One hot set of proposals at the Copenhagen climate change negotiations this week would transfer billions from developed to developing countries, by allowing rich country polluters to buy carbon offsets generated through forest conservation in poor countries -- creating a financial incentive to keep forests standing instead of razing them for cattle ranches, palm oil plantations, or slash-and-burn subsistence farming.
At first blush, this policy (known as REDD, for 'Reducing Emissions from Degradation and Deforestation') seems an unmitigated boon for the developing world and a way to get the rich and poor countries on the same climate page, something that has been so far difficult to achieve. Theoretically the revenues would allow poor countries to invest in schools, malaria bednets, and low-carbon development technologies, propelling them out of poverty and onto a path of sustained (and carbon-neutral) economic growth. Everyone is better off, right? Not so fast.
Under the dense canopy of reforestation, there lie hidden dangers. Rather than lead to much-needed investments, as currently designed REDD is more likely to fuel political corruption, erode democratic accountability, incite armed conflict, and undermine long-term economic development. That's because paying governments to keep forests standing transforms them into a very valuable, highly concentrated, natural commodity, under the control of the state - much like oil is now.
And herein lies the risk: Historically, abundant reserves of minerals and petroleum have precipitated a 'resource curse' in many countries unlucky enough to be endowed with nature's plenty. Large natural resource revenues create corruption because it's easy for government officials to siphon profits for personal rather than public gains. Resources like oil - and large standing forests - can also lead to 'rentier states', which emerge when the government doesn't need to tax the populace because it can rely on resource revenues. This hampers the development of effective state bureaucracies, and weakens incentives for citizens to demand democratic accountability since their tax dollars are not at stake. Statistical studies by political scientists and economists at NYU, UCLA, and the World Bank have found that countries abundant in oil and minerals are less democratic and more corrupt, even taking into account other country characteristics like income. On the economic side, foreign exchange earnings from REDD windfalls could cause currencies to appreciate (as happened in the Netherlands after oil was discovered in 1959), undermining export-led growth opportunities in the long term. And countries highly dependent on natural resources are more prone to civil wars, cross-national studies show, a tragedy that unfolded this past decade in Sudan, Aceh, Sierra Leone and Liberia.
REDD could also hurt the local communities living in and around forests. Members of the Ecosystems Climate Alliance filed a white paper last spring with the UN body overseeing the Copenhagen negotiations cautioning that poor forest-dwelling communities may bear the direct costs of REDD in the form of reduced rights to forage for staple foods or harvest crops, but would likely not receive REDD revenues paid to central governments. If this occurs, countries' most vulnerable citizens would be further impoverished by REDD. That's what happened when the governments of Kenya and Tanzania created big game parks to protect wildlife and promote safari tourism in the 1960's by evicting Maasai subsistence pastoralists.
But REDD could be fixed. One approach would be to link payments to political reforms and transparency at the national level, in a system modeled on World Bank loan conditionalities and Bush's Millennium Challenge Fund. However, these and other similar efforts have failed in the past. The Bank funded $4.2 billion Chad-Cameroon Oil Pipeline Project started with high hopes as a model for 'beating the resource curse' and making oil production revenue work for poverty reduction, but ended thanks to blatant flouting of the project's conditions by Chad's government (among other imbroglio, the president siphoned millions in oil revenue to buy arms, which were used to fight insurgents).
A better option would be to direct REDD payments to sub-national provinces and forest-dwelling indigenous groups, rather than central governments. This would put the carbon profits from forest conservation directly into the hands of local resource users, circumventing central governments and short-circuiting the corruption and state corrosion caused by natural resource windfalls. The distribution of REDD rents would make fighting over them less attractive, reducing resource conflict. Direct local payments will also make it more likely that REDD revenues will be spent to fund health clinics, pay schoolteachers, and spur sustainable economic development and poverty reduction. Field research I conducted in Fiji's fisheries found that environmental conservation and household food subsistence improves when local communities set the rules on natural resources use and keep the profits generated by conservation. And Ambroseli National Park in Kenya, which is managed in partnership with indigenous Maasai, has proven more successful than other parks at protecting wildlife populations and benefiting local communities. It was Elinor Ostrom's paradigm-shifting research, demonstrating that community control can promote more sustainable resource use than either private or state ownership, which in part earned her the Noble Prize in Economics this year.
Carbon emissions from deforestation account for almost 20% of human-caused greenhouse gas emissions, so there is broad consensus among environmental scientists that REDD will have to play a significant role in any serious effort to combat global warming. But negotiators in Copenhagen must take care that clever strategies to stop climate change do not threaten developing countries with a REDD induced resource curse.