Background
We believe that linking people's economic self-interest and the health of ecosystems is one of the most promising ways to garner interest in the conservation challenges facing society today. Business has a long record of pioneering new ideas, forging new partnerships and implementing new solutions. The moment has now come for the private sector to put these strengths to work in ways that will permanently halt unsustainable deforestation and allow global society to protect the ecosystems on which we all depend. We believe this can be achieved with real benefits to local stakeholders. Policy options must recognize the rights of indigenous peoples and the local communities involved.
Why Forests?
Over 20% of the world's greenhouse gas emissions are caused by deforestation. By comparison, the entire global transportation sector is responsible for roughly 14% of annual greenhouse gas emissions. The immediate protection of tropical rainforests is critical if we hope to turn the tide on global warming, and the added benefits of conserving these sensitive ecosystems are immeasurable. Despite its enormous role in causing climate change, deforestation in developing countries is not addressed in either the UN Framework Convention on Climate Change (UNFCCC) or the Kyoto Protocol.
Why Now?
The idea of introducing an international policy mechanism to reduce tropical deforestation through the UNFCCC process was formally raised in 2005. Since that time, the issue has become an increasingly high profile topic and many climate policy observers believe that important decisions will be made about international policy toward avoided deforestation at the 13th Conference of the Parties to the UNFCCC in Bali this coming December.
Why Markets?
The Stern Report estimates that reducing emissions from deforestation is one of the most cost effective means of reducing greenhouse gas emissions globally, and that the opportunity cost of stopping deforestation in the top eight countries responsible for 70% of global deforestation would run between $5 and $10 billion per year. Recently, the governments of the eight largest industrialized nations pledged $3.1 billion for all global environmental concerns over a five-year period. Clearly, there is a significant shortfall in public funding to address deforestation worldwide. Fortunately, scientists and policy makers have begun thinking about new ways to align incentives so that conservation is not only desirable, but also economically more attractive than deforestation. Responding to the policy shift, private sector firms have raised large pools of capital to finance projects that reduce greenhouse gas emission levels in the atmosphere. The global carbon market was valued at €22.5 billion ($31.8 billion US) in 2006, €3.9 billion ($5.5 billion US) of which came from Clean Development Mechanism projects in developing countries. If global carbon policy can be directed toward stopping deforestation, we believe the private sector can help finance the cost-effective and sustainable protection of forests.
Why Communities?
Regardless of the international and national policies in place, deforestation cannot be combated effectively unless local landowners and residents have more reason to protect forest ecosystems than they have to destroy them. Only by recognizing that the forest conservation efforts of the private, public and social sectors all depend on millions of land-use decisions made at the local level, can we craft an international avoided deforestation strategy capable of making the all-important transition from policy to practice. Avoided Deforestation policy must pay particular regard to community rights, social and livelihood issues. Local communities must have significant input if policies are to succeed.