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Climate for conservation: by using market-based mechanisms to provide financial incentives, Guyana is becoming a global model for environmental policies.


A left in a small plane over Guyana, the view is an unbroken blanket of trees to every horizon. In the 21st century it is startling and heartening to see so much untrammeled wilderness.

These pristine forests hold the promise of economic benefit for Guyana's people, but the question of the moment is: how? The standard path for development is deforestation, agriculture, ranching. But Guyana's leaders recognize that the world is changing, that these forests might soon be worth more alive than dead.

Thanks mostly to a low population--just 750,000, or roughly the same as the city of San Francisco--this country the size of Idaho has managed to retain almost 80 percent of its original forest. Because the interior is so rugged, most people live in or around the coastal capital, Georgetown, leaving the large expanses of intact ecosystems inland.

As a result, Guyana is a treasure trove of more than 6,000 species of plants, 700 birds, 200 mammals, 200 reptiles and amphibians, and countless insects. Many of these species are endemic and some are unknown to science. Its more famous endangered creatures include the jaguar, giant river otter, giant anteater, harpy eagle, green anaconda, Guianan cock-of-the-rock, arapaima, and tapir.

Still, in spite of these natural riches, Guyana is a relatively poor country, and its citizens need better health care, education, water, and economic opportunity. There is talk of paving the single dirt road that crosses the country from Georgetown to Lethem, Brazil, which would generate both economic benefit and environmental risk. And the country's mining sector digs for gold, diamonds, bauxite, and aluminum, also damaging the environment.

However, Guyana's president, Bharrat Jagdeo, sees another potential path for development in a world where pristine rainforests are increasingly rare.

Two years ago, he offered Guyana's standing forests to the world as carbon offsets. In recent months he has been refining that offer by actively participating in negotiations on the United Nations Framework Convention for Climate Change, set to replace the Kyoto Protocol when it expires in 2012. In particular, he has focused his efforts on retooling the proposed REDD program (Reducing Emissions from Deforestation and Forest Degradation). In early February, his efforts caught the attention of Norway, which signed a memorandum of understanding with Guyana to cooperate on forest issues. The deal includes a united front for negotiating with international bodies and financial compensation to Guyana for creating low-carbon employment and investment opportunities and avoiding deforestation and forest degradation. Such efforts are just part of a culture of experimentation in Guyana that has brought the country to the leading edge of new economic models for conservation.


This profile of conservation was boosted in 1996 with the passage of the Iwokrama Act that set aside a 917,000-acre parcel of forest, wetlands, and savanna as the Iwokrama International Centre for Rainforest Conservation and Development to provide ecological, economic, and social benefits to the people of Guyana. Iwokrama has since drawn international scientists, tourists, and policy wonks. Its charter requires it to be financially sustainable, so in recent years, that has meant forays into ecotourism and sustainable logging.

Surama, a Makushi village near Iwokrama, is an example of how many forest initiatives in Guyana are driven by indigenous people, who comprise seven percent of the population. Villagers embraced ecotourism starting in 1999 by building a few cabins for visitors and procuring training for themselves in wildlife guiding and hospitality. The growing economy from tourism has enabled local men to stay in the area with their families rather than migrating elsewhere in Guyana to work in timber or mining. It has also reduced the harmful practice of catching wildlife like macaws and parrots to sell to the pet trade. Profits are distributed among the community, funding, among other things, cultural efforts such as teaching students the Makushi language and traditional skills. Surama was honored in February with an award for responsible tourism at the US Educational Travel Conference.

Interaction with visitors has increased villagers' knowledge about the outside world and heightened their commitment to traditional stewardship of the land. Ron Allicock is a wildlife guide. "When I was a little boy and people talked about conservation, we thought it was bull," said Anicock. "We thought New York City is like Guyana, full of tapirs and monkeys." Now, he says, the people of Surama recognize and appreciate Guyana's unique assets.


"Countries like Guyana that have large areas of ecosystems intact will become more and more interesting to the discriminating tourist," said David Singh, Guyana director of Conservation International (CI). "And we must be in a position to capture that market in the future."

Indigenous people have also formed independent conservation organizations, such as the South Rupununi Conservation Society. They study species of concern, educate people about conservation, manage the take of certain game species like arapaima, replant areas affected by slash-and-burn agriculture, and guide scientists and tourists. They are also concerned about the implications of mining, which deposits cyanide into rivers and grades down mountains. And they are keen to make sure their work and rights are adequately represented in conservation deals.

Outside of Iwokrama, Conservation International has implemented another financial conservation strategy. In 2002 it purchased a "conservation concession" from the government in the form of a 30-year logging lease. Good management will keep it pristine over those 30 years. Still, funding for this concession comes from donations to CI, much like the Amazon Fund in Brazil, a voluntary fund for rainforest conservation that awards no carbon credits to contributors. Such "moral" models of conservation have been employed over the last few decades, but they have limitations, according to a newer line of thought.

"I've been involved in the frontline of conservation for 35 years," said Andrew Mitchell, director of Global Canopy Programme, a technical adviser to an organization seeking to value ecosystem services in Iwokrama. "And you get to the point where you feel like it's not working very well. Rainforests are being destroyed at the rate of 50,000 square miles a year despite everything the conservation movement has done to try to prevent that. We need to think quite differently in the next 30 years about how to save forests."


Conservationists like Mitchell are beginning to look at new financial mechanisms to encourage the preservation of forests.

Deforestation was responsible for 17.4 percent of global greenhouse gas emissions in 2004, according to the Intergovernmental Panel on Climate Change, as compared with 13.1 percent for transportation.

In March 2008, Iwokrama sold a license to a United Kingdom-based financier called Canopy Capital, partially backed by Global Canopy Programme, to investigate and market the ecosystem services of the forest. "The forest should be seen like a giant public utility," said Mitchell. "It is providing oxygen, taking carbon out of the atmosphere, storing carbon, providing rainfall, cooling the atmosphere, stopping erosion. There's a huge store of medical plants as well."

These services, which affect both the regional and global environment, have been free historically. But science shows that if forests are cut, these services will diminish, and businesses will have to pay a lot to provide them mechanically. Separate studies by Roni Avissar at Duke University and Dr. Yabzinda Mali at Oxford demonstrate that cutting rainforests could have a dramatic impact on global weather patterns. Cutting the Amazon could affect rainfall in North as well as South America. Deforestation in Congo could impact Europe.

Within five years, Canopy Capital will measure Iwokrama's ecosystem services and assign a value to them. Canopy Capital hopes to create a bond or another financial instrument that can be sold to investors and increase in value over time.


"The agreement was not in any respect the transfer of land rights," said Edward Glover, chairman of Iwokrama's board of trustees, addressing a primary concern of indigenous advocates. "Nor did it constitute a carbon-trading regime. What we have done is to open up an entirely new area."

Canopy Capital has said that 80 percent of profits would go to Iwokrama and the people of Guyana. Indigenous people can expect to benefit from any profits, said Glover, adding that they are represented on the board of trustees and are involved in forest management decisions. "Iwokrama is a source of employment and income [for indigenous people]," he said. They are, for example, co-beneficiaries in the limited timber harvesting business. Ultimately, Iwokrama is all about the people."

The business world tends to plan in quarterly terms, but those who think longer term stand to profit from these new investment opportunities, according to Mitchell. Canopy Capital is gambling that, as natural ecosystems become increasingly rare and world population swells, ecosystem services will come to have a monetary value that will increase over time. For precedent, Mitchell points to the carbon market, which was viewed as outlandish before it became reality.

"Ten years ago you might have said that carbon could never be valued or traded; you can't see it, smell it, or touch it," said Mitchell. "But it shows that with government regulation, you can create these markets."

These projects, along with related market-based efforts in Mexico and Borneo, are ground-breaking and show promise. "But the time for projects is over," said Kevin Hogan, an adviser to Guyana's president. "They are very valuable for many reasons, but the danger in them is that you can create an oasis of good practice within a desert of bad practice."

Because deforestation increases climate change, the Jagdeo administration is working on international negotiations to include forestry issues in the United Nations Framework Convention for Climate Change that will replace the Kyoto Protocol in 2012. Kyoto excluded forestry because some environmental groups feared that polluting industries or countries would simply buy a tropical forest and not reduce polluting emissions.

However, during the years Kyoto has been in effect, deforestation has continued at the same pace. Most parties agree that something must be done to curb the cutting of forests. Nevertheless, the fear that forestry conservation would replace pollution abatement continues to be an issue in current negotiations.

Hogan says the solution is to set emissions caps low and make deep required cuts. Such a structure would prompt the world to both preserve forests and reduce emissions. "The fact is, if the forests are left out, we won't solve climate change," said Kevin. "It's not an aid kind of thing. Therefore, we should turn the question on its head: What does it take to get forests in but at the same time, not stop people from meeting their other commitments?"

REDD is the United Nations' proposal to address deforestation's contribution to climate change. But as it was initially proposed, it required countries to demonstrate that they have increased the amount of forested area or decreased deforestation. These requirements would exclude countries like Guyana that have preserved their original forests and would instead reward countries like Indonesia for stopping deforestation. Such a model would be both unjust and ineffective, according to Mitchell and Hogan. It would create a "perverse incentive" that rewards bad behavior. "Countries that destroyed their forests would be paid twice, first to log their forests and grow agricultural crops, and then not do so," said Mitchell.


The ineffectiveness is demonstrated by the international leakage argument. If a REDD agreement did not include the 25 percent of forest carbon stored in countries similar to Guyana, the mechanism would simply create the incentive for loggers, soy farmers, and the like to move into those countries with no financial incentive to conserve. The net effect on global emissions would not change.

President Jagdeo has proposed a more equitable way to measure forest resources: the economically rational baseline. This theory posits that people legitimately pursue economically valuable activities such as selling timber or crops. But the global economy does not currently value the services that living forests provide, including the avoidance of greenhouse gas emissions. "Correcting this market failure is the only long-term solution to deforestation," Jagdeo wrote recently.

"Most deforestation happens for economically rational reasons," said Hogan. If the world values the carbon storage provided by intact forests, it must provide an economic incentive equal to what a country could earn via standard development. Jagdeo invited an international management-consulting firm to calculate that figure, which turned out to be about US$580 million animally, a relative bargain for carbon storage services in the global marketplace.


A trained economist, Jadeo made a splash for Guyana by presenting this proposal at international negotiations in Pozan, Poland and Davos, Switzerland. Hogan said the president's presentation was well received, partly because it contained figures. "People can argue or disagree, but at least it provides a basis for some conversation."

He emphatically disputes criticism that Guyana is looking for a hand-out, or worse, is blackmailing the world to keep it from felling its forests. Guyana has outlined a strategy of what would be done if carbon storage or other ecosystem services were financially rewarded. It hopes to invest in low-carbon energy, low-carbon investment opportunities, and adaptation to climate change, which could mean building higher sea walls or moving the population further inland. "It's not about getting cash," said Hogan. "It's about diversifying the economy into environmental services and using the remuneration in a way that is compatible with the environmental services."

Other important details of REDD are yet to be determined. How will the international community fund it? Will it be market based like the pollution market? Or will it be a public fund outside that market? Hogan and others worry that if it's the latter, funding for conservation will lag.

"The president's position is that in the long-term, it has to be treated like any other carbon within the carbon market," said Hogan. "Any REDD mechahism has to outcompete the economically rational baseline. If that doesn't happen straightaway, there has to be a path toward it happening."

Activists for indigenous people are concerned they may lose out if forests become commodities, particularly because their land rights in many countries are not well defined. Groups such as the Forest Peoples Programme (FPP) are participating in REDD negotiations, advocating for a rigorous rights-based approach. FPP notes that REDD has pledged to uphold the United Nations Declaration on the Rights of Indigenous Peoples, yet indigenous rights are not yet a condition of REDD funding, and oversight and accountability mechanisms are lacking. To be effective, REDD must also acknowledge forest governance problems, they say.

Mitchell acknowledges these concerns but says that, with thoughtful implementation, a market-based approach has the potential to change the game for developing countries. "The forest-owning nations, instead of being countries which are receiving aid, would become suppliers of a global service that is paid for or rented by the international community. It changes from an aid relationship into a trade relationship."

For Ron Allicock, the global is local. International efforts like REDD and ecotourism are opportunities to conserve his home and his people's way of life. "I think in Guyana, everything has hit at the right time. Greenhouse gases are affecting people globally, and people in developed countries can see that we need to do something about the rainforest. Luckily in Guyana, we still have a lot of rainforest and we still have a chance of protecting it, as compared to other countries that have already lost their native habitat."

Erica Gies is an environmental reporter who lives in San Francisco, California.
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Author:Gies, Erica
Publication:Americas (English Edition)
Article Type:Country overview
Geographic Code:3GUYA
Date:May 1, 2009
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