Biodiversity Payments Can Help Communities Fight Climate Change

Diademed sifaka lemur in Madagascar.

Diademed sifaka lemur in Madagascar. Found nowhere else on Earth, lemurs play an important role as seed dispersers in the country’s forests; they also attract international tourists. (© Cristina Mittermeier/iLCP)

It may seem strange that the future of tropical forests will be negotiated next week by the United Nations in Doha, Qatar — a tiny desert emirate with no forest land.

Then again, perhaps it’s not so strange. After all, tropical forests provide many useful services to people who may never see them.

Their trees store carbon that if burned and cleared goes up in smoke to the atmosphere, contributing to climate change. Their roots fix soil in place and keep rivers clean for downstream farmers. They stabilize steep slopes, preventing landslides and mudslides. And famously, they are home to a dizzying array of wildlife whose existence people treasure, from cuddly lemurs to fearsome jaguars.

All across the tropics, these forests are being burned and cleared to make way for agriculture and grazing land. Local people see immediate livelihood opportunities from oil palm, soy and cattle that they aren’t currently seeing from forests.

An emerging U.N. climate program called REDD+ seeks to alter this equation by enabling tropical forest stewards to receive payments from beneficiaries all over the world for their forests’ climate service. If such carbon payments are great enough, then tropical forests will become more valuable alive than dead, and forest countries and communities will have a direct financial incentive to keep their forests standing.

A unified global system for REDD+ under the U.N. remains several years away, but in the meantime initiatives for REDD+ are blossoming through bilateral agreements, multilateral institutions and voluntary markets. Each round of U.N. negotiations like the one in Doha next week brings REDD+ incrementally closer, by setting the rules for funds and markets, monitoring of deforestation and social and environmental safeguards.

Once all this institutional infrastructure is finally in place for carbon payments, it could be leveraged to enable payments for forests’ other services too, such as biodiversity. Carbon buyers could pay a premium for high-biodiversity forest conservation, or biodiversity conservation groups could pool contributions to match carbon payments with biodiversity payments. One group might choose to pay for forests with the highest concentration of unique species; another might pay for forests that are home to a particularly charismatic creature. (The highly threatened orangutan is a favorite of mine.)

The extra income from biodiversity payments could tip some forest communities in favor of conservation where carbon payments alone wouldn’t be enough.

I was curious to figure out what effect such supplementary biodiversity payments might have on the climate, biodiversity and payments to communities. In a scientific article forthcoming in the journal Land Economics, I used a software tool to simulate the effects of payments for carbon and biodiversity in Bolivia, Indonesia and Madagascar — three tropical countries with carbon-rich forests, extraordinary biodiversity and rapid deforestation.

It came as no surprise to find that bolstering carbon payments by making more money available from biodiversity payments led communities to conserve more forest, and hence to greater climate and biodiversity benefits.

But payments for biodiversity also had a surprising effect — in many cases, supplemental biodiversity payments actually resulted in more carbon storage than an equal amount of money spent only on increased carbon payments! They did so by extending financial incentives more broadly, spreading incentive payments to new forest communities instead of spending more money on forests that were already being conserved for carbon.

Imagine two forest communities in Indonesia. One community lives in a forest on peat soil, which is rich in biodiversity and has some of the highest carbon content in the world. (Peat swamps trap massive amounts of greenhouse gas in the soil. When their forests are stripped away, this gas escapes into the atmosphere, like taking the lid off a pot of boiling water.) The other community lives in a non-peat forest, which is also rich in biodiversity but contains less carbon.

Even without biodiversity payments, the first community is already likely to join REDD+ carbon payment programs. Simply increasing the price paid for carbon might result in higher payments to this community, while leaving out the second community. On the other hand, making biodiversity payments in addition to carbon payments might encourage the second community to join as well.

Increased carbon payments might pay US$ 2 million to the first community, whereas carbon payments plus biodiversity payments might distribute US$ 1 million to each community. Not only would this spread the income between residents of both communities, but it would conserve two forest areas, protecting more biodiversity and storing more carbon.

Jonah Busch

Jonah Busch

The message for climate negotiators in Doha is simple: First, put the rules in place to pay forest countries and communities for carbon. Once a working system for carbon payments is in place, allow payments for forests’ other benefits as well. Doing so could provide a safer home for orangutans — and a safer climate for all of us.

Jonah Busch is the climate and forest economist at CI. Read Jonah’s paper here. To learn more about CI and our partners’ position on results-based finance, download this joint position paper (PDF – 150 KB).


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