Low Carbon Development Strategy

Jun 10, 2009 Editorial

President Bharrat Jagdeo, on Monday, unveiled a bold new vision for our country’s future in the Low Carbon Development Strategy (LCDS) that he outlined at the National Convention Centre.

He has committed to a broad and comprehensive national consultation process over the next three months and during that time, starting with this editorial; we will attempt to highlight various aspects of the LCDS to facilitate a more informed interaction.

Today we look at the funding premises.

By now most Guyanese are probably aware of the basis of the President’s argument for the world to compensate Guyana for its standing forests. Deforestation and degradation of forests supply some 17 percent of the greenhouse gases that literally fuel global warming and its attendant disastrous climate change effects, such as rising oceans, floods and droughts.

If Guyana were to follow the past practices of developed countries and the present practices of many developing countries in the “exploitation” of its forests, we would be adding to that emission problem.

By keeping those forests standing, therefore, Guyana is providing a service to the rest of the world. The problem, however, as the President pointed out, will be whether the world will place a value on “the services that forests provide when trees are kept alive, including the storage of greenhouse gases”.

For the longest while, most of the attention was placed on reducing emissions of greenhouse gases (sulphur dioxide, nitrous oxide and carbon dioxide) from industrial processes and vehicles but of recent, the significant contribution of deforestation was recognised.

Four ways were proposed to deal with the problem: reducing emissions from deforestation and degradation (REDD) conserved carbon stocks, plantation forestry and ecosystem services.

The REDD concept won tacit approval in the UNFCCC’s December 2007 climate talks in Bali and has been lauded by many for its capacity to reduce emissions and protect biodiversity.

The problem for us is that the only countries that may qualify are those with high deforestation rates – such as Brazil and Indonesia.

These countries would in effect be rewarded for slowing down their recent rapid deforestation. Countries with low deforestation rates will see little funding under the proposed system since carbon credits are only issued for emissions reductions, not carbon stored.

This was the “perverse incentive” to which President Jagdeo alluded when he first broached the subject of offering to keep Guyana’s forests unravaged for the benefit of the global climate stabilization.

Under the present orientation it would be in Guyana’s interest to encourage the companies in the forestry sector to plunder the forests.

Markets value fallen forests because the lumber is given a value but the carbon they store while standing is not. This, of course, is a classic example of a market failure but the $64,000 question is whether it can be corrected with a broader scheme by December of this year (only six months away) when the UNFCCC will design a successor to the Kyoto Protocol.

We can project figures on the Present Net Value of our forests based on opportunity costs forgone by deforestation, but how realistic will they be seen? Mechanized agriculture, cattle ranching, ranch land prices that work for, say Brazil with deeper soils in their forests, might be more suitable for our savannahs that do not fall under REDD.

We have not seen many timber plantations or oil palm concessions turned away: emitters might more likely to opt for the free rider route.

And this fact in itself brings out the flaw in the broader scheme, known as preventative or conserved carbon credits, which would pay countries for the carbon contained in their forests, and seen as a way to include countries such as Guyana that have effectively preserved their forests.

U.N. negotiators up to now are concerned that the sheer volume of carbon stored in global ecosystems could lead to an oversupply of credits, triggering a collapse in the price of carbon and therefore undermining the market and the incentive to reduce emissions.

We hope that a government spokesperson could comment on the UNFCCC’s latest position since a voluntary scheme would not provide the funds for the outlined development projects.

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