Mapping REDD in the Asia-Pacific: Governance, marketisation and contention: Rebecca Pearse

Abstract:

This paper maps the sites of forest carbon market development in the Asia-Pacific region. Institutional architecture for the forest carbon market is fast developing amidst a chorus of claims that it is, or will be, a win-win-win apparatus for ecological, economic and social outcomes. However the various experiments in forest offset projects and inter-state agreements for REDD lurch forward in the midst of growing evidence of governance failure and corruption. The claimed victories and simultaneous crises of legitimacy faced by REDD initiatives in the Asia-Pacific exemplify the impacts and tensions behind carbon market extension into the world’s forests. Points of contention over seminal state-led pilot initiatives as well as corporate REDD projects for the voluntary market in Indonesia and Papua New Guinea are considered as early signs of the trajectories of REDD marketisation. This review of REDD in the region opens up questions for future investigations into the shifting modes of authority that make this process possible.

Introduction

The carbon market is here. The market’s expansion appears inevitable, and at the same time, highly uneven and contested. Prospects for market growth persist, albeit attenuated, since the impasse in the United Nations Framework Convention on Climate Change (UNFCCC) at Copenhagen 2009 and paltry outcomes in Cancún 2010 and Durban 2011.1 The slow, cumbersome multilateral negotiations over climate change mitigation, particularly securing a post-Kyoto Protocol agreement, are an important potential mandate for carbon market extension, as are domestic trading schemes. After three failed attempts, Australia has passed legislation for an emissions trading scheme starting July 2012. Other key OECD nations such as Japan, the United States and Canada are still debating the prospect of installing national carbon markets for climate change mitigation. There have been numerous efforts to anticipate these decisions and install the machinery for a new market in tradeable carbon rights. Outside the UNFCCC and national debates, three parallel processes are driving the market. These are located in UN agencies and the World Bank; proxy inter-state deal making; and the voluntary market initiatives undertaken by corporate and civil society actors. Market extension to include credits from forest carbon is being built on each of these interlocking fronts and has been gaining pace since 2005.

The unwieldy frontiers of this new market entail initiatives to develop so-called REDD carbon offsets. The acronym REDD refers to schemes aimed at Reducing Emissions from Deforestation and Forest Degradation in developing countries. Deforestation and forest degradation accounts for between 10-20% of atmospheric greenhouse gas (GHG) emissions (IPCC, 2007; Quéré et al., 2009; van der Werf et al., 2009), making these trends significant contributors to global climate change. In addition, forests are understood as important terrestrial ‘sinks’, or containers for carbon, approximately 650 billion tonnes of carbon worldwide (FAO, 2010b). REDD projects, hosted predominantly in low and middle income developing nations, are those which sequester carbon over time, by securing the continued existence of forest land scheduled for acts leading to deforestation and forest degradation such as logging, or changed land use. The projects are deemed to have a mitigating effect on future carbon emissions. Emissions reductions created through REDD projects are calculated as the difference between the project’s activities and a counterfactual baseline i.e. the emissions estimated had the project not been undertaken.

Within multilateral negotiations most signs point toward the marketisation of REDD finance in some form. That is, tying all or part of REDD funding to the carbon market (Corbera, Estrada & Brown, 2010; Okereke & Dooley, 2010). Marketisation broadly refers to ‘the assignment of prices to phenomena that were previously shielded from market exchange or for various reasons unpriced’ (Castree, 2008: 142). In the case of REDD, marketisation entails the commodification of carbon stored in forested land which is at risk of being depleted. The purpose of carbon trading is to change the cost structure of production using a price signal.2 This involves creating tradeable property rights to the carbon embedded in vegetation and perhaps soil in REDD project sites for sale on the carbon market. REDD is under the process of definitional expansion to ‘REDD+’ in multilateral negotiations. REDD+ activities include other forms of land use that are deemed to enhance existing carbon sinks such as changed agricultural practices __________

2 The epistemology behind emissions trading is environmental economics. The fundamental assumption in environmental economics is that ecological degradation and pollution is a consequence of market failure. That is, the social cost of depleting the world’s forests we bear collectively is a ‘market externality’ not reflected in the price of goods bought and sold via the functions of competitive markets. In order to ‘internalise’ these costs, environmental economists suggest market- based regulatory measures be installed to redress problems such as climate change (e.g. emissions trading or pollution taxes). Emissions trading and taxation use the price signal to send information to producers and consumers.

(Campbell, 2009).3 Firms with obligations to reduce their emissions under an emissions trading scheme, or those wishing to engage in corporate social responsibility activities, may buy credits generated by REDD activities to compensate for continued emissions in their operations. In textbook terms, the right balance of supply and demand for REDD offsets in the carbon market will set a price that acts as an incentive for conservation and a disincentive for production that exploits forest reserves. This form of finance for climate change mitigation is underwritten as the most feasible course of action in the absence of adequate and consistent public funding into the future (O’Sullivan et al., 2010).

Marketised REDD is conceived in three ways by economists and policymakers: as a financial incentive for forest conservation, a least-cost measure for climate change mitigation, and a source of alternative livelihood for forest communities (Stern, 2007; Eliasch, 2008). The claim here is win-win-win in ecological, economic and social terms. This understanding of REDD offsets reflects the near consensus assumption in climate politics – that decarbonisation, economic growth, and development can be reconciled (Bäckstrand & Lövbrand, 2006). However, this new round of commodification is not easily realised. Ongoing crises of legitimacy are persistent features of the market for forest offsets (Paterson, 2010). Notably issues of regulatory design, emissions measurement and verification have been hotly debated since REDD’s first formulation (Streck et al., 2008). In addition to concerns over REDD offsets being ‘hot air’, there is significant contention over the prospect of flooding the carbon market with cheap credits, thus undermining mitigation efforts on an aggregate international level (Karsenty, 2008; Leach, 2008). Further, it is increasingly reported that indigenous peoples and forest communities may not see the financial benefits of REDD mechanisms, and seem set to lose their already precarious hold on land tenure and sovereignty (Griffiths, 2007; Dooley et al., 2008; Cotula & Mayers, 2009; Goodman & Roberts, 2009; Hall, 2010). Finally, these issues rest against the persistent conflict involved in demarcating responsibilities for climate mitigation and adaptation between developed and developing nations. The scientific, economic, ethical and legal vagaries of forest carbon offsets are numerous, manifesting differently across political, geographical and institutional locales. REDD developments in the Asia-Pacific4 region demonstrate some of the most controversial aspects of REDD inside and outside formal institutional channels.

This paper is a survey of the activities instigating marketised REDD in the Asia-Pacific region. It considers key victories and failures claimed by carbon market proponents and their antagonists respectively. I identify the modes of authority establishing REDD as a carbon offset, and the central points of contention over REDD’s implementation. Processes of governance and legitimation are of interest here. Governance of human affairs is broadly understood as an ongoing process, inclusive of, and ‘beyond’ the actions of nation-states:

Governance is the sum of many ways individuals and institutions, public and private, manage their common affairs. It is a continuing process through which conflicting or diverse interests may be accommodated and co-operative action taken. It includes formal institutions and regimes empowered to enforce compliance, as well as informal arrangements that people and institutions either have agreed to or perceive to be in their interest. (Commission on Global Governance, 1995: 2f)

Carbon markets as a form of climate governance includes the shaping of governing rules and norms via implementation of market activities by actors not vested with ‘formal authority’ (Rosenau, 2002; Okereke, Bulkeley & Schroeder, 2009). Importantly, contestation over the legitimacy of governing authorities is constantly in play in the process of carbon market creation (Paterson, 2010). The marketisation of REDD is reflective of an ‘ongoing dynamic of legitimation and delegitimation as norms and institutions vie for legitimacy within the wider institutional contexts’ (Bernstein, 2005: 162).

There is a heterarchy of institutions and actors involved in negotiating the governance of market-based REDD and its ongoing crises. The degree to which order and coherence can be construed in the array of institutional and political practices is an ongoing point of tension for governance scholars (Dingwerth & Pattberg, 2006). Rather than ask quantitative questions about the order or disorder in political and social processes, I begin by recognising ongoing fragmentation of REDD governance and its marketisation. The data presented here shows that this fragmentation plays out in the crises and failures of REDD. The term governance failure focuses on the process of decision-making and range of institutions involved in the (mis)-management of a problem (Jessop, 2000; Bakker et al., 2008). It is used here to think through the multiple and potentially conflicting forms of authority behind REDD marketisation. This paper considers the responses of REDD advocates to various conflicts which have emerged in sites of REDD implementation. REDD market failures must be understood by reference to the full configuration of actors and institutional architectures involved in the marketisation of REDD.

Social and political science analyses of REDD should establish the links between the hybrid and multi-scalar governance of REDD inclusive of its marketisation, and the impacts and outcomes of this dominant vision for REDD. The current scholarship on REDD spans a range of disciplines concerned with the viability of REDD as a means to mitigate greenhouse gas emissions. Scholars and practitioners have queried the technical aspects of REDD (Gaveau et al., 2009a; Gaveau et al., 2009b); outlined governance challenges in host developing nations (Phelps, Webb & Agrawal, 2010); critically appraised the role of international institutions (Dooley et al., 2008; Griffiths, 2008); as well as uncovered the implications of inter-state negotiations and various cultural and domestic influences in deciding the legal structure of REDD (White & Martin, 2002; Fry, 2008; Lyster, 2010b, 2010a). However, to date no account has been provided of the full arrangement of organisational forms working to extend the carbon market into forest offsets. Nor has there been attention to how these diverse forms of authority have dealt with the ongoing questions about REDD’s viability. This is a large task given the range of intersecting programs, organisations and actors with an interest in REDD. By offering this map of the efforts to develop forest carbon offsets this article

The first section introduces the raft of intersecting organisational and regulatory forms promoting, and indeed installing market-based REDD in the Asia-Pacific. The second and third sections of this article discuss four case studies from Indonesia and Papua New Guinea. Data is taken from policy documents, annual reports, online media and public statements of key actors and organisations.

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