Tradable permits proposed to slow deforestation.

Environmental groups are pushing for the use of market mechanisms to address one of the world's largest sources of greenhouse gas emissions: deforestation. Environmental Defense and the Amazon Institute for Environmental Research are among the groups lobbying for the inclusion of one specific economic approach, known as Compensated Reduction (CR), in negotiations for the second phase of the Kyoto Protocol, the international treaty to reduce global greenhouse gas (GHG) emissions.

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Similar to carbon trading, the CR plan would award tradable "credits" to countries that voluntarily reduce their deforestation rates below historical baseline levels. Those countries could then sell the credits to other nations that are unable to meet their emissions reduction goals. By providing a monetary incentive for nations to preserve their forests, the strategy would encourage greater developing-country participation in the Kyoto agreement (which currently only applies to industrial countries), the environmental groups say.

To ensure the validity of countries' claims, compensation would be given only after a specific period of time and after sufficient satellite and on-the-ground observation. The countries would also be committed to further decreasing or at least stabilizing their deforestation rates in the future.

According to Environmental Defense and its partner groups, the clearing and burning of tropical forests is responsible for as much as 25 percent of human-created GHG emissions. South America's Amazon Forest alone holds some 60 gigatons of carbon that might otherwise enter the atmosphere--more carbon than all countries release from cars, power plants, and other human-related activities in a decade. The environmental groups say incorporating CR into the Kyoto talks is essential because at current rates of destruction, forest losses in Brazil and Indonesia alone will negate nearly 80 percent of the emissions reductions achieved under the Kyoto Protocol by 2012. Slowing deforestation has the additional benefit of preserving biodiversity in threatened tropical forests, the groups note.