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Financing the World's Forests: integrating markets and stakeholders1


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First keynote speaker presentation by Andrew Mitchell (Global Canopy Programme)

3rd August 2009 - Imperial College (CEP)

Published in: Economy & Finance, Technology
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Financing the World's Forests: integrating markets and stakeholders1

  1. 1. Financing the World’s Forests: Integrating Markets and Stakeholders Imperial College - 3 Aug 2009
  2. 2. Stepping up to Copenhagen Options for Forests Financing the World’s Forests: Integrating Markets and Stakeholders - Imperial College - 3 Aug 2009 Andrew W. Mitchell Founder & Director Global Canopy Programme Research Associate Zoology Dept University of Oxford
  3. 3. Core Areas <ul><li>science </li></ul>finance policy A Crisis of Values
  4. 5. “ There will be no solution to climate change, without a solution to deforestation” (Nobel Laureates Symposium, 2009) Aircraft Emissions = 2% Energy Emissions = 25 % Forest Emissions = 18% Forest emissions are equivalent to flying 12.5 million people from London to New York every day!
  5. 6. SOURCE: Pathways to a Low Carbon Economy , McKinsey report, Feb 2009 20% of the Problem - 40% of the Solution
  6. 7. Emerging Frameworks for Forests UNFCCC - CDM > REDD > 2012 EU ETS > 2013 US Market - Waxman-Markey Bill Australia/Others Voluntary Markets - CCX CBD - PINC? CBD - Green Development Mechanism
  7. 8. CDM > REDD > REDD + > PINC ? (Pro-active Investment in Natural Capital) Tradable Currency = 1t/CO2 > 1 ha/forest? Figure 2: Three complementary and reinforcing mechanisms for conserving and restoring forest and mitigating and adapting to climate change
  8. 9. Sources of $ US$ 17-33 Billion /yr International Auctioning (AAUs) National Auctioning of Allowances REDD Markets ODA Interim Financing Mechanism
  9. 10. Interim Funding for REDD <ul><li>HRH Prince of Wales hosted historic meeting of world leaders in London alongside April’09 G20 </li></ul><ul><li>35 Countries </li></ul><ul><li>G8 Statement </li></ul><ul><li>Norway Wking Gp </li></ul><ul><li>Report mid Sept’09 </li></ul>Meeting at St James’s Palace, 1 April’09
  10. 11. Timing of payments (IWGIFR)
  11. 12. Fund flows Tropical Forests Facility Rainforest Bond Rainforest Nations Direct Funding Private Investors Payments OECD Govts Guarantees/ Repayments Carbon Permit Auctions Special Levies (e.g. fuel) Earmarking Taxes World Bank Technical Support Issuer/ Advisor
  12. 13. Business Drives Deforestation <ul><li>60% of globally traded beef is from Brazil </li></ul><ul><li>40% of exports are to Europe </li></ul><ul><li>80% of the growth in Brazilian beef production is in the Amazon </li></ul><ul><li>EU is also the world’s largest import market for soybeans </li></ul><ul><li>Palm oil plantations are driving deforestation in Malaysia and Indonesia </li></ul><ul><li>84% of UK companies importing palm oil have done little to ensure it is not from a destructive source </li></ul>Beyond Copenhagen?
  13. 14. Emerging Earnings Risks - Reputational - Regulatory - Environmental
  14. 15. “ Are we creating wealth that’s worth having?” Clinton Global Initiative, New York, October 2007
  15. 16. Natural Capital & Financial Capital A Tale of Two Economies? Could Water become the new Oil?
  16. 17. Valuing Forest as Global Eco-Utilities? <ul><li>+ 80% </li></ul>
  17. 19. Utility to Business <ul><li>The Amazon </li></ul><ul><li>3 trillion tonnes of water stored </li></ul><ul><li>20 billion tonnes of water vapour transferred daily </li></ul><ul><li>$1 trillion of industry share this eco-dependency </li></ul><ul><li>Deforestation means declining service provision </li></ul><ul><li>Rising temperatures will compound the effects </li></ul>The Amazon’s Rainfall Service
  18. 20. Natural Capital - A New Asset Class?
  19. 21. Don’t Bank on Copenhagen Forests - Natural CCS we can’t afford to do without…. GDP > Gross Destructive Potential! TEEB - will drive recognition of Natural Capital values.
  20. 22.
  21. 24. Why should Forests matter to Investors?
  22. 25. Forests are ‘Eco-utilities’ of immense value <ul><li>Opportunity </li></ul><ul><li>45% of terrestrial carbon is stored in the world’s forests </li></ul><ul><li>1.2 billion tonnes of carbon sequestered worth $35-89 billion per year. </li></ul><ul><li>Underpin Food, Energy and Health security globally. </li></ul><ul><li>Risk </li></ul><ul><li>18-25% of total global carbon emissions from deforestation </li></ul><ul><li>$1.7-4 trillion annual cost of forest ecosystem service loss </li></ul><ul><li>Poltical and Regulatory famework likely to change fast </li></ul>
  23. 26. “ Are we creating wealth that’s worth having?” Clinton Global Initiative, New York, October 2007
  24. 27. Forest Footprint Disclosure <ul><li>A ‘Toolkit’ to enable business to report on operational and consumption related impacts on deforestation </li></ul><ul><li>Direct and indirect </li></ul><ul><li>Available to the financial community to i nform investor decision making </li></ul><ul><li>Promoting transparency and awareness </li></ul><ul><li>Preparing for future risks and opportunities </li></ul><ul><li>Ministerial launch 15th June </li></ul><ul><li>1st Report - January 2010 </li></ul>
  25. 28. We can’t do this without you! We cant’ afford to wait!