beyond carbon: trading regional to global scale ecosystem services

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Beyond Carbon:Trading Regional to Global Scale

Ecosystem ServicesAndrew Mitchell

Global Canopy Programme, UK

Hylton Murray PhilipsonCanopy Capital Ltd.

Biodiversity and Finance ConferenceLondon

26th November 2008London


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Structure of Talk

1. Why do forests fall2. Forests as Global Utilities

3. Amazonas Initiative4. Canopy Capital

Acknowledgements

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Core

Areas

science

financepolicy


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Its Not Just AboutCarbon


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Forests fall because they are worthmore cut down than they are

standing up - A Market Failure!


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D emand and Poverty driveD eforestation B eef

S oya

P alm oil

Timber


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Land Use changes are verysignificant

Land Usechanges 7.6 Gt18% primarily

deforestation

A griculture5.6 Gt 14%S oils andlivestock

Electricity

& Heat

Transport

IndustryOther Energy

E nergy 25.6 Gt 61%Consuming

fossil fuels

Source: WRI 2000 estimate all GHG CO2 equivalent


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Four Market ApproachesAll can help to reduce emissions from deforestation

1. PLANTATION FORESTRY

2. RE DD (RE D UCE D EMISSIONS FROMD EFORESTATION AN D D EGRA D ATION)

3. CONSERVE D CARBON (STOCKS)

4. ENVIRONMENTAL ECOSYSTEMSERVICES


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The movie file that was used here can be found on this website:

http://www.vets.ucar.edu/vg/CCM3T170/index.shtml


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The Amazon Rainforest puts some 20 billion tonnes of water into the atmosphere each day.Some of this falls as rain in the Rio Plata Basin to the south.

M arengo et al. 2004, Journal of Climate

The Amazon Water Pump


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RAINFALL MECHANISM IN AN UNDISTURBED RAINFOREST

CLEAN ATMOSPHERE

WarmLow Level

Clouds

Heavy but GentleRainfall

based on results of LBA : Claeys et al and Andrea et al. Science 2004; Marengo et al 2004, 2005; others

BiogenicCloud Condensation

Nuclei (CCNs )

H 2 O VAPOR

D i a g r a m

b y

A n

t o n

i o D N o

b r e

[MODEL]


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Untouched forest

Forest Ecosystem Serviceswhich could become Tradable?

Emissions Reduction (REDD)

Carbon S equestrationCarbon storageWater storage

Rainfall generationWeather Moderation

B iodiversity


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A critical interfacebetweenthe Biosphereand the Atmosphere Forests areForests are

Global EcoGlobal Eco--UtilitiesUtilities providing services all of humanity uses providing services all of humanity uses

but does not yet price but does not yet price

F uture marketswill not

just be about Carbon

Paying for Servicescould drive billionsto forest owningnations!


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1 4th May 2007


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Forest Owning Nations areGathering


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Emerging Frameworks for Forests

UNFCCC - RE DD /CD MEU ETS

US MarketAustralia/Others

Voluntary*

CBD - PINC?


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Existing and New Frameworks

Pro-active Investment in Natural Capital(PINC)

Tradable Currency = 1 hectare forest?


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RainLiving CarbonStored in forests + Ecosystems +Livelihood for 1.4 billion of the poor

D ead CarbonMainly emissions from Energy

Captured and stored underground

A Future Market Choice?


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Are wecreating

wealththatsworthhaving?

Clinton Global Initiative, New York, October

2007


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FEAR.

That doing nothingwill add to costs

is growing

7.32 billiontonnes of

CO2ereleased /

yr.(FAO)


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Onehurricane

event

US $81.2 billionof losses


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THE SERVICES and THE BUYERS1. Water Storage 16% of global freshwater supplies - 70-80% of Brazils electricity depends on Hydropower 2. Rainfall Generation 20 billion t/day; Agribusiness ,Soya, Beef and Sugarcane all depend on rain; 40% of Brazils cars use

ethanol, bio-ethanol set to expand3. Weather Moderation a regional air-conditioning unit;Amazon drought in 2005 coincided with record Caribbean hurricanes

US$xxxx billion in Insurance Losses4. Biodiversity natural nano technology; Forest disturbance leadsto a 300 fold increase in mosquito biting incidence affecting Health5. Carbon Storage 150-300 tonnes/ha; 67 billion tonnes/CO2estored = an opportunity for Carbon Markets


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A D ifferent Economic Paradigm?


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An Evolution in Thinking

Two Brief Case Studies

Amazonas Initiative, Brazil

Iwokrama, Guyana


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Case Study 1: Amazonas InitiativeAIM: Renconcile the maintenance of 67 billiontons of CO2e with the ethical need to improvethe livelihoods of its people through sustainableland uses

V irglio V ianaAmazonas State Government

Brazil

www.sds.am.gov.br


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AmazonasState, BrazilAmazonas Initiative

Law of Climatic ChangesState Parks D ecreeAmazonas Foundation For

Sustainability$10m Bradesco Bank Blosa Floresta

G ov. Eduardo B raga


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Improving SocialImproving SocialCapitalCapital

D ocumentsD ocumentsHealthHealthMarriagesMarriages


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Counter D eforestation

by increasing thevalue of

forest productsand services


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after

R egular Condition

Critical Condition

Desirable Condition

Matrix Dimensions

D i r e c

t i o n

t o S u s

t a i n a

b i l i t y

P r o g r a m

A c t i o n

before

Good Condition

Matrix s DynamicsMatrix s Dynamics


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Add Value to Standing Forests

Bolsa Foresta

Re50 / family/ M onth Payments for Ecosystem

Services

Community & Dirstrict

M ake no Smoke


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Guyana Nov. 2007

President Jagdeoscall to theWorld Community


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G uyana -

National Context 80% of forests intact M ajor road development - Soy

Deepwater port Oil based economy

Logging/biofuels/agriculture Bauxite and gold mining

M cKinsey Report - Dec 2008 A M odel for the world?


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International CentreFor ConservationAnd D evelopment

G iven to the Commonwealth in

1995 to pioneer novel ways of utilising forests and conserving

biodiversity.

371,000 hectares

50% SF M; 50% Pristine

119 million tonnes of carbon

7000 strong indigenous community

A key signature site for demonstrating a new financial

paradigm for forest valuations.




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Investment byD esigned to invest in Eco-System

Services worldwideHigh net worth investorsSecured first asset with IwokramaOption to value ecosystem servicesD esign of investment instruments80% upside to Iwokrama

Community business developmentOnly one way Standing Forest

values can go!

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I nternational community mustI nternational community mustrecognise the servicesrecognise the servicesMinding the Carbon StoreMinding the Carbon Store$3c/tonne/yr wd generate$3c/tonne/yr wd generate$5.7m./yr or $15/ha.$5.7m./yr or $15/ha.Every emission will have anEvery emission will have anincreasing costincreasing cost

Every conservation will have aEvery conservation will have avaluevalueTime to stop talking, and startTime to stop talking, and startactingactingWorld is waking up to this andWorld is waking up to this andwill drive capital to the canopywill drive capital to the canopy


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Creating wealth thats worth having


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www.iwokrama.org

www.canopycapital.co.uk

l b l

beyond carbon: trading regional to global scale ecosystem services

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