05/18/2015 11:17 am ET | Updated May 18, 2016

The Forest, The Farms and the Finance: Why the Tolo River People Turned to Carbon Finance

About This Series 

Colombia's Tolo River People collectively own 32,000 acres of rainforest, and that forest feeds the river on which they depend. But ownership means nothing if you can't protect it. Four years ago, they began harnessing carbon finance to save the forest and preserve their way of life. This series takes us into their thinking and their strategy. It has been adapted from "Modern day forest conservation: A Colombian community protecting its rainforest one carbon credit at a time," by Tanya Dimitrova.

Part One: How The Tolo River People Of Colombia Harnessed Carbon Finance To Save Their Rainforest provides an overview of the project.

Part Two: The Forest, The Farms, And The Finance: Why The Tolo River People Turned To Carbon Finance examines the drivers of deforestation in and around the Tolo River Community.

Part Three: The Tolo River Community Project: The Importance of Inclusion follows the development of the project itself - its conception, its implementation, and its challenges.

Part Four: Getting Down To Business: The Tolo River People Shift From Building Their Carbon Project To Selling The Offsets tells the surprisingly challenging story of finding and cultivating offset buyers.

You can also find the REDD Desk Project summary of this project here.

The Tolo River People of Colombia were in a bind: dependent on nearby cattle ranches to make a living, they were helping destroy the forest that sustained them and their way of life. Here’s a look at the economics that drove them to embrace carbon finance.

This story is the second in a four-part series to initially run on Ecosystem Marketplace, and has been edited for a mainstream audience. Click here to view the full, unedited version.

18 May 2015 | Every morning, Jorge Vergara drives his motorcycle from the village of Acandí to the Builes Ranch, where he tends the nearly 400 cows and cattle. The ranch is just a ten-minute walk from Tolo River village of Peñaloza and one of many bordering their forest. On this day, two boys from the Tolo River community have tagged along to help him with the chores. Their payment will come in the form of a bottle of fresh milk.

The night before, Vergara had separated the two dozen or so milk cows from their calves so their udders would be full of milk by the morning. The hungry calves are now mooing by the fence, pushing to get close to their mothers.

Vergara lets one calf in, and it anxiously runs to its mom and starts suckling, only to be pulled away by Vergara’s young assistants once the milk-flow has “spiked”. Then he takes over to squeeze the warm milk into a bucket. “Boy!” he shouts. “Let another one in!”

Vergara is at the forefront of deforestation in this region, in part because land is so cheap here, and cattle ranching is so lucrative. That disparity left the forest at a disadvantage: living trees delivered no income, while cleared land did, and the desire that the Tolo River people had to save the forest was outweighed by their need to feed their families.

To balance that disparity, they turned to REDD (Reducing Emissions from Deforestation and Forest Degradation), which would make it possible for them to earn money by saving trees. The amount of money would depend in part on the amount of carbon stored in the trees they saved and in part on demand for carbon offsets.

The advantages of REDD are clear: it conserves tropical forests and unique natural biodiversity; it reduces our global impact on climate; and it fosters sustainable rural community development. Yet to realize and sustain the initiative’s success, many potential pitfalls need to be avoided as such projects scale up around the world.

The Economics of Deforestation

In countries where land is expensive, ranchers keep cows in relatively small spaces and feed them silage – fermented fodder produced from grass and maize plants. It’s an efficient, albeit perhaps not humane, way to manage land, and a farmer can raise up to three animals per hectare, greatly reducing the size of the farm, according to the Food and Agriculture Organization.

In many tropical countries, however, land is cheap, or even free if no farmer has claimed it yet. Ranchers here exhibit a classic open-frontier mentality: when they see a forest, they feel the land is wasted because it would make a great pasture. “The farm needs to grow,” says Vergara. “Silage is too much hassle.” They opt for less land-efficient cattle operations because it is easy and cheap to expand the ranch by clearing some of the bordering rainforest. On average, they place only one cow per hectare of land. This ensures that the herd always has fresh pastures with waist-high grass to graze.

It’s easy for cattle ranches in Chocó to illegally grab the forest: they just clear the vegetation on a 60-by-80 foot plot near the edge of the forest, put a fence around it, a salt lick in the middle and let cattle in. Most of the flat lands in the region have already been converted to pasture, so cattle ranchers encroach on the hills of the forest. Some of these cleared plots have an almost 45-degree slope – the cows look like mountain goats perched on the hillside.

 Jorge Vergara milking a cow with the help of a local boy. (Photograph: Tanya Dimitrova)

Jorge Vergara milking a cow with the help of a local boy. (Photograph: Tanya Dimitrova).