As ways of assigning a monetary value to climate services provided by forests continue to be examined, a project being implemented at the Iwokrama International Centre (IIC) is said to be moving slowly, more than a year after a ground-breaking agreement was signed.
In March 2008, the United Kingdom-based Canopy Capital purchased the rights to environmental services generated by Iwokrama’s 371,000-hectare rainforest reserve. This has set the precedent for a financial firm betting that the services generated by a living rainforest, will see compensation in international markets. These services include rainfall generation, climate regulation, biodiversity maintenance and water storage.
There were a number of processes involved on the way to actual realization of the deal such as determining stock levels, assigning monetary values and building a financial model and this newspaper has been told that the process is moving along slowly. More than a year later and amid the global financial crisis, there has been no word from Iwokrama on the progress of the project.
“There is very little to add to what has already been reported in the past except to say that in the meantime Iwokrama is getting on with its work”, said Dane Gobin, Chief Executive Officer of the IIC when contacted for a comment.
He told Stabroek News that the Centre is delighted with the agreement signed with Canopy Capital adding that it enabled two like-minded entities to come together to work for a common purpose. “We would like to think that the agreement has helped in a small but practical way to draw further international attention to President (Bharrat) Jagdeo’s visionary approach to building a low carbon economy for Guyana. We will continue to do all that we can in a small way to support Guyana’s efforts to achieve success”, he said in a brief statement.
Under the deal, Iwokrama would have received funding for the next five years from Canopy Capital to value its climate services. Ninety per cent of investment returns in the long term will go towards sustainably managing this rainforest. The amount of the guaranteed yearly funding has not been disclosed by Canopy Capital or Iwokrama and it is not clear what effect the global financial crisis has had on the project.
Canopy Capital had said that it is simply buying the licence to measure and then value the ecosystem services provided by the Iwokrama Forest for a period of five years by making a guaranteed yearly payment to IIC. It had said that the agreement is about using income from the ecosystem services to make Iwokrama financially independent from institutional donors by 2010 in accordance with its business plan. Canopy Capital had explained that the guaranteed initial income would be used by the IIC to continue the sustainable management and conservation of the Iwokrama reserve and to provide livelihoods for the local communities that have depended on the Iwokrama forest for generations.
As to the question of how Canopy Capital would make money, the company had said that it is exploring various approaches to securing substantial investment in ecosystem services. “In particular, Canopy Capital is looking to market eco-system services through an Ecosystem Service Certificate attached to a ten-year tradable bond, the interest from which will pay for the maintenance of the Iwokrama forest,” it had said.
As the days tick slowly towards the Copenhagen summit in December where a new global climate agreement to replace the Kyoto Protocol is expected to be forged, an accepted system that places a monetary value on the forests has drawn much interest.
President Jagdeo recently took his offer for Guyana to provide the world with a model on how to address deforestation in a sustainable manner to the United Nations (UN). Speaking at the 17th Session of the Commission on Sustainable Development at UN Headquarters in New York last Thursday, Guyana’s president reiterated that his government supports calls to cut net global deforestation in half by 2020 and to make the global forestry sector carbon neutral (where greenhouse gas emissions from deforestation are balanced by new forest growth) by 2030.
He said that when countries meet at the Copenhagen Summit later this year, if there is no agreement to create financial incentives to address deforestation, the costs of inaction will dwarf the investments that are required to solve that issue.
Jagdeo asserted that Guyana is willing to provide the world with a model of how this can happen quickly and done sustainably noting that for two years now, Guyana has indicated its willingness to place the country’s entire rainforest under long term protection if the international community finds the right way to include forestry within a broader climate arrangement.
“We have calculated the value of our forest, and are currently engaged in a national consultation with indigenous peoples and other national stakeholders to determine exactly how compensation for forestry climate services could be invested. We believe that this can be done in a way which not only protects our forests, but also re-orients our economy onto a low-carbon trajectory by for example, taking our entire country’s electricity supply from renewable sources instead of fossil fuel dependence; by reducing overall industrial emissions from energy generation by one third without sacrificing healthy growth rates, by opening up unused, non-forested parts of the country to agricultural development, and by unprecedented investment in economic opportunities within our forest communities”, the president said.
Guyana is currently involved in several projects including working in partnership with the Government of Norway. Norway has said that it is prepared to provide performance-based, “substantial and sustained” compensation for the progress Guyana makes in limiting emissions from deforestation and further decreasing forest degradation.
