AsiaLIFE

Scientists and environmentalists have stepped up efforts to save what is left of Borneo’s rainforests and wilderness areas with carbon trading emerging as a key next solution in preserving what’s left of the world’s natural habitat, importantly that includes Cambodia. Words by Luke Hunt.

Not that long ago, the prospect of carbon trading on global financial markets raised the hackles of environmentalists and a few laughs among the boardrooms of broking houses. Now, a study recently published in Conservation Letters says that selling carbon credits linked to rainforests on Borneo could prove just as profitable as clearing the land for rubber or palm oil plantations. It also indicates that all over the region the gutted forests of recent decades may have been sold-off to loggers at fire-sale prices putting the reputation of past politicians at the mercy of generations to come.

Cambodian jungles have been cleared to make way for rubber and other crops. The clearing of Thailand is almost complete while plantation companies in Malaysian and Indonesian Borneo produce 87 percent of the world’s palm oil. They have come under continual fire for causing deforestation, which threatens populations of rare animals such as orang utans, elephants, rhinoceros and clouded leopards.

Oscar Venter, a conservationist biologist with the University of Queensland and the study’s lead author, says the time has come for governments to re-write policy to incorporate the latest scientific findings and help protect the natural habitat. “I think it could go a long way to protect these forests. I mean whether it’s going to protect all forests so no more forests are going to be cleared is doubtful,” he says. “But from our results, from our carbon prices I think certainly in some areas the reduced emissions from the deforestation and degradation carbon scheme will be able to protect forests.”

The United Nations has endorsed a plan that would compensate countries for protecting the rich bio-diversity of their forests, which soak up vast amounts of the carbon dioxide emitted into the atmosphere each year. Many environmental activists hope the plan will be included in a new global agreement later this year on reducing greenhouse gas emissions, such as carbon dioxide, which many scientists think contributes to global warming.

The UN hopes that agreement will be reached at a summit in December in Copenhagen. The compensation could be done through direct financial assistance or credits that can be sold on an international carbon market to companies that exceed their own allotted carbon limits. Secondary markets would emerge in much the same way as they have on stock markets and the forests would be entitled to the same legal protection as any other corporate asset. Ideally, values would be dictated by an informed market operating on a transparent trading platform and given the nature of such assets a futures market would follow. Derivatives spawned by call and put options would be a comfortable fit.

This would enhance any Cambodian stock market currently being considered. According to Venter’s study in Kalimantan, forests would be worth more than palm oil if carbon credits were priced between US$10 and US$33 a ton. Figures vary dramatically but according to the UN, carbon credits could be worth up to US$20 billion a year to Indonesia alone. And New Carbon Finance, a London-based investment adviser that tracks the market, predicts a world carbon trading market will reach US$3.0 trillion by 2020.

It’s a point not lost on David Ashwell, a long time environmentalist in Cambodia who is helping to formulate Phnom Penh’s position at the Copenhagen conference later this year. As a consultant for the US-based Centre for Clean Air Policy (CCAP), he says a day could emerge when Cambodia’s rainforests are a protected asset that enables carbon trading on a local stock market. Comparatively, Cambodia’s rainforests are small when compared with Brazil or Indonesia.

Ashwell adds that there were many developing countries with small plots of rainforests. By working as a bloc their value would increase and so would their voting power in the international system. “Everybody is on a learning curve – but I’m pleased to say rainforest administration is taking a big interest in this,” he says. “It could really work and my big hope is Cambodians will find somewhere more useful to put their money instead of environmental degradation.” For countries that maintain their rainforests, this market has the potential to add substantially to government coffers and help preserve the remaining wilderness areas of places like Cambodia and Borneo, crucial to the survival of many of the world’s most endangered species.

Erik Meijaard, a senior ecologist with the US-based Nature Conservancy, also contributed to the study. He says putting a fiscal value on a natural habitat is a modern day reality and by attaching a fair value much of the world’s rainforests could be saved. “We talk a lot about social values, we talk about environmental values, we talk about opportunities for economic development but in the end its pretty much all about money,” he says. According to him, Southeast Asian governments will need five to 10 years before a viable carbon trading market can be established.

First, he says, a carbon accounting system, the financial framework and good governance procedures need to be established which would allow carbon trading to move beyond the “pet project stage” where it currently sits. “Only then will investors trust the system enough to put their money in,” he says, adding the system would provide some much needed clarity to who owns and who is in control of the rainforests. “Once people start paying for actually keeping the forests then there can be a balance between the forests that are used and the forests being kept for the reduction of carbon,” he says.

If that balance can be found then places like Cambodia will be rewarded for maintaining their rainforests and one amazing scenario will emerge. If the value of a rainforest is greater than the crops the land can produce, what does that spell for this country's future environmental landscape?