Cost of Forest Loss Exceeds Current Banking Crisis

by Janet Ritz

Published on Reuters, The Huffington Post

An EU study has concluded the economic impact of world forest loss exceeds the current banking crisis. The study by economists, which quantified the vital services the worlds' forests provide (absorbing carbon dioxide, cleaning water...), places the cost of the disappearing forests between $2 and $5 trillion per year.

The global economy is losing more money from the disappearance of forests than through the current banking crisis, according to an EU-commissioned study... study leader Pavan Sukhdev emphasised that the cost of natural decline dwarfs losses on the financial markets.

"It's not only greater but it's also continuous, it's been happening every year, year after year," he told BBC News. "So whereas Wall Street by various calculations has to date lost, within the financial sector, $1-$1.5 trillion, the reality is that at today's rate we are losing natural capital at least between $2-$5 trillion every year."

The report cites the advantages forests provide as basically free and points out that, without them, the services will either have to be provided through costly technology or through the increasing cost and consequences of growing climate change (which will fall disproportionally upon the world's poor).

"Times have changed," Sukhdev explained, "almost three years ago, even two years ago, their [governments and business] eyes would glaze over. Today, when I say this, they listen."

Several countries have begun efforts toward forest conservation. Ecuador has gone so far as to enact laws that proclaim their trees and water have specific rights to life. Continued...

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European Union Proposal for Addressing Global Deforestation

by Jake Schmidt

The European Commission (the Commission) just released their proposal for addressing the challenges of deforestation and forest degradation to tackle climate change and biodiversity loss. This is the long awaited Communication on the European Union’s (EU’s) proposed position on global warming emissions from deforestation in the lead-up to the international climate negotiations in Copenhagen.

The lack of a specific position had caused some interesting back-and-forth between the negotiators for Papua New Guinea and the EU at the climate negotiations in Ghana. So, what clarity did the EU provide on its position as we move towards Copenhagen? (It is important to remember that this is a proposal and is not a definitive position of the EU, but rather begins to establish their negotiating position).Serious goals for addressing deforestation are called for:...objective to halt global forest cover loss by 2030 at the latest and to reduce gross tropical deforestation by at least 50% by 2020 compared to current levels.Cutting deforestation loss 50% by 2020 is a similar goal to the one called for in the Eliasch Review (conducted for the United Kingdom government). This would cost an estimated €15-20 billion per year (~$20-27 billion), according to the Commission’s calculation.

Deforestation reduction credits not allowed in their emissions trading system prior to 2020 for a number of reasons including:

-- the scale of potential deforestation credits (deforestation emissions are roughly three times the total regulated emissions under the EU’s emissions trading system); and

-- unresolved monitoring, reporting, verification, and liability questions (e.g., what happens if the credited forest loss reverses due to a forest fire…who is held responsible?)

This is different than the approaches being outlined in two of the main climate proposals in the U.S.—the Boxer-Lieberman-Warner bill and the Boucher-Dingell discussion draft—which both envision that a portion of a company’s compliance could be met through the purchase of deforestation emissions reduction credits.

Major portion of EU’s funding coming from use of auction revenues from its emissions trading system (an idea proposed at the climate negotiations in Ghana). The Commission proposed that at least 20% of the proceeds from the auctioning system post-2012 be used to support climate objectives including tackling deforestation emissions. As the Commission notes, this could generate €1.5-2.5 billion (~$2-2.7 billion) per year in 2020 if 5% of the proceeds from the auction was dedicated to battling deforestation... Continued...

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