Scaling and accelerating change
Scaling and accelerating the conservation, sustainable management, and restoration of forests will require addressing the governance and market failures that currently undermine the natural capital of forests. There are many possible strategies for doing so. One is to incorporate the value of forests into national economic accounts, thereby appropriately recognising the contribution of forest capital to a country’s growth (see Chapter 5: Economic Policy for a discussion on better accounting approaches and metrics). Another is creating, financing, and sufficiently enforcing protected areas. Yet another is building markets for wood and paper products certified as coming from sustainably managed forests and for agricultural commodities certified as sustainably grown. Although important, we do not expand upon these here. A lot of research has gone into them already. 179
Rather, based on analysis and expert input, we highlight three of the enabling factors required for any successful management of forest resources for economic and climate benefits:
- Secure tenure;
- Improved land use planning; and
- Better law enforcement.
In addition, we highlight four seeds of transformational change – some recent developments, some needing greater attention – that could result in significant economic and climate benefits:
- Technology-assisted transparency;
- Zero-deforestation supply chain models;
- Payments for watershed services; and
- Reducing Emissions from Deforestation and Forest Degradation plus (REDD+) finance.
As is the case with cities and energy, many of these strategies harness one or more of the three key drivers of change. Improving land use planning processes is a means of raising resource productivity, in this case land use productivity. REDD+ finance and payments for watershed services are a form of increasing infrastructure investment, in this case investment in the natural infrastructure of forests. Innovations in information and communication technologies are enabling never-before-possible transparency about forests, while zero-deforestation supply chains are an innovative new business model with great potential.Underlying these drivers of change is the potential for improvements in tenure and law enforcement – institutional conditions that set the context for how forests are managed.
Secure tenure – the assurance that the rights, rules and institutions governing the conditions of access and use of the land and its forest resources will be respected by government and society – is an important precondition for motivating people to invest in conservation, sustainable management, or restoration of forests. Individuals, families, or communities are unlikely to invest if they do not have clear rights to, or ownership, of that land, if that land can be taken away from them without due process and fair compensation, or if they do not have rights to any of the benefits of trees on that land.
Secure tenure has proven particularly effective when it comes to indigenous peoples and local communities with deep historical and cultural connections to the land. Emerging evidence from countries including Brazil, Bolivia, Guatemala, Mexico and Tanzania indicates that forests with clear and enforced property rights for indigenous peoples and local communities living in them are better conserved and more sustainably managed than forests that lack such security in rights. In Bolivia, for example, the deforestation rate in forests owned by indigenous communities is one-11th of the rate in other areas – which includes areas without secure tenure, privately owned forests, and those held by the government. In Guatemala, the deforestation rate in community concessions in the Maya Biosphere Reserve is one-20th of the rate in other parts of the Reserve, where the government owns and manages the forest, but illegal settlement and logging still occur. 180
Providing legal recognition of indigenous and local community rights to forests and supporting the integrity of these rights would be a low-cost way for a government to avoid deforestation and unnecessary conflict when it comes to natural resource management. 181 Ways that governments can support these rights include mapping community forest boundaries, helping expel illegal loggers, and not granting commercial concessions within community forests.
Secure tenure is an important strategy because it addresses some of the underlying governance failures affecting forests and because of the scale of its potential impact. More than half a billion hectares around the world are legally or officially designated as indigenous and community forests. Getting every hectare of these forests to the level of clarity and enforcement of rights as in the Maya Biosphere Reserve and in the Bolivian Amazon would help sustain the forest capital of about one-eighth of the world’s forests. And potential exists in the additional forest areas held by communities under customary rights that are not yet recognised and protected by governments. 182
Improved land use planning
Good land use planning can help optimise how land is used, encouraging agriculture in highly productive areas and prioritising forests in areas in need of watershed protection, having high forest-dependent local livelihoods, and other factors. Tools for land use planning include forest zoning (e.g. designating protected areas), tax incentives, and more. 183 Good land use planning provides clarity around procedures and land classifications, which can lower transaction costs and provide certainty to businesses and landowners. But in order to generate these impacts and avoid corruption, planning processes need to be transparent and participatory when being developed and enforced once approved.
One example of improved land use planning is Colombia’s expansion of its protected forest areas through the enlargement of the Serranía de Chiribiquete National Natural Park in 2013. This protected area, in a highly biodiverse region within the Amazon rainforest, increased from 1.3 million ha to almost 2.8 million ha, an area as large as Belgium.184 In addition to zoning, the policies and interventions summarised by the associated “Amazon Vision” initiative (which includes the expansion of Chiribiquete)also promote improved governance of forest resources, alternative low-carbon development activities, and more secure rights and livelihoods for indigenous peoples in the regions concerned, in partnership with the private sector and civil society. 185
Another example is Costa Rica. The country has conserved and restored forest capital since 1986 through land use planning policies and processes, in conjunction with wider market shifts in the national economy and agricultural subsidy reforms. 186 For instance, the country prohibits conversion of mature forests to other land uses. Roughly 25% of the country is zoned as protected forest, while some surrounding areas are sustainable management zones. And the nation has implemented a payment for ecosystem services (PES) system designed to encourage land managers to conserve, sustainably manage, and restore forest landscapes (Box 7). 187
Better law enforcement
Economists have long argued that the rule of law is an important foundation for well-functioning markets and the efficient use of capital. 188 This is no less true for natural capital. Having clear and enforced laws increases the likelihood that private-sector actors will be able to compete on a level playing field, that decisions of public-sector actors are followed, and that natural resources will be more sustainably managed. 189
Better law enforcement is paying dividends in sustaining forest capital. For instance, a major cause of the decline in deforestation in the Brazilian Amazon from 2005 to 2012 was that the government ramped up its enforcement of the Forest Code that set limits on forest clearing. The use of remote sensing to detect infractions in near-real-time, more agents in the field to follow up on those detections, and visible applications of fines and other penalties combined to boost law enforcement at the Amazon forest frontier. 190
Law enforcement is an important strategy because it addresses some of the underlying governance failures and because of its potential scale of impact. Well-executed law enforcement can affect an entire country’s forests.
It has long been recognised that transparency regarding the physical state of forests and decision-making about forests is a critical foundation for any effort to conserve, sustain and/or restore the natural capital of forests. Recent advances in technology have the potential to amplify the power of transparency. The convergence of low-cost satellite imagery, cloud computing, high-speed internet connectivity, smartphones and social media is ushering in a new world of “radical transparency” where what is happening in a far-away forest can now be known close to home. Exemplifying this convergence, the Global Forest Watch system now makes it possible for anyone freely to identify changes in forest cover anywhere on the planet at relatively frequent time intervals.
This level of transparency is vital for the successful implementation of other strategies described in this chapter. For instance, it enables monitoring and verification in pay-for-performance PES finance. It enables commodity buyers and suppliers to demonstrate adherence to supply chain commitments. And it provides the information needed for better land use planning and effective law enforcement.
Technology-enabled transparency is an important strategy in part because its scale of impact is substantial. All of the world’s forests now have a level of transparency that they have never had before. It is also important because it helps tackle the governance failures that prevent the full realisation of forest’s natural capital. Transparency can trigger accountability, deter corruption, and empower better-informed decision-making.
Zero-deforestation supply chain models
Increased transparency is leading to increased corporate supply chain pressure to curtail deforestation. Because many customers and employees of companies care about forest conservation, being associated with deforestation can negatively affect a company’s brand value, sales, and employee morale. And a company’s brand image can constitute a large share of its corporate value. 191 Recognising this connection, some companies have taken steps to leverage their supply chain power to disassociate their business activities from deforestation-related commodities.
Starting in mid-2006, for example, members of the Brazilian Vegetable Oils Industry Association and the National Grain Exporters Association committed to a moratorium on soybeans linked to deforestation in the Amazon.192 The moratorium has been quite effective; soy-linked Amazon deforestation has dropped to minimal levels. 193 More recently, members of the Consumer Goods Forum (CGF) such as Unilever and Nestlé have been making commitments to achieve deforestation-free commodity supply chains by 2020 and to curtail procurement from suppliers who do not comply. Such pledges offer a hopeful glimpse of where supply-chain behaviour is moving, and their impact is already trickling upstream to commodity producers and traders. For instance, as of mid-2014, more than 50% of globally traded palm oil is covered by “zero deforestation” commitments. 194
The zero-deforestation supply chain model is an important strategy because it addresses both market and governance failures affecting forests. To the degree that buyers follow through on their commitments, the financial flows of commodity purchases will be aligned with sustaining forest capital. And the procurement practices will necessitate heightened transparency and accountability. This supply chain model is also important because it has the potential for impact at a large scale. The CGF consists of 400 of the world’s leading consumer goods manufacturers and retailers from 70 countries with combined annual sales of €2.5 trillion. 195 Its members reach deep into the global supply chains that most affect the planet’s forests.
Building on the CGF’s work, the Tropical Forest Alliance 2020 (TFA 2020) is bringing together governments, the private sector and civil society to support zero-deforestation. TFA 2020 members are committed to reducing the deforestation in tropical forests that is driven by production of four major global commodities: palm oil, soy, beef and paper and pulp). It includes many of the major global companies that trade these products, manufacture consumer goods containing them, and sell them. This includes companies such as Unilever, Coca-Cola, Pepsi Co, Nestlé, Danone, Kellogg, Colgate, Procter & Gamble, L’Oréal, Mars, Walmart, Cargill, Wilmar International, Golden Agri-Resources, Tesco, Casino and Carrefour. The participating companies have undertaken to remove products from deforested areas from their supply chains in some cases by 2015, and in others by 2020. In the case of palm oil, companies participating in the initiative have 15% of the total consumer market by volume, and well over 50% of the global trade in the commodity. TFA 2020 also works with the governments of the producer countries (such as Indonesia, Colombia, Nigeria and Ghana), and with international donors, including the United States and several European governments, to ensure that local producers can meet the new sustainability standards and to help support anti-deforestation policy. The CGF recently called for a global climate agreement that includes large-scale financial incentives for reduced emissions through REDD+. 196
Together with the CGF, a number of banks have also engaged in a Banking Environment Initiative 197 to support consumer companies in their efforts to reduce deforestation through a Soft Commodities Compact. The Compact commits banks to work with consumer goods companies and their supply chains to develop appropriate financing solutions that support the growth of markets producing timber products, palm oil, soy and beef without contributing to deforestation. Eight banks had adopted the Compact as of mid-2014.
Payments for watershed services
Payments for ecosystem services (Box 7) monetise some of the economic benefits that forests provide beyond those traditionally traded in private markets (e.g. timber). One form of payment gaining traction relates to investing in forests as a low-cost means of securing stable, clean freshwater supplies. Leaders of New York City, for example, opted in the 1990s to conserve and restore forests in upstream watersheds that supplied the city’s drinking water instead of investing in building an expensive new water filtration system. In so doing, the city saved $6.5–8.5 billion while securing long-term, clean drinking water supplies. 198 Others are following suit, including cities such as Quito, Ecuador; São Paulo, Brazil; and Bogota, Colombia. Investments in watershed protection upstream of Bogota are projected to save the city US$35 million over the course of 10 years. 199 In essence, these payments for watershed services recognise forests as a form of natural infrastructure that can be lower cost than the traditional concrete-and-steel “grey infrastructure” of water filtration, water storage, and related technologies.
Payments for watershed services are an important strategy because they monetise one of the traditionally non-marketed benefits that forests provide and thereby better reflect the economic value of forest capital. Their scale of impact, however, will likely not be global. Not every city relies on freshwater that is filtered and moderated by upstream forests. But such payments are an investment that some cities and businesses can make that provides both economic and climate benefits, complementing the strategies described in Chapter 2: Cities. And the next 15 years are an opportune time. Analysis for the Commission has estimated water infrastructure investment at US$23 trillion in 2010 prices, covering the period 2015–2030. 200 Investing in the natural infrastructure of upstream forests can be a viable alternative that could significantly reduce these projected costs. 201