Protecting the Climate Forests

Why reducing tropical deforestation is in America’s vital

national interest
Table of Contents
Foreword…………………………….........................……………………………………………………………………….....…4

About the Commission…………………………………………………………………………………………………….....……5

Acknowledgements………………………………………………………………………………………………………...….......7

Core Messages……………………………………………………………………………………………………….................…8

Summary for Policy Makers…………………………………………………………………………………………………….…9

Climate Change and Tropical Forests……………………………………………………………………………………….…..16

Many Other Benefits……………………………………………………………………………………………………………....33

Financing Forest Emission Reductions……………………………………………………………………………………........37

International Cooperation…………………………………………………………………………………...….........................41

Designing U.S. Climate Legislation…………………………………………………………………………………………...…43

Incentivizing Local Action………………………………………………………………………………………………………...52

Environmental Safeguards…………………………………………………………………………………………………....….54

U.S. Climate Diplomacy and New Agreements…………………………………………………………………………….…..56

Making U.S. Policies Work Efficiently……………………………………………………………………………………….…..59

A Comprehensive Approach to Land-use Emissions……………………………………………………………………..…..65

Protecting the Climate Forests 3

 Foreword
The pace and severity of climate change are by now well established, and avoiding its worst effects will require
coordinated global action to reduce emissions substantially, cost-effectively and without delay. Any new U.S. climate
policies must help address the pervasive effects of deforestation, which accounts for 17% of global greenhouse gas
emissions – more than the entire global transportation sector. Without incorporating robust tropical forest protections
into new U.S. domestic climate laws and international agreements, all our other immediate efforts – to reduce emissions,
expand clean energy and improve fuel efficiency – could be undermined by the continued destruction of the world’s
carbon-rich tropical forests. In fact, avoiding unacceptable risks of potentially catastrophic climate change is likely to
prove nearly impossible without conserving the planet’s “climate forests.”

In cooperation with other interested nations, the United States must lead a global partnership to protect tropical
forests, guided by the ambitious but feasible objectives of reducing emissions from tropical deforestation by half within
a decade and achieving zero net emissions from deforestation by 2030. The severity of the threat we face demands
immediate, bold and clear-headed action grounded in scientific realities and motivated by a full appreciation of U.S.
economic, national security and environmental interests. Our nation must overcome the narrow political considerations
of the moment to join in the most significant common project of our era.

The United States can rise to this great challenge. Our nation has a long history of bipartisan leadership on tropical forest
conservation within and outside of global climate change negotiations. The American Clean Energy and Security Act of
2009 approved by the House of Representatives on June 26th has moved tropical deforestation into the mainstream
of the U.S. climate policy debate. The bill would create groundbreaking tropical forest conservation mechanisms,
backed by major new financial incentives and government resources. With debate on these and other proposals likely
in the Senate in the weeks and months ahead, and with important global climate talks occurring this December in
Copenhagen, Denmark, the time is right for America to focus on what it can do to galvanize a global partnership to
protect tropical forests.

The Commission on Climate and Tropical Forests is a bipartisan group of former Senators, Cabinet officials, senior
policy makers, and leaders from business, conservation, labor, global development, science and national security
that has come together to help advise U.S. policy makers and the American people on how best to help reduce
emissions from tropical deforestation. The Commission was formed in the spring of 2009 with the goal of laying out a
workable path forward for Congress and the Administration on this crucial issue. The consensus findings, principles
and recommendations contained in the accompanying report deliver on that promise and, if implemented, would lead
to effective, politically viable protections for our planet’s climate forests.

Lincoln Chafee, Co-Chair John Podesta, Co-Chair

Former United States Senator, Rhode Island President and CEO, Center for American Progress

4 The Commission on Climate and Tropical Forests

About the Commission
Membership

Lincoln Chafee, Co-Chair John Podesta, Co-Chair Sam Allen D. James Baker
Former United States Senator, President and CEO, Center for President and Chief Executive Director, Global Carbon
Rhode Island American Progress Officer, Deere & Company Measurement Program, The
William J. Clinton Foundation

Nancy Birdsall Sherri Goodman Chuck Hagel Alexis Herman

President, Center for Global Former Deputy Under Secretary Former United States Senator, Former Secretary of Labor
Development of Defense for Environmental Nebraska
Security

Frank Loy Michael G. Morris Thomas Pickering Cristián Samper

Former Under Secretary of State Chairman, President and CEO, Former U.S. Ambassador to the Director, National Museum of
for Global Affairs American Electric Power United Nations Natural History

Lynn Scarlett General Gordon Sullivan Mark Tercek Nigel Purvis, Executive Director
Former Deputy Secretary of the Former Chief of Staff, United CEO, The Nature Conservancy President, Climate Advisers
Interior States Army

Protecting the Climate Forests 5

 Mission
The Commission on Climate and Tropical Forests (the “Commission”) was formed in the spring of 2009 with the goal
of laying out a workable path forward to ensure effective and robust protection of tropical forests primarily as part of
U.S. climate change policies, but also through engagement in international agreements. The intent has been to create
actionable, politically viable recommendations that can inform and guide the United States in its challenging legislative
and diplomatic negotiations on this crucial issue.

Deliberations
The Commission’s report is the product of extensive analysis, careful deliberations, international fact-finding and
consensus decision-making. In addition to participating in the Commission’s in-person meetings, Commission
members also met with international policy makers, received extensive briefings and met with leading experts.

In August 2009, a number of Commission members traveled to Brazil to learn more about its national and local efforts
to reduce deforestation. They met with leading policy makers and environmental NGOs, as well as local stakeholders,
including ranchers, farmers and labor leaders. Commissioners also joined world leaders at the United Nations in
September 2009 for discussions about emerging international efforts to help developing nations conserve tropical
forests.

Several members of the Commission contributed years of first-hand experience working on climate policy and tropical
forest conservation. Other members represent companies and non-governmental organizations that have pioneered
climate-related investments to reduce tropical deforestation for more than a decade. Some members had less
background on the topic at the start but contributed their time, energy and breadth of experiences in other relevant
areas, such as foreign policy, national security, international development, science, business and politics.

Assumptions
The Commission based its findings, principles and recommendations on the consensus findings of U.S. and
international climate scientists. In crafting its policy recommendations, the Commission assumed that for the time
being climate policy discussions in the United States would continue to center on “cap-and-trade” proposals, under
which the Federal government would set emission limits (cap) but allow regulated companies the opportunity to
reduce costs by buying and selling emission allowances (trade). Cap-and-trade is the centerpiece of the American
Clean Energy and Security Act, approved by the House of Representatives on June 26, 2009. It is also the approach
endorsed by President Obama, and is expected to be the focus of Senate debate in the months ahead. The prospects
for a national, economy-wide cap-and-trade bill in the Senate remain uncertain. The focus given to cap-and-trade by
the Commission reflects the current political context. Because the possibility of a cap-and-trade program is real, the
Commission has developed specific recommendations that would allow the United States to harness that approach to
help reduce tropical deforestation.

Support
The Commission is supported in part by grants from the David and Lucile Packard Foundation to Climate Advisers, the
Glover Park Group and Meridian Institute. Climate Advisers directs policy analysis, the Glover Park Group offers strategic
communications guidance and support, and Meridian Institute provides process design, facilitation and logistics support.

6 The Commission on Climate and Tropical Forests

Acknowledgements
The Commission is grateful for the assistance it received from many quarters. The preparation of this report was a
team effort that could not have been accomplished as effectively as it was without the help of the individuals and
organizations listed below.

Nigel Purvis, the Commission’s Executive Director and President of Climate Advisers, guided the Commission through
the complexities of climate and tropical forest policies, and helped the Commission find a strategic focus. Andrew
Stevenson of Climate Advisers and Resources for the Future served expertly as the Commission’s lead researcher and
this report benefited immeasurably from his contributions.

John Ehrmann, founding partner of the Meridian Institute, expertly facilitated the Commission’s deliberations. In addition
to substantive input, Meridian provided administrative and logistical support. Shelly Foston, Kerri Wright Platais and
Shawn Walker of the Meridian Institute were tireless and ultra-professional throughout the process.

Within the Glover Park Group, Ryan Cunningham skillfully led a diverse and talented communications team, which
included Ben Becker, Matt Bevens, Carley Corda, Sara Sidransky, Alissa Ohl and Jason Miner. The Commission’s
report benefited significantly from their creativity and hard work.

A number of outstanding professional staff supported the Commissioners, including Andrew Light of the Center for
American Progress, Marty McBroom of American Electric Power, Eric Haxthausen and Rane Cortez of The Nature
Conservancy, and Charles Stamp and Vanessa Stiffler-Claus of John Deere. These individuals played a major
substantive role in the preparation of this report.

The David and Lucile Packard Foundation provided generous support. The Foundation’s senior adviser for tropical
forests, Dr. Daniel Zarin, contributed strategic advice and scientific expertise from start to finish. He also helped the
Commission interact with leading international policy makers. Dr. Walter Reid of the Foundation was an early and
consistent champion of this project.

Several international climate and forest experts provided helpful background information and answered the Commission’s
policy questions, including Per Pharo of Norway, Tasso Azevedo of Brazil and Howard Bamsey of Australia. Charles
McNeil of the United Nations Development Program helped the Commission interact with world leaders to discuss
tropical forests and climate policy during the United Nations General Assembly in September 2009.

The Nature Conservancy’s climate change and South America teams facilitated a visit to the Amazon region by several
members of the Commission. The Commission thanks Mark Tercek, Joe Keenan, Sarene Marshall, Eric Haxthausen,
Ian Thompson, Jill Bernier, José Benito Guerrero, Angélica Toniolo, Sanés Bissochi and Francisco Fonseca for making
this trip to the tropical forest frontier so educational and successful.

Dr. Douglas Boucher of the Union of Concerned Scientists, Dr. Ray Kopp of Resources for the Future and Dr. William Boyd
of the University of Colorado Law School reviewed early drafts of background material prepared for the Commission.
The ClimateWorks Foundation, through Project Catalyst, shared helpful analysis. Adrian Deveny of Resources for the
Future provided early modeling results from the Forest Carbon Index. Finally, Adrian Deveny, Rachel Saltzman and
Brad Tennis offered timely research support.

Protecting the Climate Forests 7

 Core Messages
• The United States should help lead a global partnership to halve greenhouse gas emissions from tropical
deforestation by 2020 and reach zero net emissions from deforestation by 2030 – an ambitious but achievable goal.

• Solving the climate crisis will be nearly impossible without urgent efforts to stem tropical deforestation, which
accounts for approximately 17 percent of global greenhouse gas emissions and represents the best opportunity for
quick, large-scale and cost-effective emission reductions.

• Well-designed incentives to halt tropical deforestation would also strengthen U.S. national security by reducing
international instability, help alleviate global poverty and conserve priceless biodiversity.

• To catalyze global climate action and maximize the benefits of reducing deforestation, the United States should
begin by investing at least $1 billion in public funding prior to 2012. In addition, the U.S. policy should mobilize
roughly $9 billion annually by 2020 from the private sector to reduce tropical forest emissions. Doing so could help
reduce climate costs faced by U.S. companies by up to 50 percent, saving up to $50 billion by 2020 compared to
domestic action alone. Furthermore, public sector investments should increase gradually to $5 billion annually by
2020 to unlock these cost savings and reduce deforestation in nations that cannot attract private capital.

8 The Commission on Climate and Tropical Forests

Summary for Policy Makers
Findings of global emissions, more than the entire global
transportation sector. It is one of the few major sources
Climate change is a major and growing threat to the of emissions that can be addressed cost effectively now,
United States and the world. The United States must thereby giving the world time to transform the global
marshal an effective, timely global response. energy economy with innovative new technologies and
practices in electricity, infrastructure, transportation and
The consensus scientific view is that global average manufacturing.
temperature increases ought not to exceed 3.6°F (2°C)
above pre-industrial levels to avoid unacceptable risks While planting forests will make sense in many places,
of dangerous climate change. Achieving this target avoiding the conversion and degradation of standing
requires reducing global emissions by 50 percent by forests will produce the greatest climate, national
2050, with industrialized nations reducing emissions security, economic and biodiversity benefits on the
80 percent or more and developing nations taking global scale, and thus should be the primary focus of
increasingly ambitious actions in the same time frame. U.S. policy.

Achieving these emission reductions cost-effectively

will be nearly impossible without a substantial reduction Commissioner Perspective:
in tropical deforestation before 2020 and achieving JOHN PODESTA, Co-Chair
zero emissions globally from the forest sector by no President and CEO, Center for American Progress
later than 2030. According to the Nobel Peace Prize-
winning Intergovernmental Panel on Climate Change, “Climate change is a challenge unlike any we’ve
deforestation accounts for approximately 17 percent ever seen, demanding strong domestic policies and
vigorous global leadership from the United States.
That means effective near-term solutions at both the
Commissioner Perspective: national and international levels that fundamentally
change our environment’s dangerous trajectory. Ad-
LINCOLN CHAFEE, Co-Chair dressing tropical deforestation needs to be a central
Former United States Senator, Rhode Island focus of that effort. Slowing and stopping the de-
struction of our tropical forests will massively reduce
“Climate change has become a defining issue of our CO2 emissions and create paths toward sustainable
time, a challenge to the world community to act co- global development. The Commission strongly urg-
operatively on a threat to our planet. Climate change es the U.S. to enact strong domestic climate policy
has the potential to forever alter our way of life. Tropi- and lead an international effort to provide sufficient
cal deforestation plays a central role, responsible for resources to ensure tropical deforestation is ad-
17 percent of global greenhouse gas emissions. It dressed. We must accomplish this goal. Our com-
is truly time for America to launch a comprehensive mon future depends on it.”
response to this manageable threat. Protecting the
planet’s climate forests and fighting climate change
can be the defining bipartisan issue of our time, but The United States has much to gain from leading a global
so far that bipartisanship has been largely absent. partnership with other nations to enhance tropical forest
The Commission strongly urges our elected leaders conservation. An effective and coordinated effort would:
to recognize the obligation we have and embrace
this opportunity for collaboration. Time is running
• Provide incentives for developing nations to reduce
out, and our actions now will have implications for
a major source of their emissions and adopt
generations to come.”
sustainable, low-emission land-use practices;
• Reduce the cost of implementing climate policies by

Protecting the Climate Forests 9

 funding less-costly action in developing nations in Reducing deforestation will require a strong partnership
lieu of more-costly domestic opportunities, allowing among developed and developing nations. Financing for
the United States to focus on the opportunities reducing emissions will be most productive if it is focused
climate policy presents to spur economic growth, on the financial and technical assistance needs of
develop and deploy new technologies, create jobs developing nations that commit to reduce deforestation
and make U.S. firms more competitive; through ambitious domestic actions. Success depends
• Strengthen national security by reducing instability on fundamentally altering the financial incentives that
from climate change and local environmental traditionally drive deforestation, such as income from
degradation, which are threat multipliers for social farming, ranching and logging. Global funding needed
conflict, ethnic strife, civil violence and armed to make these changes is estimated at $2 billion in
conflict in weak and failing states; 2010 growing to $30 billion per year by 2020. Public
• Contribute to alleviation of global poverty by and private investments are both needed to support the
channeling substantial new revenues to the rural different phases of action from initial planning to verified
poor who depend on tropical forests and by reducing reductions, and to engage the widest possible range of
the climate vulnerability of poor communities to countries.
drought, flooding and severe storms; and
• Conserve valuable biodiversity and ecosystem Principles
services by protecting some of the world’s
most important natural places and productive The United States should make reducing tropical
ecosystems. deforestation a centerpiece initiative in domestic climate
policy and international climate diplomacy, in parallel
To reap the economic, security and environmental with committing to prudent, cost-effective domestic
benefits of reducing emissions from tropical emission reductions. U.S. policy should be based on the
deforestation, the United States must ensure that new following foundational principles:
programs improve local living standards and promote
sustainable development objectives in tropical forest • International partnerships. The United States must
nations. New strategies are unlikely to succeed without work in partnership with developing and developed
local ownership, technical assistance and new financial countries to create and implement effective
incentives. Large-scale financial incentives can help and timely approaches, including through new
developing nations move from underdevelopment to multilateral and bilateral climate agreements.
prosperity in ways that avoid deforestation, similar to
the “leap frogging” many developing nations have done • Environmental integrity. Rigorous environmental
in communications or information technology. standards are required to ensure that emission
reductions are genuine and additional to existing
Some tropical, forest countries are already reducing efforts, as well as to protect against unintended
their deforestation rates. As one example, in 2008 Brazil ecological, economic and social outcomes.
set an ambitious target of reducing its deforestation
rate in the Amazon region 80 percent below its 1996- • Payment for performance. The United States must
2005 historical average by 2020. Emissions have been link payments to demonstrated performance.
substantially reduced in the Amazon region since 2004, Developing nations that succeed in reducing
although it is too early to say if this progress will prove tropical deforestation should be rewarded, thereby
durable in Brazil. Deforestation rates in many other encouraging further progress in those countries and
tropical forest nations remain troublingly high. creating the right incentives for others. To sustain
U.S. domestic political support for major tropical
forest conservation expenditures, the American

10 The Commission on Climate and Tropical Forests

 people must have assurances that U.S. programs United States. Strong domestic action is essential
achieve measurable, verifiable results. to secure an effective global response to climate
change.
• Cost-effective solutions. While emission reductions
from tropical forests are cost-effective, they Recommendations
will require investments of both technical and
financial resources. Capitalizing on cost-effective The Commission’s recommendations are divided into
opportunities will be essential to safeguard the three sections. The main recommendations appear
U.S. economy and secure the greatest return on first, followed by a set of more specific implementation
investment for every dollar spent. Sound policy recommendations. Recommendations in these first
frameworks that mobilize both public and private two sections are intended to inform U.S. climate policy
investment capital for their best uses are also without regard to the specific design of domestic
needed to achieve emission reductions at scale emission control policies. In contrast, the third set of
and leverage contributions from other countries. recommendations contains the Commission’s views on
how the United States could reduce tropical deforestation
To succeed, U.S. policies to reduce tropical deforestation must within a Federal “cap-and-trade” program. The political
be implemented in a manner that promotes: context and rationale for these final recommendations
are discussed further below.
• The sustainable development objectives of developing
nations. To secure the local cooperation and support Main Recommendations
that is essential for success, forest conservation
programs must help to improve living standards in Recommendation 1: With other nations, the United States
developing nations in ways that are consistent with should lead a global partnership to cut emissions from tropical
low-carbon growth strategies. deforestation in half within a decade and achieve zero net
emissions from the forest sector by no later than 2030. Halving
• Other U.S. foreign policy goals. Forest conservation total global emissions by 2050, as science indicates is
policies must strengthen relationships with key necessary to reduce the risk of dangerous climate impacts,
allies and other nations, and promote a range of will not be possible without dramatic early reductions in
important national interests in addition to climate tropical deforestation. Reducing deforestation can help
change mitigation, including international stability, make climate policy affordable and buy time for nations to
national security, biodiversity conservation and the develop and implement better energy technologies and
protection of critical ecosystems. practices. Halving emissions from tropical deforestation
by 2020 and eliminating them by 2030 will not be easy, but
• Equitable incentives for forest-dependent communities, it is feasible with a well-designed strategy and ambitious
including the indigenous. The United States must efforts. Supporting Brazil’s efforts to sustain and build
ensure that forest-dwelling communities, the rural upon recent reductions in deforestation will be essential
poor and other vulnerable populations who depend because Brazil is more prepared than perhaps any other
on forests benefit financially from climate-related nation to demonstrate real results. However, success also
forest conservation policy frameworks. This is both depends on unlocking mitigation potential in Indonesia,
a moral imperative and a practical necessity to Malaysia and the Congo Basin, as well as in emerging
secure local cooperation. economies throughout Latin America, Southeast Asia
and Africa. New bilateral and multilateral agreements will
• Ambitious U.S. domestic policies. Efforts to reduce be needed to help these nations develop credible plans,
deforestation must balance (not displace) ambitious implement much-needed forest-sector reforms and to
immediate efforts to reduce emissions within the incentivize and verify emission reductions.

Protecting the Climate Forests 11

 Recommendation 2: The United States should create major caused by mounting economic pressures, to support
new financial incentives and public-private partnerships to forest conservation in countries that cannot attract
encourage forest conservation by developing nations and private capital given perceived investment risks and
to finance emission reductions that the United States would to purchase verified emission reductions. The sum is
otherwise have to make via far more costly domestic strategies. a reasonable estimate calculated to achieve a rough
Substantially reducing and then halting deforestation balance between domestic and international mitigation,
globally will not be possible without fundamentally and consistent with both the ambitious goals in this
altering the financial incentives that forest clearing report and recent analyses of U.S. legislative proposals
provides for landowners and forest-dependent people. by the Congressional Budget Office and Environmental
The United States can benefit by complementing Protection Agency. Roughly two-thirds of these
domestic emissions mitigation programs with affordable resources should come from the private sector under a
investments in tropical forest conservation that alter well-designed policy.
the balance of financial incentives in favor of forest
conservation. Recommendation 3: The United States should adopt strong
domestic climate change laws that reduce U.S. emissions
Recommendation 2.1: To unlock these savings, the United 80 percent by 2050 and contain interim goals consistent
States should invest at least $1 billion before 2012 in programs with climate science, thereby helping to galvanize ambitious
that would build the capacity of developing nations to reduce international action. Significant and timely reductions in
forest-sector emissions. Much work lies ahead. Assuming U.S. emissions are essential to catalyze an effective
that developing nations already have the needed global response. Long-term goals should be supported
capacity for action would be unwise given the economic by cost-effective programs that ensure the United
and environmental importance of significant, early States meets ambitious and achievable medium-term
tropical forest emission reductions and the challenges emission reduction objectives and give the American
many developing nations now face in reforming their people and the world confidence that the United States
forest sectors. New U.S. foreign assistance funds is committed to action.
are needed for this capacity building work until more
sustainable private sector financing can be mobilized Implementation Recommendations
through new climate change policy frameworks. A $1
billion investment would represent no more than 25 Recommendation 4: The United States should work to ensure
percent (and probably much less) of the at least $4 billion that international agreements with tropical forest nations
urgent global need for immediate capacity building secure actions by those nations that support global emission
assistance in developing nations. The climate change reduction goals for forests. Strong domestic climate
bill approved by the House of Representatives in June legislation would create a sound basis for the United
2009 would provide no immediate financing for tropical States to ask for greater efforts from other nations,
forests, so new options and leadership are particularly including through international climate agreements.
needed from the Senate and the Obama Administration. International agreements that do not help developing
nations move aggressively toward reducing global
Recommendation 2.2: Looking further ahead, the U.S. policy emissions from forests by 50 percent in 2020 and
should mobilize roughly $14 billion annually by 2020 for zero net emissions from forests no later than 2030
tropical forests from a combination of public and private have the potential to be counterproductive. Clear and
sources, since doing so could help reduce climate costs appropriately ambitious quantitative goals should be
faced by U.S. companies by up to 50 percent compared to backed by credible and enforceable national plans.
domestic action alone. These additional resources are Over time, U.S. funding should be increasingly targeted
needed to help forest-rich developing nations with low to developing nations that are meeting ambitious
deforestation rates to avoid increases in deforestation goals. One way to frame this linkage would be to focus

12 The Commission on Climate and Tropical Forests

resources on nations with effective means to achieve Recommendation 6: The United States should work to ensure
(or at least show substantial progress toward) zero net that international agreements and financial incentive programs
deforestation within a certain timeframe. Yet, making place special emphasis on transparent and credible procedures
it too difficult for developing nations to qualify for U.S. for evaluating whether local people are participating in and
financial assistance would reduce their incentive for benefiting from new policy frameworks. The United States
action, potentially increasing the cost of the United should support tropical forest nations in their efforts to
States securing any set quantity of emission reductions develop transparent and credible procedures for making
in a fixed time. Thus, environmental objectives land-use decisions, consulting local communities and
must be realistic and reflect the diversity of national reporting on the impacts of forest conservation programs.
circumstances. With the help of civil society actors, governments will
be able to assess these reports, determine whether
Recommendation 5: U.S. policies should provide incentives appropriate procedures are being followed, and hopefully
for countries to move to national-scale action as quickly as avoid unintended consequences. National reporting and
possible. The United States should give preferential international review should occur periodically to promote
access to financial incentive programs and carbon understanding, evaluation and constant improvement of
markets to developing nations that have adopted national the social and economic effects of forest conservation
emission reduction objectives covering their entire programs on the 1.6 billion forest-dependent people in
forest sector (“sector-wide approaches”) as a means of the developing world.
encouraging nations to move swiftly to national-scale
actions. Focusing U.S. financial incentives in this way Recommendation 7: The United States should channel new
would reward nations that are taking ambitious action, forest conservation investments to high-priority areas
encourage nations to pursue large-scale policies and for national security, poverty alleviation and biodiversity
prevent the shifting of deforestation from one place conservation. Not all forests are equally important to the
to another. At the same time, policy frameworks must United States and climate policy should reflect this. The
recognize that many developing nations will require time rainforests in the Amazon-Andes region are teeming with
to develop capacity to implement national-scale forest wildlife and biodiversity of international significance.
conservation initiatives. Unrealistic assumptions about The forested watershed that enables transit across the
how quickly developing nations can act could undermine Panama Canal, for example, is of global economic and
international emission reduction efforts and increase the security significance. Conserving that watershed in
cost of U.S. climate policy by failing to deliver much- ways that make the Canal more secure, sustainable and
needed international emission reductions. U.S. policies, affordable, as existing U.S. policies seek to do, is in our
therefore, should provide incentives for capacity national interest. The Executive Branch should report
building activities in developing nations that will speed to Congress on the measures it is taking to focus U.S.
up the transition to national-scale approaches. These funding in ways that maximize climate, national security,
nations should have opportunities to participate in U.S. economic development and biodiversity benefits.
programs on the basis of action at a scale below the
national level for a limited period of time. For example, Recommendation 8: The United States should establish a
during this transition period, and subject to international coordinating council and designate a lead office or agency to
agreements with specific developing countries, major oversee tropical forest conservation programs. The success
emitting tropical forest nations should have opportunities of U.S. international forest conservation programs may
to participate in U.S. programs on the basis of state- depend on whether the United States government
or province-wide programs. Special accommodations organizes itself appropriately to manage these complex
should be made for least developed countries, which multi-billion-dollar efforts. Responsible agencies will
are likely to need the most time to acquire the capacity need the authority and expertise to perform many
to pursue national deforestation strategies. diverse functions, including developing environmental

Protecting the Climate Forests 13

 standards, negotiating international agreements, Continued scientific and technological improvements
implementing technical assistance programs in in the ability to reliably measure, monitor, and detect
developing nations, managing large new funds and changes in terrestrial carbon stocks will be essential,
possibly regulating and intermediating financial although many existing technologies are impressive
markets. No existing U.S. department or agency has the and need to be deployed and adopted far more broadly.
capacity, experience and expertise needed to fulfill all of U.S. investments in satellites and remote sensing, for
these functions. The United States should develop an example, should account for those needs, and findings
integrated “whole of government” approach by tapping should be declassified as appropriate and made widely
into the expertise and authorities of all relevant agencies. available. Early international efforts should focus on
However, there is the significant risk that by dividing improving procedures for measuring, monitoring and
responsibility across the government, implementation of verifying greenhouse gases across all land-use types,
key programs could occur in a haphazard, uncoordinated including in greenhouse gas-rich peatlands and other
manner, with different agencies working at cross- soils. The challenges associated with these tasks
purposes. Given the size, complexity, and importance should not be used as justification for inaction or delay
of the task, the U.S. government needs a single in reducing tropical forest emissions quickly now.
coordinating council separate from all existing agencies
to lead the development of new strategies, plans and Cap-and-trade Recommendations
budgets. The White House should create such a council
to serve this coordinating function because a united The climate policy debate in the United States is
effort that harnesses relevant expertise, capacity and currently focused on the pros and cons of what is
authorities across the federal government is absolutely known as a cap-and-trade program. Under a national
essential. The White House should also designate a lead cap-and-trade program the Federal government would
office or agency to head the coordinating council. One limit (“cap”) domestic emissions and seek to reduce
option would be to appoint a senior official within the compliance costs by allowing regulated businesses the
White House to chair the coordinating council. Another flexibility to buy and sell (“trade”) emission allowances
option would be to make an existing department or and to invest in international emission reduction activities
agency the lead coordinating entity. (“offsets”) in lieu of reducing their own emissions. Over
a dozen states, including California and New York, have
Recommendation 9: The United States should promote a global already begun implementing regional cap-and-trade
transition to full terrestrial greenhouse gas emission accounting. programs. Prior to his inauguration President Obama
Forests, food, biofuels and fiber production compete for called on Congress to enact a national cap-and-trade
a finite land area in developing nations. Tropical forest law. A cap-and-trade program is the centerpiece of the
loss, the principal source of terrestrial emissions, is climate bill approved by the House of Representatives
driven by that competition as tropical forests are turned in June 2009, and the Senate is expected to examine
into farmlands and rangelands, or harvested for timber. If similar approaches in the days and months ahead. A
global demand for food achieves its projected doubling well-designed cap-and-trade program would provide an
by 2050, nations will need to rehabilitate degraded lands effective mechanism for financing and implementing the
and intensify food production at a rate well beyond recommendations articulated in this Summary. However,
current gains. Reducing emissions from deforestation the prospects for (and timing of) Senate approval of a
ultimately will require the world to meet competing land- national, economy-wide cap-and-trade bill are quite
use demands as efficiently as possible. Toward this end, uncertain. Because the possibility of a cap-and-trade
the United States should promote a comprehensive program is very real, the Commission has developed
system of terrestrial carbon management that accounts these specific recommendations that would allow the
for greenhouse gas emissions from forests, rangelands, United States to harness that approach to help reduce
agriculture and other major land-use categories. tropical deforestation.

14 The Commission on Climate and Tropical Forests

Recommendation 10: The United States should allocate 5 trade program succeeds and thus continues to finance
percent of the value of tradable emission allowances in a cap- U.S. investments in reducing tropical deforestation. This
and-trade program to new international forest conservation in turn depends on forest programs helping to genuinely
programs. Substantial public funding is necessary to reduce emissions and contain the cost of the cap-and-
help developing countries build capacity to participate trade program. While this strategy holds great promise,
in markets and deliver verified emission reductions, the United States should guard against potential
especially in nations that present risks that may limit economic risks of relying too heavily on emission
private sector investment and those that still have large reductions from international forests. Few developing
standing forests but limited deforestation. Government nations today are fully prepared (including technically
estimates indicate that in the context of an affordable and administratively) to participate in U.S. carbon
cap-and-trade program a 5 percent allocation would markets. This raises the possibility that in the initial years
generate $3.1 billion in 2012, rising to $5.1 billion by of a cap-and-trade program, demand for international
2020. The climate change bill approved by the House forest carbon offsets could very well exceed available
of Representatives in June 2009 would set aside 5 supply, increasing the risk of high prices. The climate
percent of emission allowances for international forest bill approved by the House creates a strategic reserve
conservation. A Senate cap-and-trade bill should do of emission allowances that companies can access if
likewise. market prices climb above a predetermined level. To be
effective, the strategic reserve needs to be large enough
Recommendation 11: To mobilize private capital, the United to account for the possibility that the supply of forest
States should permit regulated U.S. companies to “offset” a carbon offsets could be insufficient to control costs in
substantial portion of domestic emissions through investments a particular period. Similarly, the United States needs to
in tropical forests. In this manner, the U.S. policy should mobilize avoid relying too heavily on the notion that it will “refill”
(within the overall funding need referenced in Recommendation the strategic reserve (for future use) with tropical forest
2 above) roughly $9 billion annually from private investment to emission reductions. If low forest carbon supply is the
save U.S. companies up to $50 billion by 2020 compared to cause of high prices, tropical forest emission reductions
domestic action alone. These offsets would help control simply may not be available to refill the strategic reserve
the costs of a U.S. cap-and-trade program while new before the reserve runs dry. The House climate bill sets
clean energy technology is developed and deployed. the size of the strategic reserve at 2.7 billion tons of
The U.S. Environmental Protection Agency (EPA) carbon dioxide. More analysis is needed to determine
predicts that international offsets would reduce the cost the right role for tropical forest emission reductions
of climate action faced by U.S. companies by almost in refilling the strategic reserve and to determine its
50 percent, and most studies project that a majority of optimum size.
cost-effective offsets would come from tropical forests.
The House climate bill would allow companies to use Recommendation 13: The United States should explore and
a significant number of tropical forest offsets, and the consider establishing a financial intermediary to aggregate
Senate should take a similar approach if it adopts cap- forest carbon offset demand and supply. U.S. corporations
and-trade legislation. could continue to have the option of purchasing forest
carbon offsets directly from developing country partners,
Recommendation 12: The pool of emission allowances set but they should have the additional choice of purchasing
aside to help control the cost of a new cap-and-trade program these offsets directly from a U.S. government entity. A
(the “strategic reserve”) should be large enough to manage forest carbon market with no intermediary would likely
the risk that the supply of forest carbon “offsets” may prove result in unnecessarily high costs for private companies.
insufficient to stabilize prices and avoid price spikes. New In contrast, an entity making bulk purchases on behalf
international forest conservation programs in a cap- of American companies could reduce costs and achieve
and-trade program will only work if the entire cap-and- greater emission reductions for every dollar spent.

Protecting the Climate Forests 15

 Importantly, the offset aggregator should be a public a government entity may be needed to finance emission
entity (or at least have a public charter). While a private reductions from Brazil and other nations that may
sector aggregator would probably emerge in the absence choose not to participate in U.S. carbon markets, or to
of a government entity (indeed, such entities are already engage other categories of nations that fail to attract
in existence in the voluntary carbon markets), only a private capital. A government-based forest carbon
public entity would direct 100 percent of the savings into offset aggregator also would be well-positioned to
lowering costs for regulated companies and securing ensure the environmental integrity of offsets entering the
the maximum emissions mitigation by developing United States. With the government verifying emission
nations for every dollar spent. In contrast, a private reductions and monitoring implementation, moreover,
sector aggregator would likely try to maximize its profits U.S. companies could avoid exposure to the reputation
by retaining for itself as much as possible between the and business risks associated with tropical forest sector
price companies would be willing to pay and the lower investments in faraway regions about which they may
price it negotiates with developing nations. In addition, have very little information.

Climate Change and Tropical Forests

A Global Challenge
Climate change is a serious and urgent threat to the
United States and the world, and its adverse impacts
are already being felt at home and abroad (see Figure 1).
Future climate threats to the United States include more
common and intense hurricanes, floods and droughts,
increased risk of death from extreme heat, epidemics
of pests and diseases, and decreased crop yields with
high levels of warming. Some of these impacts will be
much more severe in certain regions, including flooding
in the Southeast and changing precipitation patterns in
the Southwest. 1 Internationally, climate change acts as
a “threat multiplier” against U.S. national security and
humanitarian interests. 2 Climate-induced floods may
impact as many as 94 million people by the end of the natural resource competition, armed conflict and even
century and result in large population migrations. By state failure. 3 Inaction now will only increase the threats
2020, 75-250 million people may face climate-related the United States must face later and reduce its ability
water shortages, with Africa suffering disproportionately. to manage those threats. Acting now to substantially
In some African countries, yields from rain-fed reduce domestic emissions is essential given America’s
agriculture could be reduced by up to 50 percent over strategic global role, its contributions to the climate
the same period. As a consequence of these climate problem and the increasing risk of catastrophic climate
impacts up to one billion people risk falling back into impacts. But domestic action alone will not suffice—half
extreme poverty, with serious implications for the United of global emissions come from developing nations and
States and the world in the form of humanitarian crises, those countries are expected to account for nearly all

16 The Commission on Climate and Tropical Forests

of the expected 45 percent growth in global emissions
by 2030. Reducing emissions in developing nations will Commissioner Perspective:
require new forms of international cooperation, because CHUCK HAGEL
many developing countries lack the means and the
Former United States Senator, Nebraska
financial and political incentives to act.
“Although the bulk of our planet’s tropical forests are
Inaction now will only increase the threats the United found on foreign shores, the effects of deforestation
States must face later and reduce its ability to manage transcend national borders, increasing the pace and
those threats. Acting now to substantially reduce severity of global warming worldwide. Tropical de-
domestic emissions is essential given America’s forestation is a major element of the climate threat
strategic global role, its contributions to the climate
and requires our immediate attention, as any other
problem, and the increasing risk of catastrophic climate
global crisis would. It is clearly in our national inter-
impacts. But domestic action alone will not suffice—half
of global emissions come from developing nations, and est – economic, foreign policy, national security and
those countries are expected to account for nearly all of beyond – to confront this threat. As the world’s larg-
the expected 45 percent growth in global emissions by est economy and most powerful nation, we must
2030. 4 Reducing emissions in developing nations will work closely with our allies in both the developed
require new forms of international cooperation; because and developing worlds to cut tropical deforestation
many developing countries lack the means and the in half within a decade. We have helped the world
financial and political incentives to act. face potentially catastrophic threats before. We must
heed the call to do so again.”
Figure 1: Impacts of Climate Change Around the World

Arctic: Significant retreat of ice; disrupted habitats of polar

megafauna; accelerated loss of ice from Greenland Ice Sheet Europe: More intense winter precipitation, river
North America: Reduced springtime and mountain glaciers; shifting of fisheries; replacement of flooding, and other hazards; increased summer heat
snowpack, changing river flows; shifting most tundra by boreal forest; greater exposure to UV-radiation. waves and melting of mountain glaciers; greater wa-
ecosystems, with loss of niche ter stress in southern regions; intensifying regional
environments; rising sea level and increased climatic differences; greater biotic stress, causing
intensity and energy of Atlantic hurricanes shifts in flora; tourism shift from Mediterranean region.
increase coastal flooding and storm damage;
more frequent and intense heat waves and Central and Northern Asia: Widespread melting of
wildfires; improved agricultural and forest permafrost, disrupting transportation and buildings;
productivity for a few decades. greater swampiness and ecosystem stress from
warming; increased release of methane; coastal
erosion due to sea ice retreat.
Central America and West Indes:
Greater likelihood of intense
Southern Asia: Sea level rise and more intense cyclones
rainfall and more powerful
increase flooding of deltas and coastal plains; major loss
hurricanes; increased coral
of mangroves and coral reefs; melting of mountain
bleaching; some inundation from
glaciers reduces vital river flows; increased pressure on
sea level rise; biodiversity loss.
water resources with rising population and need for
irrigation; possible monsoon perturbation.
Pacific and Small Islands: Inundation of
low-lying coral islands as sea level rises; Africa: Declining agricultural yields and diminished
salinization of aquifers; widespread coral food security; increased occurrence of drought and
bleaching; more powerful typhoons and stresses on water supplies; disruption of ecosystems
possible intensification of ENSC extremes. and loss of biodiversity; including some major species;
Global Oceans: Made more acidic by increasing CO2
concentration, deep overturning circulation possibly some coastal inundation.
reduced by warming and freshening in North Atlantic.
South America: Disruption of tropical forests and
significant loss of biodiversity; melting glaciers Australia and New Zealand: Substantial loss of coral
reduce water supplies; increased moisture stress along Great Barrier Reef; significant diminishment of
in agricultural regions; more frequent occurrence of Antarctica and Southern Ocean: Increasing risk of significant water resources; coastal inundation of some settled
intense periods of rain, leading to more flash floods. ice loss from West Antarctic Ice Sheet, risking much higher sea areas; increased fire risk; some early benefits to
level in centuries ahead; accelerating loss of sea ice, disrupting agriculture.
marine life and penguins.

Source: Adapted from Scientific Expert Group on Climate Change (SEG) (2007) Confronting Climate Change: Avoiding the Unmanageable and Managing
the Unavoidable [Rosina M. Bierbaum, John P. Holdren, Michael C. MacCracken, Richard H. Moss, and Peter H. Raven (eds.)]. Report prepared for the
United Nations Commission on Sustainable Development, Research Triangle Park, NC, Sigma Xi, and Washington, DC, the United Nations Foundation.

Protecting the Climate Forests 17

 Finding: Climate change is a major and growing threat to Finding: Achieving these goals will require reducing global
the United States and the world. emissions by 50 percent by 2050, with industrialized
nations reducing emissions 80 percent or more, and
developing nations taking increasingly ambitious actions
Recommendation: The United States should adopt strong in the same time frame.
domestic climate change laws that reduce U.S. emissions
80 percent by 2050 and contain interim goals consistent
with climate science, thereby helping to galvanize ambitious Achieving ambitious emissions reduction goals for 2050
international action. In July 2009, during the Group of will be impossible without nations setting and meeting
Eight (G8) and Major Economies Forum (MEF) meetings, interim benchmarks along the way. According to the
world leaders endorsed the consensus scientific view Nobel Prize-winning Intergovernmental Panel on Climate
that global average temperature increases ought not to Change, global emissions may need to peak within a
exceed 3.6° Fahrenheit (2 degrees Celsius) above pre- decade, with emissions in developed nations declining
industrial levels in order to avoid unacceptable climate 25-40 percent from 1990 levels by 2020 and emissions
risks.5 in developing nations making a significant deviation
from business-as-usual projections. Making these mid-
term goals a reality constitutes a major challenge for the
Finding: The consensus scientific view is that global United States and the world. It would require averting at
average temperature increases ought not to exceed least 17 billion tons per year of expected carbon dioxide
3.6 degrees Fahrenheit (2 degrees Celsius) above pre- emissions by 2020 under business-as-usual projections
industrial levels in order to avoid unacceptable climate (see Figure 2).6
risks.

Finding: Given the seriousness of these climate risks to

Achieving this goal will require reducing global emissions U.S. national interests, it is imperative that the United
by 50 percent by 2050, with industrialized nations States marshals an effective and timely global response.
reducing emissions 80 percent or more, and developing
nations taking increasingly ambitious actions in the
same time frame. Leaders of all G8 industrialized nations
also endorsed these emission reductions objectives at
their July 2009 summit. While developing nations have
yet to embrace these 2050 emission reduction goals,
many key nations appear willing to do so provided that
developed nations play a major role in financing global
action. The climate bill passed on June 26, 2009, by
the U.S. House of Representatives (titled the American
Clean Energy and Security Act) is broadly consistent
with this emerging global policy framework as it would
require the United States to reduce emissions 80
percent by 2050 and would make developing nations
eligible for tens of billions of dollars in financial support
for ambitious climate action.

18 The Commission on Climate and Tropical Forests

Figure 2: Emerging Global Climate Objectives

Source: Climate Advisers analysis, adapted from Project Catalyst (2009) Limiting atmospheric CO2e to 450 ppm – the mitigation challenge, San
Francisco, CA, ClimateWorks Foundation.

Although developed countries are largely responsible Solving the climate problem will not be easy. Indeed,
for anthropogenic climate change, most cost-effective the only path to stabilization that avoids the high risk
emission reductions opportunities are in the developing of dangerous impacts, and that is both economically
world. However, many developing nations have few efficient and equitable, is for developed nations to
resources and inadequate technical know-how for partner with developing nations and jointly invest in the
implementing climate solutions. Developing nations are most cost-effective climate solutions.
also quick to highlight the inequity of expecting them to
finance emissions mitigation simply because they have Developed nations, including the United States, will
low-cost opportunities for action. From the standpoint need to provide substantial new funding to help finance
of international equity, world leaders have agreed that international action.
although all countries should bear some responsibility,
developed nations should do more not less than
developing nations.

Finding: In order to reach these global goals in a cost- Principle: U.S. policies to reduce tropical deforestation
effective manner, developed nations will need to help must promote international partnerships.
finance substantial emission reductions in developing
countries.

Protecting the Climate Forests 19

 Success Depends on Tropical Forests in developing nations that would need to be found by
2020 to reduce global emissions cost-effectively on a
As part of a comprehensive effort, focusing new path toward a 50 percent reduction by 2050, about 40
international climate cooperation on reducing tropical percent could come from reducing tropical deforestation
deforestation will be absolutely essential. Tropical (3.5-4.0 billion tons) or planting new forests (0.5-1 billion
deforestation currently accounts for 5.5-6 billion tons tons).10
of greenhouse gas emissions each year, nearly all in
developing nations (see Figure 3). 7 In fact, together Thus, halving emissions from deforestation by 2020
with other land-use changes forests account for 17 is both achievable and necessary to help meet global
percent of global greenhouse gas emissions, more than emission reduction goals. An effective effort, however,
all the automobiles, airplanes, trains and ships in the must also engage countries with large standing forests
world.8 but currently low rates of deforestation where forests
may be threatened in the future under a business-as-
Finding: Deforestation accounts for 17 percent of global usual scenario as global competition for land increases.
emissions, more than the entire global transportation
sector, and can be addressed cost-effectively now. These forests represent one of the greatest potential
new sources in emissions in the developing world absent
(Recent studies have questioned this widely cited figure, immediate action. In short, without conserving tropical
suggesting it may be too high. 9 However, a scientific forests it will be virtually impossible for the world to
consensus has yet to emerge around a new number. avoid unacceptable risks of dangerous climate change.
Therefore, throughout this paper 17 percent is used
since it is the current scientific consensus as reflected Finding: Meeting long-term emissions goals cost-
in the 2007 Intergovernmental Panel on Climate Change effectively will be almost impossible absent a dramatic
report.) Of the 11-12 billion tons of emission reductions reduction in tropical deforestation before 2020.

20 The Commission on Climate and Tropical Forests

Figure 3: Geography of Emissions from Tropical Deforestation

Source: Project Catalyst (2009)

Towards the inclusion of forest-based mitigation in a global climate agreement,
San Francisco, CA, ClimateWorks Foundation.

Making tropical forest conservation a central element

of a comprehensive U.S. climate program is the key to Commissioner Perspective:
reducing emissions quickly and affordably. According FRANK LOY
to U.S. government estimates of the cap-and-trade bill Former Under Secretary of State for Global Affairs
approved by the House in June 2009, the overall cost
of compliance with the bill would rise approximately “What the science tells us today is brutal and un-
$500 billion if U.S. companies were not allowed to precedented—though not without hope: Our knowl-
receive credit for financing international emissions edge and technology has given our species the pow-
reductions. 11 According to EPA cost curves, emission er — by changing the planet’s climate — to worsen
reductions from tropical forests could account for about dramatically our way of life, and maybe threaten
60 percent of the international reductions that could its very existence. That sounds like scaremonger-
be financed in lieu of more costly domestic action, ing, but the evidence is overwhelming. Solutions
indicating that they would make up a substantial portion are hard to come by, largely because what needs
of emission reductions financed internationally by U.S. to be done appears expensive (and hits established
companies under a cap-and-trade program. 12 Other interests), and because industrialized and develop-
estimates suggest that tropical forests could account for ing countries see the problem differently. Reducing
over 80 percent of the lowest cost emission reductions tropical deforestation addresses exactly these bar-
in developing nations prior to 2020.13 riers. It puts developing and industrialized countries
more on the same side, and dramatically lowers the
Compared to other climate protection strategies, forest cost of what we must do.”
conservation also has the advantage of not requiring
major new technologies to begin producing results
(although it will require new governance, monitoring
and verification and finance models). Along with Finding: The United States has much to gain by focusing
other immediate emissions mitigation opportunities on tropical deforestation as part of a balanced suite of
like efficiency gains, it can therefore help smooth the policies that would also substantially reduce U.S. domestic
transition to a low-carbon economy,14 buying time for the emissions.
commercialization and dissemination of more advanced
clean energy solutions.

Protecting the Climate Forests 21

 Box 1
The Carbon Cycle

Forests play a complex and poorly understood role in and quality, moreover, can increase or decrease carbon
regulating the Earth’s climate and mitigating the impacts storage. Thus, unlike fossil fuels, tropical forests and
of climate change (see Figure 4). Forests naturally absorb soils can serve as “sinks” by removing carbon from the
and release carbon dioxide from their biomass and soils. atmosphere. Carbon stored by forests and soils (in black)
This annual natural flux (in purple) is much larger than is also greater than carbon stored by the atmosphere.
changes in industrial emissions. Changes in forest cover

Figure 4: The Role of Forests in the Carbon Cycle

Source: National Aeronautics and Space Administration (NASA) Earth Science Enterprise
http://earthobservatory.nasa.gov/Features/CarbonCycle/carbon_cycle4.php

Well-managed tropical forests also reduce the even with optimistic assumptions about climate impacts
vulnerability of developing nations to climate change, over the next century the Amazon region could lose 20-
by helping to mitigate the impacts of extreme storms, 40 percent or more of remaining forest cover solely as
floods, and drought. However, climate change also a result of climate change, which could have important
threatens the existence of tropical forests since these economic, social and climate policy implications. This
ecosystems are sensitive to changes in precipitation creates the possibility of a positive feedback loop
and temperature. Some scientists have projected that between climate change and deforestation.

22 The Commission on Climate and Tropical Forests

The Current State of the World’s The direct causes of tropical deforestation vary by
Tropical Forests region—mainly ranching, agriculture, and logging—but
are closely related to land tenure issues associated with
Tropical deforestation rates increased 10 percent from all three and, important for all countries to address,
the 1980s to the 1990s, and with few exceptions, most global demand for food and forest products (see Figure
notably in Brazil, they show no signs of slowing in the 5).19 Ranching and subsistence agriculture are the largest
current decade. About 13 million hectares of forest—an drivers in Latin America, while intensive and subsistence
area about the size of New York State—were lost each agriculture account for the bulk of emissions in Africa
year from 2000 to 2005.15 Importantly, nearly all global and Southeast Asia.
emissions from deforestation are from developing
countries in the tropics.16 Deforestation is also highly Brazil has reduced deforestation dramatically since
concentrated geographically, with about 50 percent of 2004, but it remains unclear how permanent those gains
emissions occurring in only two countries—Brazil and really are in the context of rising commodity prices and
Indonesia—and a few dozen other developing countries its history of fluctuations in deforestation rates.20 Costa
in the tropics accounting for most of the rest.17 Forests Rica and China have largely stabilized deforestation
in many developed and developing nations, including with strong government backing and payments to local
the United States, China and Costa Rica, have actually landowners for forest conservation and reforestation
increased in density and area over the past several activities.21 However, China’s increasing demand for
decades.18 forest products has accelerated deforestation elsewhere
in Southeast Asia and in other nations that lack
Finding: The world’s tropical forests are disappearing at environmental standards.22 Some countries, such as
an alarming rate. India, have also made major strides, but in other nations
tropical deforestation is still proceeding at an alarming

Protecting the Climate Forests 23

 rate, creating the need for urgent action. Many poor
nations in the Congo basin and parts of South America Commissioner Perspective:
with large intact forests and historically low rates of forest LYNN SCARLETT
loss could begin rapid deforestation soon. These high- Former Deputy Secretary of the Interior
forest, low-deforestation nations account for almost 20
percent of global forest carbon stocks.23 “Conserving tropical forests sustains wildlife,
protects water supplies, and helps moderate carbon
Envisioning Solutions: A Forest dioxide levels globally. Seeing firsthand the effects
Carbon Bridge of deforestation is humbling. Knowing those effects
have worldwide environmental, economic, and social
As forested nations undergo economic development, implications underscores the imperative of reversing
they tend to follow a traditional “forest transition” the course of deforestation. Many local communities,
pathway that begins with an initial period of rapid through conservation partnerships, are conserving
deforestation and economic activity, followed by the tropical forests, but only U.S. policy leadership
stabilization and eventual re-growth of forests (see can galvanize global action with the speed, scope,
Figure 6). and scale necessary to prevent catastrophic forest
losses. Cooperation among government officials in
Since the root cause of deforestation is, in most cases, the U.S. and around the globe, working with those
the tangible economic benefit it generates in the form of who rely on tropical forests for their livelihood,
timber revenue and/or income from farming and ranching, will be essential to sustain conservation. The
a key to success will be fundamentally realigning the recommendations we have delineated can help
economic incentives of developing nations and local policy makers address deforestation challenges in
stakeholders. Solutions will also need to be closely the context of a changing climate.”
tailored to local drivers of deforestation, and political,
social, economic and biological conditions. Policies will

Figure 5: Drivers of Deforestation by Region

Source: Project Catalyst (2009) Towards the inclusion of forest-based mitigation in a global climate agreement, San Francisco, CA, ClimateWorks Foundation.

24 The Commission on Climate and Tropical Forests

need to both help countries with currently high rates The need for external financing of the forest carbon
of deforestation to promote economic growth while bridge will dissipate over time as circumstances change
reducing their deforestation rates and help countries in developing nations and that financing helps to
with large forest stocks but low deforestation rates to promote sustainable, “low-carbon” economic growth
“cross the gap” of the typical forest transition pathway and development. Deforestation pressures tend to
from poverty to prosperity without passing through the decrease as populations urbanize, move into service and
intermediate stage of rapid deforestation that comes with manufacturing sectors, intensify agricultural production,
traditional “carbon-intensive” economic development.24 and improve natural resource management practices.
Many developing nations can aim to cross the gap
This idea that economic incentives can help developing within a few decades, with the technical and financial
nations move from underdevelopment to prosperity in support outlined in this report. For example, the goal of
ways that avoid deforestation constitutes a “forest carbon Brazil’s 2008 national forest conservation strategy is to
bridge,” similar to the “leapfrogging” many developing reduce deforestation 80 percent by 2020, and progress
nations have done in communications or information so far is encouraging.25
technology. In the forest sector, new financial incentives
must be accompanied by fundamental reforms including Best Activities and Places for
land-use and land-tenure policies, forest governance, Forest Conservation
and infrastructure and agriculture policies. These
reforms are needed to increase the effectiveness of Finding: Economic incentives are needed to provide a
government institutions, strengthen policy frameworks, “bridge” to lasting forest conservation in developing
fight corruption, and build local ownership of new forest nations.
conservation policies to ensure their implementation
and sustainability. Dividing forest-related emissions by source and cause
helps identify the most realistic, beneficial and cost-
effective solutions. By far the largest opportunity lies in
reducing rates of deforestation (once called “avoided
Figure 6: Crossing the Gap

Source: Adapted from unpublished slides prepared by Loisel, C. and Zarin, D.

Protecting the Climate Forests 25

 deforestation” and now more commonly referred to as provide an attractive focus for U.S. leadership because
“reduced emissions from deforestation and degradation” emission reduction opportunities are expected to be
or the acronym REDD 26). Other essential strategies for low-cost and plentiful.
success include: reducing degradation associated
with selective logging and other extractive activities;
reforestation (planting new forests and revitalizing Finding: The most cost-effective opportunities to reduce
degraded forests); afforestation (planting new forests on emissions from tropical deforestation are concentrated
lands that have not been forests for centuries or have by activity and geography.
never been forest); conserving carbon-rich peatlands
(wetlands rich in carbon and other greenhouse gases)
that can be cleared for biofuels or other uses; and The overall objectives laid out in this paper of reducing
improving forest management through more sustainable emissions from deforestation by 50 percent by
timber harvesting and other agro-forestry practices.27 2020 and achieving net zero emissions by 2030 are
Degradation refers to the reduction of biomass in intended to encompass all of these activities, with the
forests without resulting in full land conversion and can acknowledgment that reductions in deforestation should
be an important precursor for deforestation, making the be prioritized initially, and that accurately accounting for
avoidance of degradation a critical component of any reductions from peatlands lands may require some time.
policy response. Reforestation and afforestation take A future ideal system would also include mechanisms for
longer to produce major gains, because trees require restoring productivity to degraded lands and improving
several decades to grow large enough to store substantial agricultural practices—in other words promoting low-
amounts of carbon. However, they reduce pressure on carbon practices throughout the land-use sector. 28
standing forests by creating a new, sustainable source
of timber products. In the near term, these emission reductions are most
likely to be achieved in a few targeted areas of the
Different activities will be more prevalent and productive world, including much of tropical South America and
in different locations, depending on forest types, historical parts of Southeast Asia and Central America. In the
patterns and current drivers of deforestation. Harnessing future, Congo Basin countries hold great promise if local
reductions from each activity will also require diverse governance can be strengthened. 29
policy frameworks and financial mechanisms. Whereas
afforestation and reforestation are already permitted
under international market approaches such as the Clean
Development Mechanism, no established system exists
for reducing emissions from deforestation, which may
involve the more challenging process of setting baseline
deforestation rates against which to measure progress,
and measuring existing and future forest carbon stocks.
Focusing on reducing deforestation, however, makes
sense because emission reductions are affordable and
provide many co-benefits (security, development and
biodiversity). Emissions from extremely greenhouse
gas-rich peatlands are particularly important in some
locations, such as Indonesia, but peatlands-monitoring
and measurement is even more challenging than for
other activities. As soon as technical impediments can
be overcome, however, peatlands lands are likely to

26 The Commission on Climate and Tropical Forests

Recommendation: With other nations, the United States should If governance reforms are not fully successful in
lead a global partnership to cut tropical deforestation in half Indonesia or the Congo Basin, it is likely that substantially
within a decade and achieve zero net emissions from the fewer tons of verified reductions could be achieved
forest sector by no later than 2030. Given the urgency and from these areas. In this scenario, the world can only
importance of tropical forest conservation to climate get close to its 2.75-3 billion ton goal by unlocking
protection, the world must act decisively and ambitiously. additional mitigation potential in non-Amazon regions of
The United States must play a leadership role in Brazil, including its Atlantic forests, and capturing nearly
creating a strong global partnership with developing every available opportunity in other small- and medium-
nations to reduce emissions from tropical deforestation size nations. Therefore, the most promising U.S.
by 50 percent within a decade and achieve zero net strategy should include three concrete components:
deforestation by 2030. This would amount to reducing a major bilateral partnership with Brazil centered on
emissions caused by tropical deforestation by 2.75-3 results-based financial incentives for achieving national
billion tons per year by 2020 and the full current 5.5-6 emission reductions from the forest sector; major
billion tons per year by 2030. Achieving this goal will not bilateral partnerships with Indonesia and Congo Basin
be easy, but it is feasible. With political will and ambitious nations to build capacity, promote governance reforms
actions by developing nations, supported by financial and incentivize forest emission reductions; and a broad
and technical assistance from developed nations, multilateral initiative with participation from small- and
emission reductions from reducing deforestation can medium-sized tropical forest nations.
form a major component of the cost-effective, near-term
reductions needed to achieve climate stabilization. These partnerships could be prioritized on a variety
of criteria, including emissions reduction potential,
A review of economic models and country studies reveals national readiness and associated “co-benefits”
two different scenarios for reaching this target: one (national security, development and biodiversity). With
where governance reforms unlock substantial mitigation success on these three fronts, it is feasible for the
potential in key geographic areas (especially Indonesia world to reach its objective of halving emissions from
and the Congo Basin), and one where poor governance tropical deforestation within a decade. Achieving zero
capacity continues to limit these opportunities. In net emissions from deforestation by 2030 will obviously
either scenario, maximizing reductions in Brazil will be require scaling-up efforts and capturing all of these
critical, as it is more prepared than perhaps any other opportunities, while preventing increases elsewhere.
nation to deliver large amounts of verified reductions.
In order to meet the goal of reducing emissions from While these estimates are supported by economic
deforestation 50 percent by 2020, Brazil alone will analysis and national reviews, solutions will vary from
likely need to reduce its emissions from deforestation place to place. The next section of this paper describes
by at least 1 billion tons, which is consistent with their the challenges, strategies and implications of reducing
national objectives. In a scenario where governance emissions substantially in three specific locations —
reforms are able to fully unlock mitigation potential Brazil, Indonesia and the Congo Basin, the three largest
in Indonesia and the Congo Basin, economic models tropical forest regions in the world. The focus on these
indicate that combined these areas could deliver at least large opportunities is not intended to downplay the
1.1 billion tons of reductions by 2020. 30 This amount potential of United States partnerships with smaller
could substantially increase if opportunities in peatlands countries; indeed many nations such as Guyana
lands are captured or reductions are compared against have been and will continue to play leading roles in
business-as-usual projections instead of current levels. pioneering innovative policies and approaches that
With modest reductions from other countries, including inform broader international efforts to reduce emissions
middle-income countries such as Malaysia and Mexico, from deforestation. The following case studies were
the 50 percent target could be reached. chosen to illustrate in concrete terms the enormous

Protecting the Climate Forests 27

 scale of efforts required and potential challenges that nearly 100 times the payments they have been offered
will be faced in some specific areas. to keep forests standing on their land. Most farmers in
the Amazon region are already required by national and
Finding: A successful alliance will need to achieve local conservation laws to keep 50-80 percent of their
substantial reductions in key countries and regions. land forested. In the past, these laws have been enforced
sporadically, but efforts to crack down on illegal forest
conversion have increased in recent years, resulting in
Case Studies dozens of convictions and imprisonments. Nonetheless,
securing long-lasting gains against deforestation will be
Brazil nearly impossible without changing underlying financial
incentives faced by ranchers and farmers.
No country is more important for the global effort to
reduce emissions from tropical deforestation than Brazil, Emissions from deforestation alone in Brazil account
and there is also no country more engaged in finding for 2.5-5.0 percent of total global greenhouse gas
solutions. Deforestation in Brazil has largely been driven emissions, making it the fourth-largest emitter in the
by the conversion of forests to cattle pasture, but illegal world. 32 Over the past 30 years about 15 percent of the
logging and the expansion of agricultural products such 1.2 billion acre Amazon region has been deforested, with
as soy have also been important factors. Recent news rates fluctuating between about 2.5 million acres and
reports about local soy production in the state of Mato 7 million acres per year, driven by long-term economic
Grosso highlighted the dilemma faced by many Brazilian cycles and periodic policy interventions. 33 In 2004, one
farmers. 31 Although some farmers and ranchers have a of the worst years on record, over 6.7 million acres of
strong desire to do what is right for the environment, deforestation in the Brazilian Amazon accounted for
the financial benefits from clearing land for soy can be about 1.8 billion tons of carbon dioxide emissions —
over 50 percent of total national emissions. 34 While the
deforestation rate fell to 3.0 million acres in 2007 with
Commissioner Perspective: relatively low commodity prices, it increased with rising
THOMAS PICKERING commodity prices in 2008, indicating that much work
remains to be done (see Figure 7).
Former U.S. Ambassador to the United Nations

“If the U.S. is to lead the global effort to combat

climate change, it must lead by example. At stake
is our position as a global leader and our ability to
achieve other major foreign policy objectives. Tropi-
cal forests offer a chance for developed nations,
led by the U.S., to work hand-in-hand with develop-
ing nations to address climate change. It would be
deeply short-sighted to let the politics of the moment
blind us either to the significance of forests’ role or
to the necessity of taking action now. The U.S. is the
nation best suited to answer that call – and we must,
not only to prevent catastrophe, but to restore our
position as the leading global diplomat.”

28 The Commission on Climate and Tropical Forests

Brazil recently set an ambitious target of reducing its Unlike many other developing nations, Brazil is well
deforestation rate in the Amazon region 80 percent positioned to be able to measure, monitor and verify
below its 1996-2005 historical average by 2020. If this emission reductions in its forest sector. The country
Amazon region objective were achieved, emissions from has invested heavily in earth observation satellites
deforestation in Brazil would be reduced by about 1.0 and remote sensing technologies. While further
billion tons per year (depending on estimates of the improvements will be necessary, Brazil’s forest and
carbon content of forests), greater than total emissions carbon data is at least as credible and current as that of
from Canada. many developed nations.

One recent analysis indicates that by further reducing In 2008, Brazil announced the creation of an “Amazon
this rate, by lowering deforestation rates in other areas Fund” intended to raise $21 billion over 13 years from
of Brazil, and through reforestation initiatives, Brazil the international community to support Brazil’s efforts
could achieve a total reduction of 1.36 billion tons below to halt deforestation in the Amazon region. 36 Thus, the
business-as-usual emissions in 2030. 35 Therefore, Brazil fund represents the first truly large pay-for-performance
alone could yield almost one-half of necessary global approach where financial contributions translate into
reductions to halve deforestation by 2020, with further verifiable emission reductions, with donations structured
reductions to 2030. as an “ex-post” payment at a rate of $5 per ton of
emissions reduced. 37

Figure 7: Brazil’s Historic Deforestation Rate and Future Objectives

Source: Adapted from Government of Brazil (2007) National Plan on Climate Change, Executive Summary, Brazil.

Protecting the Climate Forests 29

 Norway is the only nation that has already committed Indonesia
significant funding to the Amazon Fund, although a
number of other developed nations are considering Reducing emissions from deforestation in Indonesia is
contributions. Norway has provided $110 million to the also essential to meeting the goal of lowering global
fund based on emission reductions Brazil has achieved emissions from deforestation by 50 percent by 2020
in the Amazon since 2006. In addition, Norway has and achieving zero net emissions by 2030. Indonesia is
pledged to contribute up to $1 billion through 2020 the world’s third largest greenhouse gas emitter, largely
provided Brazil continues to reduce its emissions in the because of emissions from deforestation and destruction
Amazon. 38 of peatlands lands. Deforestation in Indonesia is
occurring almost as rapidly as in Brazil, with 4.9 million
Brazil’s commitment to reduce deforestation in the acres lost in 2005, accounting for about 850 million tons
Amazon has been translated into official policy and is of carbon dioxide emissions. Combined with emissions
backed by deep and broadly felt popular concern in Brazil from peatlands lands, total emissions can stretch over 2
about both deforestation and climate change. However, billion tons per year 39 or about 6 percent of total global
the effectiveness of Brazil’s initiatives will be tested in emissions from all sectors. Deforestation in Indonesia is
the coming years. One question now is whether other driven by global demand for food and forest products,
developed nations will come forward with contributions especially hardwood, paper, and, increasingly, biofuels
to the Amazon Fund. Another question is whether Brazil such as palm oil. Like cattle and soy in Brazil, palm
will be able to sustain progress in reducing deforestation oil production in Indonesia has recently been at the
when commodity prices increase for soy, beef and other frontier of the tradeoff between economic growth
agricultural products. and the protection of forests. The palm oil industry’s

Importantly, Brazil’s national government has thus far

opposed selling emission reductions from the Amazon Commissioner Perspective:
region into international private sector carbon markets. MARK TERCEK
This presents a challenge for the United States, where CEO, The Nature Conservancy
regulated companies may want to purchase verified
emission reductions from Brazil to help control the cost “Tropical forests serve as the lungs of the Earth.
of new U.S. climate policies. They manage the world’s carbon dioxide levels,
are home to the world’s most diverse species and
The Brazilian Federal government’s opposition to provide essential services — such as food, water
participating in developed country carbon offset markets and shelter — to millions of people across the
has also created tensions internally with Brazil’s Amazon globe. But these vital ecosystems are disappearing
region states that see global carbon markets as a new at an alarming rate. The good news is preserving
source of revenue. States are interested in discussing these forests requires no new technologies — just
market possibilities and are pushing the federal Government a truly collaborative effort that provides incentives to
towards considering such options. protect forests long-term. Successful on-the-ground
projects prove we can achieve carbon emission
States have also been engaged in initiatives that involve reductions while working with local stakeholders
U.S. state-level carbon markets, such as in California. The to incentivize forest preservation. Without U.S.
Obama Administration recently initiated bilateral climate leadership, however, taking these efforts to a global
change consultations with Brazil, which could result in a scale will be extraordinarily difficult. There is a strong
new framework for U.S. support for reducing deforestation foundation of success to build on, and we need to
in the Amazon. start now.”

30 The Commission on Climate and Tropical Forests

 Actual reductions are unlikely to come close to
reaching 1 billion tons without large-scale reforms in
Indonesia that address the substantial governance,
enforcement and illegal logging challenges. According
to one economic model where governance factors
are included, verified reductions from deforestation in
Indonesia would only reach about 300 million tons per
year by 2020. 41 Some believe even that total would be a
major achievement. Given the importance of achieving
reductions in Indonesia to reaching global goals, it will
be critical for the United States to mobilize assistance
to support and incentivize Indonesia’s efforts to reform
forest sector policies and governance.

Commissioner Perspective:
D. JAMES BAKER
Director, Global Carbon Measurement Program,
The William J. Clinton Foundation

“America and the world cannot win the fight against

rapidly accelerating climate change unless we are
prepared to confront all major sources of greenhouse
growth has been driven by demand for biofuels from gas emissions. Reducing deforestation and creating
the developed world and China. Conversion of native new forests are the quickest and most cost-effective
forests to fiber plantations has also been exacerbated ways to reduce carbon dioxide emissions. Together
by an overcapacity of mill facilities that far exceeds with the emissions from transportation and indus-
sustainable rates of production.
try, deforestation represents 30 percent of the total
reductions we must make. But it must be done the
According to economic models, forest conservation
right way. Proper monitoring, reporting and verifica-
efforts in Indonesia could be highly cost-effective and
tion are essential to the success of any program we
large-scale. Indonesian forests could actually have
create. We have a choice — to act now and launch
negative net emissions by 2030 at relatively low costs
an effective global system, or to watch our broader
per ton (i.e. reforestation would absorb more carbon than
efforts on climate fail. I think the choice is clear.”
is emitted by deforestation). This could account for a
reduction of 1.1 billion tons of forest emissions by 2030,
and peatlands lands could deliver an additional 0.7 billion One of the greatest challenges for the national and
tons of abatement by 2030. According to one study, in local governments in Indonesia is continuing to crack
both cases, most of these reductions would cost less than down on corruption and illegal logging. According
$8 per ton, which is less than half the expected price of to recent reports some improvements have been
carbon under the House climate bill and significantly less made, but many experts believe the problem is still
than the cost of carbon today in Europe. 40 An investment rampant. 42 In 2004 Indonesia’s environment minister
of roughly $10 billion per year by 2020 therefore has announced that he believed 75 percent of timber in
the potential to yield about 1 billion tons of emission Indonesia was logged illegally. Addressing these issues
reductions per year from Indonesia’s forests. will not be easy, given the amount of money involved

Protecting the Climate Forests 31

 and close historic ties between logging and paper supported by external financing, to actually reduce
companies and government officials. Indonesia exports deforestation and forest degradation rates. With these
about $5 billion in tropical timber annually, but loses initial steps and the appearance of political support at
about $1 billion a year in tax revenue from illegal timber, the highest levels of government, Indonesia appears
much of it thought to be smuggled through nearby areas ready to engage in this issue, but given its history, the
of Malaysia and Singapore. Logging has devastated success of these efforts is still uncertain. 48
some of the most remote areas on the islands of Borneo
and Sumatra. 43 Congo Basin

The pulp and paper industry has presented particularly Rising global demand for food and forest products,
serious challenges, since in many areas the capacity of coupled with new efforts to reduce deforestation
plants has expanded well beyond the supply of legally in countries where rates are currently high, will put
harvested timber. Instead of slowing growth of the additional pressure on nations with large forests and low
industry, developers pushed for additional expansion rates of deforestation. The Congo Basin region of Central
of plantation forests, in some cases to the detriment of Africa is a prime example of an area where deforestation
carbon-rich peatlands lands. 44 Developed nations such rates could increase dramatically without sound policies
as the United States have an important role to play in this and robust supporting incentives. The Congo Basin
effort by enforcing their existing bans against illegally region is about 445 million acres and accounts for 20
logged timber and timber product imports. percent of the world’s remaining tropical forests. 49 This
forested area is roughly three times the size of Texas.
However, many believe that Indonesia’s recent efforts to Countries in the region include the Democratic Republic
reduce deforestation are signs of renewed commitment of the Congo, the Republic of the Congo, Cameroon,
and future success. Indeed, the national government the Central African Republic, and Gabon. Congo Basin
in Indonesia appears eager to partner with developed forests are under increasing pressure from commercial
nations to reduce its deforestation rates. Unlike Brazil,
and Indonesia is not opposed to including forests in
global carbon markets in some form, and asked for $4
billion between now and 2012 to prepare the country to
deliver verified emission reductions for these markets. 45
The government recently released its proposed rules for
how revenues would be shared between the local and
national governments and project developers for forest
conservation projects that could generate credits to be
sold into U.S. global markets, indicating that it is serious
about taking action if financial incentives are on the
table. 46 Indonesia has also been working with Australia
and other nations to develop a more robust national
system to measure and monitor its forests. 47 Equally if
not more important has been the establishment of the
Timber Legality Verification System / System Verifikasi
Legalitas Kayu (SVLK) that will enable the Indonesian
government to assess the legality of timber produced
and traded by its forest products industry. This is an
important and noteworthy step and hints at the type
of concrete actions that will be necessary, perhaps

32 The Commission on Climate and Tropical Forests

and subsistence timber harvesting, mineral extraction, to make forest conservation a national and regional
and subsistence agriculture. A number of organizations priority. The second is building the capacity of the
and funds have already joined together to tackle this Congo Basin countries to accurately measure, monitor
challenge, including the U.S.-led Congo Basin Forest and verify emission reductions. The third is determining
Partnership (CBFP) and the U.K.- and Norway-led the scale and structure of conservation incentives in a
Congo Basin Forest Fund (CBFF). The CBFP has helped context where deforestation rates are relatively low now
central African nations protect more than 115 million but could rise substantially in the future. It will no doubt
acres of tropical forests. 50 The CBFF has received an take time, financial resources, and technical assistance
initial contribution of about U.S. $200 million, which to sufficiently address these challenges. Based solely
aims to achieve emission reductions at a cost of about on current deforestation rates, Congo Basin countries
$6 per ton. 51 could generate hundreds of millions of tons of annual
emission reductions by 2020 from current levels if
Since the mid 1990’s, civil strife in the Congo Basin has adequate financial incentives were available, on the
placed enormous pressure on forested lands. Hundreds order of several billion dollars. 53 Without effective policy
of thousands of refugees have moved through these reforms and capacity building, that mitigation opportunity
forests, looting national parks and constructing refugee will be reduced to a small fraction of its potential. 54
camps on park borders. As conflict has subsided, Reaching the level of capacity needed to achieve these
logging has increased. In 2004, encouraged by the reductions will be a major challenge, but one that the
World Bank, the Republic of the Congo announced its world must take on in order to halve emissions from
plans to intensify commercial logging. Illegal logging is tropical deforestation by 2020 and achieve zero net
widespread in many areas as underpaid bureaucrats emissions by 2030.
continue to supplement their incomes by opening
restricted areas. Subsistence agriculture is also driving International forest conservation is clearly one of the most
deforestation, as poor farmers and villagers rely on cost-effective emissions mitigation strategies. Importantly,
forest lands for farmland and fuel wood. 52 however, international forest conservation would produce
many other benefits to the United States and the world,
Above and beyond the challenges involved in managing including strengthening international peace and security,
and conserving the forests of the Congo Basin generally, promoting sustainable development and poverty
there are three additional hurdles that must be overcome alleviation, improving local governance, combating illegal
to include the Congo Basin in climate-related forest logging, conserving global biodiversity and protecting
conservation programs. The first is undertaking the critical ecosystems on which people and wildlife depend.
fundamental governance and policy reforms necessary

Many Other Benefits

Strengthening International
Security
In addition to the impacts of climate change itself, direct Finding: A global effort to reduce tropical deforestation
effects of environmental degradation and conflict over would strengthen international security by addressing a
natural resources, including forests, have emerged as key source of political instability and conflict.
leading global threats to U.S. and international security,

Protecting the Climate Forests 33

 according to the recent National Intelligence Estimate climate change. He emphasized that climate change
for the year 2025. 55 Deforestation is often associated will make existing security challenges worse, and that
with corruption and political instability—including in the U.S. military will increasingly be called on to assist
strategically important countries such as Indonesia and with humanitarian disasters at a substantial cost to U.S.
the Democratic Republic of Congo. 56 In poor countries, taxpayers and at the expense of military missions in
forests or forest resources can provide an immediate other areas of the world. Congress has already directed
opportunity for economic benefits, but in many cases the Department of Defense and other U.S. agencies
they are poorly governed and not effectively controlled to fully integrate climate change into their strategic
by national authorities. Thus the legal rights to forest planning and security assessments. 59 The recent
resources are unclear. In addition to the societal National Intelligence Estimate for 2025 highlighted the
conflict this can lead to in areas of scarce or degraded importance and potential interaction between emerging
natural resources, such as Darfur and Rwanda, it global challenges related to water, agriculture, climate
also contributes to significant conflict in areas with change and energy security. 60 Numerous other scholars
abundant resources that can be easily exploited for and organizations have reaffirmed the threats posed to
economic gain. In recent years deforestation and national security by climate change.
illegal logging have helped finance and sustain armed
conflict, for example, in Liberia. Conversely, forest Alleviating Poverty
conservation can promote national reconciliation, as
the community-based reforestation programs of Nobel Well-designed forest conservation programs could also
Peace Prize-winner Wangari Maathai and her Greenbelt advance U.S. interests in international development
Movement have shown in Kenya. New climate-related and poverty alleviation. 61 New financial incentives for
forest conservation programs provide an opportunity the rural poor to conserve and better manage forests
to undertake governance reforms and address these could improve livelihoods, connect local inhabitants to
underlying problems. Without these reforms, new
revenues for managing forests for their carbon could
perversely increase the potential for conflict in rural Commissioner Perspective:
areas. 57 GENERAL GORDON SULLIVAN
Former Chief of Staff, United States Army
Climate change is a “threat multiplier” — heightening
the risks associated with existing security threats. The “After a lifetime of service in our nation’s armed forc-
impacts of climate change on already poor countries es, my principal concern is preventing conflict. We
increase political instability and the possibility of know unequivocally that climate change, left unad-
failed states, potentially drawing the U.S. military dressed, will become a threat multiplier in danger-
into additional interventions abroad. In addition, by ously unstable regions of the world — and tropical
increasing the intensity of extreme weather events deforestation is a threat multiplier for climate change.
like Hurricane Katrina and creating large numbers Deforestation not only accelerates that change, but
of “climate refugees,” impacts could be directly
it causes soil degradation, loss of fresh water and
destabilizing even within the United States. According
reduced access to natural resources — all of which
to one recent study led by a panel of retired military
displace populations and intensify security issues.
officials, climate change“…has the potential to create
The U.S. has a compelling security interest in the
sustained natural and humanitarian disasters on a
stability of forest-abundant nations. Ignoring that in-
scale far beyond those we see today.” 58 Senator John
terest will allow unchecked climate change to drive
Warner (R-VA, retired) echoed many of these concerns
states into failure and people into conflict. That is an
in recent testimony before the Senate Foreign Relations
outcome we can and must avoid.”
Committee on the national security risks posed by

34 The Commission on Climate and Tropical Forests

 Finding: A global effort to reduce tropical deforestation
Commissioner Perspective: quickly would help to address global poverty by channeling
SHERRI GOODMAN substantial new revenues to the billions of rural poor who
Former Deputy Under Secretary of Defense for depend on forests for their livelihood and by reducing
Environmental Security the climate vulnerability of poor communities to drought,
flooding and severe storms.
“The debate over whether and how to confront cli-
mate change continues, but the reality is this: a rap-
idly changing climate will drive instability in develop-
ing and industrialized nations. Our national security
leaders have wisely recognized the threat posed by
climate change, and the unavoidable next step is to
address its causes – of which tropical deforestation
is a major one. Many forest-abundant nations are
central to U.S. interests, and are located in regions
where fragile states, extremists and political unrest
are already a serious concern. Swiftly and effectively
stopping deforestation and slowing climate change
must therefore be a national security priority. We
have already seen regions like Darfur plunged into
violence in the midst of a changing climate. We have
forests have the potential to improve the livelihood of
a fundamental responsibility to address deforesta-
forest dwellers and channel substantial benefits to local
tion and climate change in our effort to prevent simi-
actors, if they are designed with appropriate safeguards
lar conflicts around the world.”
to reduce corruption, improve local governance and land
tenure and involve local communities from the outset. 64
global markets, and help protect biodiversity and the
valuable ecosystem services from forests on which Ecological Benefits (Biodiversity
the poor depend. The World Bank estimates that one and Ecosystem Services)
fourth of the wealth in developing nations comes from
tropical forests and other natural ecosystems, and Tropical forests contain many of the world’s last treasured
estimates that 90 percent of those living in extreme natural places and are home to half of the world’s known
poverty depend on forests for some part of their food, terrestrial species. 65 Biodiversity can also be critical for
fuel, water or livelihoods. 62 Those living in extreme food, medicine and ecosystem health. New incentives for
poverty are the most vulnerable to economic hardships tropical forest conservation would help stem the world’s
and social conflicts associated with climate change, extinction crisis, particularly if financial incentives were
and with deforestation and forest degradation. Healthy targeted towards high biodiversity landscapes. Forest
forests provide a buffer against storms, droughts and conservation programs should also strive to maintain the
flooding, which are expected to intensify with further physical connectivity of natural landscapes, particularly
climate change. where large corridors are necessary to allow for seasonal
migration and genetically diverse populations of keystone
In addition, in many parts of the world, the economic species. This is especially important for conserving
benefits of deforestation bypass forest-dwelling people large mammals such as elephants, rhinoceroses and
as a result of corruption, land-tenure systems and limited orangutans, many of which require large intact areas to
local control. 63 New financial incentives to conserve thrive. Importantly, the world’s richest biodiversity areas

Protecting the Climate Forests 35

 overlap substantially with some of the best places to
implement forest carbon programs. This includes parts Commissioner Perspective:
of Brazil, Southeast Asia and the Congo Basin, as shown CRISTIÁN SAMPER
in Figure 8.
Director, National Museum of Natural History

Conserving intact forests would also preserve the

“The scientific case for the dealing with the impacts
“ecosystem services” they provide for local people,
of climate change immediately and comprehensive-
including food, water quality and filtration, air quality, soil
retention, maintenance of precipitation patterns and fuel ly could not be more clear, and tropical forests are
wood. This “natural capital” represents approximately an essential part of the solution. The destruction of
one third of the wealth in low-income nations, and tropical forests is at the crossroads of our two great-
even more in the poorest nations, according to the est environmental challenges: reducing greenhouse
World Bank, 66 yet two-thirds of the ecosystem services gas emissions and protecting the biological integrity
upon which humanity depends are threatened or of our planet. The global community, led by the U.S.,
stressed. 67 The Millennium Ecosystem Assessment must recognize the importance of these ecosystems
(MEA) convened by the United Nations argued that while by creating an international system to protect tropi-
some people benefit from the economic exploitation of cal forests, and ensuring that such a system is sci-
natural resources such as tropical forests, the costs
entifically designed and verified. International and
borne by society are often much higher.
domestic climate policy cannot ignore this necessity
and still succeed.”
Figure 8: Global Biodiversity Richness

Copyright: World Wildlife Fund

WildFinder: Online database of species
distributions, ver. 1.0
www.worldwildlife.org/wildfinder
For more information contact: wildfinder@wwfus.org

Source: World Wildlife Fund for Nature (2009) Wildfinder.

36 The Commission on Climate and Tropical Forests

Financing Forest Emission Reductions
A successful policy response to tropical deforestation worth more than the pastures, fields and plantations that
must alter the underlying economic incentives that replace them will not be easy. The path to success will
drive deforestation. This section provides an overview require tropical forest nations and developed nations
of how a system of financial incentives to developing to work together in several phases, which may not be
countries should evolve over time in a phased entirely distinct but are useful for conceptualizing the
approach, the scale of funding needed and the role path to verified reductions:
played by both public and private sector mechanisms.
Upfront financing to catalyze action and economic (1) Initial preparation and planning phase. Before
incentives for verified reductions are both critical. making progress on reducing their forest emissions,
countries will need to go through an initial preparation
Finding: The United States needs to mobilize substantial and planning phase, including new policy design,
new financial resources to alter the economic incentives strengthening of national institutions, development
that drive deforestation. of programs to channel benefits to local actors,
stakeholder consultations and consensus building,
Phased Approach field testing and evaluation. 68 In some cases,
more comprehensive planning will be required to
Altering the “rules of the game” to make standing forests prepare for reforms in land ownership, tenure and

Protecting the Climate Forests 37

 governance systems. Also in this first phase, strong Principle: U.S. policies to reduce tropical deforestation
local ownership of new forest-friendly development should be compatible with a phased approach that initially
strategies will be absolutely essential, as well as involves technical assistance, then provides support for
developing the capacity and networks to accurately major policy reforms and culminates with the purchase
measure, report and verify forest stocks and emission of verified emission reductions, including through private
reductions from forests. Developing nations simply sector carbon markets.
will not pursue development strategies that feel
as though they have been imposed by developed These phases should not be thought of as entirely
nations rather than having their origins in local separate and will be implemented at different rates
interests and communities. This phase will require according to national circumstances. Brazil, for
modest but critical upfront investments to catalyze example, is already pursuing activities in several phases
action. simultaneously.

(2) Policy reform and implementation phase. In the Success in reducing tropical deforestation will depend
second phase, nations will then need to finance on mobilizing the resources from developed and
and implement major policy reforms in order to developing nations needed to fundamentally realign
bring about the behavioral changes and conditions public and private incentives. Investments are needed
that are necessary to unlock subsequent emission in each tropical forest country to modernize national and
reductions. Examples include repurchasing timber local forest institutions to better measure, monitor and
concessions, investing in strong forest governance verify the effectiveness of forest conservation programs,
institutions and promoting alternative livelihoods to and to build the capacity necessary to implement major
local communities. Like the first phase, the second forest sector policy reforms. In many nations, significant
phase will require upfront costs with modest initial funding is also required to strengthen forest governance,
benefits in terms of emission reductions. In some and to clarify land and carbon rights. 69
cases, “proxy” measures such as average carbon
densities and deforestation rates could be used as Recommendation: The United States should create major
a stepping stone to verified emission reductions to new financial incentives and public-private partnerships
maintain a pay-for-performance focus. Unlike the to encourage forest conservation by developing nations
first phase, the costs are likely to be substantial. and to finance emission reductions that the United States
Upfront financing will be needed, including from would otherwise have to make via far morecostly domestic
public sources during the early years of the program strategies. The combined cost of all three phases is both
and in locations where risks are too high to attract measurable and substantial and will vary for each nation
private capital. depending on a number of factors. Total global funding
needs are estimated to gradually increase from at least
(3) Verified reductions phase. The third phase of $2 billion in 2010 to $10 billion in 2015 to $30 billion
action will require compensating nations that have a year in 2020 and beyond. 70 Tropical forest nations
the capacity, resources and policies in place for should certainly contribute financially to their own
quantifying and verifying emissions reductions emissions reductions, and many are already doing so.
on a large scale through carbon-based pay-for- Nonetheless, the financial returns from deforestation are
performance programs, including participation in too immediate and the heightened risks from climate
carbon markets. change are too diffuse for most developing nations to
pursue a more climate-friendly development path absent
new external incentives. Based on U.S. practice in other
areas of international cooperation (e.g., contributions to
the United Nations, World Bank and other international

38 The Commission on Climate and Tropical Forests

organizations), the U.S. share would fall between 20 stream for international forest conservation. These
and 25 percent of the global total, or scaling up from at revenues could be used to support all three phases of
least $0.4-0.5 billion to $6-7.5 billion per year from 2010 action. A government-to-government program may also
to 2020. As elaborated in the later section “Designing be essential to work with major countries like Brazil that
U.S. Climate Legislation,” based on analysis of existing oppose the use of forest-based emission reductions
U.S. legislative proposals, a total U.S. contribution of to offset industrial emissions. In addition, government
roughly $14 billion per year in 2020 would fully enable funded programs could be designed to engage high-
the cost containment and emission reduction benefits of risk countries that private investors may ignore, such as
reducing tropical deforestation detailed throughout this the Democratic Republic of the Congo or Papua New
report. Guinea, as well as countries with large forest stocks
and low historical rates of deforestation that may not
So far, funding for initial needs (planning and capacity be suitable for market mechanisms. However, upfront
building) has come mainly through traditional foreign funding before a cap-and-trade program potentially
assistance programs. The amounts provided— begins is also critical to catalyze action and allow the
several billion total pledged over the next five years— benefits of reducing emissions from tropical deforestation
fall well short of what is needed for success in all to be maximized.
phases. 71 Bilateral donations have come from a very
small number of countries (Norway, the U.K., Australia Private Sector Investment and Carbon
and Germany), with Norway alone committing more than Markets
a billion dollars to support forest conservation solely in
Brazil (and $2.5 billion globally).72 The leading multilateral While higher levels of foreign aid and new, dedicated
effort—the World Bank’s Forest Carbon Partnership government programs are essential, private carbon
Facility—has raised another $150 million, including a markets are likely to present the largest-scale investment
$5 million contribution from the United States, and its mechanism for international forest conservation. Under
new climate-related Forest Investment Program could the cap-and-trade program outlined in the House climate
be significantly larger. The United States does not yet bill, regulated companies would be allowed to offset
have a focused foreign aid program that links climate their own emissions by financing emission reductions
and forests. However, it urgently needs to do its part to elsewhere. When done right, emissions trading
fill the immediate funding gap, for both environmental programs harness private sector ingenuity to ferret out
and economic reasons. International forests play too the lowest-cost emission reductions without sacrificing
large a role in both increasing the ambition of proposed environmental goals. Indeed, by reducing overall costs,
U.S. climate policies and containing their costs for the emissions trading programs allow companies to reduce
United States to leave the readiness of these nations to emissions more quickly than they would otherwise, thus
reduce emissions to chance. promoting more rapid environmental progress.

Traditional U.S. foreign assistance alone will not suffice. The United States made one of the pioneering efforts
Fourteen billion dollars per year for reducing emissions on emissions trading through the Clean Air Act in the
in tropical forest nations would represent a 100 percent early 1990s, allowing companies to meet new air quality
increase in the U.S. development assistance budget. standards at only a fraction of predicted costs and more
Using auction revenues from a domestic cap-and- quickly than expected. Through its Emissions Trading
trade program—whereby Congress allocates a certain System (ETS), which now regulates almost half of Europe’s
percentage of the value of emissions allowances made CO2 emissions, the European Union has taken the lead
available to the private sector, as is done in the climate in allowing regulated entities to offset greenhouse gas
bill approved by the House—offers a far more attractive emissions through qualifying investments in developing
option for an appropriately dedicated, large-scale funding nations under the Kyoto Protocol’s Clean Development

Protecting the Climate Forests 39

 Mechanism (CDM). As noted above, projects that are unlikely to attract support, particularly during these
reduce deforestation are not allowed in this current difficult economic times. In contrast, the American
system through 2012, although reforestation projects people are far more likely to support cost-effective
are included. Forest conservation offsets are trading in a climate investments that protect the U.S. economy and
variety of voluntary carbon markets—where companies U.S. jobs, contribute to solving the climate problem and
voluntarily pay for emissions reductions without receiving advance other important national security and foreign
compliance credit with regulators. These voluntary policy objectives.
market investments were valued at $331 million in 2007,
with forest carbon transactions a mere 3 percent of the U.S. public and private resources should flow to nations
total global voluntary carbon market.73 Overall, voluntary that are doing their part to fight climate change by
market investments pale in comparison to the size of reducing deforestation in measurable and verifiable
the compliance markets for carbon in Europe and under ways. With the exception of some initial funding for
the Clean Development Mechanism, which reached $50 capacity building and early policy reforms, new U.S.
billion and $13 billion respectively in 2008. 74 funding from both private and public investments
should pay for performance—measured in tons of
emissions reduced. Public funds could also be used for
stabilizing deforestation in countries with large forests
Commissioner Perspective: but currently low deforestation rates. Although overseas
MICHAEL MORRIS financial flows associated with forest conservation could
Chairman, President and CEO, American Electric Power be substantial, these flows will be small compared to
the sums involved in international trade of other global
“We must find solutions to address global warming in commodities, goods and services purchased by the
an economically viable way. Preventing deforestation United States. 75
and degradation in tropical regions is an important
Both Public and Private Funding
part of the answer — it is one of the most effective
Mechanisms Needed
and inexpensive tools for addressing climate change
and provides the best means of controlling the costs
of other climate policies. Smart business planning
demands action to prevent catastrophic climate Finding: Public and private investments are both necessary
change, but we must be certain that such action to generate funds at the speed and scale needed to solve
does not shake to its foundations an economy just the problem, and to engage a wide range of countries that
beginning its global recovery. A commitment to may be only be suitable for one type of funding.
protecting tropical and domestic forests as part of
U.S. and global climate policy provides the cost-
effective answer to the climate challenge.” Unfortunately, as noted previously, few developing
nations, including even middle income nations like
Malaysia and Mexico, are ready to participate in
Whether the United States chooses to reduce forest carbon markets, either because of governance,
tropical deforestation through government spending monitoring and enforcement issues or due to simple lack
programs, private carbon markets or, as is the case of planning and experience with environmental markets.
in the House climate bill, a combination of both, the One recent analysis has shown that accounting for
political acceptability of these programs will depend on risk, governance and market-readiness considerations
how these programs are understood by the American dramatically changes which nations are likely to
people. Programs that look like traditional foreign aid generate large quantities of cost-effective forest carbon

40 The Commission on Climate and Tropical Forests

offsets.76 While necessary, financing for capacity building
alone will not solve these problems. Governments Commissioner Perspective:
in developing nations will need to make a decisive ALEXIS HERMAN
political commitment to understand and address what is Former Secretary of Labor
happening in their forests—including enforcing existing
bans on certain activities. “A low-carbon economy holds tremendous potential
for American job creation – but we have to get
This lack of market-readiness may suggest two there first. A smart climate policy would address
conclusions. First, market and non-market investments the near-term costs of transitioning to clean energy,
may both be essential to achieve needed emission and protecting tropical forests as part of that policy
reductions in countries that stand a chance of attracting provides a solution. Not only can we reduce a major
private sector investments and those that do not. Second, source of CO2 – we can also lay a solid foundation for
early investments (even pre-2012) are urgently needed a new economy built on energy efficiency, advanced
to give policy makers and companies confidence that renewable power, smart grids and beyond. The
the potential cost containment benefits of international promise of that economy is boundless, but the
forest offsets will prove real and that U.S. carbon markets debate over how best to prepare for that economy
will not be choked off by limited offset supply. will remain incomplete until the constructive role of
tropical forest protection is recognized. It’s a win-win
for our environment and our economy.”

International Cooperation
Prior international efforts to conserve tropical forests
have had mixed results. In recent years, many forest-rich
developing nations have dramatically expanded their
national park systems, extended other legal protections
to heavily forested areas and carried out some forest
sector reforms.

Yet despite these national-level actions, more than $1.1

billion invested in forest sector reform through the World
Bank over the past decade, and larger sums provided
directly by donor nations for forest conservation, global
deforestation rates have not diminished. 77 Without new
forms of concerted international action the next few
decades will witness precipitous deforestation in the
world’s three major forested regions: the Amazon Basin,
the Congo Basin and Southeast Asia.

Finding: Past international cooperation on tropical forest

has achieved some success, but has been far too limited
in scale and on the whole ineffective.

Protecting the Climate Forests 41

 The G8 has taken modest initiatives to reduce illegal study whether tropical forests should be included in
logging, 78 but that problem has also largely defied future climate agreements. Since that decision, the idea
progress. Most heavily forested nations (including the of integrating forests into overall climate policy has been
United States) have resisted occasional calls by other far less controversial, partly as a result of advances in
countries to negotiate binding international obligations forest carbon science that have shown that emissions
to conserve forests, as well as proposals to alter World from deforestation are such a large part of the climate
Trade Organization rules to allow importing nations to problem and given nations’ greater confidence that
give strong trade preferences to sustainably harvested emissions reductions can be adequately measured and
timber. Prioritizing the enforcement of U.S. trade policies verified. Most countries and climate experts expect that
designed to combat illegal logging—especially the the next global climate agreement, which nations hope
2008 Lacey Act amendments discussed below—could to conclude in Copenhagen, Denmark, in December
provide a strong driver for change to the international 2009, will give significant attention to reducing
system. emissions from tropical forests, including through new
public- and private-sector financial mechanisms. 79 An
Making Progress on Forests in informal working group has already been launched that
Global Climate Talks is focused on providing interim financing before broader
international efforts can be scaled up. 80
The fate of tropical forests has also been discussed in
global climate talks since the 1990s. During negotiations The Obama Administration has developed principles
on the 1997 Kyoto Protocol, the United States, Japan, regarding about how a new international climate
Canada and Australia strongly supported the proposition agreement should seek to reduce tropical forest
that investments in tropical forest conservation should emissions. 81 The Administration supports including
count towards their Kyoto emissions reduction targets. forests as one part of a comprehensive reduction
Many other nations opposed this approach, and forest strategy from all terrestrial sources—including
conservation projects were eventually excluded from agriculture—but recognizes that because of technical
the Kyoto agreement and European carbon markets, challenges a phased approach may be required with
although less economical reforestation and afforestation an initial focus on reducing rates of deforestation. It has
projects were partially included. At the time, Europe also proposed using non-market and market financing
questioned whether emission reductions from the forest to fulfill different objectives, with market financing that
sector were verifiable and feared that forest conservation could be used for offsets carrying stricter measurement,
might distract attention from the need to revolutionize reporting and verification standards.The Administration
the energy sector. Brazil shared these concerns (and has yet to weigh in on a number of key issues. While
still does), also opposing the inclusion of tropical forests the principles are somewhat general, it is clear that the
in Kyoto because it worried that climate change rules Administration places a high priority on reducing tropical
might impinge on its national sovereignty in the politically forest emissions.
sensitive Amazon region.
Key Issues Remain Unresolved
Finding: Tropical forests are a key point of discussion in
ongoing global climate talks, and the United States is an Despite the growing political consensus, how a new
active participant. global climate agreement would actually reduce
emissions from tropical forests remains unresolved.
In 2005, a new coalition of small- and medium-sized rain Following are some of the big open issues. 82
forest nations seeking access to global carbon markets
(formally known as the Coalition for Rainforest Nations Land types. While forests have been at the center
or CfRN) convinced the international community to of negotiations, some nations have proposed

42 The Commission on Climate and Tropical Forests

 covering a wide range of land types (i.e., forests, Eligibility. Some proposals focus on nations with high
wetlands, agricultural and grasslands), to create deforestation rates, but others would also provide
the most comprehensive system possible and incentives for countries with low deforestation
broaden the number of nations that would receive rates to maintain them. 86 The Bali Action Plan
financial incentives to manage their lands for carbon guiding current negotiations for the next global
benefits. climate agreement allows for both approaches. 87 At
present, these low deforestation nations are unlikely
Activities. Almost all nations wish to address to gain access to lucrative carbon markets—which
emissions from deforestation, but many nations also will likely require verified emission reductions—but
wish to include forest degradation, reforestation these nations would be eligible for government-to-
and afforestation. The United States is one of the government assistance.
few nations supporting comprehensive terrestrial
greenhouse gas accounting, covering all land types Scale. Many nations, including Brazil and the CfRN
and activities. Brazil supports focusing primarily countries, wish to limit the most significant financial
on deforestation, while most other countries favor incentives to nations that have adopted strong
including all forest sector activities, but not land- nationwide programs to reduce forest emissions
use activities that do not involve forests. 83 after a transition period. Some other developing
nations object to this conditionality and favor
Mechanisms. Many nations favor mobilizing funding allowing more ad hoc project-based approaches,
through private sector-oriented carbon markets, or state- or province-wide approaches. 88
but others argue for a system of government-to-
government payments.84 Brazil in particular has been Methodologies. Proposals also diverge on standards
staunchly opposed to a market-based system that and procedures to ensure that emission reductions
would allow developed nations to substitute tropical are genuine, particularly the setting of reference
forest conservation investments for domestic levels or baseline rates of deforestation for
emissions reductions. Although some key nations developing countries. Since payments would only
have also been unclear or opposed, many other be provided if countries improve upon these levels,
influential developing nations support transitioning they have a significant impact on the effectiveness
to a market-based system after some initial public and geography of forest conservation financing,
investments in planning, market readiness and including the eligibility issue discussed above.
implementation activities. 85 While these matters are quite technical, they are
also politically important in global climate talks and
infused with significant ideological content. Some
Finding: Several important issues to striking a global countries support using historical deforestation
deal on climate change and tropical forests remain data, but others favor using projected future
unresolved. rates. 89

Designing U.S. Climate Legislation

Despite these differences, most countries expect The United States has a strong bipartisan tradition of
the next climate agreement to include tropical forest supporting conservation of tropical forests. Most of the
conservation in a robust way. major U.S. programs to date were initiated by Republican

Protecting the Climate Forests 43

 policy makers with enthusiastic Democratic support.
Former Congressman Rob Portman (R-OH), for example,
sponsored the 1998 Tropical Forest Conservation Act,
which provides debt relief to developing nations that
conserve tropical forests—so called “debt-for-nature
swaps.” President George W. Bush expanded that
program significantly and appropriations now average
$20 million per year. 90 The largest U.S. international
forest conservation program is managed by the U.S.
Department of State (State Department) via the Agency
for International Development (USAID). Its Congo Basin
Initiative, the agency’s flagship effort, was launched by
Secretary of State Colin Powell in 2002 and has helped
central African nations place 115 million acres of tropical policy. While many of the Clinton Administration’s
forests under improved management—more than the climate policies were controversial, its efforts to include
entire land area of California. 91 The United States also tropical forests in the Kyoto Protocol drew support
provides $20-$30 million annually for tropical forest from a broad spectrum of congressional leaders.
conservation through the Global Environment Facility When President George W. Bush removed the United
(a partnership between the World Bank and the United States from the Kyoto process, he identified reducing
Nations).92 In addition, the United States has supported tropical deforestation as a fruitful area for greater
international forests through its trade policies. In 2008, international cooperation. The Bush Administration also
for example, Congress amended The Lacey Act of 1900 launched a number of promising but small-scale forest
(named for Iowa Republican John Lacey) to help stop governance initiatives in partnership with Indonesia and
the importation of timber and forest products from illegal other allies. 96 Modest incentives for public and private
logging. 93 sector technology deployment in developing countries,
including for carbon sequestration by forests, have also
While these bipartisan programs have had some success been included in U.S. energy laws such as the Energy
in conserving certain specific places, the scale and Policy Act of 2005.97
scope of these programs have paled in comparison to
the global need. In fact, there is little evidence to suggest The House Climate Bill
that global efforts, let alone U.S. programs, have had a (Waxman-Markey)
demonstrable effect on tropical deforestation rates. Total
annual U.S. appropriations for bilateral and multilateral The climate bill (American Clean Energy and Security
tropical forest conservation programs have ranged Act) developed by Representatives Henry Waxman (D-
between $80 and $100 million since 2000, 94 compared CA) and Edward Markey (D-MA) and approved by the
to the $30 billion a year that would be required annually House of Representatives in June 2009, if enacted into
to reduce emissions from tropical deforestation by half law, would reduce U.S. emissions 30 percent below 2005
in 2020.95 levels by 2020 (including U.S. contributions to international
reductions). 98 Most public attention has focused on what
Finding: The United States has a bipartisan tradition is arguably the centerpiece of that bill — a “cap-and-trade”
of protecting tropical forests, but support has been system that would regulate emissions from 85 percent of
inadequate to address the problem at the scale needed. the U.S. economy and allow regulated entities to engage in
trading of emissions allowances to reduce costs. The cap-
The United States also has a strong bipartisan tradition and-trade provisions alone would reduce U.S. capped
of supporting the inclusion of tropical forests in climate emissions 17 percent below 2005 levels by 2020.

44 The Commission on Climate and Tropical Forests

Tropical forests are at the heart of the House climate bill Finding: The climate bill recently passed by the House
and could represent 43 percent of the total reductions of Representatives places a strong emphasis on
achieved under the bill by 2020 (see Figure 9). 99 This reducing emissions from tropical deforestation, including
means that if enacted in its current form, the House substantial public and private financing mechanisms.
bill would channel an estimated $11-$18 billion in new
funding for tropical forests annually by 2050 – a more by 50% by 2050, achieve zero net emissions by 2030,
than one hundred-fold increase in U.S. funding levels. and allow the United States to capture substantial
100
Reaching these high levels of funding requires cost containment benefits from reducing tropical
substantial private investment in offsets, which is deforestation. In the event that U.S. funding under the
unlikely to occur at this scale without greater additional House bill were to exceed this amount, it would only
short-term financing for capacity building and market- serve to increase these benefits.101
readiness activities. These funding flows would greatly
exceed any existing efforts by developed nations and The House climate bill includes both public and private
would catapult the United States into a leadership role sector financing mechanisms for international forest
in conserving international forests. The funding level conservation. 102 The public financing generated by
recommended in this paper—roughly $14 billion per year the bill would be used to fund reductions from forest
by 2020—is intended to represent a minimum, realistic conservation that are in addition to those achieved
level of what would be necessary to catalyze a global by the U.S. domestic cap-and-trade system. Private
effort to reduce emissions from tropical deforestation sector financing would pay for “offsets” in place of U.S.

Figure 9: Percentage of Emission Reductions from Different Sources under House Climate Bill in 2020

Source: Climate Advisers analysis, based on data from U.S. EPA

Protecting the Climate Forests 45

 domestic emissions reductions under the cap-and-trade Environmental Protection Agency (EPA) Administrator, in
system. The total emissions reductions attributable to consultation with other government agencies including
tropical forests under the climate bill includes those the Secretary of State and the Administrator of the U.S.
achieved through both dedicated public funding and Agency for International Development. Importantly, the
tropical forest offsets expected under the U.S. domestic EPA Administrator would be required to manage these
cap-and-trade system. funds in such a manner as to purchase at least 720 million
tons of verified emissions reductions from tropical forest
Emission reductions purchased with public funding are conservation each year from 2020-2025, and a total of
mandated by the House bill to generate 720 million tons at least 6.0 billion tons from 2012-2025. The objective of
of emission reductions per year in 2020, equivalent to this specific requirement is to ensure that the set-aside
10% 2005 of economy-wide U.S. emissions. 103 The mechanism finances international emission reductions
quantity of tropical forest offsets purchased by the equivalent to reducing U.S. emissions an additional 10
private sector would depend on market prices, but U.S. percent below 2005 levels in 2020. These reductions
government estimates suggest that they could represent would be above and beyond the reductions achieved
over 20 percent of emission reductions achieved by the through the cap-and-trade program. 106
bill.104 The paragraphs below explain in some detail how
these two funding mechanisms would work. The Obama The House bill indicates that one permissible use of
Administration supports the approach taken in the House the set-aside funding would be to prepare developing
bill on tropical forests and inclusion of tropical forests in countries to sell verified emission reductions to
the new global climate agreement being negotiated by the United States government and/or to help them
the international community. 105 participate in U.S. carbon markets as “offset” providers
to U.S. companies. In order to receive any funding from
Public financing. The House bill sets aside 5 percent of the set-aside program, developing countries would be
tradable allowances from the cap-and-trade program to required to enter into a bilateral or multilateral climate
finance U.S. government investments in tropical forest agreement with the United States covering forest sector
conservation programs from 2012-2025, declining to 3 emissions. The EPA Administrator is allowed to distribute
percent from 2026-2030 and 2 percent from 2031-2050. international forest set-aside monies through multilateral
Based on government estimates of likely allowance prices funds and institutions that are pursing comparable
in U.S. carbon markets, this “set-aside” mechanism objectives, provided they have adequate safeguards
would likely generate $3.1 billion in 2012 and $5.1 billion for indigenous communities and high standards for
in 2020 and decline back to initial levels in subsequent environmental integrity.
years (see Table 1). The regulation and distribution of
this funding would be under the authority of the U.S.

Table 1: Estimate of International Financing from Allowance Allocations in House Climate Bill. 107

Total Total
2012 2020 2030
(2012-2020) (2012-2050)
International
Forest
$3.1 billion $5.1 billion $3.5 billion $38 billion $131 billion
Conservation
Funding 108

Source: Climate Advisers analysis, based on allowance price estimates from U.S. EPA and the Congressional Budget Office

46 The Commission on Climate and Tropical Forests

Private financing. The House bill would also allow U.S. developing nations to participate in carbon markets.
regulated companies to “offset” their own domestic U.S. government projections of total international offset
emissions by investing in emission reduction activities use in 2020 vary widely from only 340 million tons (by
internationally or at home in uncapped sectors (mainly the Congressional Budget Office) to about 1.0 billion
domestic agriculture). These offset provisions would tons (by EPA). This means that private-sector forest
permit U.S. companies to finance emission reductions conservation funding would likely range from $6-$13
outside the U.S. cap-and-trade program in lieu of lowering billion in 2020. 110
their own capped emissions. International offsets
(those involving emission reductions outside the United Although they are the best estimates available, these
States) are restricted each year to 1.0 billion tons total supply and funding projections are still very uncertain,
and to a defined percentage of each firm’s compliance as they rely on significant assumptions and not robust,
obligation. Companies would be allowed to purchase concrete analyses. Offset supply is most unpredictable
up to 1.5 billion tons of international offsets if EPA finds in the early years from 2012-2019, when few nations may
that fewer than 900 billion tons of domestic offsets are be ready to implement needed programs and participate
available in a given year, provided, however, that total in highly regulated carbon markets. Private sector
offsets do not exceed 2.0 billion per year from domestic funding would likely increase steadily as countries sort
and international sources combined. According to EPA, out their internal politics, gain governance and technical
“Without international offsets, the allowance price would capacity, and then start showing results. In fact, without
increase 89 percent relative to the core policy scenario.” the capacity building activities financed by the set-aside
109
Although these international emissions reductions program discussed above, the supply of international
may originate from a variety of sectors (i.e., transport, forest sector offsets would likely to be smaller than U.S.
electricity, manufacturing, mining, agriculture and waste companies need to keep their compliance costs down
management), it is likely that 60 percent of international under the cap-and-trade program. The House bill would
offsets will come from investments in tropical forests. also condition participation in U.S. carbon markets and
These high numbers reflect the relatively low cost of the sale of “offsets” on a country having entered into
reducing deforestation and promoting reforestation a bilateral or multilateral climate agreement with the
compared to other near-term international mitigation United States that covers the forest sector.
opportunities. In addition, beginning in 2017 firms are
required to submit 1.25 tons of international offsets to It must be noted that despite the exceptionally important
substitute for 1 ton of domestic compliance, as a means role tropical forests would play in both reducing the cost
of promoting stronger domestic action and leveraging of the House bill (hundreds of billions of dollars) and in
limited U.S. funding internationally. increasing the environmental ambition of the bill (a full 50
percent higher), tropical forests were not a major part of
the political debate in the House. It would be premature
Principle: U.S. policies to reduce tropical deforestation to conclude, therefore, that the House is strongly in favor
must advance cost-effective solutions. of including tropical forests in future climate legislation
and would defend international forest provisions in any
compromise with the Senate.
The emission reductions and funding levels that U.S.
private sector investments in tropical forests would Prospects for Senate Action
generate under the House climate bill would depend on
the total number of forest sector offsets used, which in Prospects for Senate action on climate legislation remain
turn would be driven by the relative price of domestic uncertain. President Obama has called on the Senate to
and international emissions reductions, the supply of approve legislation quickly so that Congress can send
forest sector emission reductions and the readiness of him a climate bill to sign into law. The Administration

Protecting the Climate Forests 47

 is eager to secure enactment of climate and energy have begun to shift. Two major coalitions of Fortune
legislation, including a cap-and-trade program, before 500 companies and influential environmental groups
global climate talks in Copenhagen in December 2009. — the U.S. Climate Action Partnership and the Tropical
Senate Majority Leader Harry Reid (D-NV) previously Forests and Climate Coalition — have put forward policy
promised a floor debate on climate legislation in October recommendations broadly in line with the approach to
2009, but recently announced they would act as soon international forests taken in the House climate bill. The
as possible without providing a specific deadline. At the support of these groups was instrumental in securing
same time, it is unclear whether or how proponents of House approval of the international forest provisions
climate legislation can secure the level of support needed described above. Climate and forest cooperation efforts
to adopt a climate bill in the Senate. Senate moderates are also moving ahead among a group of ten U.S.,
in both political parties, whose votes would be essential, Brazilian and Indonesian states and provinces. Their
continue to have concerns about the economic cost and primary objective has been to develop recommendations
competiveness impacts of climate action. about how international forestry credits should be
treated under California’s state climate law, which could
Quick action by the Senate is desirable to spur action dovetail with a future federal climate change rulemaking
by other nations, avoid dangerous climate change process. While it would be premature to assume Senate
and reestablish America’s leadership role. The House action on climate change, let alone approval of ambitious
climate bill provides a good starting point for Senate tropical forest programs, the question before the Senate
deliberations. If the Senate declines to adopt a climate appears to be shifting from a debate over whether new
bill this year, the reality of climate change and the need climate laws should help reduce global deforestation to
to find workable solutions will persist and continue a discussion of how to achieve that outcome.
to demand the Senate’s attention in the years ahead,
particularly if the Obama Administration begins In crafting its policy recommendations, the Commission
regulating emissions without the Congress through the assumed that for the time being climate policy
Clean Air Act, as many experts and advocates predict. discussions in the United States would continue to
The full Senate has yet to engage in a robust examination center on “cap-and-trade” proposals, under which the
of how tropical forest conservation fits in to U.S. climate federal government would set emission limits (cap) but
policy. During discussions on the Boxer-Lieberman- allow regulated companies the opportunity to reduce
Warner bill in 2008, some Senators expressed concerns costs by buying and selling emission allowances (trade).
that international forest conservation programs might Cap-and-trade is the centerpiece of the American Clean
not produce genuine emissions reductions, and others Energy and Security Act, approved by the House of
opposed as a matter of principle sending billions of dollars Representatives on June 26, 2009. It is also the approach
overseas for what they viewed as uncertain benefits. A endorsed by President Obama, and is expected to be
2008 survey of the most engaged congressional climate the focus of Senate debate in the months ahead. A well-
change staff, primarily in the Senate, revealed that these designed cap-and-trade program would provide an
concerns were widespread and crossed party lines. effective mechanism for financing and implementing the
recommendations articulated in this report. However,
Finding: Although many stakeholders and policy makers the prospects for (and timing of) Senate approval
are supportive, the U.S. Congress has yet to have a robust of a national, economy-wide cap-and-trade bill are
debate about the role of tropical forests in climate policy. uncertain. Because the possibility of a cap-and-trade
program is very real, the Commission has developed
Over the years, Senators have received a mixed specific recommendations that would allow the United
message from stakeholders on the role of tropical States to harness that approach to help reduce tropical
forests in climate policy. In recent months, however, the deforestation.
politics associated with climate and international forests

48 The Commission on Climate and Tropical Forests

Recommendation: The United States should allocate 5 percent • Helping forest-rich developing nations with low
of the value of tradable emission allowances in a cap-and-trade deforestation to avoid increases in deforestation
program to new international forest conservation programs. despite mounting economic pressures. Given current
Reducing emissions from tropical deforestation in deforestation rates in some forest-rich nations and
partnership with developing nations by 50 percent potential increases driven by economic activity
within a decade and achieving zero net emissions and reductions elsewhere in the world, providing
from forests by 2030 will require sustained U.S. incentives to such nations is likely to require roughly
leadership. The United States is uniquely positioned $5 billion globally per year by 2020. The U.S. share
among developed nations to catalyze an effective of this would likely be at least $1 billion per year. 116
global response given its strong history of bipartisan
cooperation on tropical forest conservation, its long • Supporting action in low governance, high-risk countries
record of leadership on forest issues in global climate that will likely be unable to attract private sector
negotiations and its enormous need for an early, steady investors, including many nations in Africa. Reducing
supply of international forest carbon offsets to keep international forest emissions by 50 percent within
domestic climate policies affordable. Historically Europe a decade and achieving zero net emissions by 2030
has been less supportive of integrating tropical forests will require substantial action by a broad group of
into climate policy, although that has recently changed. nations. Depending on the countries participating
Other major industrialized powers would stand with in carbon markets, the United States may need
the United States but are unlikely to achieve a globally to finance with public monies 0.5 billion tons of
successful forest conservation partnership without its emissions reductions annually from non-market
active involvement. nations to meet the goals of a U.S. cap-and-trade
system similar to that in the bill passed by the House.
To play a leadership role, the United States will need Combined with support for policy and governance
to invest substantial financial resources. The scale of reforms, the total global cost of engaging these
funding, of course, should match U.S. policy goals and non-market countries could exceed $5 billion, with
is best calculated with specific needs in mind. the U.S. share being roughly $1 billion annually by
2020. 117
U.S. investments with public resources are needed in
the following four areas and amounts. • Financing verified emission reductions from nations that
may not participate in U.S. carbon markets, including
• Upfront funding for building capacity and reforming Brazil. Halving tropical forest emissions by 2020
policies in forested developing nations to help them and eliminating them by 2030 will require at least
produce verifiable emission reductions and participate 80 percent emission reductions in Brazil and other
in U.S. carbon markets. Capacity building and policy countries that have the capacity and political will
reform are likely to require at least $1 billion from to act, and achieving zero net deforestation in later
the United States between now and 2012. This sum years. With at least 1 billion tons of reductions
represents roughly 25 percent of the at least $4 annually from Brazil alone by 2020, and several
billion global need by 2015 that has been estimated, hundred million from other nations, these low-risk,
a level generally in line with past U.S. foreign aid non-market countries will require at least $12.5
practices. However, given the likelihood of a U.S. billion per year, with a U.S. share of at least $3
cap-and-trade system starting in 2012, and the billion. 118
immediate need for verified emission reductions,
it would be in the U.S. interest to catalyze global The sum of these public funding needs is approximately
efforts with an early funding commitment. 115 $5 billion annually by 2020. Generating this level of
public funding will not be possible through traditional

Protecting the Climate Forests 49

 foreign assistance programs. Setting aside a share of (mobilizing $6-13 billion per year by 2020 in private sector
the allowance value of emission allowances auctioned investments). The high end of this range would only be
in a cap-and-trade program, as the House climate possible with substantial upfront public investments to
bill would do, could provide this level of funding in a unlock potential savings from forest carbon. Provided
highly reliable manner. Government estimates indicate they do not detract from efforts to reduce domestic
that the 5 percent of emission allowances devoted to emissions, even higher amounts of private sector
international forest protection in the House bill would offsets and investments would be desirable, producing
generate $3.1 billion in 2012 rising to $5.1 billion by 2020. additional climate, economic, national security and
If the Unites States adopts cap-and-trade legislation, biodiversity benefits for the United States.
the Senate should also set aside this percentage of
tradable emission allowances to fund international Recommendation: To unlock these savings, the United States
forest programs. should invest at least $1 billion before 2012 in programs that
would build the capacity of developing nations to reduce forest-
Recommendation: To lower the cost of U.S. climate action, sector emissions. As discussed throughout this paper, the
the United States should permit regulated U.S. companies to United States and the world need to support the efforts
“offset” a substantial portion of domestic emissions through of developing countries to create national deforestation
investments in tropical forests. In this manner, the U.S. policy reduction plans, as well as undertake some of the policy
should mobilize roughly $9 billion annually from private and governance reforms necessary to implement these
investment to save U.S. companies up to $50 billion by 2020. plans. Since the availability of low-cost forest offsets
In the long run, U.S. private sector financing can and is so important to containing the cost of U.S. climate
should outpace U.S. public funding by a good measure. policy, especially in its early years, this funding should
The United States can reduce the cost of climate be provided before 2012. A funding commitment of $1
action by hundreds of billions of dollars over the next billion by the United States would make up about 25
decades if it allows regulated companies to offset a percent of the expected global need for these pre-2012
substantial portion of domestic emissions by investing activities, and would catalyze additional commitments
in tropical forest conservation. The U.S. Climate Action from other developed nations. A more detailed rationale
Partnership, the leading coalition of major companies for this specific funding level was presented earlier in
and influential environmental organizations, has called this report.
on Congress to initially allow up to two billion tons of
emission reductions annually as a cost-saving measure Recommendation: The United States should channel new forest
and permit this amount to be increased by 1 billion tons conservation investments to high priority areas for national
if necessary to further manage costs. The House climate security, poverty alleviation and biodiversity conservation.
bill could permit up to 1.5 billion international offset tons Earlier portions of this report demonstrated how well-
to enter U.S. compliance markets. By most estimates, designed forest conservation policies would advance
these figures are roughly in line with what is needed to vitally important U.S. national interests beyond climate
keep new climate legislation affordable. change, including by helping to strengthen international
security, improve living standards, protect biodiversity
The Commission estimates that investments of roughly and safeguard valuable ecosystem services. But
$9 billion annually by 2020 from the U.S. private sector not all forests are equal. Some forests contain more
are needed to finance cost-saving offsets from reducing biodiversity than others. The rainforests in the Amazon-
tropical deforestation. Achieving this goal under the Andes region hold many more endemic species as
House climate bill could help reduce climate costs equally carbon rich forests in some other parts of the
faced by U.S. companies by up to 50 percent, saving up world. Some forests, such as those that contain water
to $50 billion annually by 2020.119 The House climate bill sources for major cities, are more important than others
could achieve and possibly slightly exceed these goals to economic development. Reforestation in weak or

50 The Commission on Climate and Tropical Forests

fragile states such as Afghanistan, Pakistan, Kenya and U.S. climate policy, therefore, should be designed to
Tanzania, for example, would yield greater development maximize the biodiversity, economic development,
and security benefits than would similar activities in more and security benefits of reducing deforestation without
stable nations. The forested watershed that enables detracting from emission reduction objectives. This
transit across the Panama Canal, for example, is of can be achieved by creating policy frameworks that
greater global economic and security significance than encourage investments in the highest priority countries
a potentially far larger but indistinct forest elsewhere. and places. Congress should consider making sure that
Conserving this forested watershed, as existing U.S. new climate laws contain criteria for the Executive Branch
policy seeks to do, is a high priority. From a geopolitical to apply when exercising discretion about where to
perspective, the United States may simply have more direct U.S. funding. The Executive Branch should report
at stake in some parts of the world than others. In to Congress on the measures it is taking to focus U.S.
addition, not all forest conservation activities produce funding in ways that maximize climate, national security,
the same benefits. Restoration of natural forests biodiversity, economic development and humanitarian
provides greater ecological benefits than planting trees benefits. Together, these mechanisms would help ensure
for future cultivation, although both types of activities that the forests that are most important to advancing
may sequester similar quantities of carbon. a broad range of U.S. national interests receive an
appropriate share of available U.S. funding.

Principle: U.S. policies to reduce tropical deforestation

must further the economic development objectives of
developing nations.

Protecting the Climate Forests 51

 Incentivizing Local Action
In order to be successful in the long-term, U.S. forest
conservation programs must provide substantial,
measurable benefits to the 1.6 billion people around
the world who depend on tropical forests. This means
protecting the rights and interests of indigenous
communities and the rural poor, while also contributing
to broad and sustainable economic growth in tropical
forest countries. Not only are these the right things to do
and essential to the success of financing mechanisms,
but failures here will undermine the delivery of forest
emission reductions and could produce a strong
backlash against the United States, American
companies and international climate policies.

Under evolving international norms and national laws,

governments owe extra protections to indigenous
communities, which are now organizing both locally
and globally on climate policies relating to tropical The United States could ask developing nations to
forests. 120 These concerns reflect international norms demonstrate that they have created robust opportunities
embodied in the United Nations Declaration on the for public participation in decision-making processes and
Rights of Indigenous Peoples, the broadly accepted have put in place credible and transparent procedures
global statement of the special rights and interests of for measuring, reporting and verifying the impacts of
the indigenous. climate-related forest conservation programs on local
communities. As in many other areas of international
While the primary responsibility for protecting the rights relations, sunshine is likely to be the best disinfectant.
and interests of local people rests with developing Transparency and public participation can be important
nations, the United States also has a role to play, keys to local accountability. Many developing nations
particularly since new U.S. financial incentives would are striving to strengthen their practices in these areas
be a primary driver in new land-use decisions. The and the United States should work actively to support
challenge will be determining the right role — one that them.
helps make climate policies good for the global poor
and vulnerable local communities and fully supports This broader approach is likely to be more effective
developing country efforts to implement new forest than the United States requiring developing nations
conservation programs in ways that protect the human to affirmatively demonstrate that they are meeting
rights of their citizens and strengthen their democracies, a list of conditions in order to access funding. Under
including by improving transparency and public this alternative approach, countries would not be
participation in decision-making processes. eligible to participate in U.S. programs unless the
President or Secretary of State certified to Congress
that national practices in certain areas were in line with
Principle: U.S. policies to reduce tropical deforestation U.S. expectations and international standards. This
must help local, forest-dependent people, including approach is less desirable for political and practical
the indigenous, by improving local living standards and reasons. Politically, it could be criticized by the majority
promoting sustainable development objectives. of developing nations as an inappropriate intrusion on
their sovereignty. If other nations sought to impose a
similar system on the United States we would surely

52 The Commission on Climate and Tropical Forests

object. Moreover, a fixed set of conditions about Recommendation: The United States should work to ensure
how to provide benefits to forest-dependent people that international agreements and financial incentive
could not adequately accommodate the diversity programs place special emphasis on transparent and
of national circumstances. The semi-autonomous credible procedures for evaluating whether local people are
relationship between the indigenous communities of participating in and benefiting from new policy frameworks.
the Amazon and their national governments is entirely The United States should work in a supportive role with
different in character from the relationship between developing nations to outline procedures for consulting
national governments and most forest-dwellers in local communities and reporting on the impacts of forest
Indonesia or the Congo Basin. Furthermore, from a conservation programs. The international community
practical perspective, the United States lacks sufficient and the United States could then assess these reports
information to accurately assess the appropriateness and determine whether appropriate procedures were
of very place-specific land-use decisions in remote followed and evaluate whether the impacts of U.S. and
forested communities. global policy are creating unintended consequences.
National reporting and international review should occur
periodically to help promote constant improvements
and catch problems early. Different procedures could be
Commissioner Perspective: necessary for public and private investments.
NANCY BIRDSALL
President, Center for Global Development Substituting transparency and public participation for
conditionality as the guiding framework of U.S. policy in
“Climate change is an immediate crisis already this area would produce several benefits. First, it would
affecting millions of the world’s most vulnerable give the citizens of developing countries, rather than the
people. With other nations, the United States has an United States, the responsibility for determining whether
opportunity to shape a strong international response or not these programs are benefiting them. This would give
that takes advantage of the multiple co-benefits to them greater ownership over forest conservation policies
economic growth and social change of reducing but also reduce the potential risks to the United States
deforestation in developing countries, and the plain or American companies if programs are not working as
and simple economic reality that doing so is among intended. Second, developing nations are in a much better
the cheapest and most effective single vehicles position than the United States to know what is going
for reducing emissions on the table for the next on in their countries. Under a system of conditionality
decade and beyond. A U.S. response should (1) be the United States would need to go in and investigate
organized in full partnership with Brazil, Indonesia whether conditions are being met, but under a system of
and other forested countries; (2) should avoid the transparency and reporting each country would have that
indignities and ineffectiveness that plague traditional authority and responsibility. Finally, conditionality of foreign
foreign aid programs — opting instead wherever assistance programs has a long history of resentment
possible to a businesslike approach of paying for from developing nations. The international community
measured outcomes not the latest “favorite” inputs; has moved towards empowering developing countries to
and (3) should respect the perspectives, priorities do better themselves and incentivizing good performance
and knowledge of the people who depend on rather than imposing highly restrictive external standards.
sustainable forestry for their livelihoods.”

Finding: There are real challenges to ensuring U.S.

tropical forest conservation policies benefit local people,
but workable solutions exist.

Protecting the Climate Forests 53

 The climate bill approved by the House includes with them. 121 The bill requires the Executive Branch to
provisions to protect the interests of local people and both follow these standards in distributing funding and
indigenous communities. The EPA Administrator, in ensure as much as possible that developing nations are
consultation with the Administrator of USAID, must following them in program implementation. However,
promulgate regulations establishing standards to ensure the House bill does not make public participation and
that U.S. tropical forest conservation programs give transparency the primary objectives for these regulations
due regard to the rights and interests of local people, and standards. This is an area the Senate and the
include them in consultations on design, planning, and Obama Administration should revisit and address.
implementation, and seek to share financial benefits

Environmental Safeguards
Poorly designed or managed forest conservation Appropriate environmental safeguards are essential to
programs could jeopardize important U.S. national guarantee that forest conservation programs achieve
interests. Programs that offset U.S. domestic real reductions in greenhouse gas emissions and
emissions reductions could send money overseas for advance other environmental objectives, such as
no environmental benefits if measurement, monitoring biodiversity conservation. Following are several key
and verification systems are inadequate. Approaches risks and associated feasible solutions.
that fail to strengthen forest governance, transparency
and public participation in developing nations could Non-additionality. Payments could be provided for
encourage corruption, harm indigenous communities forests that never would have been cut down or
and provide few development benefits. for reforestation that would have occurred anyway.
This can be addressed with appropriate crediting
Finding: Although the risks of inadequate environmental “baselines”—the reference level against which
safeguards are serious, they can be effectively managed. financial incentives would be provided—that
compensate nations for actions that are above and
Programs that do not consider the indirect effects of beyond business-as-usual outcomes.
major new financial incentives could convert agricultural
lands into forests in ways that reduce crop yields, raise Leakage. Deforestation could simply shift from one
food prices or heighten food insecurity. Thus, strong place to another, either within the same country
safeguards for the environment and people are essential (activity leakage) or to another country (market
to ensure that new U.S. tropical forest conservation leakage). This can be addressed by encouraging
policies are effective, economically beneficial for national-level actions and engaging as many
developing nations, and advance broader U.S. national tropical forest nations as possible, including “high-
security interests. New forest conservation programs forest, low-deforestation” countries that might
will not work on autopilot. However, good solutions exist otherwise see an increase in deforestation as rates
that can effectively manage these risks. come down in other nations.

Principle: U.S. tropical forest conservation policies must Non-permanence. Conservation benefits could be
have robust environmental integrity. short-lived as a result of forest fires, poor forest
management, policy changes or the impacts of
climate change. This can be addressed with certain
types of insurance, discount rates or “buffers.”

54 The Commission on Climate and Tropical Forests

 Improper crediting baselines. Poorly set crediting sub-national- to national-level actions—although not
baselines could result in large payments that are precisely in the same manner as that taken by the House
not warranted. This can be addressed with close bill. A transitional approach with phases would have
attention to historical and projected future rates of many advantages, including encouraging large-scale
deforestation. action by developing nations. One important benefit of
managing forest-sector emissions at a national-scale
Habitat conversion/Loss of biodiversity. Perverse would be minimizing the risk that forest conservation
incentives, such as incentives to convert non- programs simply shift reforestation with a country from
forested land into forests, could encourage the one place to another (a version of carbon “leakage”).
loss of critical biodiversity and ecosystem services The Commission, therefore, recommends that policy
if developing nations turn species-rich native makers adopt an approach that moves nations in phases
grasslands and wetlands into industrial forest through a transition from sub-national- to national-level
plantations. This can be addressed by using actions in the forest sector.
eligibility criteria and environmental assessments
that channel investments toward regions and Overall, there are plenty of reasons to be optimistic
practices that help conserve biodiversity and critical that the United States can put in place credible
ecosystems. environmental safeguards. Major scientific advances
in earth observation technologies are creating new
These are serious concerns that will need to be confidence that forest cover and carbon content can be
addressed in a very credible manner by any new U.S. measured remotely with satellites at a reasonable cost
climate policies that target tropical deforestation. and with surprising accuracy. Providing this technical
Different safeguards could be required for public and expertise could be one area for a substantial U.S.
private financing mechanisms. The House climate bill contribution to the international forest conservation
makes a good faith effort to address these concerns effort. Several leading global conservation organizations
and it has attracted the support of a number of major can point to numerous successful pilot programs to
environmental organizations that have historically reduce deforestation in ways that produce measurable,
opposed including forests in a domestic cap-and-trade verifiable emissions reductions. 123 Some leading U.S.
program. conservation organizations, moreover, have joined
with major American corporations to develop technical
Recommendation: U.S. policies should provide incentives standards that are widely used today in voluntary markets
for countries to move to national-scale action as quickly as for forest carbon. 124 These voluntary market standards
possible. The House bill includes a phased transition and certification processes provide a foundation upon
for countries to move from sub-national to national- which U.S. agencies can build when designing technical
scale actions in order to continue participating in U.S. standards in new federally managed programs.
programs. Programs that cover less than a nation’s entire
forest sector may be allowed into the U.S. system during Implementing forest conservation programs only in
this transition. This approach was designed to move countries that can verify actual reductions in their forest
countries through the three phases of action—planning, emissions could perversely accelerate deforestation in
implementation and verified emission reductions— countries with large standing forests but currently low
as quickly as possible, while also recognizing deforestation rates, such as those in the Congo Basin.
the need to encourage swift action and provide A global forest conservation system will be seriously
companies immediate access to low-cost international undermined without addressing these areas, and the
offsets. 122 Several major electricity utilities and influential participation of these “high-forest, low-deforestation”
environmental organizations have also embraced an countries is therefore critical. However, paying countries
approach with phases that transition nations from for maintaining standing forests does not achieve

Protecting the Climate Forests 55

 actual emission reductions that count toward U.S. criteria may be helpful to make sure that new U.S. forest
or global mitigation goals and therefore cannot easily conservation programs help developing nations protect
be financed through an offset mechanism. Providing critical ecosystems and globally significant biodiversity.
incentives for these forest-rich, low-deforestation This could be done in a number of ways. Reforestation
countries must therefore be a primary goal of U.S. and programs could guard against the introduction of
international public funding. Given this importance, non-native species, and afforestation programs (that
creating a dedicated “stabilization fund” for these convert non-forested lands to forests) could require
countries through U.S. legislation or global agreements environmental impact assessments. Special preferences
is essential, especially since partnerships with many could be created for investments in biodiversity
of them could also provide national security and other “hotspots” or other high priority conservation areas
benefits. 125 and for the preservation of old-growth forests and
native species as compared to managed forests and
Climate change safeguards are not the only plantations.126 These criteria could be applied differently
environmental protections that will be required. Special in public and private emission reduction programs.

U.S. Climate Diplomacy and New

Agreements
The preceding discussion has focused primarily on
emerging U.S.-driven initiatives, primarily under likely Finding: Negotiating effective international agreements
domestic climate legislation. Domestic deliberations will be critical to the success of U.S. forest conservation
are occurring, however, in parallel to global climate programs.
negotiations and bilateral climate talks with key
countries, including Brazil, China and India. Multilateral The most important negotiating objective of the United
and bilateral negotiations provide vital opportunities for States on tropical forests should be to ensure that net
the United States to advance tropical forest conservation forest sector emissions in developing nations decline fast
objectives in ways that extend well beyond domestic enough to allow the world to meet long-term emission
legislation. This section suggests how the United States reduction objectives. International agreements that do not
should pursue those diplomatic opportunities. Issues help developing nations move aggressively toward the
relating to U.S. international negotiating objectives are goal of halving deforestation in ways that are supportive
also highly relevant to domestic climate legislation. of their own sustainable development objectives may
The House climate bill, for example, would require be counter-productive. For example, an agreement that
that in order to be eligible to receive either public provided major financial incentives to high deforestation
funding (i.e., the 5 percent set-aside of allowances for nations for simply not increasing deforestation rates by
forests) or private funding (i.e., carbon market offsets) 2020 would potentially send billions of dollars abroad
a developing nation must be part of a bilateral or for relatively little climate action. Thus, a key element
multilateral agreement covering forest sector emissions of new climate agreements dealing with international
that includes the United States. This would mean that forests will be the reference levels or baselines against
the arc of U.S. climate diplomacy would influence the which progress is measured and financial incentives
effectiveness and geographic footprint of the forest are provided. International agreements should require
provisions in domestic climate laws. that developing nations create and implement credible,
domestically enforceable national plans that are

56 The Commission on Climate and Tropical Forests

Figure 10: Reference Levels

Source: Climate Advisers analysis, based on Eliasch, J. (2008) Climate Change: Financing Global Forests, United Kingdom, Office of Climate Change.

consistent with global emission reduction objectives. a reference scenario that reaches a sustainable level
Figure 10 shows the type of reference level that will be of carbon stocks within a certain timeframe after
needed to make new agreements compatible with global beginning to receive funding from U.S. programs. This
emission reduction goals. Over time all nations must take requirement would channel U.S. funding to nations that
on a greater share of responsibility domestically and meet are taking appropriate national action and thus create
more ambitious goals to receive international financing at the strongest possible incentives for nations to develop
a rate that is consistent with their stage of development. ambitious emission reduction plans. This is the general
approach taken in the House climate bill and suggested
Recommendation: The United States should work to ensure by the Administration in their submissions to global
that international agreements with tropical forest nations climate talks.
secure actions by those nations that support global emission
reduction goals for forests. One way to make this As one example, the House bill provides incentives
requirement regarding the ambition of forest agreements for countries to adopt national deforestation baselines
more concrete would be to require nations to develop that require declining deforestation rates over time and

Protecting the Climate Forests 57

 Figure 11: Sharing Responsibility for International Financing

Source: Climate Advisers analysis

reaching zero net deforestation within twenty years. Yet, there is also a risk that overly ambitious reference
This does not mean that all forest sector economic scenarios could create disincentives for action and raise
activity must cease, but that deforestation in one area the cost of U.S. climate action. Making it too hard for
must be balanced by re-growth or regeneration in developing nations to qualify for U.S. financial assistance
another, as long as appropriate safeguards are in place would reduce their incentive for action and could result in
to ensure that perverse incentives are not in place to significantly fewer emission reductions than under a more
encourage deforestation followed by crediting for re- optimal scenario. In addition, overly ambitious reference
growth. Payments would gradually decline over time, levels for U.S. funding could result in low quantities of forest
with developing nations adopting a greater share of carbon offsets and thus higher compliance prices for U.S.
the effort, and eventually taking on full responsibility for firms participating in the cap-and-trade program. The key
financing and managing sustainable levels of forests in to success, therefore, will be making sure the reference
their countries consistent with global climate goals (see scenarios set in international agreements are set based on
Figure 11). While a limit could be useful to encourage more the best available analysis and guided by climate science.
advanced developing nations to adopt commitments by Appropriate and strong reference scenarios, however,
signaling that payments will not be perpetual, the United are only one negotiating objective the United States
States must be careful in implementing provisions of must pursue. While much of this report has been framed
this type to ensure that it does not create reversals in around the question of how best to design U.S. climate
reductions that have been achieved, especially in least- legislation, the insights and recommendations offered in
developed countries. prior sections should also guide U.S. climate diplomacy
relating to forests. The following principles endorsed
previously in the context of cap-and-trade legislation

58 The Commission on Climate and Tropical Forests

are also relevant for future climate agreements.
Finalizing international negotiations on tropical forest
• Incentives are needed for reducing deforestation emissions will also require nations to resolve a number
in nations that are experiencing high rates of of highly technical methodological issues. The United
deforestation and in those where low deforestation States may need to align technical standards proposed
rates could rise absent outside support; by the State Department to international climate talks
• Public and private funding mechanisms are with those contained in climate legislation. In general,
needed; these issues are best resolved by the Executive
• Only verified emission reductions should be Branch, drawing on the technical expertise that resides
included in private carbon markets; in relevant agencies, with timely input from relevant
• Public funding mechanisms should help nations scientific advisory bodies. For purposes of implementing
build their capacity for action, implement policy and new domestic climate laws, Congress should ask the
governance reforms, provide upfront funding and Executive Branch to promulgate new regulations and to
purchase verified emission reductions, particularly consult with the National Academy of Science and other
in high-risk, non-market countries that may be science advisers when developing these regulations and
ignored by private investors; proposed methodologies in global climate negotiations.
• Credible protocols and common standards are
needed to measure, monitor and verify emission
reductions in tropical forests;
• Upfront funding is needed to help developing nations
with early phases planning and implementation;
and
• Forest provisions in an international climate
agreement should be compatible with the future
creation of a comprehensive system for managing
all terrestrial carbon, including forests, agriculture,
rangelands and other sources.

Making U.S. Policies Work Efficiently

Recommendation: The pool of emission allowances set aside A substantial amount of work lies ahead. Developing
to help control the cost of a new cap-and-trade program nations must transition through the three phases of
(the “strategic reserve”) should be large enough to manage action identified above — (1) planning, (2) implementation
the risk that the supply of forest carbon “offsets” may prove of forest sector policy and governance reforms and
insufficient to stabilize prices and price spikes. While the (3) verification of actual emission reductions. Few
United States should reduce the cost of climate action developing nations are far along in the planning process
by partnering with developing nations to finance forest and most need substantial technical assistance to
sector emission reductions, if the United States adopts even get started. Not all developing nations have the
a cap-and-trade program it must also guard against political will and societal buy-in to implement needed
the possibility that U.S. demand for international forest forest sector policy reforms. And only a few developing
carbon will exceed available supply. nations today are close to having the capacity to reliably
measure, monitor, and verify actual emission reductions.

Protecting the Climate Forests 59

 Despite these challenges several credible studies these quantities are significant, they nevertheless may
predict that developing nations should prove capable fall short of the amounts needed to achieve U.S. cost
of meeting U.S. and global needs for low-cost forest containment and climate mitigation goals, depending on
carbon offsets. The table below provides an initial demand from other countries, highlighting the urgency
estimate of forest carbon offset quantities in early years of upfront funding. The U.S. leadership and financial and
of a U.S. cap-and-trade program (see Table 2). While technical resources recommended in this report will be

Table 2: Current Estimates of Availability of Verifiable Emission Reductions from Forests (millions of tons of CO2)

Year 2013 2020

Top 9 Countries 127 950 1,400

Rest of world 200 370

Source: Climate Advisers analysis, based on preliminary data provided by Boucher, D. (2009) and Resources for the Future (2009) The Forest Carbon
Index, Washington, DC. (forthcoming report)

critical in bridging the gap between this current potential The House climate bill includes one such mechanism—
of verified reductions and the additional reductions a “strategic reserve” of emission allowances. If
needed to achieve the goal of reducing emissions from allowance prices reach a certain threshold (initially $28
deforestation 50 percent by 2020. per ton but changing over time based on market prices),
companies would be allowed to purchase at that price
The possibility of a gap between international supply and a limited amount of additional allowances from the
U.S. forest carbon demand is reason for concern. The government-managed strategic reserve. The emission
road to access U.S. and global incentive programs may allowances in the strategic reserve would be borrowed
be a long and demanding journey for many developing from current and future years of the cap-and-trade
nations. For some, this will require fundamental program. This means that emissions could rise in the
transformations in their forest-based economies and short run, but companies overall would need to reduce
societies. If progress in reducing deforestation proves a corresponding amount of emissions in later years to
more difficult than expected, the shortfall between avoid undermining long-term emission reduction goals.
international offset supply and global offset demand Total U.S. emissions from 2012 and 2050 would not
could lead to substantially higher compliance costs for increase, they would be shifted forward slightly within
U.S. regulated companies under a domestic cap-and- that period. The EPA would use revenues from the sale
trade program. of strategic-reserve tons to purchase verified emission
reductions from tropical forests. Emission reductions
For both economic and environmental reasons, therefore, purchased in this manner would refill the strategic
the United States needs a policy mechanism to guard reserve to allow for future sales to U.S. companies,
against uncertainty in international forest carbon supply assuming prices remain high.
with global offset demand, thereby controlling costs and
avoiding economically damaging price spikes. To be effective, the strategic reserve needs to be
designed in a way that takes into account expected

60 The Commission on Climate and Tropical Forests

and unexpected mismatches between domestic offset allowances for new programs that build the capacity of
demand and international forest carbon offset supply. developing nations to participate in U.S. carbon markets
More specifically, the size of the strategic reserve needs is so important. As this set-aside funding will not be
to be large enough to account for the possibility that available until a cap-and-trade program takes effect,
the supply of forest-carbon offsets will be insufficient foreign-assistance bridge financing in the range of $1
to control costs, and thus demand for strategic reserve billion is needed from now until 2012. Together, these
allowances could be larger than expected. Similarly, the public funding programs would prime the pump for the
strategic reserve needs to avoid relying too heavily on forest carbon offset market and reduce the economic
the notion that the United States will refill the strategic risks of climate policy for the United States.
reserve with tropical forest emission reductions in case
those forest carbon tons are not immediately available. Recommendation: The United States should explore and
More analysis is needed on the right role for tropical consider establishing a financial intermediary to aggregate
forest emission reductions in refilling the strategic forest carbon offset demand and supply. In order to further
reserve and to determine its optimum size. contain costs and maximize the environmental benefits
of forest carbon offsets if the United States adopts a
While a mechanism to deal with gaps between tropical cap-and-trade program we should explore and consider
forest offset demand and supply is essential, it is not establishing a financial intermediary to aggregate forest
sufficient. The United States needs to work to avoid carbon offset demand and supply. U.S. corporations
this gap rather than only dealing with it if and when it could continue to have the option of purchasing forest
occurs. In other words, the best strategy would be for carbon offsets directly from developing country partners
the United States to develop and fully fund programs but could also purchase these offsets directly from a
to help developing nations quickly generate a stable U.S. government entity. The carbon offset aggregator,
supply of tropical forest offsets. This is why setting aside therefore, would not become a bureaucratic impediment
5 percent of the allowance value of tradable emission to U.S. companies accessing low-cost forest carbon

Figure 12: Economic Rent in Forest Carbon Markets 128

Source: Climate Advisers analysis

Protecting the Climate Forests 61

 offsets without government intermediation, but rather tropical forest conservation measures. Lower offset
the aggregator would give companies an additional prices also would reduce the overall compliance costs
option with substantial potential benefits. for the U.S. economy. Also, the government aggregator
could be structured to sell offsets at a predetermined
The rationale for a government offset aggregator is price. In this way, the offset aggregator could help
straightforward. Individual firms purchasing offsets minimize short-term harmful effects of price volatility
have relatively limited market power compared to large and guard against market manipulation by speculators.
forest carbon offset suppliers, such as Indonesia. In an For these economic reasons an aggregator could make
efficient global carbon market, U.S. companies would winning Senate support for forest conservation programs
pay relatively high market clearing or equilibrium prices. significantly easier.
In many developing nations, however, the actual cost of
reducing tropical forest emissions will be substantially A government aggregator, furthermore, would have
lower than the market price. While developing nations major environmental benefits. First, it could maximize
should benefit substantially from avoiding deforestation, the amount of emissions mitigation achieved for each
an un-intermediated forest carbon market would likely dollar spent. To use a simple example, if the government
result in unnecessarily high costs for U.S. companies price were half that of the market price and all companies
as well as windfall profits that could accrue to carbon chose to buy international forest carbon offsets through
speculators and/or credit suppliers. This corresponds to the aggregator rather than through direct purchases,
what economists call “economic rent” — the difference U.S. private sector funding for international forest offsets
between market prices and production costs (see Figure would achieve double the emission reductions. Second,
12 on page 61). with an offset aggregator, the United States would be in
a better position to ensure the environmental integrity
In contrast, a U.S. government offset aggregator making of offsets entering the U.S. compliance market than
bulk purchases would have substantially more market with a purely private system. The American people
power. Indeed, the U.S. carbon market is expected would know that offsets entering U.S. markets through
to be the largest in the world — so large that it may the forest carbon aggregator would meet rigorous U.S.
have some ability to drive down market prices. A U.S. quality-control standards.
government offset aggregator could use this purchasing
power to negotiate favorable prices well below the un- Companies that purchase offsets through the
intermediated market-clearing price. Given the billions of government aggregator would receive another important
tons of offsets expected to enter the U.S. market, even benefit. For offsets purchased from the aggregator, the
a difference of a few dollars a ton would add up quickly. responsibility for ensuring that international offsets from
As the cost of reducing deforestation in some countries tropical forests are genuine and were developed in
is expected to be relatively low, the cost savings for the ways that benefited local people, including indigenous
United States could be substantial. communities, would fall on the U.S. government instead
of private companies. As the government would resell
By allowing companies to buy forest carbon offsets aggregated offsets to the private sector without linking
from a U.S. government entity at lower-than-market them to any particular country, region or project (i.e.,
prices, financial flows to developing nations could be all offsets from the aggregator would be fungible),
kept at manageable levels. As noted above, the scale U.S. companies would no longer be exposed to the
of expected forest carbon flows overseas has been a reputation risks that may be associated with tropical
major concern in the Senate. Limiting income transfers forest sector investments about which they may have
to developing nations to the level necessary to achieve very little information.
emission reductions and provide local benefits could
improve the prospects for Senate support of strong

62 The Commission on Climate and Tropical Forests

Recommendation: The United States should establish a International negotiator. Leadership is needed for U.S.
coordinating council and designate a lead office or agency to efforts to negotiate the international agreements
oversee tropical forest conservation programs. The success that climate legislation will likely stipulate are
of U.S. international forest conservation programs may required for participating in either U.S. carbon
depend on whether the United States organizes itself markets or new government-to-government forest
appropriately to manage these complex, new multi- conservation programs.
billion dollar efforts. Responsible agencies will need
the authority and expertise to successfully carry out the Provider of technical assistance. Experience and
following diverse functions. expertise are needed to provide developing nations
with the forest sector technical assistance necessary
to support effective tropical forest conservation
programs.
Commissioner Perspective:
SAM ALLEN Financial fiduciary. The ability is needed to manage
President and Chief Executive Officer, Deere & Company funds generated by auctioning emission allowances
to U.S. companies for future payment to developing
“A robust global economy is critical to expanding the nations under the terms of bilateral or regional
agricultural output necessary to meet the increasing agreements negotiated with the U.S. government.
needs of a growing and increasingly affluent
population. Projections indicate that food production Market aggregator. The capacity is needed to
must increase 50% by 2030 and double by 2050. potentially act as an “aggregator” of international
This challenge must be met with a constrained forest emission reductions for private sector offset
resource base and in an environmentally sustainably purchasers.
manner. Governments of the world must ensure
sound public policies that enhance our environment Overall strategist. Decisions will need to be made
through reduced carbon emissions, particularly about how the overall strategy of programs should
from major sources like tropical deforestation. be set and what criteria should be used when
Rational, market-based protections that control the allocating funding.
cost of carbon reductions offer the best approach
to enabling farmers around the world to meet the No existing U.S. department or agency has the
food production challenge in a sustainable manner. capacity, experience and expertise needed to fulfill all
Halting destruction of tropical forests makes business of these functions. The State Department and USAID
sense both as a cost-containment measure and as a lack experience with environmental markets but
long-term investment in healthy cropland and forest have experience negotiating climate agreements and
economies.” providing technical assistance. EPA has that market
regulation experience but lacks expertise in tropical
forests, as well as sufficient knowledge of on-the-
ground political, economic and social conditions in
Environmental regulator. Capacity and expertise developing nations. It also lacks experience negotiating
are needed to verify that emission reductions complex, legally binding international agreements with
from international forests are genuine and do not geopolitical ramifications. The U.S. Forest Service, part
undermine the environmental integrity of a new U.S. of the U.S. Department of Agriculture, understands forest
cap-and-trade program or U.S.-led international management policies and practices, but not necessarily
forest conservation programs. in developing countries. Only the U.S. Department of the
Treasury (Treasury) has experience acting as a market

Protecting the Climate Forests 63

 maker and financial fiduciary. Treasury, however, lacks a single coordinating entity. The White House should
experience with tropical forests, regulating tradable establish a coordinating council, and designate and fully
pollution allowances or negotiating international fund a lead office or agency to serve this coordinating
climate agreements. The National Oceanographic function. A fully united effort that harnesses relevant
and Atmospheric Administration (NOAA), the National expertise, capacity and authorities across the entire
Aeronautics and Space Administration (NASA) and the government is absolutely essential.
U.S. Department of Interior (through the U.S. Geological
Survey) all have relevant technical expertise but do The House climate bill envisions a very different approach.
not have the regulatory, diplomatic or international It would delegate responsibility for implementing both
development experience to lead U.S. efforts alone. forest carbon markets and the tropical forest set-aside
Many agencies have experience setting overall program to EPA, albeit in consultation with USAID,
strategies but they would certainly make decisions the State Department, and other appropriate federal
based on different criteria and their core competence. agencies.
To succeed, the United States must develop an
EPA, and not the Treasury Department, is in charge of
auctioning allowances and managing the funds from
Principle: U.S. policies to reduce tropical deforestation the 5 percent allowance set-aside. EPA is given primary
which harness the expertise and authorities of many responsibility for issuing international offset credits and
agencies and departments will be critical to the success for deciding both what specific land types (such as
of U.S. forest conservation programs. peatlands lands or wetlands) and what activities (reduced
degradation in addition to deforestation) should be
considered eligible for funding or offset crediting. EPA, in
integrated “whole of government” approach — consultation with USAID, is responsible for promulgating
tapping into the expertise and authorities in all relevant regulations establishing standards that should be met
agencies. EPA should regulate forest carbon markets. in international agreements required by the bill. The bill
USAID should administer regional and bilateral in- does not specify which agency would lead international
country assistance programs. The State Department negotiations with other nations. The decision to give
should negotiate international forest emission reduction EPA these sweeping authorities was made initially by the
agreements with developing countries. Treasury should Energy and Commerce Committee partly to keep future
serve as the financial fiduciary and work with multilateral oversight responsibility with the Committee’s jurisdiction
funding mechanisms within international financial and to avoid referrals to other committees during the
institutions, including most notably the World Bank. legislative process.
The Treasury might also be home to the new market
aggregator described above. Various technical agencies While EPA has many strengths and has a central role
should play roles consistent with their mandates and to play in many aspects of the cap-and-trade program,
capacities. delegating EPA as the single lead agency would stretch
beyond its core areas of competence and create conflicts
However, there is the significant risk that by dividing with other U.S. policy objectives, particularly concerning
responsibility across the government, implementation of diplomacy and international development. Given the wide
key programs could occur in a haphazard, uncoordinated range of expertise needed, the most effective approach
manner, with different agencies sometimes working at would bring the entire U.S. government to bear in solving
cross purposes and often without taking advantage of the problem, supported by a centralized coordinating
their respective strengths. Given the size, complexity body.
and importance of the task, the U.S. government needs

64 The Commission on Climate and Tropical Forests

A Comprehensive Approach to
Land-use Emissions
Forests, food, biofuels and fiber production compete and encourage maximum emissions mitigation. Few
for a finite land area in developing nations. Tropical countries are prepared to adopt comprehensive
forest loss is driven by that competition as tropical accounting now. Many nations lack the capacity to
forests are turned into farmlands and rangelands, or measure, monitor and verify their emissions in land-
harvested for timber. While making broader policy based sectors. The Obama Administration has proposed
recommendations about mitigating global emissions setting comprehensive terrestrial accounting as a global
from agriculture and other land-use changes is outside goal, but the U.S. proposal has attracted limited support
the mandate of the Commission, it is essential for the on this point in global climate talks.
President and Congress to be cognizant of how forest
conservation incentives will affect other land uses and For now, the best way to begin the transition to
policy objectives, and vice versa. comprehensive terrestrial carbon management is to focus
on improving procedures for measuring, monitoring,
Global demand for food is expected to double by and verifying carbon storage and emissions across all
2050. 129 New forest conservation incentives, therefore, land-use types. This includes studying the impact of
may need to be accompanied by equally large-scale forest conservation policies on other commodities, as
efforts to increase yields on existing farmlands and to well as the impacts of agriculture and biofuels on forest
rehabilitate and restore productivity to degraded lands. conservation efforts. The United States should promote
Without further agricultural intensification, some parts of improved global capacity to analyze climate interactions
the world may experience heightened risks of hunger. among land-use policies and experiment with more
Therefore, U.S. policies need to look at international comprehensive approaches. The challenges associated
land-use decisions comprehensively—balancing the with these tasks should not be used as justification for
need to feed the growing global population with the inaction or delay in reducing tropical forest emissions
urgency of protecting forests. quickly now. Many existing technologies are impressive
and need to be deployed and adopted far more broadly.
There are also concerns that poorly designed biofuel U.S. investments in satellites and remote sensing, for
policies could cause farmers to clear carbon-rich forests example, should account for those needs, and findings
to plant new fuel crops, thereby increasing rather than should be declassified as appropriate and made widely
reducing global emissions. The European Union has available. Early international efforts should focus on
concluded that developed-country biofuel mandates improving procedures for measuring, monitoring and
have already accelerated tropical deforestation in Brazil, verifying greenhouse gases across all land-use types,
Malaysia and Indonesia. World Bank auditors have including in greenhouse gas rich peatlands lands and
shown that their private sector arm, the International other soils. The challenges associated with these tasks
Finance Corporation’s palm-oil lending program has led should not be used as justification for inaction or delay
to deforestation in Southeast Asia. 130 in reducing tropical forest emissions quickly now.

Recommendation: The United States should promote a Finding: Without careful attention, U.S. forest conservation
global transition to full terrestrial greenhouse gas emission policies could work against its international agriculture
accounting. Reducing emissions from deforestation and biofuels policies, and vice versa.
ultimately will require the world to meet competing
land-use demands as efficiently as possible. Only a Another strategy, endorsed previously in this report, could
comprehensive approach—one that looks at changes be to create extra financial incentives for activities that
in carbon stocks and flows in forests, rangelands, conserve high-value primary forests or reforest marginal
agriculture and all other major land-use categories— lands not suitable for agriculture. Giving preference to
would capture how changes in one land-use affect these activities would discourage conversion of forests
emissions in another, correct for perverse incentives to agriculture and promote reforestation without harming

Protecting the Climate Forests 65

 food security. Finally, the United States could increase
funding for agricultural foreign assistance programs.
A new “green revolution” in developing nations would
reduce pressure on forests, increase food security and
help developing nations adapt to climate change.

Included in the House climate bill is a directive for the

National Academy of Sciences to study methodologies
for accounting for indirect land-use emissions and report
back to EPA and the Department of Agriculture, which
must include these emissions in their biofuel policies
after six years. 131 This provision was a final sticking
point in the House debate and is also likely to be a
point of contention in the Senate. Leading experts have
also raised concerns that standard carbon accounting
methodologies may underestimate emissions from
biofuels. 132 More analysis and policy making on this
issue is needed.

66 The Commission on Climate and Tropical Forests

Selected Bibliography
Barker, T. et al. (2007) Technical Summary in Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report
of the Intergovernmental Panel on Climate Change [B. Metz, O. R. Davidson, P. R. Bosch, R. Dave, L. A. Meyer (eds.)], Cambridge, United King-
dom and New York, NY, USA, Cambridge University Press.

Canadell, J.G. et al. (2007) Contributions to accelerating atmospheric CO2 growth from economic activity, carbon intensity, and efficiency of natu-
ral sinks, Proceedings of the National Academy of Sciences of the United States of America, vol. 104, no. 47, p. 18866-18870.

Congressional Budget Office (2009) Cost Estimate H.R. 2454 American Clean Energy and Security Act of 2009, Washington, DC.

DeFries, R.S., Houghton, R.A., et al. (2002) Carbon emissions from tropical deforestation and regrowth based on satellite observations for the
1980s and 1990s, Proceedings of the National Academy of Sciences of the United States of America, vol. 99, no. 22, p. 14256-14261.

Eliasch, J. (2008) Climate Change: Financing Global Forests, United Kingdom, Office of Climate Change.

Kindermann, G., Obersteiner, M. et al. (2008) Global cost estimates of reducing carbon emissions through avoided deforestation, Proceedings of
the National Academy of Sciences of the United States of America, vol. 105, no. 30, p. 10302-10307.

Meridian Institute (2009) Reducing Emissions from Deforestation and Forest Degradation (REDD): An Options Assessment Report, Prepared for the
Government of Norway by Arild Angelsen, Sandra Brown, Cyril Loisel, Leo Peskett, Charlotte Streck, and Daniel Zarin.

Nabuurs, G.J. et al. (2007) Forestry, in Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change [B. Metz, O.R. Davidson, P.R. Bosch, R. Dave, L.A. Meyer (eds.)], Cambridge, United Kingdom and
New York, NY, USA, Cambridge University Press.

Olander, L., Boyd, W., et al. (2009) A Primer on International Forest Carbon, North Carolina, USA, Duke University Nicholas Institute for Environ-
mental Policy Solutions.

Parker, C., Mitchell, A., Trivedi, M. and Mardas, N. (2008) The Little REDD Book, Oxford, UK, Global Canopy Programme.

Project Catalyst (2009) Towards the inclusion of forest-based mitigation in a global climate agreement, San Francisco, CA, ClimateWorks Founda-
tion.

Resources for the Future (2009) The Forest Carbon Index, Washington, DC. (forthcoming report).

United States Environmental Protection Agency (2009) EPA Analysis of the American Clean Energy and Security Act of 2009, Washington, DC.

Protecting the Climate Forests 67

 Footnotes
1
U.S. Global Change Research Program (2009) Climate Change Impacts in the United States, New York, NY, Cambridge University Press.
2
Center for Naval Analysis (2007) National Security and the Threat of Climate Change, Washington, DC.
3
Intergovernmental Panel on Climate Change (2007) Climate Change 2007: Synthesis Report. Contribution of Working Groups I, II and III to the
Fourth As sessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, Pachauri, R.K and Reisinger, A. (eds.)].
Geneva, Switzerland.
4
International Energy Agency (2008) World Energy Outlook, Paris, France.
5
Major Economies Forum on Energy and Climate (2009) Declaration of the Leaders, L’Aquila, Italy. http://www.whitehouse.gov/the_press_office/
Declaration-of-the-Leaders-the-Major-Economies-Forum-on-Energy-and-Climate/G8 Summit (2009) Responsible Leadership for a Sustainable
Future, L’Aquila, Italy. http://www.g8italia2009.it/static/G8_Allegato/G8_Declaration_08_07_09_final,0.pdf
6
Project Catalyst (2009a) Limiting atmospheric CO2e to 450 ppm – the mitigation challenge, San Francisco, CA, ClimateWorks Foundation.
7
Project Catalyst (2009b) Towards the inclusion of forest-based mitigation in a global climate agreement, San Francisco, CA, ClimateWorks
Foundation.
Canadell, J.G., Le Quere, C., Raupach, M.R., Field, C.B., Buitenhuis, E.T., Ciais, P., Conway, T.J., Gillett, N.P., Houghton, R.A. and Marland, G.
(2007) Contributions to accelerating atmospheric CO2 growth from economic activity, carbon intensity, and efficiency of natural sinks, Proceedings
of the National Academy of Sciences of the United States of America, vol. 104, no. 47, p. 18866-18870. Nabuurs, G.J., Masera, O., Andrasko, K.,
Benitez-Ponce, P., Boer, R., Dutschke, M., Elsiddig, E., Ford-Robertson, J., Frumhoff, P., Karjalainen, T., Krankina, O., Kurz, W.A., Matsumoto, M.,
Oyhantcabal, W., Ravindranath, N.H., Sanz Sanchez, M.J. and Zhang, X. (2007) Forestry, In Climate Change 2007: Mitigation. Contribution of
Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [B. Metz, O.R. Davidson, P.R. Bosch, R.
Dave, L.A. Meyer (eds)], Cambridge, United Kingdom and New York, NY, USA, Cambridge University Press.
8
Barker T., Bashmakov, I., Bernstein, L., Bogner, J.E., Bosch, P.R., Dave, R., Davidson, O.R., Fisher, B.S., Gupta, S., Halsnæs, K.,Heij, G.J., Kahn
Ribeiro, S., Kobayashi, S., Levine, M.D., Martino, D.L., Masera, O., Metz, B., Meyer, L.A., Nabuurs, G.-J., Najam, A., Nakicenovic, N., Rogner,
H.-H., Roy, J., Sathaye, J., Schock, R., Shukla, P., Sims, R.E.H., Smith, P., Tirpak, D.A, Urge-Vorsatz, D.
And Zhou, D. (2007) Technical Summary. In: Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report
of the Intergovernmental Panel on Climate Change [B. Metz, O. R. Davidson, P. R. Bosch, R. Dave, L. A. Meyer (eds)], Cambridge, United
Kingdom and New York, NY, USA, Cambridge University Press. p. 27
9
A recent working paper from the World Resources Institute (WRI) suggested that the percentage of emissions from deforestation could be as low
as 12%.  This is based on a revised estimate of emissions from deforestation, and an increase in fossil fuel emissions.  See, Herzog, T. (2009)
World Greenhouse Gas Emissions in 2005, Washington, DC, World Resources Institute, citing Houghhton, R.A. (2008) Carbon Flux to the
Atmosphere from Land-Use Changes: 1850-2005. In TRENDS: A Compendium of Data on Global Change. Carbon Dioxide Information Analysis
Center, Oak Ridge, Tenn., U.S.A., Oak Ridge National Laboratory, U.S. Department of Energy.
10
Project Catalyst (2009a) (emission reductions at less than $85 per ton).
11
Climate Advisers analysis, based on United States Environmental Protection Agency (2009a) EPA Analysis of the American Clean Energy and
Security Act of 2009, Washington, DC. Calculated by comparing the overall abatement costs of IGEM model scenarios analyzed by EPA with and
without international offsets.
12
United States Environmental Protection Agency (2009b) EPA Analysis of the American Clean Energy and Security Act of 2009, Data Annex,
Washington, DC.
13
Project Catalyst, based on McKinsey and Company (2009a) Pathways to a Low-Carbon Economy: Version 2 of the Global Greenhouse Gas
Abatement Cost Curve.
14
The term “low-carbon economy” or “low-carbon growth” has traditionally referred to the process of “de-coupling” economic growth from
growth of greenhouse gas emissions, particularly in the energy and manufacturing sectors. While the link has been lessened in many developed
countries, major technological advancements and widespread deployment throughout the world will be necessary before this can fully be
achieved. Forest conservation payments are essentially an effort to de-couple deforestation and economic growth in tropical forest nations,
making them a key part of the low-carbon economy in many nations, and one that may be more viable in the short-term since it does not require
technological breakthroughs.
15
Food and Agriculture Organization of the United Nations (2006) Global Forest Resources Assessment 2005. Progress towards sustainable forest
management, Rome, Italy.
DeFries, R.S., Houghton, R.A., Hansen, M.C., Field, C.B., Skole, D. and Townshend, J. (2002) Carbon emissions from tropical deforestation and
regrowth based on satellite observations for the 1980s and 1990s. United States, Proceedings of the National Academy of Sciences, Vol. 99, no.
22, p. 14256–14261.
16
Eliasch, J. (2008) Climate Change: Financing Global Forests, United Kingdom, Office of Climate Change.
17
Project Catalyst (2009a) p. 9-10
18
Kauppi, P.E., Ausubel, J.H., Fang, J., Mather, A., Sedjo, R.A. and Waggoner, P.E. (2006) Returning Forest analyzed with the forest identity, USA,
Proceedings of the National Academy of Sciences, Vol. 103, no. 46, p. 17574-17579
19
Project Catalyst (2009a) p. 9
20
Soliani, A. (2008) Brazil to Slash Amazon Deforestation More Than Half, New York, NY, Bloomberg. http://www.bloomberg.com/apps/news?pid=
20601086&sid=aWQ7KaCrd5HE&refer=latin_america
21
Chomitz, K. (2006) At Loggerheads? Agricultural Expansion, Poverty Reduction, and Environment in the Tropical Forests, Washington, DC, The
World Bank. p. 183-4
22
Eliasch, J. (2008) p. 87
23
Fonseca, G. A. B. d., Rodriguez, C. M., Midgley, G., Busch, J., Hannah, L., et al. (2007) No forest left behind, PLoS Biology 5(8): e216.
24
Angelsen, A. (ed.) (2008) Moving ahead with REDD: Issues, options and implications, Bogor, Indonesia, CIFOR. p. 44
25
Government of Brazil (2007a) National Plan on Climate Change, Executive Summary, Brazil.
Although the original goal in Brazil’s National Plan on Climate Change amounts to about a 70% reduction in deforestation rates by 2017, they
have since extended the goal to an 80% reduction by 2020, compared to the average rate from 1996-2005.
26
Unless stated otherwise, whenever the terms “reduced emissions” or “forest conservation” are used in this paper, they are meant to refer to
both reductions in deforestation or forest degradation rates, and enhancement of carbon stocks.
27
Project Catalyst (2009b) p. 9-10.
28
Project Catalyst (2009b) p. 8
29
Resources for the Future (2009) The Forest Carbon Index, Washington, DC.
30
McKinsey and Company (2009b) Fact Sheet: Indonesia Greenhouse Gas Emission Cost Curve, Indonesia.
Resources for the Future (2009).
31
Rosenthal, E. (2009) In Brazil, Paying Farmers to Let the Trees Stand, New York, NY, The New York Times, 21 August. http://www.nytimes.
com/2009/08/22/science/earth/22degrees.html?ref=science.
32
World Resources Institute (2009) Climate Analysis Indicators Tool (CAIT) Version 6.0, Washington, DC. Based on data from 2000, the last year

68 The Commission on Climate and Tropical Forests

comprehensive country-level data on emissions from land-use are available.
33
Government of Brazil (2007a)
Azevedo, T. (2009) unpublished presentation.
34
While the Brazilian Amazon Fund uses a conservative estimate of 100 tons of carbon per hectare to estimate emissions from deforestation,
recent studies indicate that a more accurate number should be closer to 180 tons per hectare when assessing mitigation potential. This report
uses the more recent figure from a study by Loarie et al. (2009), which accounts for any discrepancy between its results and official Brazilian
government figures.
Loarie, S.R., Asner, G.P., and Field, C.B. (2009) Boosted carbon emissions from Amazon deforestation, Geophysical Research Letters, VOL. 36,
L14810.
35
McKinsey and Company (2009c) Pathways to a Low-carbon Economy for Brazil, Brazil.
36
Exman, F., da Costa, A.N. and Zargham, M. (2008) Norway pledges $1 billion to Brazil Amazon Fund, Reuters, 17 Sept. http://uk.reuters.com/
article/idUKN1649421720080916
37
Azevedo, T. (2009).
38
Exman, F., da Costa, A.N. and Zargham, M. (2008).
39
McKinsey and Company (2009b).
40
McKinsey and Company (2009b).
41
Resources for the Future (2009).
42
Simamora, A. (2009a) Indonesia needs $4b to avert deforestation, Indonesia, The Jakarta Post. http://www.thejakartapost.com/
news/2009/06/03/indonesia-needs-4b-avert-deforestation.html
Simamora, A. (2009b) Illegal logging sharply declines in Indonesia: Minister, Indonesia, The Jakarta Post. http://www.thejakartapost.com/
news/2009/05/28/illegal-logging-sharply-declines-indonesia-minister.html
43
Butler, R. (2009b) Indonesia, Mongabay.com. http://rainforests.mongabay.com/20indonesia.htm
44
Barr, C. (2000) Profits on Paper: the Political Economy of Fiber, Finance and Debt in Indonesia’s Pulp and Paper Industries, Indonesia, CIFOR.
Pulp Mill Watch (2009) Indonesia. http://www.pulpmillwatch.org/countries/indonesia/
45
Simamora, A. (2009a).
46
Butler, R. (2009c) Indonesia releases revenue sharing rules for REDD forest carbon projects, Mongabay.com.
47
Friedman, L. (2009) How the World Bank Let ‘Deal Making’ Torch the Rainforests, The New York Times, 19 Aug. http://www.nytimes.com/
cwire/2009/08/19/19climatewire-how-the-world-bank-let-deal-making-torch-the-33255.html
48
The Nature Conservancy (2009) personal communication.
49
United States Agency for International Development (2009) Congo Basin Forest Partnership, Washington, DC.
50
United States Agency for International Development (2008) USAID’s Biodiversity Conservation and Forestry Programs, FY 2007, Washington,
DC. p. vi.
51
Borger, J. (2008) Biggest ever forest protection fund targets Congo basin, United Kingdom, The Guardian. http://www.guardian.co.uk/
environment/2008/jun/17/forests.endangeredhabitats
52
Butler, R. (2009e) Deforestation in the Congo. Mongabay.com. http://rainforests.mongabay.com/congo/deforestation.html.
53
Resources for the Future (2009).
54
Resources for the Future (2009).
55
National Intelligence Council (2008) Global Trends 2025: A Transformed World, Washington, DC.
56
Busby, J. (2007) Climate Change and National Security: An Agenda for Action, New York, NY, Council on Foreign Relations. p. 28
57
Kaimowitz, D. (2005) Forests and war, forests and peace, in Food and Agriculture Organization of the United Nations (2005) State of the World’s
Forests. p. 116-123.
58
Center for Naval Analysis (2007) National Security and the Threat of Climate Change, Washington, DC.
59
Warner, J. (2009) Testimony by Senator John Warner (Retired), Washington, DC, Senate Foreign Relations Committee, 21 July. http://foreign.
senate.gov/testimony/2009/WarnerTestimony090721p.pdf
60
National Intelligence Council (2008).
61
Purvis, N., Jones, A. and Brainerd, L. (2009) Climate Change and Global Poverty: A Billion Lives in the Balance, Washington, DC, Brookings
Institution Press.
62
The World Bank (2004) Sustaining Forests: A Development Strategy, Washington, DC, The World Bank. The World Bank (2005) Climate Change
Threatens Wealth Creation in Developing Countries, Washington, DC. http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:2074
6661~pagePK:34370~piPK:34424~theSitePK:4607,00.html
Chomitz, K. (2006).
63
Olander, L., Boyd, W., Lawlor, K., Myers, E.M. and Niles, J.O. (2009) A Primer on International Forest Carbon, North Carolina, USA, Duke
University Nicholas Institute for Environmental Policy Solutions. p. 2-5., Chomitz, K. (2006)
64
Olander, L. et al. (2009) p. 25. The World Bank. (2004).
65
Reid, W. and Miller, K. R. (1989) Keeping Options Alive: The scientific basis for the conservation of biodiversity, Washington, DC, World Resourc-
es Institute. http://www.wri.org/publication/content/8190
66
The World Bank (2006) Where is the Wealth of Nations? Measuring Capital for the 21st Century, Washington, DC.
67
Millennium Ecosystem Assessment (2005) Ecosystems and Human Well-Being, Synthesis, Washington, DC, Island Press. http://www.
millenniumassessment.org/documents/document.356.aspx.pdf
68
Meridian Institute (2009) Reducing Emissions from Deforestation and Forest Degradation (REDD): An Options Assessment Report, prepared for
the Government of Norway by Arild Angelsen, Sandra Brown, Cyril Loisel, Leo Peskett, Charlotte Streck, and Daniel Zarin. p. 3 http://www.
REDD-OAR.org
69
Eliasch, J. (2008) p. 70, 76, 162.
Stern, N. (2006) The Stern Review on the Economics of Climate Change, United Kingdom, Office of Climate Change. p. 217.
Grieg-Gran, M. (2008) The Cost of Avoiding Deforestation, London, UK, International Institute for Environment and Development.
70
Early-year estimates of global needs are derived from Meridian Institute (2009), and consistent with ongoing discussions in the Informal Working
Group on Interim Finance for REDD, a group of developing and developed countries working to advance discussions on reducing deforestation in
support of global climate negotiations. The $30 billion estimate for 2020 is the cost of reducing 3 billion tons of emissions from deforestation at an
average cost of $10 per ton. This estimate is derived from a variety of global analyses and economic models reviewed for the Commission’s
report. Most models estimate a total cost of reducing deforestation by half between $17-33 billion per year in the 2030-2035 timeframe, at a price
of $5-$20 per ton of carbon dioxide. Since the Commission is recommending emissions from deforestation be reduced by half faster than
anticipated by most of these models and based on the on-the-ground project experience of some Commission members, it has chosen an
estimate towards the high end of these ranges. Indeed, the on-the-ground project costs of some organizations suggest that costs may be higher.
The average cost of $10 per ton was chosen as a mid-range estimate within the ranges projected by these models. The actual price paid per ton
and overall global cost will differ based on a variety of factors, but the Commission believes this estimate is based on the best available data and
backed by enough confidence to serve as a strong objective for the international community to reach in terms of overall financing.
71
Meridian Institute (2009) p. 51-3.
72
Eliasch, J. (2008) p. 223-226.

Protecting the Climate Forests 69

 73
Eliasch, J. (2008) p. 224.
74
The World Bank (2008) State and Trends of the Carbon Market 2008, Washington, DC.
75
U.S Census Bureau (2009) Foreign Trade Statistics, Washington, DC.
76
Resources for the Future (2009).
77
Hermosilla, A. C. and Simula, M. (2007) The World Bank Forest Strategy: Review of Implementation, Washington, DC, The World Bank. p. 13-14.
78
G8 (2002) G8 Action Program on Forests – Final Report. http://www.illegal-logging.info/item_single.php?item=document&item_
id=38&approach_id=2
79
Tropical Forest Group (2007) A History of Climate Change and Tropical Forest Negotiations. http://www.tropicalforestgroup.org/articles/
printable/REDD_history.pdf
80
The group is known as the “Informal Working Group on Interim Finance for REDD”. It was referenced in the 2009 G8 Leaders’ statement
Responsible Leadership for a Sustainable Future found here: http://www.g8italia2009.it/static/G8_Allegato/G8_Declaration_08_07_09_final,0.pdf
81
United States (2009).
82
Parker, C., Mitchell, A., Trivedi, M. and Mardas, N. (2008) The Little REDD Book, Oxford, UK, Global Canopy Programme.
83
Parker, C. et al. (2008) p. 68-70. Brazil’s national plan also proposes reforestation and afforestation objectives, but their submissions to the
international community has focused on reducing emissions from a reference rate of deforestation.
Government of Brazil (2007a).
Government of Brazil (2007b) Brazilian Perspective on Reducing Emissions from Deforestation, submission to the Subsidiary Body for Scientific
and Technological Advice, Twenty-sixth session, Bonn, Germany, UNFCCC, 8-17 May. p. 21-24 http://unfccc.int/resource/docs/2007/sbsta/eng/
misc02.pdf
84
Olander, L. et al. (2009) p. 22-25.
85
Angelsen, A. (ed.) (2008).
86
Olander, L. et al. (2009) p. 19-21.
87
UNFCCC (2007) Bali Action Plan, Bali, Indonesia. http://unfccc.int/files/meetings/cop_13/application/pdf/cp_bali_action.pdf
88
Angelsen, A. (ed.) (2008).
89
Angelsen, A. (ed.) (2008) p. 125.
90
U.S. Department of the Treasury (2008) Debt-for-Nature Agreement to Conserve Peru’s Tropical Forests, Washington, DC, 21 Oct. http://www.
ustreas.gov/press/releases/hp1226.htm
91
United States Agency for International Development (2008) p. vi.
92
United States Department of the Treasury (2009) Treasury International Programs, Washington, DC. http://www.treas.gov/offices/management/
budget/budgetinbrief/fy2010/BIB-InternationalPrograms.pdf
The United States has contributed $80-100 million per year over the last several years to the GEF, which devotes about a third of its resources to
forest and biodiversity-related projects.
93
United States Customs and Border Protection (2009) Guidance on the Lacey Act Declaration, Washington, DC. http://www.cbp.gov/xp/cgov/
trade/trade_programs/entry_summary/laws/food_energy/amended_lacey_act/guidance_lacey_act.xml
94
United States Agency for International Development (2008) p. 100-101.
This figure includes funding through USAID, the Treasury Department, and contributions to the World Bank’s Global Environment Facility that were
directed at forest conservation.
95
See footnote 73.
96
George W. Bush (2007) Toward A New Global Approach To Climate Change And Energy Security, Washington, DC. http://2001-2009.state.
gov/g/oes/rls/fs/2007/92935.htm
97
Energy Policy Act of 2005, Public Law 109–58—AUG. 8, 2005. www.epa.gov/oust/fedlaws/publ_109-058.pdf
98
World Resources Institute (2009).
99
This number is derived from the EPA analysis of the House bill using their IGEM model. It assumes that 56% of international offsets will come
from reducing emissions from tropical deforestation, as suggested by models EPA uses, and that the 720 million tons of reductions mandated for
set-aside funding will be achieved. If the percentage of international offsets from forests were as high as 80%, as suggested by some models,
this number could be over 50%. It could also be as low as 35%, if the legally mandated 720 million tons are not achieved. Therefore, the analysis
in this report makes two key assumptions: 1) the pool of verified emission reductions from forests will be large enough and cost-effective enough
to satisfy U.S. offset and set-aside demand, and 2) there will be enough money from the set-aside to purchase 720 million tons of verified
emission reductions in 2020. These assumptions introduce some inconsistency into the analysis, but the alternative would be to assume that the
law would be violated. Indeed, the House bill includes a provision that requires the EPA Administrator to increase the set-aside for tropical forests
if there is not enough funding to achieve mandated reductions. If the world is able to reduce tropical deforestation 50% by 2020, as called for in
this report, the first assumption will be less problematic.
100
U.S. EPA (2009a).
Congressional Budget Office (2009) Cost Estimate H.R. 2454 American Clean Energy and Security Act of 2009, Washington, DC.
101
This recommendation is the sum of two components. First is the cost of international offsets that would need to be purchased by the private
sector in order to effectively contain the costs of a cap-and-trade program, according to U.S. government analyses. The second is the amount of
funding the United States would need in order to provide upfront funding and to engage high-risk countries, countries that are unwilling to
participate in markets and countries with large forest stocks but historically low rates of deforestation. The second component assumed a U.S.
contribution in each of these areas of 20-25% of the amount needed to achieve a halving of deforestation by 2020, which is the minimum amount
the United States would need to provide in order to catalyze a global effort.
102
The bill also includes a third potential provision for financing tropical forest conservation. If allowance prices rise above a certain level,
additional ones will be auctioned from a “strategic reserve,” filled each year with a pre-determined amount. Once the reserve has been
exhausted, it is refilled by purchasing verified emissions reductions from international forest conservation. Given that most estimates place the
cost of allowances well below the price required to trigger the strategic reserve, is it unlikely that any additional funding for forest conservation will
be generated in this way.
103
However, some analyses such as that conducted by the EPA assume that not enough funding will be available to achieve the full 720 million
tons of reductions. In addition, depending on the amount of credits “banked” in a given year, this number could be lower or higher than the
mandate when taking a one-year snapshot of reductions.
104
See footnote 99, because this is based on EPA analysis the set-aside is not assumed to be legally binding.
105
United States of America (2009) United States Input to the Negotiating Text for Consideration at the 6th Session of the AWG-LCA, Washington,
DC. p. 20-21. http://unfccc.int/files/kyoto_protocol/application/pdf/usa040509.pdf
106
See footnote 105.
107
All values are in millions of 2009 U.S. dollars based on allowance prices and international offset volumes estimated by the U.S. EPA’s ADAGE
and IGEM model analysis and the Congressional Budget Office.
108
The EPA Administrator is required by H.R. 2454 to increase the allowance set-aside for supplemental reductions from international forest
conservation if necessary to ensure the purchase 720 million tons of verified emissions reductions each year from 2020-2025, and a total of 6,000
million tons from 2012-2025.
109
U.S. EPA (2009a).

70 The Commission on Climate and Tropical Forests

110
This calculation is based on the range of offset volumes in the preceding sentence that are purchased at the 2020 allowance prices estimated
by each study. Since international offsets are discounted at a ratio of 1.25:1 beginning in 2017, the amount of offsets purchased will be larger than
the amount used for compliance at a 1.25:1 ratio.
111
See Congressional Record for June 2-6, 2008, remarks by Senator Corker, Senator Cochran, Senator Enzi, and Senator Craig.
112
Leonard, L., Kopp, R.J. and Purvis, N. (2009) International Forest Carbon in Congress: A Survey of Key Congressional Staff, Washington, DC,
Resources for the Future. http://www.rff.org/RFF/Documents/RFF-IB-09-03.pdf
113
United States Climate Action Partnership (2009) A Blueprint for Legislative Action, Washington, DC. p. 10-12 http://ww.us-cap.org/pdf/
USCAP_Blueprint.pdf, Avoided Deforestation Partners (2009) Tropical Forest and Climate Coalition. http://adpartners.org/pdf/ADP%20
Forest-Climate%20Unity%20Agreement-%205-18-09.pdf
114
For further details, see: http://www.climatechange.ca.gov/forestry_task_force/index.html
115
Grieg-Gran, M. (2008).
116
This figure is an estimate based on the compensation (at $10 per ton of CO2) needed to prevent the equivalent of a doubling in emissions from
deforestation in the Congo Basin by 2020, a region that has been identified as a site of potential “leakage” caused by emission reductions in other
areas.
117
This figure is an estimate based on the compensation (at $10 per ton of CO2) needed to reduce emissions from high-risk countries in an
amount equivalent to current emissions from the Congo Basin region by 2020.
118
This figure is an estimate based on the compensation (at $10 per ton of CO2) needed to reduce emissions from Brazil and other non-market
countries by about 1.25 billion tons per year by 2020, in line with earlier country-specific discussions in this paper, with the United States
financing approximately one fourth of these reductions. Although Brazil’s Amazon Fund has requested “ex-post” payments of $5 per ton of
emissions reduced, on-the-ground project experience, economic models and potential increased pressure on forests as reductions are achieved
suggests that the price of emission reductions may be closer to $10 per ton.
119
This figure is consistent with a private sector investment in 900 million tons of emission reductions at a price of $10 per ton (or 600 million tons
of emission reductions at a price of $15 per ton). Nine hundred million is approximately 60% of the 1.5 billion tons of international offsets that
have been recommended by some stakeholders and are included in the House bill, consistent with EPA estimates that roughly this share of total
international offsets would come from forests. This figure is also close to the midpoint between the total amount spent to purchase offsets in the
EPA (seen as a high estimate) and Congressional Budget Office (seen as a low estimate) analyses of the House bill. Both analyses show relatively
low costs for U.S. companies and consumers, and in the context of a cap-and-trade program the Commission believes at least this amount of
international offset purchases will be needed to contain costs. Since the CBO cost curves were not readily available, Commission staff estimated
that 56% of total offsets would come from forests. This 56% figure is drawn from the international abatement cost curves used by EPA. Under
these analyses, this would equal about 400-500 million tons of verified offset tons purchased by U.S. companies in 2020 from tropical forests,
depending on allowance prices, in addition to about 500 million tons purchased through public funding. Assuming U.S. public funding
contributions are leveraged in the manner envisioned in the previous section, with the U.S. financing about 25% of the global total (about
1.75-2.25 billion tons of emission reductions, depending on if credit is provided for reductions from high-forest, low-deforestation countries), this
means an additional 250-850 million tons of reductions would need to be achieved in order to halve global deforestation. These could be
additional offset purchases by the United States or other countries. It is also possible that some of the public funding purchases envisioned in this
analysis are instead purchased as verified reductions through carbon markets in the United States or elsewhere, shifting the balance of funding
between public and private but still requiring the same overall need. The estimate of saving “up to 50%” and “up to $50 billion” is calculated by
the difference between the costs of EPA scenarios with and without international offsets. Although not all of these savings would come from
forests, based on EPA and other cost curves it is likely that roughly 60% of international offsets could come from forests, making them a critical
part of the cost savings achieved by the bill.
120
For example, see the Amazon Alliance, http://www.amazonalliance.org/en/ and Tebtebba, http://www.tebtebba.org/
121
H.R. 2454, The American Clean Energy and Security Act of 2009, passed by the House of Representative on June 26, 2009.
122
H.R. 2454.
123
Ecosystem Marketplace (2009) Forest Carbon Portal. http://www.forestcarbonportal.com/index.php
124
Voluntary Carbon Standard (2009) Agriculture, Forestry, & Other Land Use. http://www.v-c-s.org/afl.html
Climate, Community, and Biodiversity Alliance (2009) CCB Standards. http://www.climate-standards.org/
United Nations Framework Convention on Climate Change (2009) Methodologies for afforestation and reforestation CDM project activities. http://
cdm.unfccc.int/methodologies/ARmethodologies/index.html
125
The Nature Conservancy (2009) INTEGRATED INCENTIVES: A comprehensive REDD+ framework for achieving sufficient, credible, and
equitable forest carbon benefits, Washington, DC.
126
Wagner, R.G. et al. (2006) The Role of Vegetation Management for Enhancing Productivity of the World’s Forests, 79 Forestry 57.
Nabuurs, G.J. et al. (2007) Forestry, in Metz, B. et al. (eds.) (2007) Mitigation, Intergovernmental Panel on Climate Change. p. 576.
Jackson, R.B. et al. (2005), Trading Water for Carbon with Biological Carbon Sequestration, 310 Science 1944.
Carrasco-Letellier, L. et al. (2004) Preliminary Study of Prairies Forested with Eucalyptus Sp. at the Northwest Uruguayan Soils, 127 Envtl.
Pollution 59.
127
Includes Indonesia, Brazil, Malaysia, Myanmar, the Democratic Republic of the Congo, Zambia, Nigeria, Peru and Papua New Guinea.
128
This figure is intended to be generally illustrative of the benefits of a forest carbon aggregator, but global forest carbon markets are likely to be
much more complicated. It ignores the consumer surplus offset purchasers are likely to gain from purchasing tropical forest offsets at a price
lower than other alternatives.
129
Food and Agriculture Organization of the United Nations (2006) World agriculture: towards 2030/2050, Interim Report, Rome, Italy.
130
Friedman, L. (2009).
131
H.R. 2454.
132
Wise, M., Calvin, K., Thomson, A., Clarke, L., Bond-Lamberty, B., Sands, R., Smith, S.J., Janetos, A., and Edmonds, J. (2008) Implications of
Limiting CO2 Concentrations for Land Use and Energy, Science, vol. 324. no. 5931, pp. 1183–1186.

Protecting the Climate Forests 71

www.climateforestscommission.org/