in Papua New Guinea

McKinsey’s REDD plans in Papua New Guinea: Nice work if you can get it

McKinsey's REDD plans in PNG: Nice work if you can get itA June 2009 confidential memorandum from the consulting firm McKinsey to the PNG government has been posted on the PNGExposed Blog. In the memo, McKinsey was asking the PNG government for US$2.2 million for four months work to produce a draft “National REDD and Climate Change Plan” before the Copenhagen meeting.

The confidential memorandum from McKinsey provides a fascinating insight into the world of REDD consulting. The Draft Project Proposal, which is dated 5 June 2009 and titled, “Supporting the Development of PNG’s National REDD and Climate Change Plans,” can be downloaded here (pdf file, 2.8 MB).

McKinsey has also been hired by Brazil, Guyana, Indonesia, DR Congo and Mexico to produce “REDD and Climate Compatible Development Plans”.

In case anyone thinks US$2.2 million is a lot of money for a report, McKinsey is offering its services cheap:

“We would bill you at our Social Sector rates, which are 50% below our usual fees. At these rates, our professional fees and expenses for phase one as outlined above would amount to USD 2,200,000.”

McKinsey’s consultants helpfully suggest where the money might come from:

“The budget for this project should be covered out of third-party funds available to PNG from external sources. In particular, UN-REDD could provide the financing for the REDD plan.”

On 7 March 2010, Freddy Austli of UNDP in Papua New Guinea told REDD-Monitor that “As UNREDD is not operational, none of this [UN-REDD] money has yet been disbursed.”

McKinsey’s report on REDD in PNG is not, at least as far as I’m aware, available to the public. Unlike McKinsey’s report on REDD in Brazil, it does not seem to be available on McKinsey’s website. PNGExposed notes that the country’s REDD strategy “has never been debated by PNG’s Parliament or disclosed to the PNG people.”

As Economist journalist Natasha Loder pointed out on her blog last year, McKinsey is the climate consulting firm du jour. Loder was enthusiastic about McKinsey:

“If Papua [New Guinea] can find a mere $2m, McKinsey will load up its crack team of climate consultants into the Batplane, fill it up with biofuel, and send it swooping down on Port Moresby to help the country prepare itself for Copenhagen by developing the national REDD and climate change plan, deploying cost-abatement curves from their utility belts… and all just in time for Papua’s cabinet meeting in November.”

I’m not suggesting that McKinsey’s experts don’t know what they are talking about. They do. But there are no guarantees that any international consulting firm working on a tight deadline will include indigenous peoples’ rights in its considerations on REDD. Particularly one with a strong focus on economics. McKinsey’s report on Brazil mentions neither the word “indigenous”, nor the word “rights”.

Others are less enthusiastic than Loder about McKinsey, particularly now that the company is working in PNG. In a letter to Wari Iamo, the Acting Executive Director of the Office of Climate Change and Development (OCCD), the Papua New Guinea NGO Eco Forestry Forum (EFF) expresses its dissatisfaction with “stakeholder consultation on climate change and REDD issues”. EFF was invited at short notice to the Office of Climate Change and Development on 21 September 2010 to discuss the UN-REDD National Joint Programme and REDD+ project guidelines. EFF was asked to provide comments on documents distributed at the meeting by 1 October 2010. EFF asks, “How could we do that within a short period of time?”

Regarding McKinsey’s involvement in PNG, EFF commented:

“While we have been verbally told of McKinsey’s role in the country as Technical Advisors, they were seen to be acting like OCCD or DEC [Department of Environment and Conservation] staff, answering questions relating to the processes of REDD implementation. We would have loved to see OCCD staff or DEC staff taking a lead in the discussions. This leaves us with the conclusion that OCCD and DEC does have a capacity issue that has not been admitted. It would be interesting to know when the McKinsey contract expires.”

It would also be interesting to see a copy of McKinsey’s terms of reference, just so that we know what they are supposed to be doing in PNG. It would be interesting to know where the money to pay McKinsey’s came from. And it would be interesting to see the reports that McKinsey has produced for the PNG government on REDD and climate change.

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  1. McKinsey’s experts “know what they are talking about”. Do they?

    Their proposal to the PNG government, evidently successful, refers to the work they have done in supporting other developing countries such as Guyana to prepare their national REDD plans. But what they do not say is that experts regard what McKinsey’s have done in Guyana to be nonsense, as it makes absurd assumptions about how the country might totally clear its forests within 25 years or so, and become a major producer of agricultural produce – none of which is supported by a scrap of evidence, and indeed ignores the rather more prosaic reality that very little of Guyana’s soil is fit to grow anything on whatsoever.

    There are reasons why Guyana has not already been deforested, and it has got nothing to do with President Jagdeo’s putative environmental beneficence. In Guyana’s case, McKinsey’s extended work of fiction was generously supported by UK taxpayers, through the Department for International Development.

    However, you do have to hand it to McKinsey’s for spotting a golden opportunity, during hard commercial times, to cash in on the REDD phenomenon – constantly re-cycling their conceptually flawed ‘Cost Curve’, adapted to suit the level of ambition/greed/avarice of which ever corrupt regime they happen to be pitching to, and appealing to the base interests of poor governments by encouraging them to think they can buy a formula that will make huge amounts of money fall from the sky.

    Snake oil, anyone?

  2. They do have a very good looking set of power point presentations though. They must have cost a bit.

    Sure, evidence is lacking, but the queue of developing countries stretches around the block, desperate for their expertise in cost curves, abatement levers, and transparent inclusive processes.

    What are we mad at? That Mckinsey are getting paid a fortune?

    Frankly their salaries are bizarrely high, but so are a lot of people’s. Look at the UN-REDD money vortex.

    But we should be furious that they are pumping out of their economics sausage factory generalized, bland versions of what developing countries want to hear – that BAU scenarios are essentially compatible with REDD+. Don’t want to stop logging? No problem, go ahead. Oil palm on logged over forest? Sure, why not! Reforestation with non native trees? Sounds good!

    In the case of PNG, voluntary carbon projects are being forcibly prevented from development precisely because they advocate a route which doesn’t allow the Government to continue BAU destruction and to net the profits from corrupted REDD+.

    Mckinsey has a great deal of power in these situations. They are the shadow government in these countries in terms of climate policy. Yet, as we know, with great power comes great responsibility. Do Mckinsey consultants genuinely believe that their models and cost curves will actually drive the process forward? I doubt it. How can they? They are very,very intelligent people – they must realize.

    They are milking the REDD cash cow while they still can, and doing it with flair, and ultimately it is the communities, as always, that will lose out.

  3. I believe avoide de forestation and to perserve the rain forests of PNG is the most important debate here.
    All this REDD and REDD+ has everyone confused.
    What is McKinsey consulting?
    How can REDD , REDD+ be implemented in PNG?
    Does REDD , REDD+ exist? if it does what is it.
    Is it still a European pay in return scinario????????
    How does REDD or REDD+ protect PNG rain forests?
    McKinsey is trying to preach to the converted,as most people have an idea what is actually going on now.
    The whole overture is a land grab .

  4. And what input has the Department of Environment and Conservation and the Office of Climate Change and Development had in this document, its all desktop stuff with collective effort from the Public Service Departments, none of it will happen, there is no policy in place yet PNG wants to advance its efforts, its all cold turkey stuff!!!