On 19 January the New York Times published an op-ed piece on a new carbon offset programme entitled “Make Forests Pay”. As the authors make clear, tropical rainforests are being cut, burned and cleared at an astonishing rate, which shows no sign of slowing. Aside from the other obvious effects of this loss — species extinction and biodiversity loss — they highlight the role this plays in climate change: when tropical forests are cleared, carbon (in the form of carbon dioxide) is released into the atmosphere, accounting for 12-15 percent of global carbon dioxide emissions annually.
The op-ed outlines the economic forces driving this tropical deforestation, and provides an economic argument for the preservation of tropical forests: carbon offset markets. The rationale behind offsetting is straightforward. Forest owners are paid not to cut down trees, so the greenhouse gas emissions this would have caused are avoided, and polluting companies can “buy” these avoided emissions and offset them against their actual emissions more cheaply than making reductions themselves. A simple, economically efficient way of addressing global climate change? Hardly.
Developing and implementing markets for carbon offsetting is anything but simple; and even the presumption of the efficiency of environmental markets, outside of neoclassical economics, is in no way straightforward. On 19-20 March, the Centre for Global Political Economy at the University of Sussex and the IDS STEPS Centre hosted an international workshop highlighting precisely the complexity, problems, drivers and theories behind this kind of absorption of nature within an economic rationale.
The workshop — Critical Perspectives on the Financialisation of Nature: Theory, Politics and Practice — focused on the development of practical, political and theoretical innovations that will allow us to better understand these kinds of development, engage with them, and ultimately contest them. For example, the system proposed by the three Columbia University academics who wrote the “Make Forests Pay” article, which they call “The Rainforest Standard”, involves the complex commodification or proxy-commodification of carbon dioxide absorption and retention by trees, alongside biodiversity maintenance — what ecological economists would refer to as ecosystem services.
There are numerous, proliferating market forms of environmental governance being developed at the national, regional and global levels. These markets for ecosystem services have a history stretching back to the 1970s US, and early attempts at air pollution trading and wetland banking. They have exploded in political popularity in recent years, with the development of international initiatives such as the Millennium Assessment report. Released in 2005, this analysis of on ecosystems and human wellbeing was undertaken by a partnership of the World Resources Institute, the UN Environment Programme, the World Bank and the UN Development Programme. The rationale behind these developments is always the same: the problem with nature is that it’s not quite natural enough, it needs to be brought into, embedded in, what’s really natural — the market.
While their rationale remains consistent, the challenges, contradictions and limits that arise from the creation of these new forms of market-based environmental products and services, the new materialities and commodities of nature, and the ways we relate to, govern and live in nature, are all wildly divergent and must be critically investigated.
The Rainforest Standard provides an example. The development of the standard was funded at Columbia University in part by a $3 million grant from Cargill, the giant, privately owned commodities trading firm. From a critical political economy perspective, this immediately raises questions about the role of this offsetting mechanism in broader forms of accumulation within the wider global political economy. It also raises eyebrows among those with a sensitivity to both corporate greenwashing and the potential hypocrisy of accepting money from an organisation previously accused of encouraging rainforest destruction to make way for soybean and palm oil production, as well as the ethically questionable purchasing of land reserved for the poor in Columbia, through a series of front companies.
The development of this kind of market for forest conservation and the monetising of a forest’s carbon reserves is of course fraught with technical complexity. For example, ‘Business As Usual’ baselines must be assessed; carbon stocks in the form of forest biomass counted; leakage (tree cutting) accounted for; and the permanence of avoided carbon emissions assured. All of these are central to the production of the forest carbon commodity, and none of these technical, material and accounting steps are transparent or straightforward. They cannot be simply read off the economic theories that underpin the political legitimacy of markets in ecosystem services, and as Professor Kathy McAfee remarks, “Market-oriented PES [Payments for Ecosystem Services] schemes offer myriad examples of how living eco-social systems are recalcitrant to calculation.”
Alongside political economic and material-technical issues, the impacts on indigenous peoples and local communities must be taken into account. The “Rainforest Standard” authors maintain the project involves voluntary participation by de facto rights holders such as forest dwellers and users, as well as legal owners. Similarly, revenue streams generated by projects will be distributed according to plans established by de facto rightsholders; projects will involve rigorous consultation requirements, as well as detailed, informed and prior written consent protocols. These all appear straightforwardly laudable goals — if you’re willing to simply let slip the potential for a new carbon colonialism, and the neo-imperial imposition of a northern, capitalist, property-based relationship with nature. However, environmental markets have proven remarkably susceptible to fraud and manipulation, and have even been said to represent a case of regulation as corruption.
Overall, while the goal of market-based initiatives such as “The Rainforest Standard” is to make forests, and indeed nature, pay. For the Critical Perspectives on the Financialisation of Nature: Theory, Politics and Practice workshop, the questions are rather different. Make nature pay for whom, how, and with what consequences?
Richard Lane is based at Centre for Global Political Economy, University of Sussex; he is co-author, with Benjamin Stephan, of The Politics of Carbon Markets, Routledge, 2015.
This article appears in the excellent Le Monde Diplomatique, whose English language edition can be found at mondediplo.com. This full text appears by agreement with Le Monde Diplomatique. CounterPunch features two or three articles from LMD every month.