Win Win Approaches to Development and the EnvironmentTropical Reforestation and Carbon Sequestration



                          Center for Development Information and Evaluation


     Tropical forests sequester, or store, carbon released to the atmosphere through decay, respiration, and the

     burning of fossil fuels. The sequestering plays an essential role in many natural systems, including climate

     modulation. Some developing countries are discovering they can sell this service to raise funds for

     reforestation and for natural forest management. Recently, USAID has worked with U.S. firms and

     nongovernmental organizations in testing the feasibility of funding reforestation programs in developing

     countries. The idea is to offset the carbon dioxide emissions of their power-generation facilities. A unique

     partnership between U.S. firms, environmental groups, developing-country governments, and local forest user

     groups has emerged from these experiences. It's a potential new approach to restoring forest cover and

     managing forest resources.



The Problem


     Tropical forests produce many services and

benefits not paid for by anyone. As a result,

deforestation, particularly destruction of

tropical forests in developing countries, is

resulting in the loss of watersheds, wildlife

habitats, and sources of timber products.

Deforestation also releases carbon dioxide

(C02). That contributes to the buildup of

greenhouse gases, believed by many scientists

to produce global warming. Most developing

countries lack the financial resources to make

the major investments required to halt

deforestation and to restore forests on fragile

lands.



The Win Win Solution


     A recent evaluation of selected USAID

forestry projects suggests there are opportu-

nities for a partnership between developing

countries needing resources to finance reforestation and U.S. firms seeking to offset their

emissions of carbon dioxide. (See Synthesis

Report Forestry and the Environment: An As-

sessment of USAID Support for Farm and

Community Forestry, September 1995).

Although still too new to assess their impact,

early experimental partnerships to sequester

carbon dioxide by tropical reforestation warrant consideration as a promising approach to

fostering both greater economic growth and

a better environment.


     Forests can offset industrial CO2 emissions

by sequestering carbon in forest trees and

other vegetation. Because fast-growing tropical forests can fix more carbon than temperate

forests, tropical reforestation projects jointly

implemented by U.S. firms and developing

countries can be an attractive strategy to slow

global CO2 buildup.


     Domestic legislation and international

agreements are now in place to encourage

investments in reducing and offsetting industrial CO2 emissions. For U.S. firms, investments in reforestation can often offset CO2

emissions more than equivalent investments

in equipment designed to reduce emissions.

Moreover, resources allocated for tropical

reforestation can divert demand for forest

products away from natural forests and slow

CO2 buildup that would result from further

natural-forest loss. 


     Tropical reforestation efforts provide new

sources of jobs, income and investments in

developing countries. Employment in tree

seedling propagation, contract tree planting

and management, timber harvesting and wood

products milling and finishing can form the

basis for sustainable economic activity.

Participation of local populations and accep-

tance of such projects by host governments

depend on the presence of economic benefits.


The Role of USAID


     A few developing countries are already

cooperating in reforestation and sustainable

forest management for the purpose of CO2

sequestration. In Guatemala a U.S. utility

firm and two U.S. nongovernmental organi-

zations launched a 40-year pioneering reforestation project for the sequestration of 18

million tons of carbon. USAID contributed a

small amount of in-kind support to supplement

the resources from the U.S. utility company.

More recently, private U.S. utilities have

begun experimental reforestation for CO2 cap-

ture in Malaysia, Paraguay, and Brazil.

Projects are currently being planned for

Thailand, Costa Rica, and Russia.


     USAID can provide guidance and help

mobilize U.S. private resources to finance a

share of tropical reforestation by promoting

investments in carbon sequestration in developing countries. Specifically, USAID can

work with U.S. enterprises, developing country governments and nongovernmental

organizations to


     1. Reduce risks of project failure. USAID

can support environmental and rural develop-

ment organizations able to provide technical

and managerial skills and willing to help fund

the operating costs of reforestation, particu-

larly among local communities with limited

experience in reforestation.


     2. Support independent project monitoring.

Carbon sequestration projects require periodic

review of the performance of tropical refor-

estation efforts to assess the amount of biomass production and the benefits to participat-

ing local communities.

     3. Identify potential reforestation projects

investments by U.S. enterprises. Projects

should prove profitable to U.S. investors

seeking cost-effective ways to offset carbon

emissions while helping developing countries

achieve their own objectives.


     4. Promote local group involvement in

project decisions and management. Active

participation of local groups in design and

management of reforestation for carbon se-

questration maximizes economic opportunities

for rural populations and increases the scope

for project success.


     5. Fund research on carbon sequestration

technologies. USAID can help address knowl-

edge gaps that still exist in determining which

combination of technologies and practices is

best suited for carbon sequestration and forest

management.



Outstanding Issues


     The use of carbon sequestration programs

is not without risk nor devoid of controversy.

Developing countries have few resources to

undertake reforestation and to manage remaining natural forests, despite growing demands

for forest services and products. Technical

knowledge has voids regarding biota growth,

carbon-fixing cycles, land-use substitutions,

and supporting details. Controversy has arisen

around the perception that industrial polluters

in developed countries view carbon seques-

tration as a means of escaping an obligation

to clean up their practices at home.


     Risk. There are significant risks associated

with reforestation projects in developing coun-

tries. Failure of tropical reforestation projects

has been high owing to political and social

uncertainties, limited technical knowledge

about the biology of tropical tree species, and

poorly aligned costs and benefits.


     Perceptions. Carbon sequestration through

reforestation is not always perceived as an

environmental benefit; sometimes it is seen

as an escape from environmental responsibilities. Some environmental groups argue that

by funding tropical reforestation, pollution-emitting industries are escaping their full

commitments to reducing CO2 emissions.

Developing countries fear they will lose

control over their tropical forests and become

dumps for the world's C02 emissions.


     Awareness. Considerable education is

required to encourage U.S. firms to participate

in reforestation for carbon sequestration. U.S.

industries and utilities do not understand the

complexities of tropical forestry or

developing-country politics well enough to

feel comfortable about committing resources

to tropical reforestation.


     Policy development. Carbon sequestration

is only one of the tools that can be brought to

bear on problems of deforestation and CO2

emissions. Estimates are that 465 million

hectares would need to be planted each year

to offset increases in global CO2 emissions.

Other initiatives, such as the researching of

cost