Forests - Deforestation_ Implications for Climate and Biodiversity by RG

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									Economic Development
Protected areas



Poverty reduction

Forest values

Global Environmental Services

Forests - Deforestation: Implications for Climate and Biodiversity
Robert T. Watson Chief Scientist, World Bank

IUFRO Forest Research Management Conference April 19, 2007

Importance of forest systems

Everyone in the world depends on nature and ecosystem services to provide the conditions for a decent, healthy, and secure life

Ecosystem Services

Consequences of Ecosystem Change for Human Wellbeing

 Natural hazard regulation
 The capacity of ecosystems to buffer from extreme events has been reduced through loss of wetlands, forests, mangroves  People increasingly occupying regions exposed to extreme events

Regulating Services


Degradation of ecosystem services often causes significant harm to human wellbeing


Degradation tends to lead to the loss of non-marketed benefits from ecosystems The economic value of these benefits is often high and sometimes higher than the marketed benefits

Timber and fuelwood generally accounted for less than a third of total economic value of forests in eight Mediterranean countries.

Degradation of ecosystem services often causes significant harm to human wellbeing

 The total economic value associated with managing ecosystems more sustainably is often higher than the value associated with conversion

 Conversion may still occur because private economic benefits are often greater for the converted system

Areas with high net change in forest area between 2000 and 2005

• Global forest cover -- 3,952 million ha, about 30 percent of the world’s land area
• Net forest area loss was 7.3 million ha/yr compared to 8.9 million ha/yr in the 1990s

FAO, 2006

Unprecedented change: Ecosystems

Reducing emission from deforestation

Process definition

REDD: to account for gross carbon emission reductions and non-CO2 emission reductions only in existing forest areas on a national basis.


Degradation ~ Conversion


Species extinctions

Table 1: Global carbon stocks in vegetation and soil carbon pools down to depth of 1 m. Biome Tropical forests Temperate forests Boreal forests Tropical savannas Temperate grasslands Deserts & semi-deserts Tundra Wetlands Croplands World total Area (109 ha) 1.76 1.04 1.37 2.25 1.25 4.55 0.95 0.35 1.60 15.16 Global Carbon Stocks (Gt C) Vegetation Soil 212 216 59 100 88 471 66 264 9 295 8 191 6 121 15 225 3 128 466 2011

Total 428 159 559 330 304 199 127 240 131 2477

84% 26 %

Source: IPCC (2000)

GHG Flow Diagram: Global Emissions

Greenhouse Gas Emissions

Source: WRI, Baumert et al, 2005

Improved understanding of the:

 trends in rates of deforestation by country
 underlying drivers of deforestation by location

Research Needs

 relationship between forest biodiversity and ecosystem services  relationship between ecosystem services and human well-being  valuation of forest ecosystem services – needed for the payment for ecosystem services – how to create markets for PES
 impact of climate change on forested ecosystems – especially GHG emissions

Policy situation and financing

   Avoided deforestation excluded from the CDM SBSTA discussions on REDD World Bank and other organizations have experience in piloting the carbon market
 Prototype Carbon Fund: global pioneer since 1999  BioCarbon Fund: LULUCF pioneer since 2004

International Discussion on Avoided  Deforestation 


Critical Ecosystem Partnership Fund Several developing countries (Coalition of Rainforest Nations – CoRN) have expressed interest in a World Bank initiative to provide financial incentives for REDD G8 countries interested in REDD
 Need for action + learning

Consultations with countries, Coalition and various stakeholders

 Bank’s 2002 Forest Strategy is forward looking and broadly endorsed … recent MTR points to main successes in:
 Development of innovative instruments (e.g. carbon finance, forest certification)  Forest governance and global advocacy  Poverty reduction projects  cross-sectoral  Enhancing public and private investments in sustainable forest management

Is the Bank Doing Enough?

… but implementation has fallen behind
 External reasons:
 clients have little interest in borrowing for forests (esp. for global public goods)  weak national forest institutions in client countries have a low absorption capacity  governance often a big issue

 Internal reasons
 perceived as risky and costly  lack of awareness of potential gains and linkages to poverty and livelihoods etc.

Critical Ecosystem Partnership Fund (CEPF)
 Conservation International (CI), Global Environment Facility (GEF), World Bank, Government of Japan, MacArthur  $125m – 15 hotspots to date (many forests)  Brazil Atlantic Forest, Madagascar, Sumatra, Philippines, Tumbes-Choco-Magdalena (LAC), Eastern Arc Forests of Tanzania, mountain forests of Eastern Himalayas and forests of MesoAmerican Biological Corridor.


 Past and existing partnerships notable results but need to:
    better integrate with Bank operations reduce transaction costs build an inclusive and broad stakeholder platform … develop a unified fundraising approach

Partnership  New opportunities are emerging …. and  discussion on climate change and avoided deforestation Collaboration  explicit country demand for forest carbon partnerships
 growing markets for environmental services (clean water, biodiversity, etc.)  growing demand for legally and sustainably produced timber  emerging markets for wood-based bio-fuels  shift of private investments in forest resources to Bank client countries  company – community/smallholder partnerships  revised GEF approach To be effective, we cannot go it alone …

A multi-stakeholder partnership that aims to:
    Reverse forest loss in developing countries Contribute to poverty reduction Contribute to the mitigation of climate change Secure provision of other forest environmental services

The Global Forest Alliance (GFA)

An initiative that takes advantage of a window of opportunity created by:
 Public attention to climate change  Developing country interest in forest-carbon-related partnerships  Market demand for sustainably produced forest products  Private sector interest

Scale-up with partners to achieve four bold targets by 2015
(MDGs 1&7, Bank Forest Strategy)

GFA’s Targets

 Improve and sustain the livelihoods of 500 million poor, forest dependent people by supporting sustainable forest management and/or introducing agro-forestry based farming systems  Conserve 1 billion ton of CO2 (contribute to mitigation of climate change by engaging in avoided deforestation initiatives)

 Bring 300 million ha of production forests under independently certified sustainable management  Create 50 million ha of new protected areas and bring 120 m ha of existing protected areas under improved management

The GFA ― Investment ― Impact Link
Global Forest Alliance
Technical Assistance
$100 million
• Pilot initiatives, grants for analytical work, capacity building, build incentives through increased market share, tax revenues, price premiums, etc.

• Bank Investments: • IBRD, IDA, IFC scale up
current US$0.4 billion to $0.8 billion p.a. by 2015

• Other investments by:
• Regional Development Banks Private, institutional investors, venture capital • Amount TBD, but significant

Carbon Finance
$300 million
• Trustee for carbon purchases • Linking buyers and sellers • Reforestation + Avoided Deforestation

• Carbon Finance Projects:
• Avoided Deforestation: 250 million by 2012 and over $1 billion by 2015 • Reforestation: $75 million

Leveraged Impacts on the Ground
•Improve and sustain the livelihoods of 500 million poor, forest dependent people •Conserve 5 billion tons of CO2 •Sustainably manage 300 million ha of production forests •Expand protected areas network by 50 million ha

The GFA Work Program
The World Bank Forest Strategy
Harness Potential of Forests to Reduce Poverty Sustainable Rural Development
 Ecosystem landscapebased approaches  Sustainable forest-based livelihoods  Increased adoption of agroforestry by smallholders  Access of local communities to markets  Community/smallholder partnerships with private sector

Integrate Forests in Sustainable Economic Development Sustainable Forest Management and Markets
 Sustainable & legal trade, independent certification  Exploit domestic and export market opportunities  Zoning, land tenure and land rights  Protected area and forest management planning  Community-based management  Sustainable plantation development

Enhance Global Environmental Services

Implemented by 3 GFA Work Programs

Environmental Services and Innovative Financing

Engaging in Core Activities (examples)

 Forest Carbon Partnership Facility (avoided deforestation)  BioCarbon Fund (reforestation)  PES for services other than carbon  Alternative financing for protected areas

Supported by crosscutting enabling and knowledge services

Forest Law Enforcement and Governance (FLEG)
National and regional governance (FLEG) action plans and processes

Program on Forests – PROFOR
Analytical Products (ESW), Toolkits and Knowledge Management


Governed by a multi-stakeholder council (WBG, Govs, GEF, NGOs, private sector, international organizations, other) with participation of recipient countries and beneficiaries

 Develop capacity/readiness and pilot performance-based payments for avoiding deforestation

 Set the stage for the market
The Forest Carbon Partnership Facility
million $ Readiness 1,000



Market: $1 b


Pilots: $200 m
200 Readiness: $50 m 0 2007








 Price Carbon ≥ Opportunity Cost of land  Pick low-hanging fruit first
MC per ha of forest saved

The Forest Carbon Facility


Prevent Conversion to Soy Beans
Prevent Conversion to Ranching



Enforce Protected Areas
Clarify Land Tenure ha

Control Fires


The Forest Carbon Facility: How It Would Work



Carbon Fund


Pilot carbon purchases
Target $200 million

Pilot Country

$ $ $

Purchaser/ Investor




GFA / Technical Assistance Readiness
Target $50 million


IBRD, GEF, IFC, others

 We have an exceptional window of opportunity to increase investments through avoided deforestation to mitigate global climate change, promote environmental services and safeguard global public goods

Main Messages

 Upstream analysis and capacity building in client countries will pave the way for meeting increased demand in investment
 The GFA will help to resolve limitations that the multiplicity of existing, overly fragmented forest sector partnerships present  GFA will mobilize new and additional financial resources that will eventually leverage the lending of WB and other financial institutions

 The World Bank is prepared to take a lead in the integration of efforts in the forest sector, but we need many partners to reach our strategic goals

Potential support for:
 Pilot(s) on “avoided deforestation” with a view to prepare for post Kyoto Protocol discussions,
Examples for GFA’s potential relevance to the Japanese Government

 Approaches to non-carbon based forms of Payment for Environmental Services (PES)
 Support Forest Law Enforcement and Governance (FLEG) through relevant analytical work and address issues like improved forest sector governance

 Flagship programs on biodiversity conservation  Mobilization of advisory services for important trading partners to Japan (e.g. China, Indonesia) to advance on sustainable forest management, certification and operational issues

 Support to analytical work on topics of wider relevance to forest sector (governance, trade etc.)

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