Should we really trade ‘forest carbon’?

Paying for the protection or rehabilitation of forests by pricing and trading carbon stored in them has increasingly entered global climate talks today. Many have endorsed the mechanism as it is seen to accomplish twin goals: reduce man-made greenhouse gas emissions and halt deforestation. Yet, forest carbon trading, as so-called, is increasingly criticized—why has it become controversial?

Over the last few decades, more studies have emphasized that forests hold massive potential to halt the rise of greenhouse gas concentration in the atmosphere, thanks to their ability to trap carbon dioxide in tree biomass, soils, and decaying matter. Today there is general acceptance that planting trees (reforestation or afforestation) or protecting existing ones (avoided deforestation) can be viable climate change mitigation strategies.

Increasingly, this carbon storage capability of forests has been co-opted in so-called climate finance schemes to forward the concept of ‘payment for stored carbon’. In ‘carbon markets’ endorsed by mechanisms like CDMREDD+ and voluntary carbon disclosures, carbon in forests are quantified, price-tagged (officially as ‘credits’), and sold to emitters as a way to ‘offset’ their emissions. Proponents of the scheme see this as a ‘win-win’ approach: it will channel funds to cash-strapped forest conservation projects in developing countries while also provide emitters—mostly from developed economies—with low-cost mitigation options.

However, as ‘carbon forests’ enter the realities of forest communities especially in developing nations, a bundle of technical challenges, tensions, and complexities has also emerged, marring the touted “simplicity and elegance” of the scheme. As it turns out, forest governance and climate mitigation make a complicated marriage, and forest carbon trading is unhelpfully oversimplifying critical details.

Oversimplification, uncertainties, and missed realities

Per critiques of the scheme, proponents of forest carbon trading inaccurately paint the idea that quantifying and pricing carbon is simple—it is not, and in fact is complex both in theory and practice.

For one, estimating carbon stocks in the land use sector remains riddled with high uncertainties, due to methodological challenges and insufficient forest baseline studies.a,b Furthermore, to qualify for ‘verified credits’ (and thus earn payments) a complex system of measurement, monitoring, verification, and auditing is required—a process that has resulted in increased transaction costs and administrative challenges, as commonly cited in reviews of forest carbon projects in Asia and Africa.a,b,c,d In most cases, partner communities often have to rely on external support, often via non-profit groups, to accomplish all the technical requirements, thus leading one to question how sustainable and scale-able such conditions are.

In some cases, too, the technical demands of current schemes have resulted in cost-inefficient administration of climate finance for protecting forests, such as described in this strong criticism of the World Bank’s Forest Carbon Partnership Facility. 

The contentions don’t stop with technical difficulties. Emerging reports on forest carbon projects also show they tend to misunderstand the complexities of forest governance and conservation in developing countries. These have led to tensions on livelihood displacement, such as in the Kachung carbon forest of Uganda; undermining of community rights as pointed out in Kenya’s Mai-Ndombe; unanticipated vulnerability to local politics, as is the case of Indonesia’s Rimba Raya; and land ownership concerns as cited in project reviews in the Philippines, China, India, Tanzania, and elsewhere.a,b,c

Arguably, some of these projects are of really good intent and genuinely driven by the desire to help channel funds into forest protection and rehabilitation. But, as discussed above, the “desire to do good” should be clearly tied with crucial local realities, lest the good sets us back and does more harm.

Overall, the irony with trading forest carbon is that on one hand, it over-simplifies governance in our forests, while on the other it over-complicates ecosystem payment schemes, inserts too abstracted concepts of ecosystem benefits, and buries critical local conversations in the jargon of marketers, experts, lawyers, and the general technocrat.

As concerns continue to mount, perhaps we need to go back to the drawing board and re-think how we are designing climate finance for the world’s forests and other conservation areas. Hopefully this time, a more nuanced narrative wins.

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