Will REDD preserve forests or merely provide a fig leaf?

It could be the cheapest way to save the planet from climate change. Western governments and corporations want to shut down a major source of carbon dioxide emissions by paying the people who destroy forests to desist. But the dream could turn into a nightmare, in which Western polluters use their carbon credits to evade cutting emissions at home, while the promised benefit to the atmosphere is lost in a mire of conflict and corruption.

The plan is called REDD, for Reducing Emissions from Deforestation and Forest Degradation. It has backing from big oil and forest tribes, the World Bank, and blue-chip environment groups like the Nature Conservancy. Right now, REDD looks to be the only positive outcome likely to emerge from this December’s Cancun climate conference, the successor to last year’s failure in Copenhagen. If it happens, a new global business of carbon conservation in forests could soon be worth tens of billions of dollars a year.

The stakes are high. The destruction of tropical rainforests is responsible for an estimated 17 per cent of global CO2 emissions - six times the amount of emissions from aircraft. REDD’s backers say REDD could snuff out those emissions, sharply reducing deforestation by 2030. Already a range of pilot projects are up and running. But the warning signs about what could go wrong are flashing.

Take the Nature Conservancy’s Noel Kempff Climate Action Project in Bolivia. This is a 14-year-old forest conservation project rebranded as a model for REDD. But Greenpeace last year called it a “carbon scam”. The $10 million project doubled the size of an existing national park to more than 800,000 hectares. It expelled loggers and installed forest rangers with funding from corporate sponsors, including the oil giant BP and America’s largest coal burner, American Electric Power. The plan is to reward this corporate philanthropy with carbon credits equivalent to half the amount of carbon fixed in the forest. The rest go to the Bolivian government.

To date, carbon auditors say the project has prevented emissions of more than a million tons of CO2. One day, the partners may offset the carbon credits against their own emissions back home, or sell them in the carbon market likely to emerge under REDD.

The Noel Kempff project is highly regulated. Nobody doubts extra carbon is being kept in the forest. But there is a problem about its benefit to the atmosphere that can be summed up in one word: leakage. Some of the loggers expelled from the park simply put their chainsaws in the back of the pickup, drove down the road, and resumed cutting in the next forest. Since the project started, UN data show that rates of deforestation in Bolivia overall have gone up, not down, with a 4.4 per cent rise between 2000 and 2005.

Timber pirates are everywhere, says Karl Bahler, a principal at Bahler Consulting and the former portfolio manager at Sustainable Forest Systems, which runs a green-minded logging project near the Noel Kempff forest. “The idea that governments in places like Bolivia can effectively police property rights just doesn’t match up to the reality on the ground,” says Bahler. So the bigger picture suggests that, however virtuous the Nature Conservancy’s activities within the park, they may not be keeping carbon out of the air. Those carbon credits may represent hot air.

To prevent such leakage, many people say governments should have to ensure that national deforestation rates are curbed before anyone can claim any carbon credits for local projects. “National accounting is essential,” says Kevin Conrad, the son of an American missionary in Papua New Guinea who has promoted REDD in his adopted country as the special envoy for climate change. Yet groups like the Nature Conservancy and Conservation International oppose the idea that credits should be awarded at the national level. They have lobbied hard at the UN that local projects should qualify, whatever goes on over the back fence.

Perhaps this is not surprising for organisations whose main activity is “on-the-ground” conservation. The Nature Conservancy accepts that “national-scale accounting is the ultimate goal”. But it argues that “a transition period should be allowed in which subnational or project-scale activities can generate credits for sale,” which will ensure “learning by doing”. In UN negotiations, the Obama administration has argued the same position. But, even if leakage does not become endemic, the danger is that a few well-publicised cases could fatally undermine the whole REDD project.

REDD faces many other challenges if it is to become part of the solution to climate change, rather than part of the problem. They range from the scientific to the economic, legal, and political.

Satellites have transformed the ability of independent scientists to track deforestation, and ended reliance on questionable form-filling by national governments. But if scientists are to verify REDD, what exactly should they be measuring? A study last year by the Nairobi-based World Agroforestry Centre showed that in many places, farm woodlots and woody scrub are as important in capturing carbon as forests, but they are not part of the REDD definition.

There are other critical questions for the carbon counters. If countries are to be given carbon credits in return for cutting rates of deforestation, how do you measure the baseline rate? It can make a massive difference. In Brazil, for instance, deforestation rates doubled between 1990 and 2004, then fell by two-thirds in the next four years. So measuring changes in deforestation against the earlier, higher rate, would yield far greater compensation than if a more recent date were chosen.