In his book “Foreclosing the Future”, Bruce Rich notes that one of the lessons of 20 years of the World Bank is “governance first”. Even the best designed projects will fail in the absence of proper institutional and legal capacity.
Rich argues that this means “designing interventions in a sequenced fashion; where governance capacity is weak, it has to be built up first before large amounts of money can be pushed into ambitious schemes.”
But there’s a catch. Governance and the rule of law aren’t things that can be implemented by flicking a switch or holding a series of collaborative workshops on governance. There are powerful economic and political forces behind the current system, as Rich points out:
Unfortunately, the Bank’s own experience has shown that attempts to build up local capacity were often swamped by much more powerful global economic forces. This was particularly true for the Bank’s wildlife, biodiversity, and forest-protection projects, which were frequently overwhelmed by internationally driven demand and prices, and by highly organized cabals of investors and mafias that made poaching, illegal logging, and destruction of natural habitat for cash crops virtually irresistible. This is a challenge for which there appears to be no easy solution, or any solution at all without a major reorientation of the world economic order and national economic priorities.
In a previous post, REDD-Monitor looked Rich’s overview of the World Bank’s involvement in, and promotion of carbon markets. This posts looks at Rich’s take on REDD.
Rich points out that a 2000 Operations Evaluation Department report on the Bank’s Forest Strategy identified the destruction of tropical forests as an example of “concurrent government and market failure”. Eleven years later, an internal review of the Bank’s lending on forests came to the same conclusion. Rich writes that, “Bank efforts to re-engage in “sustainable” forest management had been a major failure” and notes the problems the Bank has run into in Cameroon, Gabon, the Democratic Republic of Congo, and Cambodia.
Rich explains why REDD seemed so attractive:
The siren allure of huge amounts of money that might be generated from future global carbon markets had seduced many: if standing forests could be conserved for their value as carbon sinks, then perhaps an international market could be established to pay people in tropical forests for not selling them or chopping them down.
He describes carbon markets as the “financial cargo cult that had driven much of the early enthusiasm for REDD+”.
The World Bank’s Forest Carbon Partnership Facility (FCPF) started operations in June 2008. The following year, a new Forest Investment Program (FIP) was established as part of the Climate Investment Funds, with the Bank as trustee. The founding funders of the FCPF included BP, as well as governments.
BP recognized a leveraged investment: its contribution could be repaid many times, since a forest carbon market would allow the company to purchase cheap emissions offsets in tropical-forest countries while continuing to pollute elsewhere.
Rich notes that REDD national plans often tended to focus on the technical complexities of measuring forest carbon. When the plans did acknowledge governance and land-tenure, it was not clear how these problems would be addressed.
In 2011, the International Institution for Environment and Development put out a report titled, “Just Forest Governance – for REDD, for sanity”. The report concluded that REDD national strategies in Indonesia, Ghana, Mozambique, Tanzania, and Vietnam were on the wrong path, with “overhasty, formulaic, and barely credible plans that could do more harm than good”.
According to IIED’s report, all of the REDD strategies were,
based on the idea that with enough money over two to four years, a top-down, government-led process will impose governance and give forest-based practitioners what they need to guarantee emissions reductions and qualify for REDD payments.
Rich points out that the REDD programme “seemed to be in denial about the intractable challenge of governance”. The complexity and novelty of REDD poses even greater challenges than the many forest management and conservation projects that have failed in the past.
To make matters worse, the vast majority of REDD countries are in the bottom half of Transparency International’s corruption index in 2011. Interpol has warned that “there is an inescapable nexus between emissions trading, illegal logging, and organized crime”.
Meanwhile, carbon markets collapsed. There have been several, increasingly desperate, calls to bailout the carbon markets, to save the rainforests. The first came from WWF in 2012. WWF’s analysis was clear: The money is not being delivered. WWF pointed out that the REDD programme is asking forest nations to engage in a 30 year activity, “where the rewards beyond year 2 or 3 are completely unknown”.
Rich makes the point that as a carbon trading mechanism, REDD will not reduce global emissions:
If the justification was fighting global warming, participants [in the REDD negotiations at the UNFCCC] seemed to forget that even in the most wildly optimistic scenario of a successful, scaled-up program, the net result would be no overall reduction in GHG emissions: REDD+ carbon sequestration offsets would be paid for by emitters in other parts of the world to allow them to release more global-warming gases than they otherwise would.
Further, Rich notes that Brazil has reduced its rate of deforestation dramatically since 2004, and adds that,
[F]or the most part, Brazil did this on its own, not because of any external financial incentives. The difference that REDD+ would make, if it ever takes off, would appear questionable.
Rich argues that it would make more sense to abandon the focus on commodifying forest carbon and instead redesign REDD as an aid programme that could help empower local communities. That would be too simple, for the World Bank, with it’s apparently unshakable faith in carbon markets. In 2011, the Bank set up its 14th carbon fund: The Partnership for Market Readiness.
In 2012, Barclay’s Bank issued a note predicting that the price of CDM CERs (certified emissions rights) would not rise above €3 on the EU Emissions Trading System, even with a bailout agreed by the EU governments. The price of CERs on the Intercontinental Exchange is currently €0.17.
Rich describes the Bank’s Partnership for Market Readiness as,
one more voyage to an alternative planet, a planet of climate policy and politics increasingly divorced from the natural world – and one might add, from the actually existing economic one.