Ba se line s, p e rm a ne nc e a nd le a ka g e

Any e ffe c tive re g im e to re d uc e na tio na l d e fo re sta tio n will ne e d , a t le a st, to 1 sup p o rt g o ve rnm e nts to m o nito r a nd m e a sure d e fo re sta tio n tra nsp a re ntly a nd to im p ro ve e nviro nm e nta l la w e nfo rc e m e nt a nd fo re st g o ve rna nc e ; 2 p ro vid e d ire c t b e ne fits to lo c a l, ind ig e no us a nd tra d itio na l fo re st p e o p le s; a nd 3 o ffe r inc e ntive s fo r b usine sse s with le g a l rig hts to d e fo re st, to fo rg o tho se rig hts. The C fRN sup p o rts a “ fle xib le b a ske t” o f m e c ha nism s, inc lud ing c a rb o n m a rke t c re d iting fo r na tio na l-le ve l d e fo re sta tio n re d uc tio ns b e lo w a n histo ric a l b a se line , o ffic ia l a ssista nc e fund s, a nd ta xe s o n Kyo to o r p o st-2012 e missio ns a llo w a nc e s. Bra zil sup p o rts a fund m a d e up fro m No rthe rn c o untry d o na tio ns tha t w o uld p ro vid e inc e ntive s fo r tro p ic a l c o untrie s fo r re d uc ing na tio na l d e fo re sta tio n b e lo w a n histo ric a l b a se line . Ind ia a nd C hina a lso w a nt so m e typ e o f c o m p e nsa tio n fo r m a inta ining c a rb o n sto c ks . C o ng o Ba sin c o untrie s w a nt m a rke t inc e ntive s a nd a id fo r c o nse rving la rg e a re a s o f fo re st tha t ha ve histo ric a lly no t ha d hig h d e fo re sta tio n ra te s. The EU sup p o rts p o sitive inc e ntive s fo r REDD a nd hig hlig hts the ne e d fo r a p e rfo rm a nc e b a se d a p p ro a c h. Tuva lu is p ro p o sing a “ c o m m unity re te ntio n fund ” to p ro vid e inc e ntive s to re d uc e e m issio ns fro m d e fo re sta tio n.

5. Ba se line s, p e rm a ne nc e a nd le a ka g e

C e rta in te c hnic a l issue s a rise re g a rd le ss o f p o lic y a p p ro a c h, a nd c a n b e a d d re sse d in va rio us w a ys. The y inc lud e : - The se tting o f b a se line s o r re fe re nc e p e rio d s - Ho w to e nsure “p e rm a ne nc e ” o f re d uc e d d e fo re sta tio n - Le a ka g e – ho w to e nsure tha t re d uc tio ns a c hie ve d in o ne p la c e a re no t c a nc e lle d b y inc re a se s e lse w he re The se tting o f b a se line le ve ls – the le ve ls b e lo w w hic h re d uc tio ns will b e c re d ite d o r c o m p e nsa te d -- c a n b e d o ne in d iffe re nt w a ys. The sim p le st is to use the a ve ra g e d e fo re sta tio n ra te fo r a c o untry o ve r a histo ric a l m ulti- ye a r p e rio d . G lo b a liza tio n is inc re a sing d e ma nd fo r tro p ic a l c o m m o d itie s inc lud ing tim b e r, b e e f, so y a nd p a lm o il, a nd a lm o st a ll o f the la nd a va ila b le fo r inc re a se d p ro d uc tio n o f the se c o m m o d itie s is in the tro p ic s. Ad o p tio n o f b io fue ls will furthe r inc re a se inc e ntive s to c le a r fo re st. Thus in the a b se nc e o f la rg e -sc a le inc e ntive s fo r c o nse rva tio n, d e fo re sta tio n w ill te nd to c o ntinue o r inc re a se o ve r tim e . Any re d uc tio n o f na tio na l – le ve l d e fo re sta tio n b e lo w histo ric ra te s c o ntrib ute s to b ring ing d o w n o ve ra ll g lo b a l e m issio ns, a nd thus to lim iting wa rm ing to 2 ° C . The se tting o f ta rg e ts a nd b a se line s m ust e nsure tha t the c o m m itm e nts re q uire re a l d e fo re sta tio n e missio n re d uc tio ns a nd d o no t p ro vid e inc e ntive s to inc re a se the ra te s o f d e fo re sta tio n b e fo re the syste m sta rts. O ne o f the ke y issue s is ho w to e nsure “ p e rm a ne nc e ” – tha t is, to m a ke sure tha t re d uc e d d e fo re sta tio n is no t a nnulle d b y inc re a se d d e fo re sta tio n o r d a m a g e suc h a s fire s la te r. The re a re m a ny p ro p o sa ls o n ho w to a d d re ss p e rm a ne nc e thro ug h insura nc e m e c ha nism s suc h a s b a nking o r re q uire m e nts fo r se tting a sid e a re se rve . So m e a rg ue fo r o nly te m p o ra ry c re d it fo r re d uc e d d e fo re sta tio n o n the se g ro und s. O the rs ho ld tha t REDD c re d its sho uld no t b e tre a te d d iffe re ntly fro m fo ssil fue l c re d its, a nd tha t if a c o untry re c e ive s REDD c re d it a nd the n surp a sse s its b a se line , it sho uld b e o b lig e d to m a ke up the e xc e ss witho ut c o m p e nsa tio n, o r sho uld no t b e a llo w e d a c c e ss to the m a rke t until it ha s m a d e up the e xc e ss. Pe rm a ne nc e p e rta ins no t o nly to fo re st c a rb o n, b ut to a ny e m issio ns re d uc tio n tha t is tra d e d . The q ue stio n o f lia b ility if ta rg e ts a re no t m e t, o r if a c o untry tra d e s a llo w a nc e s a t o ne m o m e nt b ut inc re a se s e m issio ns a b o ve its lim it la te r, ne e d s to b e w o rke d o ut fo r the e ntire e m issio ns c o ntro l re g im e , no t o nly fo r REDD. The risk tha t re d uc tio ns in o ne p la c e c a n b e c a nc e lle d b y inc re a se s e lse w he re is c a lle d “ le a ka g e ” . Na tio na l-le ve l m o nito ring e lim ina te s the issue o f le a ka g e within a c o untry, b ut m a y no t a d d re ss le a ka g e tha t o c c urs a t the inte rna tio na l le ve l. This to o a p p lie s to a ll se c to rs – c o m p a nie s c a n m o ve hig h-e m issio ns a c tivitie s o ut o f re g ula te d re g io ns suc h a s the EU to unre g ula te d c o untrie s. Ultim a te ly o nly invo lving a ll o f the m a jo r e m itte rs in the inte rna tio na l e missio ns c o ntro l re g im e will so lve the p ro b le m . No t a ll c o untrie s m a y b e a b le to a c c o unt a t a na tio na l le ve l, a nd the re fo re ne e d sup p o rt fo r c a p a c ity b uild ing to d o so . So m e Pa rtie s a rg ue tha t p ro je c t-le ve l a c tivitie s sho uld b e c re d ite d a s a w a y fo r c o untrie s tha t a re no t re a d y to sta rt na tio na lly to b e g in to a d d re ss d e fo re sta tio n. O the rs a rg ue tha t this ra ise s the sa m e issue s a s in the p o le m ic a l d isc ussio n o n d e fo re sta tio n in the C DM a nd its a sso c ia te d p ro b le m s, w hic h ha ve a lo ng histo ry o f c o nte ntio us d e b a te in the UNFC C C p ro c e ss. Ultim a te ly the e nviro nm e nta l inte g rity o f re d uc e d d e fo re sta tio n w he the r fund e d b y the m a rke t o r b y p ub lic fund s d e p e nd s o n a c hie ving o ve ra ll re d uc tio ns in d e fo re sta tio n ra te s, no t just suc c e ss in ind ivid ua l p ro je c ts.

6. C o - b e ne fits Ind ig e no us p e o p le s