Take a leaf from insurance industry’s book

18 04 2012

Just a quick one rehashing today’s media release on the iREDD paper I blogged about a while back. The full, online version is available upon request. Stay tuned for media coverage.

A group of environmental scientists say a problem-ridden economic model designed to slow deforestation can be improved by applying key concepts from the insurance industry.

REDD (Reduced Emissions from Deforestation and forest Degradation) is a UN-promoted scheme that allows countries to trade in carbon credits to keep forests intact. It is mainly targeted at developing nations where deforestation and exploitation are a major threat.

In a paper published online in the journal Conservation Letters, ecology researchers from Australia and South Africa argue that REDD projects can suffer from three major problems. They have proposed strengthening the scheme by using insurance policies and premiums, creating a new scheme known as iREDD.

“The idea of paying a nation to protect its forests in exchange for carbon pollution offsets can potentially reduce overall emissions by keeping the trees alive, and ensure a lot of associated biodiversity gets caught up in the conservation process,” says Professor Corey Bradshaw,, Director of Ecological Modelling at the University of Adelaide’s Environment Institute and a senior author of the paper.

“However, there are three main problems with REDD: these are known as leakage, permanence and additionality.” Read the rest of this entry »





Unholy trinity of leakage, permanence and additionality

13 03 2012

I begin with the proverbial WTF? The title of this post sounds a little like the legalese accompanying a witchcraft trial, but it’s jargon that’s all the rage in the ‘trading-carbon-for-biodiversity’ circles.

I’m sure that most of my readers will have come across the term ‘REDD‘ (Reduced Emissions from Deforestation and forest Degradation), which is the clever idea of trading carbon credits to keep forests intact. As we know, living forests can suck up a lot of carbon from the atmosphere (remember your high school biology lesson on photosynthesis? Carbon dioxide in. Oxygen out), even though climate change is threatening this invaluable ecosystem service. So the idea of paying a nation (usual a developing country) to protect its forests in exchange for carbon pollution offsets can potentially save two birds with one feeder – reducing overall emissions by keeping the trees alive, and ensuring a lot of associated biodiversity gets caught up in the conservation process.

The problem with REDD though is that it’s a helluva thing to bank on given a few niggly problems essentially revolving around trust. Ah yes, the bugbear of any business transaction. As the carbon credit ‘buyer’ (the company/nation/individual who wishes to offset its carbon output by ‘buying’ the carbon uptake services provided by the intact forest), you’d want to make damn sure that all the money you spend to offset your carbon actually does just that, and that it doesn’t just end up in the hands of some corrupt official, or even worse, used to generate industry that results in even higher emissions! As the buyer, of course you want to entice investors to give you lots of money, and if you bugger up the transaction (by losing the resource you are providing), you’re not likely to have any more investors coming knocking on your door.

Enter the unholy trinity of leakage, permanence and additionality.

This horrible jargon essentially describes the REDD investment problem:

Read the rest of this entry »