Can Money Stop Deforestation? – The Economist (2023)

In the 1980’s due to governmental policies favoring agriculture, the landcover of tropical rainforests decreased from 75 % (in the 1940s) down to 21 % in Costa Rica. Many tropical countries followed suit. The world’s largest rainforest the Amazon also experienced decades of deforestation. Money clearly drives deforestation. But can it also help save the forests?

The promise of REDD+ (Reducing Emissions from Deforestation and forest Degradation) is fairly straightforward: Forest owners keep their standing vegetation intact and in return get compensated by polluters. There are already established strong protective traditions in some local communities such as the indigenous Mayan cantones in the state of Totonicapán, Guatemala, Kichwa tribe of the Ecuador and many others around the World.

REDD+ is an economical model developed by Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in 2005. It aims to create a financial value for the carbon stored in forests. Carbon emissions from deforestation and forest degradation is up to 17 percent of total yearly emissions. This is more than that of the entire global transportation sector and second largest after the energy sector.

However, theory and practice appears to differ. According to The Guardian, more than 90% of rainforest offset credits – among the most commonly used by companies – are likely to be “phantom credits” and do not represent genuine carbon reductions.

Certainly, we are living in a very dynamic world and experiencing a whirlwind of revolutionary technical developments. Perhaps a new autonomous and immutable record keeping system such as the blockchain might help. Building trust is key which can drive a shift from the tragedy of the commons towards fortune of the commons. REDD+ was proposed to be restricted to developing countries and was a good first step effort to build a carbon market. The political history of emissions trading in the US is particularly important in this regard. The US has already implemented a successful cap and trade market solution to prevent the acid rain problem within the 1990 Clean Air Act. California’s own cap and trade market also called as the emissions trade market is currently the largest on planet. Another promising initiative is the Regional Greenhouse Gas Initiative of the New England and the Mid-Atlantic states (RGGI). Similar to REDD+, the RGGI program has a component aiming to avoid conversion of forests.