August 6, 2015

Carbon Market Funding for Reducing Deforestation: Big Debate, Small Potatoes

Washington (August 06, 2015) – Within the international policy community, there has been a long-running argument about whether carbon markets should be used to fund efforts to reduce deforestation. According to a new Journal of Sustainable Forestry article by Doug Boucher, director of the Union of Concerned Scientists’ (UCS) Tropical Forest and Climate Initiative, this is an obsolete debate that will not reduce deforestation.

Instead, advocates of reducing deforestation – which is responsible for about 10 percent of all climate emissions – should focus on how to change industry behaviors with the goal of moving industry towards a zero-deforestation business model.

“We can say with certainty that four commodities directly drive deforestation: beef, palm oil, soy and wood,” said Boucher. “Pushing the companies in these industries to adopt zero-deforestation business models will reduce deforestation quicker than continuing to argue about carbon markets.”

Opponents of employing carbon markets to fund deforestation reduction efforts are dubious of selling nature as a commodity and allege that such markets could threaten indigenous communities. On the other hand, proponents of carbon markets have long anticipated a rapid growth in funding that could, one day, funnel money to countries working to combat deforestation. However, the boom has yet to happen.

Boucher’s paper presents data showing that carbon market funding to reduce deforestation is far lower, at $220 million, than public funding (more than $7 billion). Furthermore, he argues that the companies producing merchandise that drives deforestation make far more from their products that drive deforestation  $100s of billions – than the current and potential returns from carbon markets. To produce these commodities, companies spend billions on projects that drive deforestation. By changing their business practices, the money they spend could instead protect tropical forests.

 “Companies don’t have a line item on their balance sheets that reads ‘investments made for increasing deforestation,’” said Boucher. “Deforestation has become just part of the normal cost of doing business – and this cannot change unless the companies start changing their business models.”

The article further highlights that commodity producers, processors and exporters have the political and economic power to cause a rapid decline in deforestation rates. Consumer pressure can force businesses to sell deforestation-free products, which will ultimately push the commodity producers, processors and exporters to make the necessary changes on the ground.

“Companies are already responding to the pressure; recently we’ve seen Avon, McDonald’s, and Yum! Brands start to demand deforestation-free goods from their commodity suppliers,” said Boucher. “The bottom line is that driving industry behavior is more effective at reducing deforestation, and climate emissions, than continued ideological debates about carbon markets.”

Boucher discusses the article further in a blog post on UCS’s The Equation.

The Union of Concerned Scientists puts rigorous, independent science to work to solve our planet's most pressing problems. Joining with people across the country, we combine technical analysis and effective advocacy to create innovative, practical solutions for a healthy, safe, and sustainable future.