Cnemidophorus lemniscatus lizard in Honduras. (Photo by R. Butler)
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FUNDING AND ORGANIZATION
Now that we have prioritized what forest areas should be set aside for reserves, we must focus on implementation and
management of these protected areas. Clearly all three steps will require a broad spectrum of participants, from
local farmers to CEOs of multinational corporations to high-ranking government officials. Without cooperation, any
protected-areas system is destined to fail.
FUNDING
Reserves are expensive to establish and maintain, as is forest management. FAO 1997 estimates that the forestry
sector alone is funded only 27 percent of what it requires, while the United Nations Conference on the Environment and
Development (1992) estimated the cost of protecting tropical forests through sustainable development at $30 billion
per year. The countries in which reserves and forest management are most needed have neither the money nor the
interest in funding these projects. The governments are far more concerned with supporting their people, developing
their country, and making interest payments on their debts. Thus some funding must come from the outside in the
form of loans, debt cancellation, and investments. These can be organized and engineered by international organizations
with the consent of the countries' peoples. However, it important that more emphasis be placed on local resources,
since outstanding debt obligations are growing to be insurmountable and are affecting the ability of developing countries
to attract private international investors.
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Innovative Funding Mechanisms
Tradable Carbon Dioxide Permits / RED / Avoided deforestation:
For setting aside forest for the purpose of atmospheric carbon mitigation, developing countries can receive payments from industrialized countries looking to offset their carbon emissions. Carbon-offset programs are popular in many circles since they can "provide a mechanism for motivating wealthy countries to pay for a benefit of forest conservation that transcends national borders." In effect, such programs promote "the transfer of funds from industrialized countries to tropical countries as a commercial transaction rather than an act of charity" (Costa 1996). Instances include Malaysia, Indonesia, Belize, Costa Rica, Guatemala, and Ecuador. [more]
Bio-prospecting Fees:
Rainforest countries can earn revenue by allowing scientists to develop products from the island's native plant and animal species. The pioneer in the area was Costa Rica, which entered into an agreement with an American pharmaceutical company, Merck, to look for plants with potential pharmaceutical applications. Under the agreement, a portion of the proceeds from compounds that do prove commercially valuable will go to the Costa Rican government, which has guaranteed that some of the royalties will be set aside for conservation projects. Similarly, in 2001 Givaudan, a Swiss fragrance and flavor company, sent a team to look for new exotic smells and flavors in Madagascar. Following their survey, Givaudan researchers "reconstituted" 40 aromas that could be used as commercial products. The company has agreed to share a portion of the profits from these products with local communities through conservation and development initiatives.
Deforestation Charges: Increasingly used as a way to both raise revenue and protect forest ecosystems. Deforestation charges are levied against firms whose activities cause deforestation. Countries in point include Brazil and the Central African Republic.
Eco-tourism Charges: Eco-tourism charges through park entrance fees, hotel taxes, and service charges are becoming
a major source of funding for parks around the world. Funds collected from eco-tourists are used to improve reserve
management, hire guides and park rangers, and expand park boundaries.
Scientific Permits: Like
eco-tourism charges, scientific fees are customary in many parts of the world and are often used to finance reserves. Critics say such fees reduce the incentive for foreign scientists to do research and limits opportunities for local researchers who can otherwise benefit from the presence of outside scientists.
Watershed Charges: Charges are
imposed on urban dwellers by the government for the protection and reforestation of hillside forests which ensure
the regular flow of clean fresh water into cities. Instances: Costa Rica, Brazil, Indonesia, Malaysia.
Tradable reforestation/conservation credits:
Financial credits issued by industrialized countries to forest countries in exchange for environmental protection.
Compensation for conservation: Some
governments grant monetary compensation to farmers and land-holders who allow their lands to revert to forest.
Corporate sponsorship: Corporations have been a bit slow in "adopting" parks but they have the money and a marketing-driven interest in taking a closer look at such schemes. See below for more details on a potential plan.
The Linden-Lovejoy-Phillips plan: One interesting idea proposed by Eugene Linden, Thomas Lovejoy, and J. Daniel Phillips for tropical rainforests consists of dividing natural areas into blocks and then soliciting funding commitments from international environmental groups, development institutions, corporations, and other credible donors. There would be a bidding process after which an entity would take responsibility for maintaining forest cover and forest health in each block of the entire forest system. This plan could be a road for corporations to become involved in conservation as a public relations/marketing tool. A given percentage of the proceeds could be put into a trust fund with the payout ear-marked for ongoing conservation and sustainable development programs.
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FUNDING METHODS
Debt Exchange
One method of financing conservation projects in developing countries is debt-for-nature programs where conservation
and other international organizations purchase a portion of a developing country's commercial debt at a discount,
or else persuade creditor banks to donate some of debt. Foreign debt can be purchased at 50 to 90 percent of its actual
value and sometimes far less. For example the non-profit organization Conservation International purchased $650,000 worth
of Bolivian debt for only $100,000 when it initiated the first debt-exchange program in 1987. In exchange for being
relieved of the obligation to repay a portion of international debt, the country agrees to set aside funds to promote
conservation by encouraging sustainable development, expanding environmental education programs, purchasing land,
and improving land management. By 1996, debt-for-nature agreements totaling nearly US$1 billion had been arranged
in sixteen countries including the tropically forested countries of Argentina, Bolivia, Costa Rica, Dominican Republic,
Ecuador, Guatemala, Honduras, Jamaica, Mexico, Madagascar, Philippines, Venezuela, and Zambia.
In March 1998, the U.S. House approved a bill that authorized $325 million over three years in debt-for-nature swaps.
Under the Tropical Forest Conservation Act, proposed by R. Portman (R-Ohio) and J. Kasich (R-Ohio), the U.S. reduces
or forgives debt owed the U.S. by developing countries in exchange for establishing forestry funds to be used for
conservation and promoting economic reform. The act mandates that projects be carried out at the local level by
NGOs, community organizations, and indigenous organizations. In his 2001 budget, President Clinton proposed expanded funding
for these debt swaps, while President Bush has continued the policy with deals in Peru and Jamaica.
According to an analysis by the World Bank, while debt-for-nature agreements will never substantially reduce external debts of poor countries—which are far too large for such schemes— they can dramatically increase the amount of funds spent by the debtor country on environmental protection.
Possible Funding Strategies for the Future
There are other means that may prove useful in financing reserves, although they have not been developed
to their fullest potential. Most of these are based on the concept that all nations should finance rainforest preservation
since the effects of deforestation will impact everyone. Because a few temperate nations are the wealthiest, they should be the primary financiers of these projects, since the richest
environments are usually found in the world's poorest countries, which can not afford to sponsor such projects.
To fund these projects, the government could reduce subsidies currently given to certain polluting and environmentally damaging industries.
Tradable Greenhouse-Gas Budgets
Carbon-Offset Programs
Bolivia's Noel Kempff Mercado National Park
Lower Taxes and Save the Environment
A global rainforest funding project may be a potential mechanism for sponsoring reserves in the future. Rainforest and other reserves could be financed by a fund made up of contributions from
nations worldwide. This fund would draw its income from a tax levied on temperate zone nations scaled progressively
with the amount of pollution they release into the atmosphere. The host tropical countries
would receive regular payments from this fund to finance new environmental programs and to maintain the existing
ones. If the host nation failed to uphold its end of the bargain by oppressing native peoples, violating environmental
regulations, or failing to actually use funds properly, payments could be reduced or even halted.
This program could work, but only if run efficiently and fairly so the peoples who live in and around
the reserves received their fair share of the funds. The program could not ignore the concept of sustainable development
without failing. Further, corruption could be a concern and Western countries may balk at what some see as simply a transfer of wealth from wealthy to poor countries
Another way to help ease debt pressures on tropical countries would be to reform the way companies of the industrial
world think about blocked funds. Blocked funds refer to a situation where a country cannot pay a foreign company
for services it performed and goods it provided. The foreign company often considers the debt to be uncollectible
in any reasonable amount of time. Instead of tacking on additional interest that will never be collected anyway,
the company could donate the blocked funds in exchange for guarantees of forest protection and still receive a
tax write-off from its own government for the charitable contribution. In the long run, the company would stand
to lose little (the write-off could cover the cost of the services performed) and gain a better reputation by helping
to save the planet.
One newly proposed concept to measure the economic value of unexploited forests is known as "forest capital."
Under the system, suggested at the World Commission on Forests and Sustainable Development, countries would be
rewarded for not exploiting their "forest capital." In exchange for forgoing income that could have been
earned from exploitation activities, countries would be granted credits by international financial organizations.
Like carbon-dioxide and pollution credits, "forest capital" is a way to integrate forests into the global
economy as intact ecosystems.
A similar concept won support at the 2005 United Nations summit in Montreal on climate change. A group of ten countries, led by Papua New Guinea, proposed that wealthy countries pay them to preserve their rainforests. The Coalition for Rainforest Nations argued that all countries should pay for the benefits—from carbon sequestration to watershed protection—that tropical rainforests provide.
Review questions:
- How can pollution by wealthy countries be used to protect rainforests in poor countries?
- What is a debt-for-nature swap?
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CONTENTS
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WEEKLY NEWSLETTER
INTERACT
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Recent news
Tropical ecologist: Australia must follow U.S. and EU in banning illegally logged wood
(02/09/2012) Australia should join the widening effort to stamp out illegal logging, according to testimony given this week by tropical ecologist William Laurance with James Cook University. Presenting before the Australian Senate's rural affairs committee, Laurance argued that the massive environmental and economic costs of illegal logging worldwide should press Australia to tighten regulations against importing illegally logged timber at home.
Majority of protected tropical forests "empty" due to hunting
(02/08/2012) Protected areas in the world's tropical rainforests are absolutely essential, but one cannot simply set up a new refuge and believe the work is done, according to a new paper in Bioscience. Unsustainable hunting and poaching is decimating tropical forest species in the Amazon, the Congo, Southeast Asia, and Oceana, leaving behind "empty forests," places largely devoid of any mammal, bird, or reptile over a few pounds. The loss of such species impacts the whole ecosystems, as plants lose seed dispersers and the food chain is unraveled.
New rainforest and indigenous reserve established in Peru
(02/07/2012) On February 4th, the Peruvian government and a small indigenous group created a new Amazon reserve, dubbed the Maijuna Reserve. Located in northeastern Peru, the 390,000 hectare (970,000 acres) reserve is larger than California's Yosemite National Park and over three times the size of Hong Kong.
Guyanese tribe maps Connecticut-sized rainforest for land rights
(02/07/2012) In a bid to gain legal recognition of their land, the indigenous Wapichan people have digitally mapped their customary rainforest land in Guyana over the past ten years. Covering 1.4 million hectares, about the size of Connecticut, the rainforest would be split between sustainable-use regions, sacred areas, and wildlife conservation according to a plan by the Wapichan tribe that will be released today. The plan says the tribe would preserve the forest from extractive industries.
Supernatural beliefs keep hunting sustainable on Indonesian island
(02/02/2012) How do indigenous communities hunt without pushing target species to local extinction? In other words, how have communities retained sustainable practices over countless generations. One answer is given in a new study by the Center for International Forestry Research (CIFOR) and the Center for International Research in Agronomy and Development (CIRAD): supernatural beliefs. Looking at a community of indigenous people on the Indonesian island of Seram, researchers found that supernatural hunting beliefs ensured animals never vanished for good.
More news on rainforest conservation
More rainforest news
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