Can markets protect nature?
Rhett A. Butler, mongabay.comMay 03, 2010
An interview with Michael Jenkins, President and CEO of Forest Trends
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While are innumerable reasons for protecting forests—including aesthetic, cultural, spiritual, and moral—most land use decisions boil down to economics. Therefore creating economic incentives to maintaining forests is key to saving them.
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 Michael Jenkins. |
After a decade with MacArthur Foundation, Jenkins founded Forest Trends in 1998 to "highlight the market value of natural ecosystems to promote their conservation". In the process, Forest Trends and Katoomba have attracted a bright and innovative group of collaborators and partners who share the vision of using payments for ecosystem services as a platform for protecting forests and other ecosystems.
In 2010 Jenkins was recognized for his commitment to innovation in forest conservation with the Skoll Foundation's Award for Social Entrepreneurship. Mongabay spoke with Jenkins about his work during the Skoll World Forum, held at Oxford University from April 14-16.
AN INTERVIEW WITH MICHAEL JENKINS
Mongabay: What is your background and what inspired you to start Forest Trends?
Michael Jenkins: My background is that I am Tropical Forester, or should I say agroforester, by practice and training and I have worked in places like Paraguay, Haiti, and Brazil. And then after graduate work at Yale I kind of fell into a job at the Macarthur Foundation, where I worked for ten years and took the local experiences that I had in Haiti and in Paraguay and saw how these translated globally.
  
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All of those experiences shaped the path that took me to Forest Trends. For example, in working with small farmers in rural Paraguay we tried to figure out how to make forest management more productive and more beneficial than the national cotton programs that didn’t make any sense at all and were really hurting them. Under the cotton program the small farmers and their 1 hectare, 2 hectare plots weren’t making any money and were over applying harmful pesticides. We looked for approaches that would make these farms more profitable, while engaging in products and crops that were going to be more sustainable. We started planting trees and raising bees.
When I was in Haiti it was kind of a similar thing, how to get trees on a landscape where the farmers are struggling to get any annual maize or millet crop at all. In that environment trees take five years if you’re lucky - ten years probably and the long-term logic was very hard to communicate to these small farmers. The program started with the standard package of local miracle trees—fast-growing and nitrogen fixing—yet we were surprised Haitians viewed them as weeds. So that led us to shift to planting native ‘useful’ species, as Haitians suggested, that would produce known and tangible products like valuable timber, fruit, or charcoal.
 Forest in Lacassine National Wildlife Refuge, Louisiana (2010). Photo by Rhett A. Butler |
My experience at MacArthur helped shape the institutional model of Forest Trends. After seeing so many organizations and efforts around the globe, completely disconnected or working at cross purposes, it was really clear to me that what the world did not need was another NGO with a big staff and its own separate vision. What we needed was what I like to call the “connective tissue” the connected all of the dots, all the organizations scattered around the globe. The connective tissue also needed to work from the very local up to the regional, national, and international level where global policy is negotiated. Local innovation needs to inform global policy, and you also need to make sure the local actors are informed about what is happening on a global scale, policies that will undoubtedly have an effect on them.
So that was part of the notion of a new type of organization. Also at MacArthur we started getting into a lot of unusual alliances, where we would bring in forest companies, financial institutions and businesses, as well as NGOs and communities, to try to figure out new ways to think about forest sustainability. Many times these groups had been enemies or at least perceived that way.
 Deforestation in Mato Grosso, Brazil (2009). Photo by Rhett A. Butler |
Mongabay: Looking at the market issue, what is the landscape under the Copenhagen Accord?
Michael Jenkins: Copenhagen was a huge disappointment to a lot of folks in the traditional market sense. It was a big disappointment for the carbon market and a lot of the big financial institutions, who have since backed away from the table. A lot of people in these institutions have been laid off and carbon desks have folded.
 Rainforest of the Darien, Colombia (2010). Photo by Rhett A. Butler |
We’ve since seen the commitment of bilateral donors—like Norway, Britain, Germany, France, Japan, and the U.S.—who have pledged around $4 billion since Copenhagen, just last December, for investment in forests and climate. This public finance will have to become the bridge between action today and sometime down the road when hopefully the climate process comes back together again including significant private sector involvement.
Mongabay: So if you are a REDD developer in the midst of a project today, is there the potential to become part of an eventual market system?
 Forest clearing in the Colombian Amazon (2010). Photo by Rhett A. Butler |
Mongabay: There are lots of concerns with proposed forest carbon approaches, especially around transparency and equity for forest dependent-communities. What are some ways to address these?
Michael Jenkins: One project that we have started to design with a number of local partners in Latin America and Africa is a tool to track public finance commitments for forests. Transparency and accountability are critical.
 Forest river in the Colombian Chocó (2010). Photo by Rhett A. Butler |
Our idea would be to track finance in the same way, so you can actually go on a map and see where money is going, for example Norway to Tanzania. You would be able to see what has happened, whether any communities are benefiting from it, what registries and accounting systems are in place to measure the impacts, and what is being monitored not only in terms of carbon emissions reductions, but also the other environmental and social benefits.
We see this real-time tracking system serving as a safeguard to make sure the money is used well and effectively and produces real climate benefits, real social benefits and real biodiversity benefits.
Mongabay: What do you see as the best way to ensure that we have real safeguards and don’t just fall back into the traps of the old system? Institutions involved with REDD—like the World Bank—have a checkered history with maintaining safeguards and aren’t really trusted by many of the groups that will be most affected by REDD. Is there a role for activists to serve as watchdogs?
 In Rondonia, Brazil, Surui use ACT-provided laptops to monitor their reserve using Google Earth technology. Photo © Fernando Bizerra Jr. |
Part of other work we do at Forest Trends, meant to complement this transparent information platform, is to actually work with projects on the ground, demonstrating how local communities can benefit from these emerging markets like REDD. For example, we have the project with Surui in the Brazil Amazon, which has established a legal precedent showing that forest communities have rights to the forest carbon in their territories. It is to demonstrate the process by which this finance can flow in a way so that a local indigenous community can benefit.
So I think there are two sides of advocacy work, a watchdog to keep everyone honest, and demonstration with partners to show how things could work.
Mongabay: Do you see REDD as the stepping-stone towards valuing ecosystems for other services they provide humanity?
Michael Jenkins: Actually, payments for other ecosystem services have been happening for years. We’ve been tracking about twenty different emerging environmental markets. There are public payment schemes for water, voluntary watershed protection schemes, water quality markets, wetland mitigation banks, conservation banks, and certified commodities like timber, coffee, and others. All of these tools are part of the universe of environmental markets.
Clearly carbon and REDD—the Carbon market before REDD and now REDD—have been the big “Kahuna” in terms of scale and attention but that might not always be the case.
For me the failure of Copenhagen was actually an opportunity to go back to a fundamental message, which is “there is no silver bullet here. Carbon is not going to save everybody.” If you look across the whole array of environmental markets, you might have a silver lining because, regardless of where you sit in the world, one of those markets is going to be relevant to you. And they will all hopefully be vehicles to invest in healthy and productive ecosystems, with real benefits to the stewards that deliver these public goods of clean water, stable climate, and biodiversity.
Mongabay: Do you see environmental markets as a way to encourage corporations become better stewards of the environment?
 Rainfall in the Pantanal, Brazil (2009). Photo by Rhett A. Butler  Rain falling over agricultural lands and forest in Mato Grosso, Brazil (2009). Photo by Rhett A. Butler |
But what is also interesting to think about is once you have put a price on that service—whether it’s pure water or nitrogen that pollutes water, whether it’s clean air or carbon emissions—then that becomes a price that is embedded in their business model. And so if an energy company is thinking about building a coal-fired power plant—and right now the price of that the clean air is free—it has no bearing on that decision. But once it becomes carbon at $28 a ton, that becomes a significant part of your decision in what kind of a facility you are going to build and where. The price signal becomes even a more systemic driver of company behavior change.
Mongabay: We are already seeing pressure from companies on governments on some of these issues—do you think this will increase?
Michael Jenkins: Yes, this is completely counterintuitive probably to most of us - but I feel like in the last decade our best partner in catalyzing these markets has been the private sector. Governments—certainly our government—haven’t shown much leadership up until recently. It has been some high minded businesses, alongside a few intrepid NGOs, that have been driving this shift.
Mongabay: Would you say you are optimistic about the outlook for forests and other ecosystems?
Michael Jenkins: I would say yes, I am optimistic. Having worked in forestry issues for some thirty years it seems like we finally have a really significant hook where we might able to turn the tide in terms of forests and really change the game. That has not been the case in the past.
Mongabay: What do you see as the biggest remaining obstacles to realizing that future?
Michael Jenkins: I think there is not one but a range of obstacles that interact together. We have got to get the policies in place. Markets and market-like instruments cannot work in isolation. Market tools are part of an ecosystem that requires regulation, information, and capacity to succeed. For these markets to reach scale and have strong drivers behind them we need to have a regulatory environment that sets the scene.
 Deforestation in southern Laos (January 2009). Photos by Rhett A. Butler |
So you need good policies in place that can serve the regulatory framework in which markets can function. You need the ‘architecture’ in place so that the buyer gets what he paid for and that the payment actually goes to the producer of that service. You need to make sure that these developing policies and markets include channels through which resources can flow to smallholders. We need to break that traditional model of markets screwing the poor.
That is the work that we all need to do; creating a new type of marketplace that invests in maintaining and restoring our natural infrastructure, our rural communities, and rewards innovation and collaborators at all levels. The historic opportunity of this moment is that we are the builders.
Mongabay: Do you think there may be a forest agreement by the end of the year?
Michael Jenkins: Yes, I do think there will be a Forestry Agreement. It would be a surprise if we didn’t get one. The Mexican Government is all ready to do this and the bilaterals are all ready for this, and NGO’s, business all want some positive step. And we are close.
Mongabay: What would that look like? Would it be an international deal or would we see bilateral deals? Would there be financial incentives to stop deforestation?
Michael Jenkins: Well, there again, that is the big question. My hope is that it would be a multilateral agreement of some sort. Whether it would be part of the UN-FCCC process or not is not clear; whether a forest agreement could drive that larger climate negotiation process is not clear.
 Rain storm approaching over the Amazon River in Colombia (2010). Photo by Rhett A. Butler |
Yet while there is a lot of excitement around the potential scale of the market carbon we need to balance that with other important opportunities for environmental markets out there that can help stop deforestation and invest in our natural resources. These are equally as valuable; maybe in the longer term, more valuable than the carbon market. Water markets, for example, are going to be more important than carbon markets over the long term because while the carbon market will eventually move us away from a carbon-based economy, but we can’t find a substitute for water. We are going to need ways or instruments to help us most efficiently and equitably manage our water resource in a time when we are going to be 9 billion people.
Mongabay: Water will be a big issue for China. Is that going to be a way to engage it in environmental issues?
Michael Jenkins: Water quality is probably the biggest environmental challenge facing China—they are definitely interested in ways to better manage that resource.
 Oil palm plantation and logged-over forest in Borneo (April 2008). |
Mongabay: But at present these roundtables are developing standards that are basically driven by Europe and the United States.
Michael Jenkins: Yes. The roundtables have leading business corporations that are worried about their image in markets in Europe and US and the long-term sustainability of products. We need to engage Chinese and Indian corporations if we are to produce a stronger more systemic outcome.
Mongabay: So the idea is you could engage China by establishing best practices for production or capture products that are manufactured in China but end up in Europe and the U.S.?
Michael Jenkins: Right. You can take from experiences like forestry and certification. You get the corporate leaders from Europe to provide leadership adopting new, better standards and then China realizes that to sell into major markets they have to meet these standards.
Experience has been the export markets, and particularly those into Europe, are going to be the first adopters. And then hopefully it develops into an internal market with home grown standards and certifiers. That has been the case in Brazil with forestry and now we are seeing other early promising initiatives around soy and cattle.
For us that are focused on forests and ecosystem conservation, stabilizing this frontier between forests and agriculture using the mix of advocacy, standards, and market tools will be fundamental to stemming the tide of tropical deforestation.
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