"Institutional Support for an International Forest Carbon Sequestration Agreement"
Discussion Paper 2010-41, Harvard Project on Climate Agreements, Belfer Center
Belfer Center Programs or Projects: Harvard Project on Climate Agreements
Because forests play a critical role in the global carbon cycle, the international community is actively pursuing policies and programs to increase the amount of carbon stored in forests. Recent estimates suggest that forestry could contribute an average 6.7 billion tons of emissions reductions annually, with over two-thirds of this potential coming from tropical nations.3 Making full use of the forest carbon sink is appealing to both the developed and the developing world. Developed nations see forest carbon projects as a low-cost option for mitigating climate change. For the developing world, forest carbon payments could provide a sustainable source of much-needed income. At the most recent climate negotiation talks in Copenhagen, even as negotiations on greenhouse gas emissions limits stalled, the parties moved closer to a framework agreement on forest carbon.4 Five donor nations have committed $3.5 billion to jump-start a program to reduce emissions from, and increase carbon sequestration in, the world’s forests.5
Parties to the UNFCCC have considered a wide range of policy options to address forest carbon.6 However, no single approach has been selected by the parties. Whichever approach is ultimately chosen, it will also require the international community to develop institutional support mechanisms. To identify the key services and institutions that will be needed to support a successful IFCS program, this paper will examine three possible international forest carbon sequestration (IFCS) models: a fund-based approach, proposed by Brazil7; a market-based approach submitted jointly by several rainforest nations;8 and the Forest Program for Inventories of National Carbon (PINC) approach, which focuses on rewarding a broad range of countries for increases in national carbon stocks.9 While these three approaches share the same overall goal, they are structured in different ways, and their need for support services will differ as well.
The basic types of support services under any IFCS program will be similar — support will be needed during the initial negotiations, both for program design and for individual countries decisions whether to participate; managing financial transactions; providing oversight of the entire program, including dispute resolution and enforcement; measuring and verifying carbon stocks; and ensuring developing country readiness to enter a program.10 Within these basic categories, however, different IFCS programs will have different needs. For example, some programs will need more support in the negotiation process than in the enforcement process. A market-based IFCS program will need different kinds of financial transaction support than a fund-based program. These differences suggest not only different support service needs, but also different institutional options for delivery of support services.
This paper proposes that the success of any IFCS program will depend in large part upon the institutional design of its support services. A successful IFCS program must be supported by services and institutions that maintain its effectiveness, maximize its political viability, and minimize its transaction costs. To achieve these goals, the provision of these services should be based upon the available delivery options, the characteristics of each service and the overall goals of the IFCS program.
For example, the support service of measuring carbon stocks might be provided by individual nations, private contractors, or by quasi-governmental international bodies. Each party will approach the task with a different set of capabilities and incentives: individual nations have close proximity to data, but may be tempted to overestimate carbon stocks; private contractors may work quickly, but require extensive and costly contracting; international bodies may produce highly accurate data, but provide little transparency and raise controversial questions about national sovereignty. The relative weight of these advantages and disadvantages should be matched to the needs of the IFCS program. The effectiveness of some IFCS programs will depend upon measurement accuracy, while under others transparency or timeliness might be most necessary.11 Because the different IFCS programs have different needs, the institutional arrangements that will be most successful will also differ, depending on the IFCS program that is ultimately chosen.
This paper examines key considerations for organizing support institutions under an IFCS program. Since the international community has not yet chosen a specific IFCS option, this paper will not recommend one set of support institutions over another. Instead, it will 1) identify the key characteristics of the support services needed under each of three possible IFCS options; 2) suggest possible institutional arrangements for these support services, considering both existing and new institutional arrangements; and 3) discuss the key advantages and disadvantages of each arrangement identified.
3 Brent Sohngen, An Analysis of Forestry Carbon Sequestration as a Response to Climate Change at 11, Copenhagen Consensus on Climate (2009).
4 See Copenhagen Accord, FCCC/CP/2009/L.7, at 2, U.N.F.C.C.C. Draft Dec.-/CP.15 (Dec. 18, 2009), available at http://unfccc.int/resource/docs/2009/cop15/eng/l07.pdf (stating that "[w]e recognize the crucial role of reducing emission from deforestation and forest degradation and the need to enhance removals of greenhouse gas emission by forests and agree on the need to provide positive incentives to such actions through the immediate establishment of a mechanism including REDD-plus, to enable the mobilization of financial resources from developed countries.").
5 See Press Release, United Stated Department of Agriculture, United States Announces $1 Billion to Reduce Forest Emissions (USDA Dec. 16, 2009).
6 For a good overview of the range of options, see Charlie Parker et al, THE LITTLE REDD+ BOOK (Global Canopy Program 2009).
7 Brazil's proposal was one of the initial REDD proposals and according to some commentators is the "frontrunner" proposal following the recent climate change talks in Copenhagen. See Climate Change and Brazil Deforestation, UNITED PRESS INTERNATIONAL, Dec. 11, 2009 (available at http://www.upi.com/Science_News/Resource Wars/2009/12/11/Climate-change-and-Brazil-deforestation/UPI-86931260550408/). For an overview of Brazil's proposal, see generally UNFCCC Subsidiary Body on Scientific and Technological Advice, Views on the range of topics and other relevant information relating to reducing emissions from deforestation in developing countries, p. 21–24, U.N. Doc. FCCC/SBSTA/2007/MISC.2 (hereinafter Brazil Proposal).
8 This proposal builds on one of the first REDD proposals, which was jointly submitted by Papua New Guinea and Costa Rica. In addition to using a market approach to discourage emissions, this proposal includes two other options for developing country participation: a "readiness and capacity building" program and an "expanding implementation" program, which would allow countries to participate at incremental levels while building sufficient capacity to participate in the full program. This paper will focus on the market approach, which is the end goal of the Program. See generally UNFCCC Ad Hoc Working Group on Long-Term Cooperation, Reducing Emissions From Deforestation and Forest Degradation in Developing Countries; and the Role of Conservation, Sustainable Management of Forests and Enhancement of Forest Carbon Stocks, submitted at Accra, Ghana, (August 25, 2008) (available at http://unfccc.int/files/kyoto_protocol/application/pdf/papuanewguinea190908.pdf)(hereinafter Coalition Proposal). The coalition members are Belize, Bolivia, Cameroon, Central African Republic, Costa Rica, Democratic Republic of Congo, Dominican Republic, Equatorial Guinea, Ghana, Guatemala, Guinea, Kenya, Lesotho, Liberia, Nicaragua, Panama, Pakistan, Papua New Guinea, Singapore, Solomon Islands, Thailand, Uganda, and Vanuatu. Id. at 1.
9 See generally Andrew Plantinga & Kenneth Richards, International Forest Carbon Sequestration in a Post-Kyoto Agreement in POST-KYOTO INTERNATIONAL CLIMATE POLICY: IMPLEMENTING ARCHITECTURES FOR AGREEMENT 2009 (Joseph E. Aldy & Robert N. Stavins eds.) (hereinafter PINC proposal). The national inventories approach to IFCS was first proposed in Andersson, K. and K. Richards. 2001. "Implementing an International Carbon Sequestration Program: Can the Leaky Sink Be Fixed?" Climate Policy 1: 73–88. See also Andersson, K., A. Plantinga, and K. Richards. 2009. "The National Inventory Approach for International Forest Carbon Sequestration Management." In Dieter Helm and Cameron Hepburn, eds. The Economics and Politics of Climate Change. Oxford: Oxford University Press.
10 Additional support services will be needed to assist individual countries with capacity development as needed to support a REDD program. National level services are beyond the scope of this paper. For a good overview of national level support service needs, see generally Legal Frameworks for REDD: Design and Implementation at the National Level, IUCN Environmental Law and Policy Paper No. 77 (John Costenbader, ed.) (2009). See also the World Bank Forest Carbon Partnership Facility website at http://www.forestcarbonpartnership.org/fcp/.
11 Andersson, K., T. Evans, and K. Richards. 2009. “National Forest Inventories: Policy Needs and Assessment Capacity.” Climatic Change Volume 93 (Nos. 1–2): 69–101.
Liz Baldwin, School of Public and International Affairs and Maurer School of Law, Indiana University; Kenneth R. Richards, School of Public and Environmental Affairs and Maurer School of Law, Indiana University, and the Smith School of Enterprise and Environment, Oxford University
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