in Brazil, Mexico, USA

Including offsets from Latin America in California’s cap-and-trade plan is a bad idea

The University of Arizona’s Public Political Ecology Lab has produced a series of essays focussing on REDD and California’s cap and trade scheme under the Global Warming Solutions Act, AB-32.

These six essays look at different aspects of REDD: carbon trading, REDD offsets, safeguards in the context of carbon markets, the purpose of REDD, REDD and California and “Natural Capital”.

All of the essays are worth reading. This post highlights Kathleen McAfee’s essay, because it focusses specifically on the inclusion of REDD offsets in California’s cap and trade scheme. McAfee is Associate Professor of International Relations, San Francisco State University, and has written several papers on REDD and markets in ecosystem services.

In her essay, McAfee focusses on the proposed REDD Offset Working Group recommendations for California. McAfee questions the assumption that REDD is a win-win-win that “creates new incentives for conservation, mitigates global warming, and transfers needed resources for development to cash-poor countries and communities”.

She draws on studies of CDM and Payments for Ecosystem Services projects to counter this assumption. CDM projects are rarely additional. In PES projects, criteria for market-based efficiency conflict with anti-poverty objectives. Linking land-use decisions to payment for performance systems can crowd out existing non-monetary or non-material values that support equitable distribution of land-use rights and limit environmentally destructive practices.

She points out that “trade in carbon offsets, in itself, does nothing to reduce total, global GHG emissions”. Within the area regulated under a cap-and-trade system, emissions actually increase as a result of offsets:

[W]ithin regions such as the EU where regulations restrict GHG emissions for various enterprises or sectors, the option of purchasing offsets from outside the region means that the total emissions allowed within that regulated space are greater than they would be in the absence of provisions for offsetting.

This is one of the reasons that McAfee questions the inclusion of international offets in California’s cap-and-trade system.

McAfee agrees with the REDD Offset Working Group’s (ROW) arguments in favour of jurisdictional scale programmes as opposed to project-based REDD. The ROW argues that such approaches are “more likely succeed, with less leakage, fewer reversals, and greater additionality”.

However, McAfee quickly parts company with the ROW’s promotion of ecosystem services. McAfee describes ecosystem services as “the latest in a long history of tropical-commodity miracle crops”:

They are no more likely to boost prosperity for the majority in the exporting regions than did coffee, sugar, rubber, or any such commodities in the past. Meanwhile, landed elites and well-connected investors with influence in the courts, police, military, and other federal agencies, commonly defy or bypass environmental restrictions in their pursuit of profitable but environmentally destructive logging, ranching, and expanded cultivation of export crops such as soy and agrofuels including cane, palm oil, and jatropha.

McAfee writes that the ROW proposal takes for granted that REDD is a “sound and preferred conservation-and-development strategy”.

The ROW proposal tells us that REDD offsets “would represent, at most, 2% (first compliance period) to 4% (second and third compliance periods) of total compliance obligations under the cap-and-trade program”. But the ROW proposal provides no estimates of how much money might be generated by the sale of REDD offsets from Acre and Chiapas, or what the price of these REDD credits might be. McAfee points out that this is important, because corporations in California are only likely to buy REDD credits from Acre or Chiapas if they are cheaper than offsets generated in the USA or elsewhere in the global North. And McAfee notes that a globalised, private-sector-led carbon market is likely to deepen North-South and urban-rural inequalities, while failing to reduce global greenhouse gas emissions.

The ROW proposal does not mention that several Latin American delegations have opposed REDD as a carbon trading mechanism at the RIO+20 summit and at UNFCCC and CBD negotiations. McAfee notes that regardless of whether the environmental statements by the governments of Brazil, Bolivia, Mexico, Ecuador or the US are genuine, there are distributional aspects of privatising and marketing ecosystem services that need to be addressed:

[C]ap-and-trade systems carry the risk of reinforcing existing inequalities or creating new ones… There is ample basis to expect that markets or market-like systems for allocating permits to pollute or rewards for conservation will favor larger-scale and better-connected landholders and enterprises while pricing out the poor.

To make matters worse, California’s offsetting proposal coincides with a global land grab, which includes “green grabbing” as featured in an excellent recent issue of the Journal of Peasant Studies. “Claims on territory and ecosystems for differing purposes – food production, biofuels and carbon sequestration – are now in conflict in many locations,” McAfee writes.

McAfee opposes including REDD offsets in California’s cap and trade system for two reasons:

  • First, for reasons given above, it does less than nothing to reduce total GHG emissions in California, regionally, or globally.
  • Second, offset commerce promotes the market-centric approach that is proving so inadequate in achieving real, net conservation and climate-mitigation results while – predictably – reinforcing or worsening preexisting inequalities. Climate-mitigation policies “that address the underlying causes of both deforestation and degradation” and “large-scale changes in the rural development model” are not possible if rewards are allocated according to market-efficiency criteria because they are bound to reflect existing power relations and inequalities.


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