Deforestation and Greenhouse Gases

Report
January 6, 2012

Human activities produce large amounts of greenhouse gases (GHGs), primarily carbon dioxide (CO2), and thus contribute to global warming. The use of fossil fuels is the primary source of CO2 emissions, but the removal of trees from forested land has also contributed.

Mature forests, having absorbed CO2 from the atmosphere while growing, store carbon in wood, leaves, and soil. That carbon is released when people clear forested land and destroy the wood. From 2000 to 2005, the loss of forests, primarily in tropical developing countries, accounted for approximately 12 percent of global GHG emissions.

Slowing or halting deforestation in developing countries is a potentially low-cost way to help reduce global GHG emissions. For that potential to be realized, however, substantial challenges would need to be addressed—by providing technical and financial assistance to governments, by creating demand from private markets, or both.

Challenges in Reducing Forest-Based Emissions

If actions to support forest preservation are to play a cost-effective role in a significant international effort to reduce global GHG emissions, three broad challenges would have to be met:

  • Obtaining useful measurements of changes in the amount of carbon stored in forests,
  • Structuring incentives to reduce total forest-based emissions, and
  • Improving governance in developing countries.
Measuring Changes in Carbon Storage

Establishing programs to reduce emissions of greenhouse gases and assessing the effectiveness of those programs require methods for measuring emissions. In some cases, measuring them is easy—the electric power industry, for example, can use systems that directly, continuously, and accurately monitor CO2 emissions.

Measuring emissions resulting from deforestation is more complicated, however, because such emissions depend on the amount of deforestation and the carbon content of the wood that has been destroyed. Researchers can combine remote-sensing data about the amount of deforestation with information about the carbon content of the wood gleaned from on-the-ground inventories of the number and size of trees in sample areas to make such measurements. Most developing countries would need to improve their technical capabilities to process remote-sensing data and conduct inventories in order to effectively implement any program aimed at reducing carbon emissions from deforestation.

Structuring Incentives to Reduce Total Forest-Based Emissions

To reduce total forest-based emissions worldwide, the design of preservation programs must consider not only how much additional preservation would result but also how much “leakage” would occur—that is, how much of a forest program’s direct reductions in GHG emissions would be negated by additional GHG releases elsewhere. For example, a program that compensates people for preservation in one location might prompt a decline in the clearing of forested land for agriculture or timber production in that area, thus reducing supplies of those commodities and raising their prices. Higher prices, in turn, could encourage uncompensated landowners elsewhere to clear forests to produce agricultural products or timber to sell at the higher prices. Consequently, programs might need to compensate not only new preservation efforts aimed at threatened forests but also the continued preservation of forests that would not be threatened in the program’s absence. Leakage reduces a program’s cost-effectiveness, and significant leakage might negate the cost advantages that using forest preservation has in comparison with other approaches to achieving GHG reductions.

Improving Governance in Developing Countries

Weak governance—the inability to successfully design and implement policies to achieve stated objectives—undermines any efforts to use forest preservation programs to produce verifiable reductions in greenhouse gases. Even if they are motivated to participate in such programs, agencies in some developing countries may have inadequate authority for that task and may lack effective mechanisms for negotiating and distributing compensation to those who preserve forests. Also, the rights to any potential benefits from preserving forest resources may be poorly defined, making the gains from deforestation for agricultural and timber production and the use of wood for fuel more certain than the gains from preserving forests. Finally, government corruption and political instability can undermine laws that promote preservation.

Improving governance may be the most intractable of the three challenges. Of the 25 countries with the largest forest-based emissions in recent years, which together produced 95 percent of such emissions globally, nearly three-quarters rank in the bottom half of all countries on a key indicator of a country’s ability to govern—government effectiveness. That indicator measures, for example, the quality of policy formulation and implementation and the credibility of the government’s commitments to its policies. The World Bank, which tracks and reports measures of governance, rates the two largest emitters of forest-based CO2—Brazil and Indonesia—at roughly the 50th percentile in terms of government effectiveness.

Policy Approaches for Reducing Forest-Based Emissions

Approaches the United States and other developed countries could take to encourage forest preservation in developing countries fall into two broad categories:

  • Providing financial and technical assistance to governments interested in preserving forests and
  • Creating demand in private markets for reductions in forest-based greenhouse gas emissions.

The two types of policies might work best together. The viability of markets, for example, may depend on having in place a reliable program for achieving measurable reductions in forest-based emissions—the type of program that financial and technical assistance can help establish.

Assistance to Governments

Financial and technical assistance can help overcome some of the challenges of pursuing forest preservation. It can help support advances in measuring and monitoring changes in forest carbon, help ensure that developing countries have access to the technologies for doing so, and also help counter leakage by offering incentives for achieving global reductions in forest-based emissions. Given uncertain funding and the challenges of improving governance in developing countries, the United States and other developed countries could consider focusing efforts on selected countries—for example, Brazil and Indonesia—that have relatively reliable governance, that are rich in remaining forest resources, and whose experiences could inform subsequent policy development.

Markets for Forest-Based Emissions

The United States and other developed countries could also generate resources for reducing forest-based GHG emissions by creating demand in private markets for such reductions. They could do that by establishing cap-and-trade programs or by taxing GHG emissions and providing tax credits for those who fund forest preservation activities. The potential for forest preservation in developing countries to lower the private-sector costs of achieving a goal for global GHG reductions might motivate substantial funding from private sources.