	2020	2030	2040	2050
Business as usual emissions	0	1	4	9	14	18
Short-term projected emissions	-6
S. 2877 Emissions caps only		1	-1	-20	-44	-63
H.R. 2454 Emissions caps only		-2	-14	-36	-54	-72
H.R. 2454 Caps plus all complementary requirements		-2	-28	-40	-57	-75
H.R. 2454 Potential range of additional reductions		-2	-33	-46	-63	-81
S. 1733 Emissions caps only		-2	-17	-36	-54	-72
S. 1733 Caps plus all complementary requirements		-3	-29	-37	-55	-73
S. 1733 Potential range of additional reductions		-4	-34	-43	-60	-78
Percent change from 1990 emissions	2010	2012	2020	2030	2040	2050
Business as usual emissions	17	18	21	27	33	37
Short-term projected emissions	10
S. 2877 Emissions caps only		18	16	-6	-35	-57
H.R. 2454 Emissions caps only		15	0	-25	-46	-68
H.R. 2454 Caps plus all complementary requirements		14	-16	-30	-50	-71
H.R. 2454 Potential range of additional reductions		14	-22	-37	-57	-77
S. 1733 Emissions caps only		15	-3	-25	-46	-68
S. 1733 Caps plus all complementary requirements		13	-17	-27	-48	-68
S. 1733 Potential range of additional reductions		12	-23	-34	-54	-74
Bills analyzed include S. 2877 as introduced and S. 1733 as reported in the Senate, as well as H.R. 2454 as passed by the House of Representatives on June 26, 2009. “Business as usual” emission projections are from EPA’s reference case for its analysis of the Waxman-Markey bill. “Short-term projected emissions” represent EIA’s most recent estimates of emissions for 2008-2010. S. 2877, Cantwell-Collins, sets economy-wide reduction targets beginning with a 20 percent reduction from 2005 levels by 2020. However, additional action by Congress would be required before these targets could be met. Reduction estimates do not include emissions above the cap that could occur due to the safety-valve.

Counting the Cash: Elements of a Framework for the Measurement, Reporting and Verification of Climate Finance

Maggie Barron — Mon, 14 Dec 2009 13:51:27 -0500

The role of finance in an international post-2012 climate change agreement cannot be overstated. Agreements on the provision and tracking of financial support to developing countries to reduce their greenhouse gas emissions, adapt to a changing climate and build capacity to report their actions internationally will be critical to the success of the international negotiations for a post-2012 climate regime at Copenhagen and beyond.

The need for Parties to clearly demonstrate financial support has given rise to two questions. First, what types of financial contributions from developed countries can count as climate finance? Second, what framework can be put in place to track these contributions? This Working Paper aims to shed light on both of these issues.

Forests in the Balance Sheet: Lessons from Developed Country Land Use Change and Forestry Greenhouse Gas Accounting & Reporting

Maggie Barron — Fri, 11 Dec 2009 13:22:38 -0500

Executive Summary

The world’s forests, both their use and loss have a critical role for international efforts to counter climate change. Recognizing this, Parties to the United Nations Framework Convention on Climate Change (UNFCCC) included in the 2007 Bali road map a mandate to develop a mechanism that would create incentives for developing countries to reduce emissions from deforestation and forest degradation (REDD).

In order to ensure that a REDD mechanism is both effective and credible in protecting and restoring forests and reducing carbon dioxide emissions, a range of accounting and methodological challenges will have to be solved. In assessing the scale of those challenges many commentators have looked to pilot projects. However, while instructive, these projects do not get at the larger issues involved in national accounting. It is interesting therefore to look for lessons from the experience of Annex I (developed) countries in accounting for forest-related emissions and sequestration as part of their national emission reduction commitments. This working paper thus analyzes developed country experience to date in relation to implementation of the LULUCF (land use, land use change and forestry) provisions of the Kyoto Protocol.

Key Findings

The paper draws conclusions and recommendations around including the GHG emissions and removals from developing country forests and other relevant land uses into an international climate architecture. We hope this information will inform the negotiations both at and beyond the Copenhagen Conference of the Parties to the UNFCCC in December 2009. Lessons learned from Annex I LULUCF accounting point to the need to design an international REDD mechanism that differs significantly from the current LULUCF model.

Lesson 1: Current LULUCF rules have resulted in the significant under-reporting of forest-related greenhouse gas emissions. This is because Annex I countries are only required to report on greenhouse gas emissions from deforestation and greenhouse gas removals due to afforestation and reforestation. Negotiations for the post-2012 arrangements are debating whether to make inclusion of emissions and removals from forest management activities mandatory for Annex I countries. Initial research suggests that if only deforestation is considered for developing countries, the same under-reporting that developed countries have experienced will result.

Recommendation 1: To account more accurately for forest-related emissions and removals, reporting requirements of a forest mechanism for both developed and developing countries should be broader than the current mandatory requirements under LULUCF.

Lesson 2: Current accounting systems under LULUCF rules do not yet provide the accuracy and precision needed for credibly including land use emissions in emission trading. Annex I countries are actively seeking to improve quantification and accounting for emissions and removals in relation to forest management activities under LULUCF, but this has proven challenging. These difficulties will also exist in a forest mechanism that includes activities such as degradation, sustainable management of forests and enhancement of carbon stocks. Such imprecise accounting may prove problematic for effective functioning of a carbon market mechanism.

Recommendation 2: A system that relies wholly on carbon markets to finance REDD would greatly sacrifice accuracy and/or inclusiveness among countries. Parties should implement a range of means for financing REDD. This should include a fund to finance activities that cannot be precisely accounted for. In some cases changing the definition of deforestation in order to capture significant land conversion activities may address some of the accuracy issues.

Lesson 3: Significant improvements in transparency and consistency are needed in the way countries report on land use change and emissions from forest activity. In addition, reporting is scant on the biodiversity and human welfare impacts of policies designed to reduce emissions. Both of these factors reduce the credibility of, and support for, country actions.

Recommendation 3: Parties should undertake full and consistent reporting of all relevant data for quantifying emission reductions or greenhouse gas removals. This includes data on the basis for setting a reference level and on non-carbon factors, such as biodiversity and impacts on forest stakeholders, specifically related to tenure. This reporting should include actions as well as emissions data and assumptions.

Lesson 4: Inventories of greenhouse gas emissions have been critical in helping countries understand where their most significant land use emissions come from. They also help identify “leakage” between land use activities.

Recommendation 4: Any country that engages in voluntary REDD Plus activities as part of its commitments under an international climate agreement should undertake a full land use emissions inventory. In accordance with the Convention, support should be provided to developing countries to produce these inventories.

Download the Complete Paper (PDF, 29 pages, 1.2 Mb)

An Emerging Revolution: Clean Technology Research, Development and Innovation in China

Tim Herzog — Tue, 08 Dec 2009 13:01:09 -0500

Technology has long powered human progress, and remains central to global development. In the decades ahead, developing and deploying clean energy, low carbon technologies will also play a crucial role in countering perhaps the biggest global threat of our times: climate change.

Our ability to deploy effective technologies, on a scale large enough to significantly reduce greenhouse gas (GHG) emissions, depends on two key factors: the direction, and the pace, of technological innovation. The direction of technological innovation, to a large extent, is contingent on a balanced, technology-neutral approach to energy policy (Weiss and Bonvillian, 2009; Diazanadon, etc. 2009). The pace of technological innovation, on the other hand, depends on a range of factors including, critically, the presence of effective domestic policies to spur research and innovation. Such policies will be particularly important in major developing countries whose emissions are accelerating and which lack the long established research and development (R&D) infrastructure of industrialized countries.

This working paper examines efforts made by China – the world’s largest gross emitter of greenhouse gases – to create an enabling environment for R&D and innovation in the field of clean technology. The goal is to highlight how governments in developing countries can craft effective technology policies against the backdrop of a pending international climate agreement expected to trigger significant new financing for clean technology assistance. The paper summarizes China’s policies to prioritize, fund and deploy clean technology R&D and innovation over the short and medium term. These comprehensive policies reflect China’s ambition of emerging as a global power in science and technology through clean technology R&D and innovation.

It Should Be A Breeze: Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry

Maggie Barron — Tue, 08 Dec 2009 12:27:14 -0500

The political debate concerning climate change and global trade and investment flows has increasingly taken on a defensive posture in the United States and other developed countries. The spotlight has been on the competitiveness of energy-intensive industries and potential border adjustment mechanisms to prevent carbon leakage, as well as on the need to grow and protect industries that will gain from a low-carbon future and create millions of new “green jobs” at home.

This paper analyzes the global wind power industry in light of the latter debate and shows that global integration—broadly defined as increasing cross-border trade and investment flows —can make a strong positive contribution in the form of green technology cost reductions and innovation while still creating predominantly local jobs. As such, national trade and investment policies that promote increased global integration of the wind industry are a powerful ally in the fight against climate change.

Our analysis starts with a brief summary of current and future global demand for wind turbines and the role of government support in this demand picture. Next, we show how the wind energy sector is developing into a truly global industry characterized by high levels of growth and competition and how this process is increasingly driven by cross-border investment rather than trade. Then we map out the globalization potential of different components in the value chain and analyze existing barriers to further global integration. Finally, we discuss the distributional consequences of greater globalization and especially the outlook for green job creation along the wind value chain, before we conclude with a set of policy recommendations.

Our principal findings are:

Local demand creation draws in local production. Demand for wind energy through long-term government support policies creates the basis for local supply of wind capital equipment and services and associated local job creation; policies that put a price on carbon will further help to make wind more competitive and increase the overall demand for turbines and equipment.
Cross-border investment rather than trade is the dominant mode of global integration. Standard international trade in wind energy equipment is relatively small and declining. Instead, foreign direct investment (FDI) flows dominate the global integration of the wind sector, and the cost structure of the wind industry favors the emergence of regional production hubs in markets of sufficient size.
Abolishing trade tariffs will have limited effects on the wind industry. Principal barriers to global integration are not at-the-border tariffs but rather several nontariff trade barriers and formal and informal barriers that distort firms’ investment decisions.
Intellectual property rights (IPRs) are currently not restricting firms’ access to wind power equipment markets. Intellectual property plays only a very limited role in the cost structures of the wind industry, and technology is widely available for licensing. IPRs therefore cannot be considered a major impediment for market participation for firms from both developed and developing countries.
A highly globalized wind industry will create jobs locally. Wind energy is a generally more labor-intensive source of electricity supply compared with fossil fuel generation. Due to its specific characteristics, a globalized wind industry will still create lasting and highly localized employment opportunities.

Trade Measures and Climate Change: Searching for Common Ground on an Uneven Playing Field

Tim Herzog — Tue, 08 Dec 2009 09:41:51 -0500

As the United States and other developed countries have enacted or are in the process of developing legislation to cap greenhouse gas emissions post-2012, their policymakers are under increasing pressure from domestic constituencies to include trade measures as part of climate policy. This Working Paper analyzes relevant measures in emerging U.S. domestic climate policies, describes the objectives of these measures, assesses how they might be imposed, and discusses their implications for both a future climate agreement and the international trading system. It also touches on proposals to use trade measures in the European Union and other developed countries.

We find that:

Proposed trade measures are driven by multiple objectives. Trade measures have been included in draft climate legislation in the U.S. and have been considered by the EU in an effort to achieve several policy objectives: to protect domestic industry from potential competitive disadvantages that might arise from unequal carbon prices (“competitiveness”); to provide temporary assistance to energy intensive, trade exposed industries in transition towards a low-carbon economy (“transition assistance”); to prevent greenhouse gas intensive production from moving to countries with less stringent limits on carbon emissions, undermining the environmental effectiveness of domestic climate policy (“leakage”); and to create incentives for other countries to adopt climate policies and join a future climate agreement (“free-riding”).
Protecting domestic industry is not a legitimate use of a trade measure. The United Nations Framework Convention on Climate Change (UNFCCC) and World Trade Organization (WTO) agreements share a set of common principles that discourage the use of unilateral trade measures that are arbitrary, unjustifiable, or disguised restrictions on trade. Neither the UNFCCC nor the WTO authorizes the use of trade measures for the specific purpose of protecting domestic industry from competition.
Properly designed trade measures are not prohibited under the WTO or the UNFCCC. It may be possible to design trade measures that are sufficiently targeted and equitably applied to prevent emissions leakage to contribute to the UNFCCC’s objective without violating WTO rules. While the UNFCCC Conference of the Parties (COP) has not formally considered whether using trade measures to prevent emissions leakage or to penalize non-Parties would be consistent with the UNFCCC, some developing country Parties are calling on the COP to prohibit the use of unilateral trade measures (by developed country parties) to promote climate change objectives.
Draft U.S. climate policy includes the use of trade measures. The most procedurally advanced proposal for U.S. climate change legislation, the American Clean Energy and Security Act (ACESA), was passed by the U.S. House of Representatives in June 2009. ACESA is intended, in part, to help “reach an internationally binding agreement in which all major greenhouse gas-emitting countries contribute equitably to the reduction of global greenhouse gas emissions.”3 Yet, ACESA would, in certain circumstances, authorize the U.S. government to use trade measures against products from another Party to a post-2012 international climate agreement, even if that Party was in full compliance with its commitments under that agreement, if the U.S. determines that the Party’s commitment in that agreement was not “at least as stringent as” that of the U.S.4 In other words, ACESA would permit the U.S. to make its own determination of whether another country’s efforts to reduce its emissions were “equitable” as compared to U.S. efforts. This determination could override burden sharing as agreed internationally and principles key to UNFCCC, including the principle of common but differentiated responsibilities and respective capabilities of developed and developing countries.
A number of developing countries have come forward with significant actions that may entail costs for their domestic industries. In recent months, a number of developing countries have announced significant new climate policies that would contribute to a global deal and a global response to climate change. As indicated, they have also proposed that the UNFCCC parties agree to prohibit developed country parties from using unilateral trade measures to advance climate policy. It is not clear whether these developing countries contemplate the use of such trade measures themselves.
The risk of a WTO dispute arising over climate related trade measures is high, but could be lowered or guided by UNFCCC decisions or processes. If climate-related trade measures were implemented, by either a developed or a developing country, a trade dispute could arise and a WTO dispute settlement panel could be asked to choose between a result that required a country to dismantle a central part of its climate legislation, and a result that allowed the trade measure to stand but that redefined UNFCCC standards for fair and effective climate policy.

Since it is unlikely that the U.S. or the EU would agree to an outright prohibition on the use of trade measures, or that China or India would agree to rules that explicitly authorized such measures, the UNFCCC COP should articulate a set of principles and procedures to limit the use of any trade measures to avoid, or help resolve, any disputes that might arise under the WTO or elsewhere.

Forest Taxation in Post-1994 Cameroon: Distributional Mechanisms and Emerging Links with Poverty Alleviation and Equity

Maggie Barron — Mon, 07 Dec 2009 15:42:43 -0500

Executive Summary

This report documents a study carried out on the Cameroonian forest taxation system, particularly covering: (i) the distribution practices of the government, as demonstrated through transfers from the central government to the local authorities and from the latter to the local communities; and (ii) the interrelations of these transfers with equality and livelihoods. The study was conducted in the forested zone of Cameroon in 2006. It covers three Rural Councils in the East and Center provinces, with the inclusion of a “non-forested” council in the North-West province. In total, 22 villages and 525 households were targeted by the exploratory work and evaluation.

Numerous villages have yet to benefit from any projects while their forests are exploited, mostly because of lack of responsible management practices and safeguards.

The emphasis on forests in the Millennium Development Goals as well as in the National Strategies for the Reduction of Poverty is an illustration of how political discourse is translated into the economic planning of human well-being. With significant forest resources—the third or the fourth largest by area in the Congo Basin, according to estimates—Cameroon has placed a key emphasis on sustainable use of them to meet national development objectives. Revenues generated by forest taxes constitute one of the options that could help Cameroonian forests contribute to the fight against poverty.

The forest tax system in Cameroon aims at a series of objectives, including: (i) the creation of revenues and of national prosperity; (ii) distributional equity and the reduction of poverty; (iii) fiscal decentralization; and (iv) the inclusion of local communities in access to forest benefits. The Cameroonian forest tax system also brings together a number of mechanisms. One of these, the Annual Forestry Fee, is representative of the political desire of the central government to use part of the revenues generated by logging activities to improve local development and livelihoods. Since 1999, however, the Annual Forestry Fee does not appear to have led to a significant improvement in the conditions of life at the village or household level in the forested zone. This fee is the primary focus of this report.

The Annual Forestry Fee is an area-based forestry tax and stems from Article 68 of the 1994 Forestry Law and subsequent modifying and accompanying texts. The Annual Forestry Fee is presented as an annual “governmental transfer” towards the Rural Councils and villages—one of the many forest taxes applied in Cameroon. In the logic of the transfer, 50 percent of the annual tax goes to the central government and the other 50 percent is allocated to relevant sub-national parties. The 50 percent allocated to local entities is further divided between the Rural Council with jurisdiction over the forest titles and the village communities surrounding these titles, with a 40:10 ratio, for the execution of socio-economic projects in the villages.

Data shows that from 1999 to 2005 the Annual Forestry Fee generated approximately 70 billion CFA francs (FCFA). The three Rural Councils considered for this study regularly received their share of the Annual Forestry Fee. However, discrepancies were found between the distributed amounts as published at the central level through the Forest Revenue Enhancement Program and the amounts declared as received by the municipal authorities. For instance, in one of these councils, the Rural Council of Mindourou (Eastern province), data from the central level indicates a transfer of 578 million FCFA as the 40 percent allocated to the council in 2004, while the municipal authorities acknowledged a transfer reported at 544 million FCFA. In the Rural Council of Gari-Gombo, figures from the central level indicate a transfer of 321 million FCFA as the 40 percent allocated to the community in 2004, while the municipal authorities acknowledge receipt of approximately 230 million FCFA.

Discrepancies were even greater when the 10 percent of Annual Forestry Fee allocated to the village communities was considered. For example, in 2005, in the Rural Council of Gari- Gombo (Eastern province), the amount registered by the municipal authorities as the village communities’ AFF allotment was only 55 percent of the amount registered by the Forest Revenues Enhancement Program (PSRF ). These discrepancies are indicative of an overall lack of transparency that surrounds the management and redistribution of the Annual Forestry Fee.

Differences also exist in the way the 10 percent actually committed to village communities is disbursed by the Council. In the Rural Council of Mindourou, for instance, each of the 16 villages received 8.5 million FCFA for the implementation of socio-economic projects in 2005, while other councils decided to allocate money according to different and not clearly defined rules.

As far as the impact of the 10 percent is concerned, results show that when data could be gathered the actual money spent on planned activities in a number of villages was found to be less than the amount supposedly allocated. Results show that several of the village-level projects carried out had been over-budgeted and recorded inflated costs, as already found by previous audits done on the Annual Forestry Fee distribution and disbursement.

The distribution and transfer of the Annual Forestry Fee on paper, therefore, does not necessarily reflect the actual execution of socio-economic projects at either the village or Council levels. Numerous villages have yet to benefit from any projects while their forests are exploited, mostly because of lack of responsible management practices and safeguards. As for the councils, this study found—in concordance with previous studies—that the 40 percent was allocated to diverse uses (such as overall administrative costs) and that the first objective of the transfers (local development) has not been an absolute priority. Though exceptions do exist, a swift evaluation of the undertakings in key places of the targeted communities, when data could be found, shows wide discrepancies between the amount allocated under the 40 percent and the actual value of implemented projects or activities.

For the purpose of analysis and comparison, the study calculated the theoretical amount of Annual Forestry Fee allocated per household annually in the three Rural Councils for 2005, based on the amount of the 10 percent actually received by the Rural Council. The resulting figures (18,000 FCFA/household in Mindourdou, 12,500 FCFA/household in Bibey, and 800 FCFA/ household in Gari Gombo) show that there exists asymmetry in the horizontal distribution of the Annual Forestry Fee (i.e., amongst forested Rural Councils) and that overall, the amounts of Annual Forestry Fee allocated per household are often extremely small in relation to median annual household income in Cameroon (340,000 FCFA). Thus, the amounts collected and redistributed annually do not guarantee by themselves that measurable impacts on the incidence of poverty or well-being are occurring.

This study found that the households interviewed perceived themselves as being poorer nowadays than a decade ago (i.e., comparison 1995–2005) in the study area. The perceptions of the local communities were put in context by data collected on basic social services and infrastructure. Results show that close to 96 percent of the villages visited are lacking electricity, 82 percent did not have health centers, 70 percent did not have wells installed and 30 percent did not have a primary school for all grades. In addition, the access that minority pygmy enclaves have to benefits of the Annual Forestry Fee remains marginal.

Furthermore, it is important to note that over the period of time considered by this study (2000-2005), the annual amount of the Annual Forestry Fee grew approximately by 25 percent, while other sources of governmental budget allocation (central government to regional) aimed at poverty reduction declined nationally by 17 percent. Though this inverse relationship would need a deeper analysis to be fully understood, it nonetheless shows that the Annual Forestry Fee not only boosted the budgets of many concerned councils, but it also replaced the money normally disbursed by other state agencies (i.e., the fee acted in part as a substitute and not wholly as additional funds).

The various actors involved in this process have different perceptions of the Annual Forestry Fee, according to interviews conducted across the study sites:

Policy-makers believe the actual system for decentralization of forest tax revenue is an effective tool for local development and poverty reduction;
Mayors generally see the distribution of the Annual Forestry Fee as justice more properly served to local communities who consider the surrounding forest resources to be their own. However, they criticize the many problems with the current Annual Forestry Fee distribution system, including: the delays in delivering the Annual Forestry Fee checks, the discrepancies between the amounts received and those published at the central level, and the inadequacy of the sums received at the Council level from the Annual Forestry Fee, given that all local development concerns fall henceforth to the Rural Councils;
Local administrative authorities have mixed perceptions. When limited to the approbation of council budgets (the 40 percent), their appraisal of the poor results of the forest revenue distribution process remains objective, and they have a negative opinion of the mayors; but when they are involved with the execution of the actual projects conceived, their opinion of the mayors switches to positive;
Local communities believe the distribution and utilization of the Annual Forestry Fee to be unfair and only contribute to increasing the wealth of the State, the mayors and the souspréfets;
Municipal authorities in the non-forested zones focus on equity issues at the national level. Since wood is a national resource, these authorities contend that all Cameroonians should be able to benefit, thus supporting a national realignment of the Annual Forestry Fee redistribution.

In order to address shortcomings in the Annual Forestry Fee distribution process, we propose the following structures and mechanisms:

Increase public information on the amount of Annual Forestry Fee distributed and its impacts;
Monitor the entire process of Annual Forestry Fee distribution and promote transparency in its management;
Improve the Annual Forestry Fee management process and focus on building capacity of those actors responsible for its execution (e.g., mayors, Rural Council members, Village Development Committee representatives);
Develop and implement structures for downward and upward accountability, including enforcement of sanctions, when necessary.

Broken Promises: Forest Revenue-Sharing in Cameroon

Maggie Barron — Mon, 07 Dec 2009 14:37:32 -0500

Executive Summary

In Central Africa, most governments have introduced mechanisms to redirect more of the benefits from the extractive use of forests to the regions where logging is taking place. Several governments are in the process of designing or implementing forestry revenue tax/fee distribution schemes whose objectives are decentralization, poverty alleviation, and promotion of local development. Cameroon has been a leader in this endeavor, with a system that distributes half of its Annual Forestry Fee (referred to herein by its French acronym, RFA [redevance forestière annuelle]) revenues to decentralized public authorities (40%) and villages (10%) that are adjacent to exploited forests. These funds are targeted at furthering local economic development, poverty reduction, and conflict abatement in and among villages adjacent to forests, forestry companies, and the government.

Despite being considered progressive by global standards, Cameroon’s revenue-sharing system is failing to provide the expected benefits to the communities it targets.

This Forest Note summarizes findings from case studies of three rural councils (Bibey, Gari Gombo and Mindourou) and their constituent villages regarding implementation of the RFA revenue-sharing system from 2000-2002. Based on this information and an examination of the strengths and weaknesses of the revenue distribution system, the authors present recommendations to the Government of Cameroon on how to increase the system’s positive impacts on local livelihoods and poverty alleviation and, correspondingly, reduce conflict between villages and forestry companies.

The findings indicate that despite being considered progressive by global standards, in the rural councils addressed through this study, Cameroon’s revenue-sharing system is failing to provide the expected benefits to the communities it targets: those living adjacent to forest concessions. In some cases, revenues did not reach villages at all; in all cases, the amount received by villages was less than what was allocated to them at the national level. Of the almost US $7 million allocated to the three rural councils examined in this study, almost US $2 million is unaccounted for during the period 2000-2004, and of the US $1.7 million allocated for village development within these rural councils, almost US $1 million is unaccounted for during the same time frame. Furthermore, the projects funded were often not those requested by the village representatives, and villagers reported that the costs of these projects were often higher than the accepted cost of implementing such activities by local sources.

Monitoring of the use of revenues by the Ministry of Economy and Finance’s General Treasury and Budget Office was haphazard and made even more problematic by the absence of standardized, transparent accounting systems. Holding decision-makers accountable for the use of funds was difficult, not only because of weak accountability mechanisms but also because of weak law enforcement, lack of political will, capacity, and resources. These factors, among others, resulted in a system that depended primarily on the integrity of the mayor (the head of the elected rural council) and thus provided opportunities for the misappropriation of funds, cronyism, and other forms of corruption.

This study was unable to isolate what impacts, if any, the RFA revenues had on poverty reduction because of the relatively small amount of revenues that reached villages and the lack of comparative data. However, the findings indicate that there is an urgent need to strengthen the governance of the RFA revenue distribution system and the larger system of political representation in which it operates if revenues are to be used effectively for poverty alleviation. This brief builds on previous studies and on findings from three case studies to provide recommendations to the Government of Cameroon on how to improve the RFA revenue-sharing system’s ability to contribute to the government’s poverty reduction objectives.

Recommendations

The Forest Revenues Enhancement Program should set aside 5% to 10% of the total RFA revenues to develop and maintain effective transparency, monitoring, local participation, and accountability mechanisms as well as to build capacity at the various government, rural council, and village levels to implement those mechanisms. More specifically, funds should be provided by the central government from the 50% of the PSRF funds that is not earmarked for the rural councils to:

develop, implement, and enforce standardized accounting systems set up by the Ministry of Economy and Finance. Implemented through the PSRF, these systems would be used by the rural councils and villages to track RFA revenues and expenditures.
strengthen existing auditing systems and build operational capacity to audit rural council RFA expenditures annually (to be implemented by the Ministry of Economy and Finance).
increase the capacity of local villagers to engage effectively in the decision-making process by:
- defining a democratic process for selecting village representatives;
- developing decision-making procedures that ensure effective consideration of village representatives’ priorities;
- providing training in development planning, basic budgeting, and accounting;
- increasing local representation on Forestry Fee Management Committees that determine project funding; and
- establishing Forest Fee Management Committees in villages where they do not exist (to be implemented by the rural councils through their engagement with local nongovernmental organizations (NGOs) and the Ministry of Economy and Finance).
build transparency into the use of RFA funds at the rural council and village levels through the posting of RFA revenues and expenditures in public gathering places, printing them in local newspapers and periodicals, and annual meetings with villagers to present and explain expenditures financed by the RFA (to be implemented by the Ministry of Economy and Finance together with the Ministry of Forests and Wildlife). In addition, mayors should be required to publish annually a full list of the projects funded under the RFA with their locations and costs.

The Environmental Committee in the Cameroonian Parliament, in partnership with civil society organizations, should take the lead in ensuring increased accountability in the expenditure of RFA revenues by:

acting as an ombudsman for villages with complaints of RFA revenue mismanagement;
investigating specific cases of the misuse of RFA funds;
holding public hearings, if an RFA audit fails, that involve all the villages in the rural council area so that the leaders can be sanctioned for their failure to use the funds according to existing laws.
commissioning a study of the enforcement chain to identify actions to increase sanctions for the misuse of RFA revenues and to strengthen the enforcement chain.

Voices From the Congo Basin: Incorporating the Perspectives of Local Stakeholders for Improved REDD Design

Tim Herzog — Fri, 04 Dec 2009 17:18:55 -0500

Summary

The scarcity of information on local and indigenous perspectives on Reduced Emissions from Deforestation and Forest Degradation (REDD) may inhibit the development of effective REDD-related measures in the Congo Basin. The World Resources Institute (WRI), along with the Network for Environment and Sustainable Development (NESDA) in Cameroon, and the Council for Environmental Defense by Legality and Traceability (CODELT) in the Democratic Republic of Congo (DRC), engaged underrepresented local communities in the Congo Basin on issues regarding REDD. We conducted a series of workshops with local and indigenous communities, community-based nongovernmental organizations (NGOs), and parliamentary representatives to raise their awareness of forest/climate issues and REDD. The workshop participants then had an opportunity to discuss their aspirations and concerns regarding REDD’s design and implementation. Their five main concerns were the following:

Limited recognition of land-tenure rights.
Inadequate information about forest and carbon resources.
Weak institutional capacity and unclear roles.
Inequitable revenue distribution.
Fewer opportunities for development.

We discussed recommendations for addressing these concerns, and decided on priorities. This working paper summarizes the feedback and conclusions from these workshops for international civil society, UN-REDD, the Forest Carbon Partnership Facility (FCPF), and the parties to the United Nations Framework Convention on Climate Change (UNFCCC).