Current Carbon Markets Encourage Global Warming Through Deforestation


Forests remove carbon dioxide from the atmosphere where it contributes to warming the planet. So protecting and planting more forests is a good way to lower the temperature. However, a new report in the journal Public Library of Science Biology finds that the structure of the current carbon market under the Kyoto Protocol actually encourages deforestation. The problem is that countries with high forest cover and low rates of deforestation (HFLD) have no way to earn carbon credits under current UN schemes. Therefore the PloS Biology report notes,

Without the opportunity to sell carbon credits, HFLD countries would be deprived of a major incentive to maintain low deforestation rates. Since drivers of deforestation are mobile, deforestation reduced elsewhere could shift to HFLD countries, constituting a significant setback to stabilizing global concentrations of greenhouse gases at the lowest possible levels.

Reuters reports:

The Kyoto treaty and other talks on global warming focus on so-called carbon credits for countries and companies that plant new trees where forests have been destroyed. Trees and other plants absorb carbon dioxide, a greenhouse gas emitted by petroleum-fueled vehicles, coal-fired power plants and humans.

At this point, there is no credit for countries that keep the forests they have, the study said.

"The countries that haven't really been the target of deforestation have nothing to sell because they haven't deforested anything," said Gustavo Fonseca, one of the study's authors.

I highlighted this problem in my reporting on the U.N. climate change conference in Nairobi:

The panelists in climate and forests session strongly advocated for including forests as a way to offset carbon emissions. They claimed that protecting forests and encouraging the planting of new forests could offset as much as 20 percent of global CO2 emissions. Forests act as sinks for CO2, that is, they absorb CO2 from the atmosphere as they grow. Furthermore, deforestation itself releases CO2 into the atmosphere. One estimate suggests that burning forests in Malayasia and Indonesia to clear land for palm oil plantations in 1997-98 released in the atmosphere the equivalent of 40 percent of all fossil fuel carbon emissions globally. One panelist Ian Swingland, founder of the Sustainable Forestry Management consultancy, calculates that at $20 per ton that one hectare would earn between $4000 and $10,000 in carbon sequestration services. And this does not take into account values such as preserving biodiversity and watersheds.

In comparison, a typical hectare of forest cleared for pasture earns between $200 and $500 annually. Swingland noted that the annual rate of deforestation was 12 million hectares per year. So he calculated that it would take $48 billion per year to protect 12 million hectares at $4000 per hectare. In comparison the Global Environment Fund is $800 million, only half which was spent on biodiversity protection. I asked Swingland later why pay $4000 when the marginal cost implied by his pasture example would be $500 per hectare? This would mean that it would take $6 billion per year to protect 12 million hectares of forest…

Swingland did point out one the perversities of the Kyoto Protocol. Rich countries that have commitments to cut their emissions can count their forests as sinks and get credit for offsetting CO2 emissions. However, poor countries have no incentives not to cut their forests. Thus the incentives under the Kyoto Protocol are to conserve temperate forests in rich countries while destroying tropical forests in poor countries.

In the original negotiations for the Kyoto Protocol, forests were left out as CO2 offsets because of problems with figuring out how much carbon they actually sequestered. In addition, there is the problem of making sure that governments don't take money to leave their forests standing and then cut their trees anyway. Anders Wijkman, a Swedish Member of the European Parliament, argued that "as long as standing forests have no value, it will be difficult to reverse the trend toward deforestation."

For those of us who favor carbon taxes, incorporating carbon credits for protecting and planting forests is a difficulty. Perhaps carbon emitters could earn tax credits by purchasing carbon sequestration services from private and public owners of forests? It is clear that forests must be included in whatever carbon control system that is eventually adopted.