Carbon Credit Watch

Set for failure: As money for carbon-reducing forestry programs increases, so too does fraud and corruption

As rich countries continue with plans to pour money into forestry programs in the developing world as a way to combat climate change they should heed warnings that the programs will fail to reduce carbon emissions, strip local citizens of their ownership rights, and be ridden with fraud and corruption. Yet, governments in the developed world seem intent on ignoring these warnings, as they recently pledged another $500-million—on top of the $3.5-billion they promised at Copenhagen’s UN Climate Conference in December—to carbon-reducing forestry programs in the developing world.

World Bank chief Robert Zoellick says the new agreement “could be the first comprehensive component for a future international agreement on climate change [since Copenhagen].”

A number of the problems with forestry programs have been well-documented:

According to the report in the Guardian UK, Reducing Emissions from Deforestation and Forest Degradation programs—known in policy circles as REDD—could turn dreams of forest protection into a nightmare, with the programs spurring illegal logging, among a host of other problems. All the while, the programs may begin to slowly strip the rights of ordinary citizens so national governments can assume greater control over forests—now that carbon markets will increase their value by millions, if not billions, of dollars.

According to this report from Reuters [PDF] , the forest carbon credit industry that might emerge from REDD programs could, says Interpol environmental crimes specialist Peter Younger, become a perfect opportunity for organized crime syndicates.

“It starts with bribery or intimidation of officials that can impede your business,” he says.

“Then if there is indigenous people involved, there’s threats and violence against those people. There’s forged documents.”

And in this report from the Guardian UK [PDF] , Younger said: “Alarm bells are ringing. It [A REDD scheme] is simply too big to monitor. The potential for criminality is vast and has not been taken into account by the people who set it up.

Tiina Vahanen, a senior officer at UN-REDD, said: “Where countries are corrupt the potential for REDD corruption is dangerous. [In Papua New Guinea], people have tried to take advantage of the market in an unacceptable way and carbon cowboys are trying to get the benefits. We can expect more of this as REDD develops.”

According to the Bogar-based Center for International Forestry Research [PDF] , REDD programs in countries such as Indonesia will be riddled with corruption and financial mismanagement.

“Investors should be looking very carefully at the financial governance conditions in the countries where they will be investing their funds. Like Indonesia, many countries with tropical forests have long track records of mismanaging public financial resources, particularly in the forestry sector,” said Christopher Barr, one of the report’s authors.

And according to researchers Jacob Phelps, Edward L. Webb and Arun Agrawal from the National University of Singapore and the University of Michigan, REDD programs will undermine decentralized governance systems that were already accomplishing the program’s goal—saving forests and sequestering carbon.

Further Reading:

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