This U.N. Program Should Have Taxpayers Seeing REDD

While the Obama administration’s push to regulate domestic greenhouse gas emissions has mostly stalled, the worldwide fight for carbon suppression continues. Consider an ambitious United Nations effort that, while not widely known in the U.S., has implications for developing world economic growth and for American taxpayers.

The U.N.’s Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD) is simple in theory. It aims to prevent developing countries in Asia, Africa, and Latin America from cutting down parts of their forests. Since forests store carbon, the thinking goes, stopping rapidly growing nations from felling trees will limit carbon emissions.

The REDD solution is to pay developing countries not to cut down their trees.  It’s a kind of global welfare system with transfer payments from the wealthy, developed North – in particular the U.S., Europe, and Japan — to the underdeveloped South.

REDD’s backers in the environmental movement and at the U.N. must confront several uncomfortable realities. For starters, just like residents of Europe and the U.S. before them, residents in developing countries often have excellent reasons for cutting down trees.

Poor country residents need wood to build homes and paper products for schools and hospitals. They also need timber and paper goods to trade in global markets.

People in the developing world also often want to clear jungles to make way for more productive agricultural lands so they can feed their people. As economies grow, urban centers expand, further necessitating the need to cut down trees.

In other words, the poor in developing countries have perfectly justifiable economic and humanitarian reasons for cutting down some portion of their forestlands.

Given the significant economic and social value of forest harvesting, the wealthy West will have to pay a pretty penny for developing world residents to sit on their hands. According to the U.N., the financial flows from REDD and related initiatives “could reach up to $30 billion a year.”

REDD’s advocates think these financial flows will be less costly than other efforts to limit emissions. An analysis from Resources for the Future, an environmental research group, says, “one of the main arguments for creating such a system is that REDD will be inexpensive compared to fuel switching, carbon capture and storage, and other greenhouse gas abatement options.”

But the same analysis from RFF throws cold water on the rosy assumptions that REDD will be cheap. “REDD is likely to be significantly more costly than widely believed,” RFF finds. Why? Deforestation will migrate to the areas not targeted by payments. This would result in still more REDD payments. And the U.N. models don’t account for corruption and waste endemic to lofty bureaucratic projects of this kind.

But even if REDD were relatively inexpensive, would it be good long-run policy?  Probably not. What the environmental movement’s anti-forestry campaigners fail to appreciate are the dynamic economic effects that forestry unleashes.

Forestry is an important economic sector in many developed and developing countries, providing good jobs and incomes for workers and their families.

According to the World Bank, annual trade in forest products is $186 billion. In developing countries, “forest based employment accounts for 32 million jobs,” the Bank says.

In addition to jobs, foreign direct investment in forestry projects brings valuable technology, human capital, and know-how into developing nations. These critical inflows produce additional spillover benefits that bolster overall growth rates.

And in the longer run, this economic growth will also be a boon for global forests.

As my AEI colleague Steve Hayward and his research team at EnvironmentalTrends.org [http://www.environmentaltrends.org/]  have documented, rates of deforestation around the world appear to be declining rapidly.  Greater wealth, thanks to economic growth, is yielding forest health.

Forests in the U.S., for example, are advancing rapidly. Asia has been a particular bright spot of late as its deforestation rates have reversed and it is now reforesting.

Even Brazil, which in the 1990s was the poster child for reckless forest management, has significantly reduced its loss of forests. Part of the reason has been improved governance and its booming economy.

United Nations delegates gather later this year in Durban, South Africa to discuss the future of the environment, and forestry issues will figure prominently on the agenda. But as the University of California, Berkeley’s Jack Hollander documented in his landmark book “The Real Environmental Crisis,” poverty is the world’s No. 1 environmental enemy, since wealth is required for sustainable ecological health. A program like REDD is aimed right at the heart of the poverty alleviation that is the key to both human and environmental flourishing.

Nick Schulz is DeWitt Wallace Fellow at the American Enterprise Institute and co-author of From Poverty to Prosperity (Encounter, New York).