The United Nations and a large coalition of financiers have urged policy makers to clarify the role of private investment in helping to fight deforestation, in a new report published ahead of this year’s climate change negotiations in Durban.
More than 200 banks and investors issued the call today under a United Nations Environment Programme Finance Initiative (UNEP FI) partnership seeking to ensure the success of REDD+. The REDD+ policy is aimed at reducing deforestation and forest degradation in developing countries.
The report, backed by – among others – Bank of America Merrill Lynch, Barclays and Deutsche Bank, warns against the huge financial and environmental losses occurring if negotiations at Durban fail to spur private sector investment in reducing deforestation.
It is looking increasingly likely that the Kyoto Protocol will expire in 2012 without a legally binding replacement having been agreed. This will result in a “regulatory gap” after 2012, undermining the legal foundations of the emerging global carbon market.
The new study says that any post-Kyoto climate convention negotiated in Durban and beyond must include text clarifying the role of private engagement and investment in funding REDD+.
It also calls for effective measures to tackle the drivers of deforestation, by shifting behaviour in the private sector towards sustainable land use.
Christian del Valle, director of environmental markets and forestry at BNP Paribas, one of the report’s contributors, urged negotiators to boost the economic case for storing carbon in trees.
Forestry credits are labelled temporary under the Clean Development Mechanism as any carbon sequestered by new forests is not captured permanently. This is because trees will die at some point, releasing their carbon back into the atmosphere.
“The fundamental reason for current levels of deforestation worldwide is that cleared forests translate into economic opportunity for farmers, local communities and governments while standing forests do not,” said del Valle.
“There is a price for soybeans, palm oil, beef and other products grown on deforested lands, but not for the many critically important services provided by healthy forests, including the sequestration and storing of carbon.
“With the possibility of a global funding mechanism for REDD+, we now have the unprecedented opportunity to address this imbalance at the global level. I hope we do not miss it, so natural forests are given the value they deserve.”
Previous research has estimated that an ineffective climate change regime on forests will entail losses in the global economy of $1tn annually by 2100.
In contrast, a healthy forestry-based carbon market has been forecast to mobilise more than $10bn investment by 2020 for the protection and rehabilitation of natural forests, according to the The Economics of Ecosystem and Biodiversity (TEEB) study last year.
Abyd Karmali, managing director and global head of carbon markets at Merrill Lynch, urged governments to make private finance a central concern in the funding debate.
“The banks, insurers and investors that are members of the UNEP FI are optimistic that governments, when meeting in Durban this December, will realise the importance of mobilising private capital to help reduce deforestation and forest degradation,” he said.
“Without the systematic involvement of the private sector, ranging from institutional investors to local forest cooperatives, the REDD+ mechanism agreed to in Cancun risks being rendered ineffectual.”
