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Guest Post: Oddar Meanchey communities “have long been abandoned”. The Fern report correctly raises a number of difficulties and challenges with carbon offsetting generally and REDD+ in particular

Dr Tim Frewer carried out part of the research for his PhD thesis in Cambodia, looking at the Oddar Meanchey REDD project. Following the responses from Terra Global Capital and VCS to Fern’s recent critical report that featured a case study of the Oddar Meanchey project, Frewer sent the following Guest Post to REDD-Monitor.

Guest Post: Oddar Meanchey communities “have long been abandoned.” The Fern report correctly raises a number of difficulties and challenges with carbon offsetting generally and REDD+ in particular

By Dr Tim Frewer, 9 February 2018

In November 2017, environmental NGO Fern published a report on the aviation sector and forest offsetting that specifically dealt with the Oddar Meanchey REDD project. The Fern report correctly raises a number of difficulties and challenges with carbon offsetting generally and REDD+ in particular. These issues have been raised and discussed in depth by a number of researchers working in the area. Last week in response, two actors heavily involved in the Oddar Meanchey project – Terra Global Capital and VCS, wrote an open letter heavily critical of the Fern report and the research it was based upon labelling fern as ‘ideologically motivated’. It is disingenuous to label Fern as ideologically motivated or having inadequate knowledge of REDD+ as similar challenges and issues have been widely published in scholarly journals and books.

Based on my own on-the-ground research across Oddar Meanchey as part of PhD research over several years that specifically looks at the REDD+ project, I would argue that the Fern report is timely and important. I would briefly like to address some specific points raised by Terra Global Capital and VCS in relation to the Oddar Meanchey project.

Terra Global Capital have retained almost no contact with people on the ground in Oddar Meanchey for several years. They have largely ignored the myriad problems that people involved in the project brought up and have largely abandoned the project as a whole. That Terra Global Capital continues to state a number of untruths about the project shows its distance from people on the ground. It is entirely untrue that all 13 of the projects have stable tenure over forest lands. Several of the communities have entirely collapsed with no practical management over forest lands. 15 year agreements with the Forestry Administration which can be revoked at any time, and which in practice have been entirely undermined by the presence of the Royal Cambodian Armed Forces in no way constitutes secure tenure. There are now entire villages located within core project forests which community members have been powerless to stop. A large tract of the largest community forest area is also to be submerged by a Chinese built dam, yet the temporary forest agreements were ignored.

Terra Global Capital blames the global market for the fact that money never reached the communities of Oddar Meanchey as promised noting that,

    “It is a failure of the market for carbon and the shift that international donors have made away from supporting on-the-ground REDD+ activities to paying millions of dollars to governments for national level REDD+ readiness and results-based payment programs which will not likely trickle down to Oddar Meanchey in the near future.”

Yet it was Terra Global Capital and other project proponents from the start who so confidently hedged so much on the global carbon market without a sound understanding of how that market works. Terra Global Capital and other project proponents convinced local partners and hundreds of farmers to invest vast amounts of labour, time and capital in order to conserve local forests. What was for local farmers a major effort to conserve local natural resources (and which predated the REDD+ project), was for Terra Global Capital a risky financial bet that they hoped would raise the profile of their company. Yet while Terra Global Capital has been able to use the project as a means to promote its own experience with REDD+ projects and had been generously provided with financial assistance from the US government to insure against its financial risk in the project, local participants have gained nothing and lost much. Terra Global Capital was even insured against the risk that the Cambodian government would develop a national level carbon accounting system that would include credits from Oddar Meanchey under its national reductions.

Several participants have received injuries when confronting soldiers while trying to protect forests. Others have been seriously injured due to accidents when on patrol as well as suffering from severe sickness such as malaria. None of these people were compensated. Several participants have been involved in long running and highly contentious court cases over forest and farming lands encroached upon by the military and other private interests and which have devastating effects on local livelihoods. There have also been several instances of violent conflict between local farmers who claim to have lost farming land to the project. Yet instead of acknowledging these very serious issues and provide any meaningful assistance to resolve these issues – which would be needed in order to fulfil several of the claims made about the project by Terra Global Capital and others – Terra Global Capital effectively abandoned the project once money ran out.

It is untrue that the project “has received virtually no funds to implement activities from sale of its environmental assets, from the government or donors”. Carbon sales are minimal (from my calculations 48,000 VCUs have been issued which is just under 10% of all available credits generated from the project with a value of approximately US$240,000). It appears that most of these have been sold by Terra Global Capital through various other brokers as per an initial agreement that granted Terra Global Capital an undisclosed percentage of credits. While Terra Global Capital has singularly focused on pursuing cost recovery the people supposedly at the centre of the project have been left with nothing.

Donors have also invested substantial amounts of money into the REDD project: from my calculations more than U$2 million. On top of this Terra Global Capital received a US$900,000 political risk insurance package from the US government. Donor funding was given to various project proponents to develop the project in the early stages. Very little of this money reached the local community. One of the NGOs at the centre of the project has since been involved in serious financial mismanagement of donor funds, yet Terra Global Capital and other project proponents have systematically ignored widespread irregularities in spending of funds. Donor money allowed the project to proceed where much of the money was spent on the verification process and putting in place legal mechanisms and technical procedures to facilitate the sale of carbon credits. Very little of this money was used to provide the livelihood benefits that the project claimed and to this day people in Oddar Meanchey are bitterly resentful that they never received what they were promised. This is public money that ultimately facilitated Terra Global Capital being able to market the Oddar Meanchey REDD project as a ‘world first’ project that was supposedly benefiting local communities – while the actual communities have long been abandoned.

VCS and Terra Global Capital should take seriously that substantial aspects of the validation process undermine the integrity of the VCS label. That the Oddar Meanchey project could be verified as a model REDD+ project while facing such serious and widespread problems is concerning. Fern rightfully points out some of the challenges and difficulties of establishing baselines, avoiding leakage and ensuring permanence – all of which have plagued the Oddar Meanchey REDD+ project. For instance in the VCS verification document the verifier states that project proponents gave a value of zero for the risk of disputes over access or use rights to forests (specifically in light of the fact that the verification team witnessed several community forest areas entirely taken over by the Cambodian military). Yet using a highly technical definition of ‘dispute’ justified by reference to the fact that Cambodian law does not give the military rights to cut trees over community forestry agreements, it was argued there is a low risk to such disputes. This is questionable because the verification team directly witnessed such widespread disputes. At another point the verifier concludes that risk of overlapping claims to forest resources will be minimised because within the project document the Forestry Administration is committed to resolving all disputes with the military. That the FA has next to no influence over the RCAF can be observed through the fact that one FA compound involved in the project was barricaded in by armed RCAF soldiers for confiscating timber in a project site (and the head of Oddar Meanchey FA is quite candid about the powerlessness of the FA in relation to the RCAF). It has to be emphasised that in the real world, and especially in Cambodia, risks to conservationists are high and underestimating these risks only puts people in danger. Just last month 3 people were shot dead while patrolling another REDD+ project in Cambodia.

In a section on leakage the verifier claims that there is no compelling reason to believe that leakage will take place or that tenure insecurity will increase for farmland and forest lands bordering the project areas. The project proponents (Terra Global Capital) make vague reference to the fact that secure forest tenure will likely be a disincentive to land grabbers – because apparently this was the case in the United States. In fact tenure insecurity has been a huge issue for communities involved in the project – from surveys I conducted, hundreds of families have lost surrounding farmland. Yet although the verifier was unable to witness any efforts to reduce tenure security stating that “the audit team is unable to confirm that the activities were actually implemented and that they actually reduced land-grabbing within the leakage areas” the query was still closed. In another section project proponents similarly try to convince the auditors that deforestation will likely decrease in leakage areas because people will be disinclined to continue logging when enforcement is stepped up in the core area. Their sole reasoning for this is a hypothetical anecdote. Yet of course in reality, the leakage areas of the project have been decimated – and they were already significantly encroached upon at the time of verification.

It should be noted that the risk assessment used (VCS’s AFOLU non-permanent risk assessment) which is used to calculate the overall risk of non-permanence and the number of required buffer credits in hindsight severely underestimated project risks. For instance the risk that “[O]ngoing enforcement to prevent encroachment by outside actors is required to protect more than 50% of stocks” was assigned no risk (a value of 0). In reality the single biggest problem for project success was a lack of enforcement. Project proponents also claimed that the “[P]roject cash flow breakeven point is 4 years or less from the current risk assessment”, once again severely underestimating the risk of financial viability (all project proponents had essentially abandoned the project at the time of verification due to a lack of continued finances). Similarly, under the risk of land tenure impacts, risk was severely underestimated where it was concluded there was no risk of disputes in the project area. In reality there were several military bases already located inside core project areas at the time of verification. Under the community engagement risks, the VCS states that “[T]he project generates net positive impacts on the social and economic wellbeing of the local communities who derive livelihoods from the project area”. What evidence this was based on is unknown. The point to all this being that if one reads the verification documents in detail there emerges a clear pattern of systematically underestimating the nature of serious project problems and risks. This results in an underestimation of risk, and a very conservative buffer pool of credits that in hindsight is nowhere near adequate considering the substantial amount of forest loss. Only 11,938 credits were set aside for the VCS buffer which represents merely 2% of credits generated. All of this has real world ramifications. If we leave behind the convoluted algebra of carbon offsetting what can be seen is that supposed real and tangible ‘avoided deforestation emissions’ have been created and companies have brought these credits and continued to emit carbon under the belief that carbon emissions are being avoided in the forests of Oddar Meanchey. In reality this is not the case. The credits are supposedly generated from project activities across a thirty year span. In reality all project proponents knew at the time of the first verification period there would be no more verification stages due to the imminent collapse of the project. So Terra Global Capital and PACT and others have now moved on to other projects. Yet credits are still in circulation meaning that entities are still able to purchase these emissions and use them to mitigate against very real carbon emissions. This results in a net increase in emissions not reduction.

Another side to the project that needs to be deeply scrutinised is its failure to provide social benefits and the fact that two carbon labels that are dedicated to the supposed positive social benefits of carbon mitigation projects could give the gold standard to these projects. The Climate Community and Biodiversity assessment suffers from many of the same shortcomings as the VCS. The assessment shows that many of the claims about the positive social impacts of the project could not be proven – yet the project was still given the top gold standard of the label. For instance, at the time of the assessment there was no evidence that livelihood activities had even been conducted. Within the verification document this is clear: “[W]hile some research has occurred, as described in the PIR [Project Implementation Report], it was indicated to the audit team that no cook stoves have been distributed to the communities.. While some research and conversations with the communities has occurred, as described in the PIR, it was indicated to the audit team that no mosquito netting has been distributed to the communities…. With the exception of the research documented in the PIR, it was indicated to the audit team that none of the agricultural intensification activities described in the PDD has yet occurred.” In other places anecdotal reference to project documents was used as evidence for positive impacts. In a section on Natural Resource Management Projects the report states: “As the audit team did not visit any of the CFs in which irrigation activities were ostensibly implemented, as described in the PIR, the audit team cannot specifically confirm the implementation of the activities. However, the audit team did receive some substantiating evidence in the form of a spreadsheet…” The document is full of lazy auditing and unsubstantiated claims:

    “Discussions with project personnel, as substantiated by documentation and observations during the site visit, have indicated that a good-faith effort has been made to implement most of the mitigation measures… Measures to ensure the maintenance measures or enhancement of high conservation value attributes (e.g., securing land tenure) and measures to maintain and enhance the climate, community and biodiversity benefits beyond the project lifetime (e.g., provision of training), as required by G3.6 and G3.7, respectively, have also been implemented”.

In hindsight, once again it can be seen how there is a systematic bias towards the project proponents where the nature of fundamental project problems and issues were continually underestimated.

As person after person in Oddar Meanchey who actually works on the ground protecting forests have pointed out, it would have been far more efficient to simply provide community groups with a modest budget to cover the costs of conservation activities – rather than waste millions of dollars on developing legal frameworks, carbon accounting procedures and verifications. The Oddar Meanchey REDD+ project employed highly convoluted and technical procedures to measure project risks yet has no practical accountability to the people who are supposedly at the centre of the project. What has Terra Global Capital done in light of the fact that it was unable to fulfil the promises it made to people involved in conservation in Oddar Meanchey? What practical measures has it taken to compensate people for lost time, for injuries? Why does Terra Global Capital still advertise the project as successful and conducting livelihood activities that have never been implemented? What is VCS doing in light of the fact that buffer credits have not been adequate for the level of deforestation? What is CCB doing in light of the fact that it gave the Oddar Meanchey a gold rating for its outstanding ‘social benefits’ which have never been realised?


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