David Miliband wants Westerners to buy the Amazon rainforest (Sunday Telegraph, 1 Oct 2006, News, p.2). We need to ensure that there is a balance between urban and industrial development to provide the goods that people demand, agricultural development to provide the food that they demand, and undeveloped areas to provide the ecological services (such as carbon dioxide absorption) that we need and the habitat to support the biological diversity that may yield untold benefits in the future. Property rights are an important way of encouraging protection of assets. In that sense, a proposal to introduce property rights in rainforests should be welcomed.
But property rights are only useful in something that has value. The question is, what value will be placed on the acres of rainforest? The truth is that trees are not carbon-negative through their lifecycle. They absorb carbon during their growing phase, but at some point they die or are cut down, at which point the carbon, under most circumstances is released back to the atmosphere. The only planting that could be considered carbon-negative is the planting of land that previously absorbed little carbon with plants that increase that land's carbon-absorption potential. And that is a gain that can only be counted once - the gain cannot be increased by harvesting and replanting. So what value is being attributed to the rainforest?
In one sense, it doesn't matter. Value is subjective. If people want to pay for property rights in some acres of rainforest, then that land is worth what they are willing to pay. The problem comes if the owners expect to recoup their investment from trading of carbon credits on account of their land's absorption potential. If all the world's rainforests were privately-owned and protected from destruction, we would be no farther down the road to reducing our carbon footprint than we are now. We would have avoided the further increase in our carbon footprint that would have come from more destruction of the rainforest, but that should be a cost applied to those who carry out the destruction, not a value offered to those who prevent it.
Of course, cost and value can be two sides of the same coin. The destruction of rainforest is a cost to the environment, so the avoidance of its destruction must have a value. But the destruction of the rainforest also had a value to those who would have cleared the land, otherwise they would not have done it. The prevention of the destruction is therefore also a cost to the farmers (typically very poor farmers) who would otherwise have benefited. The schemes that allow rich Westerners to buy rainforest to trade its carbon-saving potential therefore have two flaws: (1) they attribute to it a non-existent carbon-saving, and (2) they fail to compensate the other parties to the transaction - the farmers. If we really want to find out how altruistic are the intentions of these rainforest purchasers, we should (a) ensure that the property is in the first place attributed to individual smallholders in the countries where the rainforest is to be protected, so that they can benefit from the transaction that removes from them the potential to develop that land to their advantage, and (b) ensure that the trading of carbon-savings is within a mechanism that recognises the difference between non-exacerbation of the carbon problem, and its amelioration. It is to be hoped that the benefactors will still be interested in the opportunity, but the system should not be skewed to make it look like it offers more environmental benefit than it really does.
Under the auspices of the Kyoto mechanism, the world is awash with schemes that claim to cut carbon when all they really do is avoid making the situation worse. Thanks to the proliferation of these schemes, which offer notional carbon savings for a pound or two per tonne of carbon, it is very cheap to "neutralise" or "offset" the carbon emissions from any activity. At the current rate of adoption of these schemes, one can foresee a point in the not too distant future where whole countries or industries are notionally "carbon-neutral" and yet they continue to contribute to the accumulation of carbon in the atmosphere. Already, we have the first carbon-neutral school, and the first provider of carbon-neutral water.
A new publication from the Dag Hammarskjöld Foundation exposes the illusions at the heart of current Carbon Trading systems. If Carbon Trading is not to be discredited, it needs urgently to be put on a solid foundation that values carbon appropriately. Amelioration of carbon emissions should be accounted, wherever it occurs in the world, as a reduction in the cost of emissions, not as a carbon saving to be traded. It may be that this is an unrealistic political ambition. If so, an alternative approach to Carbon Trading must be adopted.
The effect of this distorted market is to encourage investment into some schemes that have a marginal climate benefit, and to pay excessively for others that would have been done anyway, and away from other schemes that would offer greater long-term benefit. In particular, it allows rich first-world polluters to assuage their conscience at the climate impact of a flight or a tank of petrol for minimal cost. This neither prevents the polluting activity, reduces its impact, nor compensates those who will suffer the impact. Unless Carbon Trading is based on genuine costs of reducing our carbon emissions, it is a sham that simply wastes the money spent on it.