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Wednesday, November 30, 2005

Reducing Deforestation Using Economic Incentives

The Coalition for Rainforest Nations has a proposal to reduce deforestation:

A solution to climate change in the world’s rainforests, by Geoffrey Heal and Kevin Conrad, Financial Times: A novel economic model for reducing deforestation is being proposed by the Coalition for Rainforest Nations at the current United Nations climate change conference in Montreal. ... [T]he coalition is proposing economic incentives for conserving tropical forests while contributing to climate stability. Deforestation is a big source of carbon dioxide emissions ... In what could be crucial to current climate negotiations, coalition countries may accept binding caps on their emissions levels in exchange for tradable emission reduction credits. In fact, these countries are being drawn toward pledging “voluntary reductions” by the prospect of access to now viable emissions reductions markets. This is the first time for any developing countries to consider mechanisms to cap carbon emissions, and the first real global move to address the growing and critical issue of deforestation.

Deforestation contributes almost as much to climate change as does US fossil fuel use. ... Curbing deforestation reduces CO2 emissions just as surely as replacing coal by nuclear or renewable energy. Emission reductions from deforestation are not yet eligible for financial compensation under the Kyoto protocol, while replacing coal with renewable energy sources is. This gaping hole in the Kyoto protocol defies logic, is scientifically unsound and throws doubt on the efficacy of the entire framework. To help level the playing field, the rules must be revised to make carbon credits from reduced deforestation tradable in carbon markets on a par with other offsets. This would value them at present in the range of $25 (€21) per ton of CO2. Such a price is high enough to transform the economic incentives to conserve forests and is quite competitive with the lumber prices currently received by local communities from logging companies. Recognising carbon credits from avoiding deforestation makes standing timber an income-earning asset worthy of conservation. ...

The coalition’s proposal seeks to create new markets while reforming outmoded market and regulatory mechanisms. From the perspective of tropical countries, this change would make conservation a financially viable policy, with real economic returns. ... Instead of pitting the traditional conservation groups against industrial countries and business, this model appeals to all constituencies. ...

[Dual posted at Environmental Economics.]

    Posted by on Wednesday, November 30, 2005 at 12:19 AM in Economics, Environment, Policy | Permalink  TrackBack (0)  Comments (1)

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