{"id":10868,"date":"2025-03-10T13:09:57","date_gmt":"2025-03-10T10:09:57","guid":{"rendered":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/?p=10868"},"modified":"2025-03-10T13:09:57","modified_gmt":"2025-03-10T10:09:57","slug":"commentary-no-more-price-takers-five-disruptive-ideas-for-fair-value-for-forests","status":"publish","type":"post","link":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/news\/commentary-no-more-price-takers-five-disruptive-ideas-for-fair-value-for-forests","title":{"rendered":"Commentary No More Price Takers: Five Disruptive Ideas for Fair Value for Forests"},"content":{"rendered":"

Genevieve Bennett, Dr Theresia Ott, Gabriel Labbate, and Nathan Truitt<\/span><\/p>\n

\n

[Feature image: Yaeda-Eyasi Landscape REDD+ Project. Credit: Roshni Lodhia for Carbon Tanzania]<\/em><\/p>\n

Add up all of the greenhouse gas emissions released every year from airplanes and the shipping sector and\u00a0multiply it by four<\/a>. That roughly equals the total emissions released, every year, by tropical forests being cut down.<\/p>\n

We cannot meet climate goals without forests, which absorb nearly one-third of the fossil fuel emissions that humans emit each year. They\u2019re among the most cost effective climate solutions<\/a> in the toolkit. Yet financial support for forests is a constant challenge: REDD+ carbon credits continue to\u00a0trade at less than $10 per ton,<\/a>\u00a0far below the\u00a0$30-50\/ton<\/a>\u00a0that UNEP estimates is the actual cost of large-scale, high-integrity forest protection.<\/p>\n

Ten dollars a ton may be enough to dissuade tree clearance in some places. In many other landscapes, it is still far more lucrative to continue clearing forests<\/a> for agricultural commodities.<\/p>\n

High financing costs eat further into the actual revenues flowing to projects. And market intermediaries, though they provide important functions like liquidity and buyer-seller matching, also take a cut. As a result, the forest communities<\/a> that REDD+ is supposed to support in finding economic alternatives to deforestation receive little, relative to the tremendous climate benefit they\u2019re producing.<\/p>\n

How do we close the gap between market price and real value, and make REDD+ a better deal for forest countries<\/a> and communities?\u00a0A recent webinar<\/a>\u00a0hosted by Forest Trends, Nature4Climate, and UNEP offered some ideas for innovating. Here are five unconventional ideas proposed by speakers to reshape the market.<\/p>\n

Idea#1: Move to Prepayment Structures<\/b><\/p>\n

The high cost of capital \u2013 up to 25% according to market participants \u2013 significantly erodes the value reaching communities<\/a> and project activities.<\/p>\n

\"\"<\/a>
The Chaco tortoise is threatened by animal traffickers, due to demand from for these tortoises as pets. This colorful moment was captured on the grounds of the Chaco Greenheart REDD+ project, which conserves 32,000 hectares of critical forest in the Paraguayan Chaco and creates a safe environment<\/a> for the Chaco tortoise. Credit: Claudia Merlos for Quadriz.<\/em><\/figcaption><\/figure>\n

Prepayment, wherein projects receive part of the money from buyers before final delivery of credits, can increase the share going directly to communities. \u201cA huge portion of money going to the developer is to cover the cost of their capital,\u201d noted moderator Nathan Truitt, Executive Vice President of Climate Funding<\/a> at the American Forest Foundation.<\/p>\n

\u201cThey\u2019ve had to go and borrow this money. So whenever buyers raise the concern [of community benefits], I always say that\u2019s something that you can control by making prepayments. You will see a lot more of the credit price<\/a> flow through to communities if we don\u2019t have to pay that cost of that capital.\u201d<\/p>\n

Prepayment structures also result in better outcomes, says Roselyn Fosuah Adjei, Director of Climate Change<\/a> at Ghana\u2019s Forestry Commission.<\/p>\n

\u201cWhen you\u2019re able to do a prepayment, you show commitment\u2026It can ward off illegalities, because the time lag between signing an APA and going through validation, verification, and delivery could take about a year to two years,\u201d said Adjei. During that time, illegal forest loss<\/a> could very well continue in the absence of livelihoods alternatives.<\/p>\n

In this way, prepayment structures enable project delivery with immediate gains for communities alongside more structured implementation to secure longer term outcomes on the basis of a theory of change. \u201cWhen there\u2019s an upfront payment it\u2019s some form of insurance or security. And so local communities<\/a> and indigenous peoples know that you are serious,\u201d said Adjei. \u201c[They\u2019ll think:] \u2018Yes, let\u2019s commit to this program. Let\u2019s ensure that it works.\u2019\u201d<\/p>\n

Idea #2: Double Down on Communication\u00a0<\/b><\/p>\n

Bad press on REDD+ has hurt demand and depressed prices. REDD+ credits lost 62 percent of their value between 2022 and 2023, with the average price of credits falling 23 percent. More than one billion dollars in market value, virtually all of which was going to project developers in Asia, Latin America, and the Caribbean,\u00a0evaporated during that period<\/a>.<\/p>\n

Setting the record straight on REDD+\u2019s performance, and impact, came up repeatedly.<\/p>\n

\u201cThere was a lot of negative media coverage that specifically targeted REDD+,\u201d noted Alex Procton, Manager of Data Solutions at Ecosystem<\/a> Marketplace, \u201cA number of articles that seemed to cherry pick individual REDD+ projects and then hold up issues with those projects as issues with the entire sector.\u201d<\/p>\n

\u201cThe string of almost non-ending articles had a real impact, not only on the market, but on people on the ground,\u201d says Gabriel Labbate, Head of the Climate Mitigation<\/a> Unit at UNEP. \u201cI mean, those projects<\/a> were depending on funding.\u201d<\/p>\n

Dr Theresia Ott, Chief Adviser for Nature Solutions<\/a> at Rio Tinto, pointed to fundamental misunderstandings about what REDD+ actually involves.<\/p>\n

\"\"<\/a>
The community in Bunda Bunda Chiefdom, Rufunsa District Zambia opted to drill a borehole using conservation fees paid from a REDD+ project, to provide clean and safe drinking water. Previously, community members had to travel long distances to fetch water from streams. Credit: Muswema Henry Chanda, BioCarbon Partners.<\/em><\/figcaption><\/figure>\n

\u201cI think there\u2019s a bit of a misinterpretation of what we\u2019re actually talking about. A REDD+ project is not a conservation<\/a> project where we\u2019re just drawing a protective line on a map, and voila, the forest is protected. It\u2019s actually all about people,\u201d said Dr Ott. \u201cWe\u2019re talking about\u00a0 land use change<\/a>. It doesn\u2019t happen overnight. You need decades worth of investment and guaranteed cash coming through to these communities so that stick with it long enough to see that this is actually a better way of using the landscape through demonstrated benefits.\u201d<\/p>\n

Dr Ott provides a powerful example from Madagascar, where communities face stark choices: \u201cIt\u2019s not easy to hike halfway up the mountain five kilometers away from your home, cut down a tree, bury it and set it alight to convert it to charcoal, but you do it because your family is dependent on that charcoal to cook with, or the livelihood from selling it at the market.\u201d<\/p>\n

The old adage \u201cYou get what you pay for\u201d comes to mind. When buyers, or journalists, lack a full understanding of how high-integrity REDD+ works and why it matters, credit prices will inevitably fail to reflect actual value and cost of getting these projects right. More education, story-telling, and data are all needed here.<\/p>\n

Idea #3: Adopt Portfolio Approaches to Integrity\u00a0<\/b><\/p>\n

Rather than letting individual project controversies damage the whole sector, Labbate suggests viewing REDD+ more like an insurance portfolio: \u201cIn a sense, we are a bit like an insurance company. I may not be that concerned about your particular claim. What I want to make sure is that at the portfolio level, things are okay. We do not dismiss concerns, but we believe that these risks can be managed, and that we can improve integrity as we take the market with us.\u201d<\/p>\n

While negative press has impacted the market, Labbate argues, \u201cWe will be able to turn the tide\u2026 we should see a change in the mood.\u201d<\/p>\n

Whilst criticism of the market is vital to ensure that projects represent real carbon emissions<\/a> or avoidance, criticism of individual projects should not result in a loss of investment to\u00a0all\u00a0<\/i>REDD+ projects that are so critical in protecting what is left of the planet\u2019s forests in regions where such finance is lacking.<\/p>\n

Idea #4: More Direct Jurisdiction-Buyer Relationships\u00a0<\/b><\/p>\n

In Ghana\u2019s experience, eliminating intermediaries has allowed 69% of carbon revenues to flow directly to communities while building national capacity<\/a> and ownership. Direct relationships not only improve economics but create stronger partnerships and sustained<\/a> engagement.<\/p>\n

\u201cWhy do we always need middlemen?\u201d asks Adjei. \u201cIf buyers can engage directly with countries, all the better. We have built national capacity<\/a> \u2013 we are not there [all the way there] yet, but we can do our negotiations, understand our legal positions, work on safeguards and MRV.\u201d<\/p>\n

While buyers often prefer intermediaries for accountability and reporting, countries can build this capacity<\/a> over time, leading to more sustainable and equitable outcomes.<\/p>\n

Idea #5: Forest Country Coordination\u00a0<\/b><\/p>\n

Forest nations<\/a> have historically been price takers, accepting what buyers in the Global North offer. And while we\u2019ve seen buy-side coordination to raise the floor for REDD+ prices (notably through the LEAF Coalition), Adjei made a powerful case for coordination on the supply side as well. \u201cWhat happens [presently] is if others start accepting $5-10\/ton, then your country will practically just be left behind.\u201d<\/p>\n

\u201cIf it\u2019s $30 a ton that we need, and we can justify thirty, let\u2019s wait to get thirty,\u201d she said. \u201cLet\u2019s have a stronger alliance.\u201d<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Genevieve Bennett, Dr Theresia Ott, Gabriel Labbate, and Nathan Truitt [Feature image: Yaeda-Eyasi Landscape REDD+ Project. Credit: Roshni Lodhia for Carbon Tanzania] Add up all of the greenhouse gas emissions released every year from airplanes and the shipping sector and\u00a0multiply it by four. That roughly equals the total emissions released, every year, by tropical forests […]<\/p>\n","protected":false},"author":2,"featured_media":10434,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-10868","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/posts\/10868","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/comments?post=10868"}],"version-history":[{"count":4,"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/posts\/10868\/revisions"}],"predecessor-version":[{"id":10872,"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/posts\/10868\/revisions\/10872"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/media\/10434"}],"wp:attachment":[{"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/media?parent=10868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/categories?post=10868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cfwt.sua.ac.tz\/ecosystems\/wp-json\/wp\/v2\/tags?post=10868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}