9.6.1 Policies aimed at reducing deforestation

Deforestation in developing countries, the largest source of emissions from the forestry sector, has remained at high levels since 1990 (FAO, 2005). The causes of tropical deforestation are complex, varying across countries and over time in response to different social, cultural, and macroeconomic conditions (Geist and Lambin, 2002). Broadly, three major barriers to enacting effective policies to reduce forest loss are: (i) profitability incentives often run counter to forest conservation and sustainable forest management (Tacconi et al., 2003); (ii) many direct and indirect drivers of deforestation lie outside of the forest sector, especially in agricultural policies and markets (Wunder, 2004); and (iii) limited regulatory and institutional capacity and insufficient resources constrain the ability of many governments to implement forest and related sectoral policies on the ground (Tacconi et al., 2003).

In the face of these challenges, national forest policies designed to slow deforestation on public lands in developing countries have had mixed success:

• In countries where institutional and regulatory capacities are insufficient, new clearing by commercial and small-scale agriculturalists responding to market signals continues to be a dominant driver of deforestation (Wunder, 2004).
• A number of national initiatives are underway to combat illegal logging (Sizer et al., 2005). While these have increased the number of charges and convictions, it is too early to assess their impact on forest degradation and deforestation.
• Legally protecting forests by designating protected areas, indigenous reserves, non-timber forest reserves and community reserves have proven effective in maintaining forest cover in some countries, while in others, a lack of resources and personnel result in the conversion of legally protected forests to other land uses (Mertens et al., 2004).

China (Cohen et al., 2002), the Philippines and Thailand (Granger, 1997) have significantly reduced deforestation rates in response to experiencing severe environmental and public health consequences of forest loss and degradation. In India, the Joint Forest Management programme has been effective in partnering with communities to reduce forest degradation (Bhat et al., 2001). These examples indicate that strong and motivated government institutions and public support are key factors in implementing effective forest policies.

Options for maintaining forests on private lands in developing countries are generally more limited than on public lands, as governments typically have less regulatory control. An important exception is private landholdings in the Brazilian Amazon, where the government requires that landowners maintain 80% of the property under forest cover. Although this regulation has had limited effectiveness in the past (Alves et al., 1999), recent experience with a licensing and monitoring system in the state of Mato Grosso has shown that commitment to enforcement can significantly reduce deforestation rates.

A recently developed approach is for governments to provide environmental service payments to private forest owners in developing countries, thereby providing a direct financial incentive for the retention of forest cover. Relatively high transaction costs and insecure land and resource tenure have thus far limited applications of this approach in many countries (Grieg-Gran, 2004). However, significant potential may exist for developing payment schemes for restoration and retention of forest cover to provide climate mitigation (see below) and watershed protection services.

In addition to national-level policies, numerous international policy initiatives to support countries in their efforts to reduce deforestation have also been attempted:

• Forest policy processes, such as the UN Forum on Forests, and the International Tropical Timber Organization have provided support to national forest planning efforts but have not yet had demonstrable impacts on reducing deforestation (Speth, 2002).
• The World Bank has modified lending policies to reduce the risk of direct negative impacts to forests, but this does not appear to have measurably slowed deforestation (WBOED, 2000).
• The World Bank and G-8 have recently initiated the Forest Law Enforcement and Governance (FLEG) process among producer and consumer nations to combat illegal logging in Asia and Africa (World Bank, 2005). It is too early to assess the effectiveness of these initiatives on conserving forests stocks.
• The Food and Agricultural Organization (FAO) Forestry Programme has for decades provided a broad range of technical support in sustainable forest management (FAO, 2006b); assessing measurable impacts has been limited by the lack of an effective monitoring programme (Dublin and Volante, 2004).

Taken together, non-climate policies have had minimal impact on slowing tropical deforestation, the single largest contribution of land-use change to global carbon emissions. Nevertheless, there are promising examples where countries with adequate resources and political will have been able to slow deforestation. This raises the possibility that, with sufficient institutional capacity, financial incentives, political will and sustained financial resources, it may possible to scale up these efforts. One potential source of additional financing for reducing deforestation in developing countries is through well-constructed carbon markets or other environmental service payment schemes (Winrock International, 2004; Stern, 2006).

Under the UNFCCC and Kyoto Protocol, no climate policies currently exist to reduce emissions from deforestation or forest degradation in developing countries. The decision to exclude avoided deforestation projects from the CDM in the Kyoto Protocol’s first commitment period was in part based on methodological concerns. These concerns are particularly associated with additionality and baseline setting and whether leakage could be sufficiently controlled or quantified to allow for robust carbon crediting (Trines et al., 2006). In December 2005, COP-11 established a two-year process to review relevant scientific, technical, and methodological issues and to consider possible policy approaches and positive incentives for reducing emissions from deforestation in developing countries (UNFCCC, 2006).

Recent studies suggests a broad range of possible architectures by which future climate policies might be designed to effectively reduce emissions from tropical deforestation and forest degradation (Schlamadinger et al., 2005; Trines et al., 2006). For example, Santilli et al. (2005), propose that non-Annex I countries might, on a voluntary basis, elect to reduce their national emissions from deforestation. The emission reductions could then be credited and sold to governments or international carbon investors at the end of a commitment period, contingent upon agreement to stabilize, or further reduce deforestation rates in the subsequent commitment periods.

One advantage of a national-sectoral approach over a project-based approach to reduce emissions from deforestation relates to leakage, in that any losses in one area could be balanced against gains in other areas. This does not entirely address the leakage problem since the risk of international leakage remains, as occurs in other sectors.

Other proposals emphasize accommodation to diverse national circumstances, including differing levels of development, and include a suggestion of separate targets for separate sectors (Grassl et al., 2003). This includes a “no-lose” target, whereby emission allowances can be sold if the target is reached. No additional emission allowances would have to be bought if the target was not met. A multi-stage approach such that the level of commitment of an individual country increases gradually over time; capacity building and technology research and development; or quantified sectoral emission limitation and reduction commitments similar to Annex 1 commitments under the Kyoto Protocol (Trines et al., 2006).

Proposed financing mechanisms include both carbon market-based instruments (Stern, 2006) and non-market based channels, for example, through a dedicated fund to voluntarily reduce emissions from deforestation (UNFCCC, 2006). Box 9.3 discusses recent technical advances relevant to the effective design and implementation of climate policies aimed at reducing emissions from deforestation and forest degradation.