Failure of Market-Based Approaches to Forest Conservation

• 10 May 2024

For Prelims: Forest conservation, Payments for Ecosystem Services (PES), carbon emissions, Greenwashing

For Mains: Analysis of Market-Based Approaches to Forest Conservation.

Source: BT

Why in News?

Recently, a major scientific review by the International Union of Forest Research Organizations (IUFRO) found that market-based approaches to forest conservation, such as carbon offsets and deforestation-free certification schemes, have largely failed to protect trees or alleviate poverty.

What are the Key Findings of Recent Study?

• The global study, done in 120 countries, concluded that trade and finance-driven initiatives had made "limited" progress in halting deforestation and in some cases worsened economic inequality.
• The report suggests a "radical rethink" of market-based approaches as poverty and forest loss persist across different regions globally where market mechanisms have been the main policy option for decades.
• It also provides examples from the Democratic Republic of Congo, Malaysia, and Ghana where market-based projects failed to benefit local communities or halt deforestation.
• There is a rise in complex and overlapping market-based schemes “with financial actors and shareholders more often interested in short-term profits than long-term just and sustainable forest governance”.
• Study raises concerns about wealthy nations' green trade policies, arguing they might have negative consequences for developing countries without proper implementation.
• The report is planned to be presented at a high-level UN forum, emphasising the significance of its findings and recommendations for policymakers and stakeholders in the field of forest conservation.

What are the Market-Based Approaches to Forest Conservation?

• About:
  • Traditionally, forest conservation relied on regulations and government intervention.
  • Market-based approaches put a value on the environmental benefits of forests and create mechanisms for people to profit from protecting them.
  • It aims to create a market where sustainable practices become more attractive than deforestation.
• Examples of Market-Based Approaches:
  • Carbon Offsets: Companies that produce carbon emissions can invest in projects that protect forests, which absorb carbon dioxide. This allows them to offset their emissions footprint.
  • Payments for Ecosystem Services (PES): Landowners who manage their forests in a sustainable way can receive payments from governments, NGOs, or businesses for the environmental services their forests provide, such as clean water or biodiversity habitat.
  • Deforestation-Free Certification: This involves independent verification that products come from sustainably managed forests, allowing consumers to choose forest-friendly options.

What are the Impacts of Market-Based Approaches (MBAs) to Forest Conservation?

• Positives:
  • Incentivise Conservation: It creates economic value for keeping forests standing. This can motivate landowners who might otherwise see profit in logging and forest conservation.
    • Example: Carbon offsets provide income for communities protecting forests that absorb carbon dioxide, a valuable service in combating climate change.
  • Market Efficiency: It is more efficient than traditional regulations. They allow the market to find the most cost-effective ways to achieve conservation goals.
    • Example: Payments for Ecosystem Services (PES) programs can direct resources towards landowners who can demonstrably provide the most significant ecological benefits.
  • Promote Sustainable Practices: It encourages long-term forest management by rewarding sustainable practices over deforestation.
    • Example: Deforestation-free certification schemes give consumers the power to choose products that promote responsible forestry, creating market pressure for sustainable practices.
• Negatives :
  • Unequal Benefits: It can increase existing inequalities. Wealthy companies or landowners might benefit more readily, while poorer communities struggle to participate effectively.
    • For example: Complexities in carbon offset markets can leave some local communities out of the loop, limiting their ability to profit from forest conservation.
  • Monitoring Challenges: Ensuring projects deliver real conservation benefits requires robust monitoring. Weak monitoring can lead to "greenwashing" where projects appear beneficial but have little actual impact.
    • Example: PES programs need clear baselines to measure improvements in forest health and effective verification to prevent fraudulent claims of conservation efforts.
  • Uncertain Long-Term Impact: The long-term effectiveness of MBAs is still being evaluated.
    • Recent study by International Union of Forest Research Organizations (IUFRO) found that market-based approaches to forest conservation, such as carbon offsets and deforestation-free certification schemes, have largely failed to protect trees or alleviate poverty.

Greenwashing:

• Greenwashing is a deceptive practice where companies or even governments exaggerate their actions and their impact on mitigating climate change, often providing misleading information or making unverifiable claims.
• It is an attempt to capitalise on the growing demand for environmentally sound products.
• It is fairly widespread, and entities often label various activities as climate-friendly without verifiable evidence, undermining genuine efforts against climate change.

Way Forward

• Empowering local communities through land tenure rights, capacity building, and ensuring their participation in decision-making processes can create a strong foundation for sustainable forest management.
• Clear regulations and robust enforcement alongside MBAs can help prevent deforestation and ensure sustainable practices.
• Designing market-based approaches to forest conservation with equitable benefit-sharing mechanisms that prioritise local communities and alleviate poverty is crucial.
• Investing in effective monitoring systems and ensuring transparency in project implementation can prevent greenwashing and ensure genuine conservation outcomes.

Conclusion

Market-based approaches can be a valuable tool in forest conservation, but they must be implemented with caution and alongside other strategies. The IUFRO study serves as a wake-up call to prioritize community-driven solutions, strengthen regulations, and promote equity. By adopting a more holistic approach, we can ensure the long-term protection of our vital forests and the well-being of the communities who depend on them.

Drishti Mains Question:

Q. Analyze the market-based approaches to forest conservation in the context of recent studies.

UPSC Civil Services Examination Previous Year Question (PYQ)

Prelims:

Q. Regarding “carbon credits”, which one of the following statements is not correct? (2011)

(a) The carbon credit system was ratified in conjunction with the Kyoto Protocol

(b) Carbon credits are awarded to countries or groups that have reduced greenhouse gases below their emission quota

(c) The goal of the carbon credit system is to limit the increase of carbon dioxide emission

(d) Carbon credits are traded at a price fixed from time to time by the United Nations Environment Programme.

Ans: (d)

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Mains:

Q. Should the pursuit of carbon credits and clean development mechanisms set up under UNFCCC be maintained even though there has been a massive slide in the value of a carbon credit? Discuss with respect to India’s energy needs for economic growth. (2014)