Failure of Market-Based Approaches to Forest Conservation | 10 May 2024

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.

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.