The Economics of Storing Carbon

Ultimately, until the standing forest is worth more than what it's cleared for, large-scale conservation is probably a losing fight. This is potentially where the international carbon market comes in. The Bush administration has done a good job of convincing Americans that the Kyoto Protocol has failed (even though its effects cannot be measured yet). The little secret they hope no one will notice is that the global carbon market, non-existent two years ago, has already generated $30 billion in trades.

The value of the carbon stored on an acre of Amazon forest is already more than most of the things people clear forest for. All of a sudden lots of companies with real money to invest are figuring out how to buy forest carbon, despite the fact that there are officially no rules for trading it in the European or Kyoto Protocol markets. Until only a few years ago, Brazil was solidly against even talking about forests in climate negotiations. Now it has one of the proposals on the table for how forests can get into the system.

--Stephan Schwartzman and Paulo Moutinho

A key element for the future of these areas will be the degree to which the economy supporting their human populations can be transformed to rely on the value of the environmental services of standing forest, rather than the sale of traditional commodities like timber and beef. I first proposed this transformation in 1985, initially as a complement to management of forests for timber and nontimber forest products like rubber and Brazil nuts, and since 1992 as a more far-reaching redirection of the rural economy in the region. "Environmental services" is now a household word, and is reflected in a variety of federal and state initiatives in Brazil and elsewhere. The Amazon forest provides many environmental services, roughly grouped into biodiversity maintenance, water cycling, and protection against increasing global warming.

It is this last service that has progressed the farthest in terms of international negotiations, thanks to the Climate Convention of 1992 and the Kyoto Protocol of 1997. Sooner or later there is bound to be a break in the political barriers that now block actions on the scale needed to deal with the problem. When this happens, financial flows to maintain the Amazon forest will be part of the solution, along with the obvious need to desist from the profligate use of fossil fuels. The first priority for Amazonia must be creating the institutional mechanisms to use this resource so that it serves to maintain both Amazonia's traditional population and the forest.

--Philip M.Fearnside

Studies attribute at least 20 percent of the increase in carbon dioxide (CO2) in the atmosphere to deforestation. In a 24-hour period, deforestation releases into the atmosphere as much CO2 as aircrafts flying 8 million people from London to Miami.

So why have we not done more about curbing deforestation in order to slow down climate change? One of the disappointing flaws of the Kyoto Protocol that was ratified by many nations is that its system of carbon credits does not give credit for avoided deforestation, reforestation, and afforestation. The developed world must wake up to its duty to compensate the developing nations for avoiding deforestation through the creation of large protected areas of forest and to finance reforestation and afforestation. It is vital that the successor to the Kyoto Protocol include such provisions. We need a system that allows carbon credits in all the world's markets for sustainable management of existing forests, whether the forests will serve as reserves for conservation of biodiversity or for sustainable production. In order to make a system of carbon credits for avoided deforestation, it will be necessary to substantially increase the amount of sustainably managed forests, since we cannot expect the Amazon countries to leave their entire forest area untouched and totally unproductive.

It is also important to establish a system of carbon credits for reforestation and afforestation. There are now various initiatives to show that commercial returns can be generated by investment in sustainable reforestation and afforestation. A leader in this area is the company Sustainable Forest Management, which uses venture capital to create new production forests and preserve existing forests.

We are intimately connected to the fate of the Amazon rainforest, whether it be as a result of the products we use or of our unwillingness to pay for the environmental services the region supplies to the whole world. Every day we are getting closer to total environmental disaster, and it is to a large extent in the hands of the developed world to decide whether or not we are willing to pay subsidies to those countries that are protecting the whole world ecosystem through maintaining their forests. The solution to global warming cannot just be technological. It will also have to be biological -- finding ways to maintain the essential environmental services that Amazonia and other areas of forest contribute to the support of life on Earth.

--Sir Ghillean T. Prance

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