"> Saving What Remains FUNDING RAINFOREST CONSERVATION April 1, 2007 Now that we have prioritized what forest areas should be set aside for reserves, we must focus on implementation and management of these protected areas. Clearly all three steps will require a broad spectrum of participants, from local farmers to CEOs of multinational corporations to high-ranking government officials. Without cooperation, any protected-areas system is destined to fail.

FUNDING


Reserves are expensive to establish and maintain, as is forest management. In the 1990s, the U.N. FAO estimated that the forestry sector was funded only 27 percent of what it requires, while the United Nations Conference on the Environment and Development (1992) estimated the cost of protecting tropical forests through sustainable development at $30 billion per year (a number that has roughly doubled today). The countries in which reserves and forest management are most needed often have neither the money nor the interest in funding these projects. Other priorities — ranging from growing the economy to improving health care access to providing education — win out over forests. Yet innovative models are showing that forest conservation need not be separate from other initiatives. In fact protecting forests can go hand-in-hand with economic growth and poverty alleviation.

FUNDING METHODS


Debt Exchange

One method of financing conservation projects in developing countries is debt-for-nature programs where conservation and other international organizations purchase a portion of a developing country's commercial debt at a discount, or else persuade creditor banks to donate some of debt. Foreign debt can be purchased at 50 to 90 percent of its actual value and sometimes far less. For example the non-profit organization Conservation International purchased $650,000 worth of Bolivian debt for only $100,000 when it initiated the first debt-exchange program in 1987. In exchange for being relieved of the obligation to repay a portion of international debt, the country agrees to set aside funds to promote conservation by encouraging sustainable development, expanding environmental education programs, purchasing land, and improving land management. Within a decade of the first agreement, debt-for-nature agreements totaling nearly US$1 billion had been arranged in sixteen countries including the tropically forested countries of Argentina, Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Jamaica, Mexico, Madagascar, Philippines, Venezuela, and Zambia.

In 1998, Congress approved a bill that authorized more funding for debt-for-nature swaps. Under the Tropical Forest Conservation Act, the U.S. reduces or forgives debt owed the U.S. by developing countries in exchange for establishing forestry funds to be used for conservation and promoting economic reform. The act mandates that projects be carried out at the local level by NGOs, community organizations, and indigenous organizations. By 2011, debt-for-nature swaps under the TFCA had generated more than $250 million for forest conservation.

According to an analysis by the World Bank, while debt-for-nature agreements will never substantially reduce external debts of poor countries—which are far too large for such schemes— they can dramatically increase the amount of funds spent by the debtor country on environmental protection.
Possible Funding Strategies for the Future

There are other means that may prove useful in financing reserves, although they have not been developed to their fullest potential. Most of these are based on the concept that all nations should contribute to rainforest preservation since the effects of deforestation will impact everyone. Wealthy countries are expected to provide most of the funding. Some have suggested that money could come by reducing subsidies currently given to certain polluting and environmentally damaging industries, such as the fossil fuels and mining sectors.

Presently the most advanced program for funding rainforest conservation is called Reducing Emissions from Deforestation and Degradation or REDD+. As a concept, REDD+ aims to cut greenhouse gas emissions by paying tropical countries to protect their forests. While many of the details — including sources of finance, safeguards, and implementation protocols — are still being hammered out, a number of REDD+ projects are underway in countries ranging from Brazil to Cambodia. REDD+ has the potential to generate tens of billions of dollars annually for forest protection efforts.

Another approach that has been discussed is a "rainforest bond", which would be issued by a forest country and sold to investors. The bond would generate money upfront for conservation activities and would be paid back using revenue generated from environmental taxes, reduced impact logging, and payments for ecosystem services — including carbon sequestration and watershed services. Rainforest bonds have been advanced by Prince Charles' Rainforest Project as a mechanism for funding the early stages of the REDD+ program.

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Borneo. Click image for more pictures of Borneo. (Photo by R. Butler)


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Continued / Next: Organization of Rainforest Conservation Efforts
  • Inamdar, A., H. de Jode, K. Lindsay, and S. Cobb in "Capitalizing on Nature: Protected Area Management," (Science 283: 1856-1857, March 19, 1999) suggest that a business-oriented approach to biodiversity conservation may be the best way to strengthen existing conservation institutions.
  • The merits of community-based conservation are reviewed in Western, D., Wright, R.M., and Strum, S. eds., Natural Connections : Perspectives in Community-Based Conservation, Washington, D.C.: Island Press, 1994 (a series of case studies); Fimbel, C. and Fimbel, R., "Rwanda: The role of local participation." Conservation Biology Vol. 11 No. 2 (309-310), Apr. 1997 (case study in Rwanda); and Getz, W.H. et al., "Sustaining Natural and Human Capital: Villagers and Scientists," Science 283: 1855-1856, March 19, 1999. Hackel, J.D. ("Community Conservation and the Future of Africa's Wildlife," Conservation Biology, Vol. 13, No. 4: 726-734, August 1999) discusses some of the conflicts between community-based conservation and the economic needs of local Africans.
  • Kremen, C. et al. ("Designing the Masoala National Park in Madagascar Based on Biological and Socioeconomic Data," Conservation Biology, Vol. 13 No. 5 (1055-1068), Oct. 1999) note the importance of considering human use of forest areas prior to designating a protected area.
  • Noble, I.R., and R. Dirzo, "Forests as Human-Dominated Ecosystems," Science 277: 522-525, July 25, 1997 argue that it is important to recognize that today many forests are human-dominated ecosystems used for logging, hunting, and agroforestry. The emphasize the need to develop strategies for sustainable management and to encourage interaction between all interested parties.
  • Costa, P.M. ("Tropical forestry practices for carbon sequestration: a review and case study from southeast Asia," Ambio Vol. 25 No. 4, June 1996) examines tradable greenhouse gas emission budgets including some of the hurdles such a system must overcome. Rippel, B. ("Tradable CO2 Emissions Permits: Problems with the 'Perfect' Solution," National Consumer Coalition 11/25/97) points out that because some countries already have emissions below their 1990 levels, they will be able to sell their credits to countries with growing economies, essentially being rewarded for running polluting and inefficient industries. Daly, H. (Beyond Growth: The Economics of Sustainable Development, Boston: Beacon Press, 1996) notes the scale problems of tradeable pollution permits in that there will always be pressure to exceed self-imposed limits on carbon emissions.
  • Costa, P.M. ("Tropical forestry practices for carbon sequestration: a review and case study from southeast Asia," Ambio Vol. 25 No. 4, June 1996) and Asumadul, K. ("Carbon trading: a new opportunity for tropical timber producing countries," ITTO Tropical Forest Update Vol. 8, no. 4, 1998) discuss carbon offset programs based on the idea that forests can serve as net carbon sinks. However, recent studies (B. Scholes, "Will the terrestrial carbon sink saturate soon?" Global Change NewsLetter (the International Geosphere-Biosphere Programme-IGBP) No. 37:2-3, March 1999) and R. Watson et al. IPCC Special Report on Land Use, Land Use Changes, and Forestry, the Intergovernmental Pannel on Climate Change, 1999) dispute this claim. They suggest that as temperatures rise, respiration rates will increase, eventually canceling out the carbon absorbed by forests growing today.
  • Mattoon, A.T., "Bogging Down in the Sinks," Worldwatch Nov/Dec 1998 points out potential problems with the greenhouse forestry-sinks program under Kyoto Protocol.
  • Bolivia's agreement to protect 2.2 million acres of forest for carbon emission credit is reported in PR Newswire, "Vice President Gore Announces Approval of International Project to Protect Bolivian Rain Forest and Offset Greenhouse Gases," 12/7/96.
  • The Woods Hole Research Center in "RisQue98," 1998 and Holdsworth, A.R. and Uhl, C. in "Fires in Amazonian selectively logged rain forest and the potential for fire reduction," Ecological Applications Vol. 7, issue 2 (713-725), 1997 provide an outline of steps to reduce the massive Amazonian forest fires.