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FCPF’s “poster child” would reward forest destroyers in Indonesia

FCPF's poster child would reward forest destroyers in Indonesia

A colleague recently asked the question: What is the possibility of plantations being included in REDD schemes under the World Bank’s Forest Carbon Partnership Facility? It’s an excellent question.

The response from FCPF’s Management is extraordinary, since they chose one of the most controversial potential REDD schemes to illustrate the supposed “benefits” of plantations. If it were to go ahead, this REDD scheme would involve paying APRIL, a company which is responsible for destroying vast areas of forest in Indonesia. This appears not to concern FCPF management at all.

In June 2008, the World Bank produced an “Information Memorandum” about FCPF which states that “It is expected that the FCPF will be able to review a great diversity of ER [Emissions Reduction] Programs depending on country circumstances and preferences.” The Memorandum includes a list of “groups and categories of ER Programs [that] can be envisaged”, including:

Reforestation: Promotion of new plantations, in particular on degraded lands, to meet timber and energy needs and remove pressure on natural forests, including through company-community partnerships, some of which may be eligible to generate credits under the Clean Development Mechanism of the Kyoto Protocol.

This suggests that the FCPF will finance plantations. And that the companies establishing these plantations could receive further subsidies through the CDM.

The question and the reference to the Bank’s “Information Memorandum” was passed on to the FCPF Management. Here’s the reply from the FCPF Management:

The section of the FCPF Info Memo referred to . . . illustrates Emission Reduction Programs that might be supported by the Carbon Fund (of the FCPF). It mentions plantations as a way to relieve pressure on natural forests and reducing emissions from deforestation and degradation, the assumption being that the need for fiber and energy will continue to exist (or even grow as the world switches away from fossil fuels). The source of carbon finance would be indirect, i.e., from the reduction of deforestation/degradation, not directly the reforestation/plantation. So it falls under REDD, not reforestation.

A poster child is the relocation of the pulp and paper industry away from peat forests to degraded lands in Indonesia in the context of state-company-community partnerships. In such a case, the Forest Investment Program (FIP), along with other sources of investment finance, could finance the investment cost, and the FCPF Carbon Fund, or another source of carbon finance, could provide a performance-based incentive for verified emission reductions from deforestation/degradation. It is even possible that the plantation part would earn additional carbon finance (though not from the FCPF Carbon Fund) if it met specific criteria for reforestation — this might actually be eligible under the current CDM. And this climate mitigation would potentially be achieved with significant social and biodiversity co-benefits.

The myth that plantations relieve pressure on native forests is often put forward by proponents of industrial tree plantations. The reality is that plantations do not relieve pressure on forests. The FCPF Management should read some of the World Bank’s own reports about plantations: “To date, however, plantations have had no discernible global impact on reducing deforestation,” notes an article by two World Bank staff, Jürgen Blaser and Jim Douglas. In its 2003 report on “Fastwood” plantations, the Centre for International Forestry Research (CIFOR) states that “there is little evidence to suggest that fast wood plantations have taken pressure off natural forests elsewhere”.

Countries can have rapidly expanding industrial tree plantations and rapid deforestation. Brazil is one example of this. Indonesia is another. The FCPF Management’s “poster child” raises one of the most controversial issues surrounding REDD: that of paying large sums of money to the very companies responsible for deforestation. Fred Pearce, writing in New Scientist (22 March 2008) sums up the problem as follows:

Meanwhile, some huge forest destroyers are drawing up plans to get compensation. On the Indonesian island of Sumatra, for instance, giant pulp mills are responsible for vast amounts of carbon being released into the air as they log rainforests and drain peat bogs to plant new trees. One of them, Asia Pacific Resources International (APRIL), wants to set up a REDD pilot project under which it will block the canals that now drain the Kampar swamp. APRIL could receive tens of millions of dollars a year in compensation for protecting the forest and not releasing the peat carbon. The project is genuine and is based on sound science, but the reductions are only possible because the company has been so destructive in the past.

It would be difficult to exaggerate the destruction that APRIL has caused to the forests in Sumatra and to the livelihoods of people living there. An article in the Japanese newspaper The Daily Yomiuri from July 2006 describes one of APRIL’s logging operations: “Drying tropical timber was stacked in piles between thick tree stumps — as if it were a heap of bones. The place looked like a field that had been hit by a bomb.”

To summarise FCPF Management’s response to the question: “Will FCPF finance plantations?”:

    The answer is yes, if we can find a company that is responsible for destroying hundreds of thousands of hectares of forest to provide raw material for its pulp mills. We may not finance the plantations directly, but our colleagues in the World Bank will do so. With a bit of luck the company will be able to get CDM approval. FCPF will help the company to trade the carbon stored in the forests and the peat swamps that they did not destroy (even though under Indonesian law, it is illegal to exploit land where the peat is more than 3 metres deep and many APRIL concessions are on peat 6 to 8 metres deep). Then the company can trade the carbon supposedly stored in its acacia monocultures through the CDM. The company gets away with its past record of social and environmental destruction and with its continued emissions from its pulp and paper mills (as well as the methane released when the paper is thrown away and rots in landfills). Job done.

PHOTO Credit: Robin Wood.

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  1. The monoculture plantation should not receive FCPF. It’s not a good business.

    Clearing rainforest for pulp and change it into a monoculture plantation does not make any bussiness sense at all.

    Why spend so much money to plant monoculture tree while we could just leave the forest regrowth itself naturally?

    Of course in some conditions, but very doable in the tropical forest. All they have to do just create the “naturally regrowth pulp plantation forest” condition. Much more efficient and ecologically sound.

  2. Izefri – thanks for this comment. Allowing forest to regrow takes very much longer than establishing a fast-growing tree plantation. Acacia or eucalyptus plantations grown in the tropics can be harvested on a rotation of seven years or less. There is no way that any forest could regrow in such a short space of time. The question is whether it makes sense to hand over large amounts of money to companies that have destroyed vast areas of forest in the past – or that are threatening to do so in the future. And whether the World Bank really thinks that this is FCPF’s “poster child”.

  3. Chris – Thanks you very much for your re-comments.

    I might be wrong, but as far as I know, all cellulose/carbon based tree species could be used as a source for paper pulp. This mixes tree pulp might not “as good or as white as” eucalyptus pulp. But, don’t forget that “good paper” is basically based on “paper producer advertisement” not what as buyer or user need. Moreover, I wouldn’t worry much about “not as good as or as white as……” based on our current industrial technology. You must be familiar with the recycled paper.

    In the natural condition, 4-5 years is long enough for the forest to regain biomass/carbon as much as it might need to be harvested for pulp industry. There are enough woody plants available, as long as the location is not in the middle of the dessert or very far away from the mother tree seed source. At least, that what I have been observing in natural forest regeneration in many places in Indonesia.

    Blaming the pulp company for their “past mistakes” might not solve the current environmental problems. (Since the past mistakes were very complicated, you know why…. the wrong maps, poor administration, etc….). It might only waste time and money and benefit taken merely by small group of people.

    I would prefer to advocate natural pulp industry plantation. Plus with the FSC+RSPO+HCVF demand from the market, it could be best choice. The business still there, the money is still there, and the native tree species plus its wildlife still there. And I could still buy and read affordable newspaper in the morning with a cup of hot coffee mixed with eurycoma longifolia root…..

    Moreover, if I thought I have read a cost benefit analysis done by CIFOR in 2006 mentioned that most all of this business were not visible, which meant not profitable economically. Unless…. these companies have more than business as usual in their minds. Say….., land occupation, to get bank credit for other investments… or making new “kingdoms” in the “frontier land” used to be forest home for local people and wildlife… Otherwise, there should be no problem….

    Enlight me. Best and good luck.

  4. Thanks Izefri – you’re right, any tree species could be used to produce pulp. APRIL’s pulp mills were designed to use “mixed tropical hardwood” as raw material. However, I don’t know of any examples of pulp companies that have used rainforests as raw material and allowed the forest to regrow for future harvests. APRIL is of course part of the RGM International Group, which also has large areas of oil palm plantations. APRIL has clearly benefited from clearing forest and establishing plantations.

    FSC has certified many industrial tree plantation operations, despite the social and environmental impacts of these plantations. (FSC may be the best forestry certification scheme in the world, but that’s largely because the competition consists of a series of meaningless rubber stamps.)

    I wrote about CIFOR’s report on the financing of pulp mills here.

    CIFOR also produced the following report on the economics of tree plantations in Indonesia: Julia Maturana, Economic Costs and Benefits of Allocating Forest Land for Industrial Tree Plantation Development in Indonesia, Center for International Forestry Research (CIFOR), Bogor, Indonesia, 2005. According to calculations in the report of the total economic value of logged over forests, (including timber, fuel wood, non-timber forest products, soil and water conservation and flood protection) the conversion of 1.4 million hectares of logged over forest to industrial tree plantations, results in a total loss to the country of at least US$3 billion.

    Perhaps someone from APRIL would like to respond to the following questions:
    1. Why does the company establish plantations, rather than allowing the forest to regrow?
    2. Given the company’s historical record of forest destruction, why should APRIL benefit now from payments for “avoided deforestation”?

  5. Chris – Those are sound goods. However, I am afraid the answer of your #1 question would be “the history always repeat itself” in market failure theory (Panayotou). When market demand is high on a particular supply, everybody goes to that business, although lack of research. And in “a tight condition”, depression or inflation, to avoid social chaos, any quick and fast money on any business would do, anyhow. Then, when the producer can’t sustain the supply (caused of no more instant fast stock available, pests, soil and climate or land right problems, plus high fertilizer and “social stabilizing” costs) the consumer would go for substitute supplier/supply. Then, all these business would collapse and leave nothing but unpaid bank mortgage and devastated lands.

    For question #2, the answer may because they are already aware of #1 hypothetical answer now? Trying to fix it but no funds available? Then, eventually they will go for natural forest re-grow plantation forest state. Too optimist?

    The more interesting answer would be, “what if they couldn’t get the funds”. I wonder what the consumers think. How long they could hang on before collapsing? Would the consumer overtake the business and run it themselves? Could they? How?

  6. sory, the last paragraph should written “the most interesting question….”