Protecting and Growing Forests to Save the Climate -- a Business Opportunity for Latin America?

Apr 01, 2014 | Updated Jun 01, 2014

The start of this year's World Economic Forum on Latin America in Panama coincides with a landmark in the research on climate change: More than 2000 scientists, experts and reviewers have compiled the latest findings on the impacts of climate change in a newly launched IPCC report titled "Climate Change 2014: Impacts, Adaptation, and Vulnerability."

The authors leave no doubts about the seriousness of the issue: "Observed impacts of climate change have already affected agriculture, human health, ecosystems on land and in the oceans, water supplies, and some people's livelihoods. The striking feature of observed impacts is that they are occurring from the tropics to the poles, from small islands to large continents, and from the wealthiest countries to the poorest."

One of the key elements in the fight against climate change is the protection and restoration of forests. Declining forest cover does not only lead to rapidly increasing CO2 emissions, thereby speeding up climate change, but in many cases the cleared land also leaves the local population more exposed and vulnerable to natural hazards such as floods or droughts.

While global politicians generally have been very slow in responding to the challenge, the last UN climate change conference did achieve some results on protecting forests, which could lead to interesting investment opportunities for the private sector. The so-called REDD framework (Reduced Emissions from Deforestation and Degradation) creates the basis for measuring and quantifying forestry protection.

In order to participate, a country must have various elements in place to guarantee the integrity of the system, including a national REDD strategy or REDD action plan, a national forest reference emission level, a national monitoring system for REDD, as well as a system for providing information about how safeguards are being addressed and respected.

Once up and running, international climate finance could reward investors for protecting forests and creating alternative livelihoods for local populations, instead of cutting down the trees, sell the wood and use the land for often marginal and low-productivity agriculture. The Norwegian government, for example, has already committed more than USD$1 billion for pilot REDD schemes in countries such as Brazil and Indonesia. By 2020, international climate finance is supposed to total USD$100 billion per year.

In the mean time, projects to protect and re-grow forests are already being launched on a voluntary basis. In Colombia, South Pole Carbon has partnered with Forestal San José in a large reforestation and conservation project. The project area of 4'800 ha in Antioquia and Córdoba has previously been exposed to extensive cattle grazing activity, and has suffered negative impacts of gold mining. The polyculture project consists of planting 25 different native species adapted to soil conditions and selected according to local biodiversity and conservation needs, including highly endangered species from the IUCN red list such as Magnolia silvioi. Many tree species have flourished as a result of the micro-climate and soil conditions created by the planted trees, which have a positive impact on temperature and humidity regulation, soil formation and soil carbon accumulation.

The Forestal San José / South Pole reforestation and conservation project is the first in Colombia to obtain carbon credits certified according to the CarbonFix Standard (now Gold Standard). Leading research institutions such as the Medellin Botanical Gardens, conservation NGOs, and leading Colombian company NOEL (cookies, chocolate), well known for its leading sustainability strategy including its supply chain, was one of the first purchasers of these carbon credits, on its way to climate neutrality.

Can such initiatives be replicated and scaled-up in order for the forest sector to become a net sink of carbon, and not a cause for climate change? For this to happen, climate finance needs to increase dramatically -- and it won't work without substantial private finance. While a global political deal on climate change is still a challenge, let alone clear understanding of the role of the private sector, countries such as Mexico or Costa Rica are already moving ahead with laws that are putting a price on carbon, which will ultimately increase the attractiveness of low-carbon investments.

On the way to such a global deal on climate change, the World Economic Forum's Annual Meeting 2014 at Davos has seen a tremendous amount of relevant sessions and discussions, many of which will hopefully be continued in Panama over the coming days!