Global Environment & Energy

Every nation’s behavior affects other nations, and the countries that historically have produced the least amount of greenhouse gases are often the ones most impacted by climate change and global warming. Intensified tropical storms and hurricanes have pounded countries like the Dominican Republic and Haiti; Bolivia’s mountain snow caps are disappearing, impacting water supplies; Bangladesh has experienced devastating floods; and the list goes on. A fair and equitable way of distributing the costs of dramatically reducing emissions has been elusive as wealthy countries and developing countries differ about the limits each will accept.

Work on global energy and environment at the World Policy Institute currently focuses on key programs on sustainable forestry; on the water-energy nexus; and on the overlap between trade and environmental policy.

Toward a Robust and Inclusive Forestry Regime

New initiatives to reduce emissions from deforestation and degradation (REDD) –-also called carbon ranching or avoided deforestation– allow polluters to make up for their greenhouse gas emissions by paying developing countries, including several in Latin America, to preserve their forests. These countries use the resulting money they get from multinational corporations to safeguard the forest and pay for poverty reduction programs.

Carbon ranching is based on the premise that trees absorb carbon dioxide and keep it locked up and safely out of our warming atmosphere. Deforestation today causes around twenty percent of the world’s greenhouse-gas emissions – or more than the combined emissions of all of China’s inefficient factories, power plants, and vehicles. While one hectare of rainforest cleared and converted to ranchland or soy plantation produces a piece of land worth $200 to $500, that same hectare is worth far more on “carbon futures” markets as a carbon sink. The World Policy Institute is exploring how comprehensive climate legislation can not only push companies to reduce their industrial carbon emissions, but also protect our planet’s storehouse of forest carbon through win-win market mechanisms.

This type of project — one of Time Magazine’s Top 10 green ideas of 2007 — could reduce total global greenhouse gas emissions by up to 20%, allow developed countries to set more ambitious targets for emissions reductions than would otherwise be possible, and support sustainable development in countries that need it. WPI sees REDD as working in conjunction with many tools for reducing emissions. As a stand-alone tool, it would not provide the proper incentives for polluters to reduce their own direct emissions. Nor, given the limited areas of forest still standing, would it be sufficient to reduce emissions as much as is needed. But as part of a combined set of policy efforts, it is a powerful tool for good.

Worldwide attention to environmental and climate change issues is at an all-time high. We are at a remarkable moment where forests can be saved as part of the biggest payment-for-environmental-services mechanism in history, under which forests can finally be properly valued for the role they can play in cooling a warming planet.

The world carbon offset market grew from $10.8 billion in 2005 to $30.1 billion in 2006. At the current going-rate of about $16 for a one-ton unit of carbon dioxide on European markets, Bolivia’s forests alone, to take but one example, would have a carbon sequestration value of $93 million, money that could benefit that country’s conservation and sustainable development objectives in ways previously unimaginable.

Yet there is a real danger that the international community will ignore the voices of the very forest dwelling people who depend on and even live in those forest areas. Indeed, many REDD projects have made this mistake, causing protests by indigenous and local groups who feel that they have received the short stick, while other groups profit. Done wrong, REDD can give scant benefit to local stakeholders and create a rich-get-richer cap-and-trade regime. A successful global REDD regime includes indigenous and local stakeholders; a strategy of inclusion not only will make the process fair, but also more robust.

The World Bank has been carrying out efforts in this area through its Forest Carbon Partnership Facility (FCPF). Thisinitiative, part of the World Bank Carbon Finance Unit, aims to provide financing for the REDD in developing countries. It also seeks to test a program of performance-based incentive payments in certain pilot countries.  The overall development objective of the FCPF is to set the stage for a much larger system of positive incentives and financing flows for REDD in the future.

The World Policy Institute seeks to facilitate a process that addresses the needs of local stakeholders in avoided deforestation projects, using these dialogues as a tool to promote sustainable forest management and secure financing for such efforts to preserve biodiversity and arrest climate change. WPI Senior Fellow William Powers, author of Whispering in the Ear of the Giant –a moving account of just such a sustainable forestry project in Bolivia which failed to fully take into account indigenous groups early enough in the process—will lead an initiative to assess the scope of avoided deforestation projects in Latin America and the success of those projects, provide and develop best-practices recommendations, encourage and argue—alongside local partners in target countries— for the importance of the inclusion of local stakeholders in the development and implementation of sustainable forestry and emissions reduction, and disseminate our findings and recommendations widely in Latin America and the United States. 

WPI’s role in this process is as a neutral, non-ideological convener, bringing a fresh perspective to a field that is dominated by environmental groups and insiders. With a wide range of expertise spanning “green” issues as well as democracy and political and economic inclusion, WPI brings an appreciation of the importance of protecting the environment as well as attention to ensuring that all stakeholders are included in the planning process. This combination of attributes will enhance its ability to build confidence of local actors. WPI sees its role as being a catalyst of local talent in NGOs, giving them agency in every way possible –from providing technical tools and strategies to creating channels for their voices to reach international policy makers– rather than supplanting capacity of local NGOs.


Trade Policy

The World Policy Institute is working with Demos, a partner institution, on a joint project funded by the Connect US collaborative, to develop trade policies that promote sustainable development.

Existing U.S. efforts to link trade and the environment – most notably the NAFTA side agreements – have not only been half-hearted and ineffectual, but tend to pre-date current concerns with climate change. Multilateral efforts to create such linkages have also been weak, most notably the much derided Committee on Trade and the Environment (CTE), which is part of the WTO. The Kyoto Protocol itself contains no trade measures to help enforce compliance with the accord – in contrast to the Montreal Protocol on Substances that Deplete the Ozone Layer that did include such trade measures. Currently, discussions of creating an equitable trading system and that of reducing carbon emissions are unfolding on separate tracks, revolving around parallel multilateral regimes. A key task of the next President and Congress will be to provide U.S. leadership in integrating those tracks – as well as ensuring that U.S. trade relations promote climate-friendly development.

Our work offers fresh ideas for how to do this. For more information, see:

Emissions Reductions Incentives Paper

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