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THEWORLDTODAY.ORG DECEMBER 2007

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resulting from subsistence farming, commercial logging, agribusiness, the collection of wood for fuel and a myriad of other human activities. Each of these has its own opportunity cost and a different set of actors are involved. Establishing a global ‘cost’ for avoided deforestation would be a serious undertaking. Current estimates vary widely but the review by Sir Nicholas Stern put it at around $5 billion per year. On the other hand, the Coalition for Rainforest Nations has argued for a market-based approach. Avoided deforestation would generate credits, which developed countries would be able to buy to help meet their greenhouse gas-reduction targets. This approach would allow markets rather than politicians to set the global value of forests. It has the potential to generate funding on the scale required to change behaviour if demand, and thus the price of carbon, is high enough. But this will only happen if developed countries are willing to take on ambitious reduction targets. In the end, a compromise is likely, and some combination of the two options will be set up – for example a capacity building fund phasing into a market-based system, or parallel options for countries with different capacity levels. Once in place, a REDD financing mechanism will only maintain credibility with those who pay into the system – developed country governments or private sector investors – if the countries that wish to claim from it can effectively demonstrate that forests are being protected. Some nations with the largest forest resources face serious governance challenges – from a lack of clarity about the legal ownership of forest land, to an inability or, in some cases an unwillingness, to enforce land use or forest management laws. Poverty, poor capacity and corruption all play their part in this problem; as does the historical willingness of consumers in Europe and America to turn a blind eye to the source of their imported timber or agricultural products. However changes are afoot in timber markets in Europe, Japan and the US, which may suggest options for countries wishing to demonstrate their achievements in protecting forests. First, demand for timber from independently certified forests is growing fast, driven by corporate social responsibility policies and government purchasing. Second, the European

Union (EU) is negotiating forest agreements with key development partners which link investment in forest law enforcement with market access under the EU Forest Law Enforcement Governance and Trade Action Plan. Both such agreements and certification rest on a number of principles that could underpin credibility in avoided deforestation and are likely to be a fundamental part of any effective REDD system: clarity of land tenure; local community engagement, system auditing and third-party monitoring.

THE BIG THREAT This may be a unique opportunity to make avoided deforestation in developing countries part of the international climate arrangements. Progress may be possible towards a postKyoto climate agreement, while addressing a major source of greenhouse gas emissions. However, decision-makers need to keep in mind that, while tropical deforestation and the emissions it releases must be dealt with, the main problem remains energy use in developed countries, and it must be tackled as the priority in a post-Kyoto agreement.

Chatham HouseEvents December 2007

DECEMBER 4 America and Europe from 9/11 to the 2008 Presidential Election James Rubin, former US Assistant Secretary of State DECEMBER 5 How Pakistan Works Professor Anatole Lieven, King’s College, London DECEMBER 7 Does the Foreign Office Have a Future? Lord WilliamWallace, Deputy Leader, Liberal Democrats, House of Lords

Chatham House has a worldwide reputation for furthering the understanding of international issues. An impartial research and membership organisation, independent of government and vested interests, it brings together people of all nationalities and from all walks of life.

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