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Reducing Emissions
from Deforestation
in Developing Countries
COP-11 Agenda Item #6
UNFCCC Workshop
August 31, 2006
www.RainforestCoalition.org
PNG Overview

Forests: The island of New Guinea has the world's third
largest rainforest, after Amazonia and the Congo. PNG has
about 35 million hectares of tropical forests.

Climate: As a Small Island Nation, we will feel the adverse
effects of climate change, including the terrible consequences of
sea level rise.

Diversity: PNG is a land of tremendous diversity:



820 living languages - not dialects, languages - more than any other
country in the world.
Tremendous biological diversity - with 750 bird species and the
greatest floral richness of any island on the planet.
7.5% of global biodiversity on less than 1% of landmass.
Papua New Guinea
PNG Experience:
Multilateral Cooperation
Multilateral Efforts: In 1972 the world held its first global
conference on the environment in Stockholm. Since then, two
other such conferences were held in 1992 in Rio de Janeiro and in
2002 in Johannesburg.
Continued Decline: Over past 34 years, and in spite of these
international efforts, our world remains hampered by a steady and
significant decline in its natural environments, and the goods and
services those environments provide to its inhabitants.
Trends: The trends in air and water quality, crop production, global
fisheries, infectious diseases, traditional economies, and social
stability are all negative.
PNG Experience:
ODA Outcomes
Poor: ODA has brought very little with regard to poverty
alleviation or reduction in deforestation rates.
Good: ODA has been successful in supporting analysis and
technical capacity.
Mixed: Good evidence that ODA efforts to reduce ‘illegal
logging’ activities are taking effect. However, poor results
delivering benefits of ‘fair trade’. Developing Countries still
receive only a small fraction of logging values.
Deforestation Drivers
 Agriculture:
 Logging:
Soya, Coffee, Cocoa, Sugar, etc.
Low value exports, unsustainable practices.
 Development:
 Population:
Roads, power-lines, social services, etc.
Urbanization + growth drives above.
Perverse Incentives!
Climate Change:
Multilateral Cooperation
Common but Differentiated Responsibilities

Industrial to Developing: Maintain philosophy of
mandatory reductions that finance voluntary instruments by
developing nations. Support Sustainable Development.

Amongst Developing: Immense difference between
developing countries. Need flexible ‘basket’ of voluntary
emissions reduction instruments – in present form, CDM alone
is not enough. Must consider National Circumstances.
North to South
Flexible Incentives
Questions for the Future:
Expansion of Annexes

Annex vs. Non-Annex: Likely not sustainable
if global climate stability targets are to be achieved.

Multi-Staged Expansion of Annexes:
We must consider staged expansion of Annexes,
considering economic, governmental and social
conditions.


Balance mandatory ‘reductions’ against new ‘supply’
Possible to integrate by sector and/or country.
‘Black & White’ → ‘Full Color’
QuasiIndustrial
UNFCCC
Developing
Industrial
Medium
Least
Developed
COP-11 Agenda #6:
Policy Approaches

Leverage Experience







Local Community Participation & Buy-In
Sustainable Forest Management Incentives
Promote increased productivity for land use – agriculture,
ranching, among others.
Strengthen National Institutions and Legal frameworks
Expand concept to pay for environmental services
Integrate National Development Plans
Increase political status of conservation activities

Capacity Building

Credit for Early Action

National Level Pilots

2007 Deadline
COP-11 Agenda #6:
Positive Incentives
Flexible Basket of Voluntary Incentive
(Diversity of National Circumstance)

Official Development Assistance Approach (ODA)

Voluntary National Approach (Voluntary ‘Annex C’?)

Flexible Scale Approach – National Circumstance

Aggregate under UNFCCC: Bilateral and/or Multilateral Funds
and Emissions Trading Agreements

Optional Protocol within UNFCCC
Voluntary
Multi-Staged
Not Mutually Exclusive
COP-11 Agenda #6:
Positive Incentives
Official Development Aid Approach

Supplimental Funds for Capacity Development

Special Climate Change Fund & GEF

Up-front funds - debt for nature, revolving funds...

Public-Private Partnerships

Tax on carbon-intensive commodities

Prioritize Actions under Adaptation Fund
COP-11 Agenda #6:
Positive Incentives

Voluntary National Approach: Developing countries
could participate in a “Voluntary Annex C” for deforestation:
voluntarily adopt a negotiated emissions reductions approach for
forestry sector – could generate a REDD Credit.
Develop a robust national ‘reference period’
 Fully fungible with AAU/ERU emissions allowances (JI as precedent.)
 Credit could for activities in advance of the 2nd Commitment Period.

Flexible Scale Approach: Certain countries face issues,
such as political instability, that may limit ‘national’ implementation.
Soft Capping for Reduced Deforestation
Credits this year
For trade
Clearing
Goal
Trend
Bank
160
140
120
Units of carbon

100
80
60
40
20
0
-20
-40
0
1
2
3
4
5
6
7
8
9
10 11
Years
12 13 14
15 16 17
18 19 20
Contact Ian Noble [email protected] orldbank.org
COP-11 Agenda #6:
Positive Incentives

Aggregate under UNFCCC: Aggregate bilateral or
multilateral emissions reduction efforts and funds to support
emissions reductions from deforestation in developing countries
-- Australia, UK, US States, ETS, etc.

Optional Protocol: Bilateral and/or multilateral
agreements could also be aggregated to a new “Optional
Protocol” under the UNFCCC. Credits would be fungible.
COP-11 Agenda #6:
Price vs. Reductions

CER




AAU/ERU





Positioned as ‘cheap’ mechanism
Carries ‘performance’ risk – buyer must replace credit
Lower ‘atmospheric value’ – supplemental credit
National ‘Cap & Trade’
Fixed targets
Minimal transactional risk
Higher ‘atmospheric value’
REDD (Annex C?)





Voluntary Reductions
National Scale
Performance Risk minimized
Higher ‘atmospheric value’
Higher ‘Social value’
COP-11 Agenda #6:
Additional: Deeper Cuts
KP1
(- 6%)
 AAU --- JI --- CDM 
Additional
KP2
(- 10%?)
 AAU --- JI --- CDM 
+ REDD - 5%?
NEW CREDITS = DEEPER CUTS
+
REDD
New Total:
-15%?
COP-11 Agenda #6:
Social Benefit

Significant source of carbon emissions currently outside
frameworks.

Increases the role of developing countries through a
‘national’ approach.

Significant new revenue streams to addresses poverty in
rural areas with clear metrics to access effectiveness.

Underpins MDG objectives related to environment, poverty,
gender equality, health, etc.

Major biodiversity conservation benefits

Supports efforts against desertification and soil erosion

Leads to watershed protection and potable water supply
Key Messages

Drivers: Leading drivers are identifiable. Must overcome
perverse incentives and opportunity costs of alternative land
uses -- both locally and internationally. In most cases, higher
carbon ‘incentives’ will drive greater emissions reductions
from deforestation.

Solution Possible: Technology, methods and
markets available now to accurately measure changes in
carbon stocks and trade relevant credits at a National scale.
Challenge is implementation (standards, policy, etc.)
Key Messages

Policy & Incentives: Diversity of ‘national

Future: Deforestation must feature prominently in future
circumstances’ justifies a flexible set of positive incentives -ODA may be important to get started quickly, but markets are
likely the best sustainable finance solution.
climate stability actions. Continue cross-regional consensus
-- Bolivia, Central African Republic, Congo, Costa Rica,
Dominican Republic, DR Congo, Gabon, Ghana,
Guatemala, Honduras, Indonesia, Kenya, Lesotho,
Nicaragua, Panama, Peru, Papua New Guinea.
International funding needed immediately for
analysis, capacity building,
& pilot market activities.