Published on October 22nd, 2018 | by The Beam0
How Blockchain Could Help To Protect The World’s Forests
October 22nd, 2018 by The Beam
By Jack Robinson, Sustainia
This article was published in The Beam #6 — Subscribe now for more on the topic.
Deforestation is responsible for an estimated 15% of global emissions every year. Since Europe and North America deforested much of their forested land long ago, most of this deforestation is occurring in the tropics, an area that also happens to be home to a staggering 50 bazillion species(1), as well as some ancient, indigenous communities. It was with these facts in mind that the forested nations Costa Rica and Guatemala first brought the concept of REDD to the table, at COP11 in 2005. REDD stands for Reducing Emissions from Deforestation and forest Degradation, and two years after it was first discussed, the decision came to start implementing it as an international policy. Buried deep in the minutes from the COP meeting, you wouldn’t be blamed for missing this landmark in climate change mitigation policy. One year later the concept was extended to include conservation, sustainable management of forests and enhancement of forest carbon stocks, which can all increase carbon sequestration from forests, and led to the name REDD+.
The idea seemed beautifully simple: polluters would pay (ideally through a global carbon market) to offset their emissions by reducing deforestation, biodiversity loss, and emissions in high-risk forest areas, whilst giving forest communities sustainable work and development opportunities. Win-win-win? The influential Stern Report(2) suggested reducing emissions from deforestation to be one of the most cost-effective options for reducing emissions, and another study estimated total benefits of halving deforestation to be US$3.7 trillion(3), at a cost of just US$20 billion a year. You don’t have to be an economist to see the favorable cost-benefit ratio there.
However, in the 13 years since REDD was first introduced, there has been a monumental failure to live up to expectations. Some are proclaiming that ‘REDD is dead’(4), and others suggesting it is just another ‘conservation fad’(5). There are a few reasons for this.
Setting up REDD+ projects proved to be more challenging than expected. Preventing leakage (deforestation simply shifting location), ensuring additionality (only paying for areas that are genuinely at risk from deforestation), and actually measuring carbon fluxes, were all early challenges for policy designers. Then there was the question of land rights. Many of the countries where deforestation is rife lack clarity and institutions for assigning and protecting land rights, especially for indigenous forest communities. In order for REDD+ to work, there needs to be an arrangement in place with owners and users of the forest as to how the benefits are shared between involved parties. All of these problems led to the UNFCCC (United Nations Framework Convention on Climate Change) and UN-REDD program to create guidelines for nations to make their own national plans for getting ‘REDDy’ before implementation could begin.
This top-down approach to climate change governance is familiar. A UN acronymed body (e.g. WMO, FAO, etc.) does research, the international institutes talk about the research (at COPs for example), and sometimes, guidelines or agreements are made (i.e. The Paris Agreement). Then national governments make plans, which are — sometimes — implemented by local actors. Elena Ostrom’s seminal 2011 paper prescribed a ‘polycentric’ approach to climate change governance, to combat the frustrations of working with large, slow moving, international governance structures, that many argue have hampered climate change mitigation to date. She emphasized the need for non-state actors to lead on climate-change action.
Enter blockchain, the new tech that is on everyone’s lips
Blockchain is a ‘secure, distributed ledger’, which probably means nothing since most of us have no concept of how fundamentally important ledgers are. Understanding that is the key to understanding blockchain. A ledger is just a record of transactions, stored (usually) in a centralized place, visible to all, and controlled by a trusted party, to ensure that no changes are made and the record remains truthful. Ledgers are used to prove ownership, and make transactions. If you were to digitalize that ledger, say by putting it on the internet, it would lose its value, since it would be easy to corrupt and change. But blockchain fixes that using some very clever cryptographic functions. And by doing that, you can bypass a lot of the old, centralized institutions, with proof of ownership and transparency at the very core. Bitcoin for example, allows you to make financial transactions, without a bank. Benben allows you to make land and property transactions, without a central housing authority, and Everledger allows you to record ethically sourced diamonds on the blockchain to improve trust and reduce blood diamond purchases.
Blockchain can also interact with ‘smart-contracts’ which are hard wired instructions that follow logic. For example, when ‘A’ occurs, a monetary transaction occurs, sending x money to ‘B’. This opens a world of opportunity for decentralized applications (d-apps).
The characteristics, and advantages, of blockchain systems are that it can create trust in an untrusted environment, it can allow disintermediation (skipping out ‘middle-people’), allow peer-to-peer interactions, and track ownership. These are the reasons for the hype. And REDD+ could be a perfect match for the technology. Imagine a world where every purchase has an associated carbon price, which is offset by REDD+ projects. Each tonne of carbon saved through REDD+ projects could be registered on the blockchain, and tracked by people offsetting their purchases. The technology could in theory, remove the complexities associated with polycentric governance, and allow forest owners to claim a larger share of the benefit for protecting their forests, by interacting peer-to-peer with the consumers making purchases.
It is important to be critical of new technology though, which will of course have unforeseen drawbacks and limitations. In REDD+, there are certainly aspects which blockchain cannot address. For example, whilst blockchain can help to document land rights in countries lacking formalized institutions, it cannot set those land rights in the first place. It is still up to governments to recognize rights of indigenous communities, before blockchain technology can document and protect those rights. Blockchain can also do little for some of the technical aspects of REDD+, like addressing permanence. Even if every single tree in a forest is recorded on the blockchain using its DNA, there is nothing to stop illegal loggers cutting it down and releasing all of the carbon that has been carefully preserved in the biomass over however many years. And then who is to say how those who invested in the REDD+ project would be reimbursed after their ‘carbon credits’ go up in smoke. And then there is the question of energy consumption: Bitcoin alone will be responsible for more energy consumption than Greece this year.
All of these, and more, are reasons not to always believe the hype. Or at least question the hype. There is however plenty of room for optimism, and a chance that after 13 years, REDD+ may finally be unchained.
- Attention: fake news. This is, as you may have noticed, not a real number. We actually have no idea how many species they are home to, or how many species exist globally. It is widely acknowledged though that tropical rainforests are hotspots of biological diversity and contain millions of undiscovered species.
- Stern (2006). Stern Review: The Economics of Climate Change.
- Eliasch (2008). The Eliasch Review. Climate Change: Financing Global Forests.
- Fletcher et al. (2016). Questioning REDD+ and the future of market-based conservation. Conservation Biology.
- Redford et al. (2013) Fads, Funding, and Forgetting in Three Decades of Conservation. Conservation Biology.
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