Sustainable Forestry & Payments for Environmental Services

Question 1

Describe how LDCs (lesser developed countries) have asserted their ownership/control over their forest resources

Answer 1

Nationalize Forest Resources

Typical:
*Gov took over and established control
*States recognize “private” informal ownership of converted lands
NEW:
*recognition of community forest rights, empowering locals to manage their resources.
*Indigenous groups use mapping to assert territorial claims
* communities engage in Common Property Resource Management (CPRM), promoting collective governance and sustainable resource management.

Question 2

Identify the three main options that LDCs have for extracting direct revenue from their forests

Answer 2

1. Privatization: selling logging rights to companies that can convert forest land for various uses, such as agriculture or ranching.
2. State management: government retains ownership of the forests but allows companies to log or convert the land for other uses,
   Concession contracts specify how land can be used ( such as plantations for palm oil or pulpwood. ) often leading to a loss of its original agricultural or forestry designation.

State management: managing forests to extract wood in a sustainable way.
State keeps ownership while implementing concession contracts for sustainable

Question 3

Clarify how LDC’s structure/manage the logging sector on their public lands

Answer 3

Concession contracts → own land but contract it out to other companies to do the logging, so they can still get the land

Question 4

Define opportunity cost

Answer 4

represents the potential benefits that (the state) misses out on when choosing one alternative over another
State management → sustainable logging high opportunity cost missing out on income you could’ve gotten

Question 5

Compare the direct revenues generated by the three main options. Clarify two reasons why sustainable logging does not compete

Answer 5

1. Privatization → log → conversion
   *export, Business, employee income, and
   Property taxes
2. State management → log → conversion
   *Export taxes and Permit fee
3. State management → sustainable logging
   * Permit fee and Export taxes, but only once until the old growth grows back

Question 6

Characterize the structure of an “export-enclave economy” in the LDC forestry sector

Answer 6

1. Backward Linkage: Industrial Companies bring in all equipment necessary, not sourcing it locally (no linkages)
2. Forward Linkage: Weak because Gabon exports raw logs, they don’t do value added in the country
3. Fiscal Linkage: concession contracts and export taxes goes into the pockets of the state and politicians, not the community
4. Final Demand: hire Americans for high skill, high wage jobs and hire locals for low skill, low wage jobs (weak, there is employment, but not the best that the industry has to offer)

Question 7

identify “conditions” that LDCs might consider to break those structures and generate more indirect revenue from the forest

Answer 7

Final Demand: have to hire Gabon locals to do high skill, high wage→they can pay more taxes→ more indirect revenue

Forward Linkage:
Refining in country (Have to do value added in the country)
Can also provide indirect revenue

Question 8

Explain two ways in which, theoretically, LDCs should benefit from participating in sustainable forest certifications

Answer 8

1. Higher Prices for Certified Wood: wood is high quality and sustainable forestry certified→ charge more

2.Access to Global Markets: sell the idea that you are selling high quality gabonese wood, you can access ANY market in the world → more customers

Question 9

Explain three reasons why, in reality, LDCs struggle to realize those benefits

Answer 9

1. Costs, extraordinarily high with the certification
2. No ‘fairtrade style’ pricing/premium structure: no guaranteed price or premium.
3. Customers are less than 15%,: Not many buyers, the market has not caught up so loggers are having to shoulder the costs of the inputs

Question 10

Explain, in general, how REDD+ (and RIL-C) help LDCs generate additional revenue from their forests

Answer 10

1. REDD+
   rewards LDCs for demonstrating that they absorb more carbon dioxide than they emit, enabling them to earn carbon credits that can be sold on the market to larger emitters, such as developed countries and oil companies, which need these credits to meet their emissions target
   RIL-C
   RIL-C certified forest area, we are going to chase more carbon credits for that, extracting value, by calculate the carbon saved and generate additional carbon credits

Question 11

Characterize the complexity of REDD+

Answer 11

Complexity: meticulous data collection and management. ex: establishing a baseline for one time period and comparing it to another. Need a national-level system that ensures no leakage and requires comprehensive accounting for the entire country’s emissions. Created an Agency, Sponsored several PhD students and requires High scientific standards

Question 12

Why difficult for LDCs like Gabon to compete in the carbon credit market (difficult for LDCs to compete in the credit market and actually cash in on carbon credits)

Answer 12

1. Competitive market: operates on a bidding process, making it challenging for countries to sell their credits.
2. Carbon credits mature over time, becoming more valuable, which leads companies to prefer purchasing cheaper credits
3. Gabon had perceptions of non-accountability, which undermined the credibility of their carbon credits and made it harder for the country to successfully cash in on them.

Question 13

Summarize, from LDCs perspective, three big barriers they face in REDD+

Answer 13

Barrier 1: not coming through with the amount of revenue they should be receiving

Barrier 2: it’s really difficult, complicated, and expensive to do

Barrier 3: there’s no point for them to protect the forest because the REDD+ is beyond where they can reach, so might as well just log

Question 14

Clarify why Brazil is not participating in REDD+ and why they are looking for an alternative approach

Answer 14

Brazil is deforesting at a high rate, and they could never qualify for REDD+ credits

Why looking for alternative:
Leading them to wanting to get some compensation for the forest they are protecting, and if they get money now they might be able to not deforest as much

Question 15

Describe Brazil’s plan, identifying the two main problems it is addressing and how (in general)

Answer 15

Approach 1: Secure adequate funds
Create a TFFF (tropical forests forever facility). Invest in the bank and pay interest
Makes more money by lending out for other projects - by charging a higher interest rate
Uses that money to pay the people who are keeping their forest

Approach 2: Simplifying assessment/verification: satellite images tracking what is forest or not forest.
State management to sustain logging (has to be more revenue than what brazil would get from other managements)