The world’s forests are threatened by an ever-expanding demand for commodities such as soy, timber, palm oil and beef. Every year 13 million hectares of forests are being lost worldwide due to illegal or unsustainable logging and the conversion of forests to agricultural land. Emissions from forest degradation and deforestation account for 18% of global GHG emissions – 5.8 Gt CO2 – more than the emissions of all EU countries combined. But forests are crucial in the struggle for sustainable development. Not only do they have a fundamental role in the preservation of global ecological systems, they are especially important for supporting the livelihoods of local populations.

REDD+ stands for Reducing Emissions from Deforestation and Forest Degradation “plus” Conservation. This contains the sustainable management of forests and enhancement of forest carbon stocks in developing countries. The idea is to develop policies and financial incentives to ensure that forest conservation becomes economically more attractive than forest destruction. Based on a 2005 initiative by Costa Rica und Papua-New Guinea REDD became part of the UN Climate negotiations in 2007 in Bali. In 2008, the United Nations launched its UN-REDD Programme to provide incentives to developing countries to reduce emissions from deforestation and forest degradation. Under REDD+, payments for forest protection are made by developed countries to developing countries, tied to performance in deforestation reduction. There is no agreement yet on how an international mechanism for REDD+ would operate at scale. Moreover, countries have not agreed on comprehensive financial arrangements for full-scale implementation. Yet, the number of REDD+ pilot-initiatives is rapidly rising.

What finance for REDD+?

Proposals to finance REDD+ reach from scaling up public finance, for example through the Green Climate Fund to including REDD+ activities in international carbon markets. A large number of developing countries continue to stress that forest-related activities under the UN Framework Convention on Climate Change (UNFCCC) must primarily be publicly funded. Many countries including Least Developed Countries (LDCs) have expressed criticism over the appropriateness of using mechanisms that create offsets to finance REDD+. Also in Brazil’s view appropriate market-based approaches exclude the use of offset mechanisms. Still, the idea of harnessing market based mechanisms to support REDD+ has attracted substantial interest and many countries, such as Norway and the EU support them.

Concerns about REDD+ in the carbon market

A little over ten years ago, forest conservation was excluded from the Clean Development Mechanism, and the EU decided to ban offset credits from forestry and land use land change activities (LULUCF) in the EU-ETS. And for very good reasons. There is an inherent high risk that forest offset credits do not represent real emission reductions due to leakage, the impermanence of forest carbon, inflated baselines, problematic additionality testing and difficult MRV. If these artificial credits would be traded in a global compliance market, global emissions would actually rise. However, offsetting is a zero sum game. Even if the credits would represent real emission reductions, allowing REDD projects in an offset mechanism would only shift emission reduction obligations from one country to the other and would not deliver the large long-term emission cuts required to stay below 2 degrees warming. Moreover, costs for the monitoring and implementation of forest carbon projects are high and fraudulent activities related to forest carbon trading have already been reported.  REDD+ emission credits must therefore not be included in a global compliance market. Alternative financing options exist and should be prioritized. These include for example a fund-based approach, carbon taxes, levies on international aviation or maritime fuels and financial transaction taxes .

REDD+ credits in California’s carbon market

While negotiations about international options continue, California’s carbon market, which kicked off in January 2013, is set to include REDD+ credits from Acre Brazil and Chiapas Mexico. In the second largest cap-and-trade scheme after the EU, these credits could then be used by companies that cannot meet reduction targets. But a poorly designed mechanism could fail to reduce carbon emissions. Moreover, in the absence of proper safeguards it could undermine the rights of forest-dependent people and community-based forest governance. However, despite unresolved issues and wide spread civil society opposition, market regulators are close to a deal. If the Air Resources Board accepts the ROW recommendations, REDD offsets may comprise between ¼ and ½ of the state’s offset quota.

Rights before REDD

A well designed REDD mechanism, in a larger mix of political instruments and financed outside of a compliance carbon market is an opportunity for the protection of forests and the biodiversity of forest ecosystems. However, forests play a vital part for biodiversity and forest-dependent communities around the globe. Therefore it is first and foremost essential that rights and livelihoods of forest dependent peoples are protected. Experience with afforestation and reforestation activities under the Clean Development Mechanism (CDM) has shown that impacts on forest peoples can be excessively negative. Displacements, land grabbing, restriction of traditional use of forests and other violations of indigenous peoples and forest dependent peoples have been reported.  The same issues have been reported with voluntary forest carbon activities such as REDD pilot projects and forest conservation projects. A robust and harmonized safeguard framework must therefore be put in place to enable the protection of forest livelihoods, uphold human rights and the conservation of biodiversity. There must be systematical monitoring, reporting and verification of safeguards. Information about these processes to forest dependent peoples must be scaled up considerably.

For information on forestry projects in the CDM go here