Strategic Options to Advance The Conservation of Natural Forests

1. Strategic Options to Advance The Conservation of Natural Forests Forest Trends Andy White, Augusta Molnar, Alejandra Martin, Arnoldo Contreras-Hermosilla, Sara Scherr Presentation to the GEF Roundtable on Forests, 2nd UNFF, New York, 3/11/02

2. Overview • Findings (Lessons?) since Rio • In Transition: What has changed since Rio? • Looking Forward: Devising an Agenda • Opportunities to Increase Commitment and Incentives • Options to Advance Goals • Potential Roles for Key Players • Conclusion: To Johannesburg and Beyond • Implications for ODA and GEF

3. Findings (Lessons?)Since Rio • Continued deforestation & degradation in developing, regrowth in developed • Limited impact/disenchantment/weariness of global processes • Problem much more complex than thought: driven by state actions, entrenched constituencies; face political tradeoffs rather than ‘win-wins’ • Despite rhetoric, poverty not a key concern; focus on public protected areas (PAs) • Low level of effort - in sum, not a priority: either in ‘South’ or ‘North’

4. Lessons (?) Continued • Focus on PAs inadequate: must address forest matrix (1.0 billion hectares) • Owners (mostly govts) have no/limited incentive for conservation (protection and SFM) • Why so difficult to  commitment and incentives? • Govt. authority exceeds capacity (in terms of land and regulatory reach) • Existing policies and regulations make forestry more expensive than options (e.g. agriculture) • Financing for ‘public services’ has not yet materialized

5. What has Changed Since Rio? • Newly perceived threats: alien invasive species & climate change • Both require multi-sectoral approaches • Both require reconsidering conservation strategies •  Community control of forests • At least 25% owned or administered • Must ‘engage’ communities: more rights or more compensation • Huge opportunity and challenge for global community •  domestic demand: tradeoffs between plantations and natural forests • DD is 90% of total trade; growing faster than int. demand • Plantations a ‘double-edged sword’: reduce pressure but reduce value • Natural forests: sole comparative advantage for millions of poorest

6. What has Changed Since Rio? •  Globalization & industrial restructuring • ‘bad’: global reach of (corruptible) industry • ‘good’: (some) new players, new ethics, new money •  Demand for environmental services • Natural disasters driving new appreciation • Many innovations at domestic level: Brazil, Costa Rica, Colombia ($ billions) • New global mechanisms: CDM, others underway •  Attention to governance, certification • Illegal logging ‘out of the closet’ • Certification: greatest contribution – active, inclusive debate, required for payments for environmental services, but: raises costs of forest mgt.

7. What has Changed Since Rio? •  assertiveness of ‘South’ and reduced ODA from ‘North’ • frustration with agreements: “show me the money!!!” • ‘N’ dissatisfied with results: “money down rat holes” • Looking for new mechanisms (partnerships ?) • Summary: reasons for hope • Old challenges: markets, tenure, governance, industry • New opportunities to achieve 3 goals (social, environment, economic): markets, tenure, governance, industry • Must increase domestic and international commitment and financial incentives • Must do things differently – but what?

8. Looking Forward: Devising an Agenda for Conservation • Opportunities to increase commitment and incentives • Domestic constituencies necessary – but not sufficient • ODA: $ 1.2 billion/year and declining • GEF: $ 50 million/year and (?) • CEPF: $ 20 million/year and (?) • Private philanthropy: $ 70 million/year and stagnant • International payments: CDM - $ .063 – .36 billion/year • Private capital: $28 billion/year in exports (alone!) • In-kind contributions of poor: $ (?) billions • Domestic payments for env. services: $2- 5 billion/year

9. Looking Forward: Devising an Agenda for Conservation • Summary analysis: • ODA/private philanthropy small player • If $2.5 billion/year: • $6.0/ha (210 million has of ‘hotspots’) • $1.8/ha (700 million has of PA) • $.7/ha (1.7 million has of all developing country forest) • Can’t compete with gov’t options: • royalties ($ 1-5/ha/year) + timber ($80/ha/year) • ‘Conservation concessions’ non-viable strategy (even less viable if consider the equity implications) • Private flows the big player • ODA should refocus to ‘leverage’ transformation in private sector: for conservation and for poverty alleviation

10. Options to capture value and advance conservation • Addressing governance issues • Reform public timber concessions • Control illegal logging/corruption • Develop/strengthen independent certification • Adopt regular, independent audits of government performance • Shift ownership and access to communities • Increase investments to facilitate transition • Identify/clarify rights to forest services • Generate and share transition strategies

11. Options to capture value and advance conservation • Reform policies to provide incentives for SFM • Remove regulatory barriers • ‘level the playing field’ for small-scale producers • Involve local producers in policy negotiations • Promote community enterprises and joint ventures • Characterize and establish markets for low-income producers • Improve market position/strengthen producer organizations • Promote business partnerships • Establish business services (links in chain) • Establish domestic markets for services • Build knowledge and capacity • Build institutional framework • Make deals (encourage innovation)

12. Options to capture value and advance conservation • Establish international payment mechanisms for services • Strengthen existing innovative mechansims • PCF, PSequestrationFund • Transform CDM into more useful tool for natural restoration and development • Privilege natural over plantations • Reduce transactions costs for communities • Devise something new (for WSSD?)

13. Conclusion: to Johannesburg and Beyond • Past: 3 goals, 3 strategies • Future: 3 goals, 1 strategy • Converging social/environmental/economic agendas: new scope for impact • Pro-poor policy and tenure reforms: • + social, + economic, + environmental • Shift focus from PAs to forest matrix • + mitigate threats, + social, + environmental, + economic development • Shift ODA/GEF/Private philanthropy from ‘ignoring’ to ‘transforming’ private sector

14. Implications for ODA/GEF • What does “leverage” private sector mean? What is done differently? Some ideas: • Help build new institutional frameworks for markets • Advance certification • Help reform laws/regulations • Help devise standards, due diligence procedures • Identify innovation, ‘good’ practice, and disseminate • Help leaders from the ‘S’ learn from each other, connect with new sources of ideas and money • Remember: our challenge is to save 1.7 billion HAs of forest and alleviate the suffering of some 500 million people: must be much more strategic than we’ve been