President Bharrat Jagdeo yesterday unveiled Guyana’s position on avoided deforestation and argued that the REDD mechanism must back compensatory economic alternatives which, based on calculations, could be worth US$580M per annum to this country.
The Reducing Emissions from Deforestation and Degradation (REDD) mechanism could be a boon to countries like Guyana with standing forests and the position paper asserted that any REDD mechanism “must support the creation of economic alternatives that exceed the economic value to a nation (EVN) generated by pursuing rational economic activities involving deforestation”. The glossy 33-page document then proceeded to lay out a methodology for estimating the EVN. However, the vexed question of how to finance such a mechanism was not addressed.
The document, ‘Creating Incentives to Avoid Deforestation’ was made available to stakeholders following the President’s address to a large gathering at the Guyana International Convention Centre at Liliendaal.
It is the product of an analysis conducted here over the past several months by McKinsey and Company, which focused on three areas including looking at how Guyana can assist the international community to forge a post-Kyoto climate agreement that creates incentives to rapidly slow tropical deforestation, developing rigorous implementation to low carbon investment and employment opportunities in Guyana, and adjusting to climate change, which includes the need to invest heavily in infrastructure.
The work undertaken in each of these areas will provide the foundation for next year’s national consultations, Jagdeo said. These consultations are expected to be done in the first part of next year while the report unveiled yesterday will be presented to the Parties to the United Nations Framework Convention for Climate Change next week.
In his presentation yesterday, the President asserted that aligning national and global interest is the only long term solution to deforestation. He noted that the document undertook an analysis of the value of Guyana’s forest by developing a hypothetical value where the economic value Guyana could realize was estimated on its forest.
He stated that it was determined that the forest could generate an economic value between US$430m and US$2B per year for Guyana but the most likely economic value to the nation would be about US$580m per annum. Generating this value, he said, would involve a deforestation rate of about 4% and would result in the release of over 200 million tonnes of carbon in the atmosphere every year and would involve a significant cost to the world through the loss of ecosystem services.
While noting that it is unlikely that a fair trading market for biodiversity, water regulation and other ecosystem services will exist for some time, Jagdeo said there is a chance for emerging markets for carbon emissions to act as a proxy for providing wider ecosystem services to the world.
Forest offsetting
He declared that the figures represent one of the most cost effective solutions to climate change and pointing out that avoiding a tonne of carbon emitted from Guyana’s forest under this model will cost from US$2 to US$11 with the most likely figure being about $4 per tonne. He said that the figures are compatible with other figures from around the world.
“Forest Offsetting”, a scheme that lets countries and companies compensate for excess carbon emissions by funding tropical forest conservation, which is the scenario that the President is advocating, is currently being debated by European Union member states. But in negotiations for a new climate change treaty currently ongoing in Poznan, Poland, such a scheme has already been ruled out by Brazil and the country’s representative has indicated that the country would block this under the new climate treaty, media reports said. Most other tropical forested countries want money for protecting their forests.
The president, who in the last few years has lobbied intensively for compensation for standing forests, pointed out that while it could be concluded that the way to stop deforestation is to immediately start transferring funds on this scale to rainforest countries, it is important that countries like Guyana recognize that nations are grappling with many climate change problems other than deforestation. He noted that that scenario will require an unprecedented shift in the already strained global economy. “We therefore need a reasonable, pragmatic approach from both forest countries and the developed world…as forest countries we need to recognize that it will take time for appropriately capitalized markets to emerge on the scale required and the developed world needs to recognize that even if it does not have any immediate market or other payment system we need to reach sufficient scale over time”, said Jagdeo.
Guyana’s President recalled that he had offered last year to place almost all of the country’s rainforest under long term protection if the right market based incentives were created to make this economically worthwhile. “Of course placing our forests under long term protection could only be done with the sanction of the national assembly and those who live in and depend on the forest”, he stated adding that he believes most Guyanese are willing to do this. Consultations on this will begin next year and the key to success Jagdeo said is that it is done in an inclusive manner. He stated that the international community has a responsibility to recognize that the solutions to deforestation will come from within forest countries and further stated that Amerindian communities also have an important role to play.
Climate services
If Guyana is be remunerated for the climate services it provides then there is a responsibility to ensure that the money earned is spent on a manner which is environmentally sound, financially prudent and assists efforts to create a socially just and prosperous society, Jagdeo said. He further stated that the importance of strengthening the national institutions and ensuring proper parliamentary oversight of financial flows from climate services must be recognized. He pointed out that large inflows can sometimes cause intense inflationary pressures and other problems. “So it is vital that we therefore improve our policies and institutions if remuneration for climate services is received over time”.
The president further noted that the international community often poses questions about what countries were going to do with the resources if they are received. In this light, Jagdeo declared that he would move the entire economy to clean energy- building the Amaila Falls hydroelectricity plant, provide unprecedented assistance to forest communities, diversify the wider economy into low carbon economic sectors, invest heavily in people development particularly improving the health and education system and upgrading the sea defences and irrigation system to cope with climate change.
Earlier, Jagdeo had said that this year, carbon markets will probably exceed US$90B but declared that the sum will stay almost entirely within the developed world. A more ambitious global agreement is required when the Kyoto Protocol expires in 2012; he said adding that it is essential that incentives be created to reduce tropical deforestation. He declared that the ineffectiveness of Kyoto is proved by the fact that deforestation continues to take place and at a minimum, Copenhagen (in Denmark, where negotiations on a new climate treaty by the end of 2009 is expected to end), must create incentives to halve tropical deforestation by 2020 “and as a country where almost 80% of out territory is tropical rainforest, we recognize that we have a responsibility to work with others to create a solution”.
