Wrap up
This week I wrap up that part of my assessment of the LCDS that focuses on the several misstatements and computational errors found in the draft text and related official documents, especially as they pertain to such basic data as the area under forest and estimated rates of deforestation for Guyana. I am aware that these disclosures have been disconcerting to several readers who cannot comprehend how such weaknesses could persist in a text claiming global attention, while being simultaneously advertised as officially sponsored by the Government of Guyana.
To those other readers who sarcastically ask me: what else would you expect from third-rate politically preferred know-it-alls? I hasten to remind them that if careful thought is given they would acknowledge that Guyanese are capable of producing a far better product. That is why, personally I am more disappointed than critical.
The LCDS makes crucial observations related to the evolution of Guyana’s proposed “avoided deforestation” policy as it transitions into the production of forest-based carbon offsets. This transition is envisioned under the aegis of a REDD/REDD-plus mechanism, whose end product is a global market trading in forest-carbon offsets. For the remainder of this column I shall explore these observations to conclude this part of my assessment.
‘Co-ordination’
The first observation is that the LCDS proposes an option which requires the global trading mechanism that eventuates, to operate through national or sub-national authorities. Such authorities have been advocated because they provide “coordination” of the forest sector, which is required to ensure the effective management of environmental pledges governments make to the international community.
This proposal would not be acceptable to countries where private sector ownership and control of the forests is the dominant property type. However, in Guyana, where historically, the government has owned the vast majority of the forests this may be a useful option. In other jurisdictions it would be considered unacceptable, because it is too state-led, authoritarian, and dependent on government as the driver of the supply side of traded global carbon offsets.
Arguably, this point is implicitly recognized in the Draft LCDS, which speaks for, and commits, only, the state forest estate sector. Lands under the jurisdiction of Amerindians are purposely excluded. That is, until, and only if, their titled communities agree to “opt-in” to the LCDS. Until then, the LCDS commits only forests owned and controlled by the government.
Readers should note that by similar parity of reasoning, other forest-lands not in the control of the state or the Amerindian communities (for example, state leased lands) cannot be legally committed to the scheme, without the prior permission of those who presently exercise legal control.
The main reason offered in the LCDS for governmental authorities coordinating the supply of avoided deforestation is to avoid “leakage.” By this is meant that forested land in one area designated to be preserved as forest-carbon offsets under the LCDS does not result in forested land elsewhere being deforested, thus negating their positive environmental effects.
Financing gap
A second observation is that the LCDS is also explicit about the need for putting in place “transitional arrangements” allied to the government-led process, in order to meet the “financing gap.” This gap emerges because, on the one hand, the income that would eventually be earned from selling forest-carbon offsets on the global market trading in carbon emissions reductions/offsets would take time (in the LCDS this is estimated to fall into place after 2020). And, on the other hand, Guyana would forego substantial income if it practised “avoided deforestation.”
To estimate this latter income, the LCDS makes the heroic assumption that the country is handed over to a “rational deforester,” whose primary objective is to deforest the country at an optimal rate.
This deforester is given the objective of maximising immediate income, subject to prevailing technical, economic, and legal factors. No other objective is to be entertained. More specifically, environmental stability and long-run sustainability are not to be considered rational choices for the “rational deforester.” These are in fact externalities, which the rest of the world would gain if Guyana kept its forests intact, at its own cost. The attributable income is thus what Guyana could earn, if it totally ignored issues centring on global warming and climate change.
In the LCDS the estimated value of Guyana’s rainforest to the rest of the world lies between US$4.3 billion and US$23.4 billion, with the most likely value being US$5.8 billion.
This is termed the economic value to the nation (EVN). Converted to an annuity payment, the value lies between US$430 million and US$2.3 billion, with the most likely value being US$580 million. Deforesting therefore reduces the value of Guyana’s rainforest as an environmental asset to the rest of the world. The estimate of this value of the forests, if left standing is US$40 billion annually.
To be phased in
The LCDS recognizes that, given the above, all of Guyana’s forests cannot be committed upfront to any market-based compensation mechanism.
It is therefore proposed that transitional public funding would be available from the international community. It is projected that, starting in 2013, Guyana’s forested lands (and indeed those of all rainforest nations under the REDD/REDD-plus arrangement) would assign only a portion of their accumulated forest-carbon offsets to the global trade in carbon offsets. This portion would be progressively phased in at a pace designed to prevent flooding of the markets or a glut in forest-based offsets.
The estimate is that, based on the UK Government Report on Climate Change: Financing of Global Forests, a target of 22 per cent by 2020 and 75 per cent by 2030 would be feasible.
As I have stated before, the McKinsey estimate is that “avoided deforestation” is one of the lowest cost-abatement options to deal with climate change and global warning.
The LCDS projects that if in conjunction with this, sustainable forest management practices prevail globally (avoided deforestation, afforestation, reforestation and forest restoration) the global forest sector could become carbon neutral!
Next week I shall turn to an assessment of trading in carbon (and forest-carbon) offsets markets.
