Archive for November, 2010

The build-up to Copenhagen last year was immense, and the result – mixed.  There were a few who were happy, but most were not.  US President Barack Obama described the talks as an “unprecedented breakthrough”[1], Ed Miliband, the climate change secretary in 2009 at Copenhagen (and current Labour leader), called the talks “…chaotic, at times farcical”[2] but remained hopeful with the results from Copenhagen. George Monbiot, journalist and activist called it “chaotic and disastrous”[3], and Oxfam International called it “a triumph of spin over substance”[4].

The interesting thing is that these very different viewpoints all stem from left-winged institutions and individuals concerned with the environment, but with obviously different ideas about how far an international, high-profile conference of parties, such as Copenhagen, can go.

So what did the various nations agree to last year in Copenhagen, and what are we hoping will come out of this year’s talks in Cancun?


The agreements can be split into two types: agreements on mitigation (slowing down or stopping climate change altogether through reducing greenhouse gas emissions) and adaptation (adapting to the effects of climate change – particularly as a provision given by developed countries to developing countries).


The countries agree that “deep cuts in global emissions are required… with a view to reduce global emissions so as to hold the increase in global temperature below 2 degrees Celsius”[5]. But they don’t tell us when/how they will do this, how to ensure that everyone is doing their part, and what happens to the nations that don’t do their part. Annex I (developed countries) committed to implementing emissions targets, but were allowed to set their own[6]!

There is also provision for “Scaled up, new and additional, predictable and adequate funding as well as improved access… to enable and support enhanced action on mitigation, including substantial finance to reduce emissions from deforestation and forest degradation, adaptation, technology development and transfer and capacity-building” to developing countries from developed countries. This is quantified at US$100 billion a year by 2020. However there are no assurances that the US$100 billion will be additional to existing aid commitments.


The countries also agreed that developed countries would “provide adequate, predictable and sustainable financial resources, technology and capacity building to support the implementation of adaptation action in developing countries”[5]. Here, quantity is again not mentioned.


So what do we hope to come out of Cancun?  Basically, following on from the vaguely worded Copenhagen accord, talks at Cancun are expected to hammer out the details and framework of how mitigation and adaptation will be achieved, hoping to put in place a new (strong) treaty before the Kyoto protocol (the result of the 1997 climate change conference of parties) expires in 2012.

What we don’t want is a weak treaty – one that doesn’t do enough, that nations refuse to sign, and lets others off the hook. We’ll be keeping an eye (or 14) on proceedings.

[1] A meaning and Unprecedented Breakthrough Here in Copenhagen – Jesse Lee, The White House Blog

[2] The road from Copenhagen – Ed Miliband, The Guardian

[3] Copenhagen negotiators bicker and filibuster while the biosphere burns – George Monbiot, The Guardian

[4] Historic moment, historic gathering, historic COP out – Oxfam International

[5] Copenhagen Accord

[6] Appendix I – Quantified economy-wide emissions targets for 2020 – Copenhagen Accord

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While much of the public knows of various campaigns to protect certain species or habitats, rarely does the maintenance of rich biodiversity as a whole get much attention. 2010, however, has been an important year for raising awareness of the issue: it is the ‘International Year of Biodiversity’, has seen the publication of The Economics of Ecosystems of Biodiversity (TEEB) report, and only last month Nagoya, Japan, hosted the 10th UN Biodiversity summit.

So why should we be worried about a reduction in biodiversity? Well, biodiversity underpins much of how we, as humans, survive; it supports the key ecosystem services that we rely on. These range from cleaning of air, sequestration of carbon and regulating water and nutrient cycles, to the provision of medicine and nutrition. As is the case with many environmental problems, these services are, by and large, not marketed. Their economic value is hidden in the contributions they make to goods and services that have market values or in the costs we incur if the natural services are lost. Looking at these hidden (as well as some market values), the TEEB report calculated the global value of biodiversity at between US$2 – 4.5 trillion annually, which is up to 7.5% of global GDP.

The Nagoya summit attempted to address these issues, and has since been hailed as a success by many. A pledge to at least halve the loss of natural habitats was made, and there was also a commitment to widen the coverage of nature reserves and marine protected zones, so they will have a hold on a higher proportion of the world’s surface than ever before. All signatories will also have to draw up national biodiversity plans. Furthermore, a new treaty was adopted – the Nagoya Protocol – which outlines how separate nations should cooperate with regards to accessing and sharing the benefits of genetic resources. A part of this will include payments to developing nations for the current use and sale of tradition medicines and medical knowledge that was collected in the past.

Some, however, have questioned how this is all actually going to work. The funding pledged by developed nations has disappointed some, while others are concerned that some of the targets are not really binding, or in fact simply act to distract attention away from attacks on biodiversity in their own countries (whales and Japan comes to mind). Indeed, George Monbiot noted last week that “The evidence suggests that we’ve been conned. The draft agreement, published a month ago, contained no binding obligations. Nothing I’ve heard from Japan suggests that this has changed. The draft saw the targets for 2020 that governments were asked to adopt as nothing more than “aspirations for achievement at the global level” and a “flexible framework”, within which countries can do as they wish. No government, if the draft has been approved, is obliged to change its policies.[1]

What has been seemingly agreed upon at Nagoya is a step in the right direction, with the new Protocol in particular having some promising aspects to it. However, there are two serious problems that must be addressed. Firstly, if these agreements really aren’t binding, then the targets themselves are meaningless; and secondly, even if governments are compelled to act, the distinct lack of any real mechanism to facilitate it implies significant delays as arguments erupt over where the funding will come from. The real issue in the coming months may be maintaining biodiversity and the Nagoya summit as relevant to the media and the public, so any attempts to renege on promises made do not slip through unnoticed.

[1] We’ve been conned. The deal to save the natural world never happened. – George Monbiot, The Guardian, 1 November 2010

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The Aldersgate Group convened a discussion on the developing Green Investment Bank (GIB) policy (which we’ve written about before), attracting around 250 attendees to the marble-panelled halls of Bank of America Merrill Lynch. It was good to hear the Department of Business Innovation and Skills official and bankers alike using the language of market failure that is the ethos of cowburps.

There are large market failures that justify the need for the GIB. Stern described climate change as the ‘biggest market failure’. More subtly how will the financial sector provide insurance products (that typically cover 2-3 years) to hedge against green investment risks: which are taking place over 40 year time horizons!

But a check is needed here as to whose markets are failing and why. Governments have addressed the basic market failure for carbon (that there was no market for it). There are now markets, created and driven by regulations, such as through the European Emissions Trading Scheme, creating a price for carbon. A significant problem for low-carbon green investments is the political uncertainty over carbon markets and the long-term price of carbon. These are market failures with the Government-created carbon market. Rather than rely on the GIB policy intervention to fix the failures in the carbon market, the first policy option should be to remove them. This can be done by setting a long-term policy that puts a price on carbon, i.e. a carbon tax with a long-term escalator, and/or a better designed cap on emissions addressed by the Emissions Trading Scheme.

In reality, both a Green Investment Bank and a carbon tax are needed. But it would be perverse for Government to intervene to fix failures in the markets it has created, without also trying to remove those failures by improving the policies that created them.

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The Defra website has recently started posting up ‘mythbusters’ – a convenient way for them to refute claims made by sensational newspapers. We were disappointed however to find out that Defra are not, in fact, spending £12 million on cow flatulence as the Express reported on Friday November 5th.  We felt extra special but now we find out that we will have to share that limelight with the rest of agriculture!

We were also relieved to find out that the privately owned woodlands will still enjoy legal protection from development, however it still does not address all our concerns from our last post!

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As part of the recent budgetary changes, Defra Minister Caroline Spelman is expected to announce a consultation on the sale of some of the Forestry Commission held forests. The legislation that is likely to be changed currently governs “ancient forests” such as the Forest of Dean and Sherwood Forest. The change would give private firms the right to cut down trees to build Center Parcs-style holiday villages, golf courses, adventure sites and also commercial logging operations.

Let’s have a look at all the services forests provide:

  • Timber/fuelwood: the main tangible product provided by forests and woodlands;
  • Greenhouse gas regulation: sequestration of carbon by trees as they grow;
  • Recreation: a key public use of woodland areas;
  • Aesthetic and cultural values: the visual impact of woodland areas and historical and cultural importance;
  • Biodiversity: providing habitats for flora and fauna; and
  • Water cycle regulation: influencing local rain fall and erosion control reducing the risk of flooding of downstream areas.

Some of these services bring in cash income – particularly timber/fuelwood and recreation when paid for.

Others don’t bring cash through conventional markets but have a value in a decision-making context – particularly greenhouse gas regulation which is valued by something called the ‘shadow price of carbon’ (an estimate of the lifetime damage costs associated with climate change measured by incremental greenhouse gas emissions) and water cycle regulation, which can be valued by taking account of what we need to spend to avoid erosion and flooding risk in the absence of forests. Carbon sequestration can be turned into cash through carbon trading. Flood risk reduction could be turned into cash through payments for ecosystem services (a system whereby those who benefit from any of these services pay the landowners or caretakers for the provision and maintenance of these services).


The values of aesthetic, cultural and biodiversity services still have a value in a decision-making context but are the hardest to turn into cash. There are no markets in which they are traded unless government policy intervenes and creates a market like payments for ecosystem services.


There are of course trade-offs between these services. For example, old trees are better at providing habitats but not as good in carbon sequestration (as young trees  grow faster and hence capture carbon faster). But this does not mean it’s better on balance to cut down old trees and plant new ones…because the benefits of carbon sequestration by the new trees have to be weighed against the other benefits of the old trees (or the cost of their loss). Recreational access and timber can be in conflict with each other, and both (to different levels) in conflict with biodiversity.


The type and management of forests affect how much of each of these services is provided and how valuable they are. The key to good practice decision-making is to take the values of all services into account and maximise the return to different management options. The decisions, like the one to sell forests for recreational use, should not be based on partial analysis of those services which are readily turned into cash income, but should include values of all services regardless of whether they can be turned into cash, or even can be measured in monetary terms. This is particularly important for ancient forests which are likely to have much higher aesthetic, cultural and biodiversity values that are more difficult to measure than other afore-mentioned values which are easier.


There is also the issue of equity. If forests are sold to private developers, there’s going to be less access, and for the access there is, we, the general public, will be more likely to pay for at the point of use.  Those slightly up the income scale will still go, but pay more; the wealthier groups already paying for recreation will not be much affected.  Shareholders/private sector will be winners.  But what about those on the bottom of the income scale who may not be able to afford as many trips, if any? Obviously this is a simplified picture but the sale is likely to be very regressive overall.


So, here is yet another case of hidden economic values at risk of being ignored…until the forests are lost, the values are gone and it is too late.


We shall be following the developments…



eftec’s report for the Forestry Commission on the economic value of forests: http://www.forestry.gov.uk/forestry/infd-7yxk2h#economic (see Economic Research)



sign a petition for your views to be taken into account: http://www.38degrees.org.uk/page/s/save-our-forests#petition

shadow price of carbon: http://www.eftec.co.uk/UKNEE/envecon/2010_documents/envecon2010_CLIMATE_CHANGE_Thomas_presentation.pdf

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