From the article: ... ... Matt Levine had some commentary on Wednesday where he described what's going on in basic economic terms: Who Gets Paid For Not Cutting Down Trees? ... ... How much do...
From the article:
With a handshake and a discreet smile, Sheikh Ahmed Dalmook al-Maktoum, accompanied by the Liberian finance minister, gave nothing away in front of photographers on March 25. The young member of the ruling family of Dubai, one of the seven emirates in the United Arab Emirates (UAE), had just signed an unprecedented memorandum of understanding with Liberia. Under the terms of the agreement, the Liberian government will grant the company he heads, Blue Carbon LLC, exclusive rights to one million hectares of its forests – 10% of the West African country's total forest area – for 30 years.
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For the time being, these agreements are preliminary. The rules governing the trading of carbon credits are due to be set at COP28, held in the UAE from November 30. "Countries are still waiting for clear, concrete rules for using this tool, for example regarding project registration and monitoring," said Erika Lennon, a researcher at the US-based Center for International Environmental Law (CIEL).
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Meanwhile, in Liberia, more than a million people could see their livelihoods affected by Blue Carbon's project, according to the NGO Fern. The transfer of land to the company would constitute a violation of the land rights of the communities that depend on it, warned the Independent Coordination of Forest Monitoring, which is made up of Liberian civil society organizations, in July.
Matt Levine had some commentary on Wednesday where he described what's going on in basic economic terms:
If you live on some land, and it turns out there is oil under the land, then either you get to drill the oil and sell it and keep the money, or the government does, or someone else does. There are various legal regimes. Perhaps you get to lease the oil rights to an oil company and keep some of the money. Perhaps you get nothing; perhaps the government owns all the oil in your country and can cut its own deals with the oil companies without giving you anything. All sorts of possibilities. But in any case, either you get the money from the oil, or someone else does, or you split it somehow. Or, of course, the oil is not discovered, or not exploited, and nobody gets the money.
Similarly, if you live on some land, and it has trees, and you don’t cut down the trees, then the trees store carbon that might otherwise go into the atmosphere, and therefore they reduce global warming. And in the modern economy, those trees — or, rather, the fact of not cutting down the trees — can be turned into carbon credits; some big company will pay money for those credits to offset its own emissions. But who gets to sell the carbon credits and keep the money? Again, the possibilities include (1) you, as the person living on the land, (2) the government, or (3) someone else. Perhaps you can cut a deal with a carbon-credit company to preserve the trees, generate the credits and split the money. Perhaps the government owns all the not-cutting-down-trees in your country and can cut its own deals with global markets without giving you anything. All sorts of possibilities.
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And so if you just live on some land, and it has some trees, and you leave those trees alone and have for generations, you might have a hard time making money from the carbon credit market. Whereas if you live on some land, and it has some trees, and you sometimes chop down those trees for firewood and building materials, and have for generations, the efficient carbon credit market approach might be for your government to bring in someone else — some outside carbon credit company — to manage the trees and protect them from you, generating carbon credits. And then the outside company and the government split the money. Maybe they give you some of it, to compensate you for your loss of use of the trees.
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The central conceptual oddity of carbon credits is:
You can get paid for not cutting down trees, and
If a tree is not cut down then everyone on Earth did not cut it down, but
Only one of them gets the carbon credit.
If a tree in Liberia is not cut down, then it is technically true that a Dubai company didn’t cut it down, but it is also true that I didn’t cut it down, and it is arguably even more true that the Liberian person who lives next to the tree did not cut it down. But the Dubai company has some advantages in terms of getting paid.
One day in late October, leaders from more than a dozen towns across Liberia’s Gbi-Doru rainforest crammed into a whitewashed, tin-roofed church.
They had gathered to hear for the first time about a deal signed by their national government proposing to give Blue Carbon, a private investment vehicle based thousands of miles away in Dubai, exclusive rights to develop carbon credits on land they claim as theirs.
“None of them were aware of the Blue Carbon deal,” says Andrew Zeleman, who helps lead Liberia’s unions of foresters.
Only two of the leaders were even remotely familiar with the concept of a carbon credit, he adds — the tradeable instrument that can be obtained when a tonne of carbon is removed from the atmosphere or avoided, for example because a forest has been planted, or protected from deforestation.
From the article:
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Matt Levine had some commentary on Wednesday where he described what's going on in basic economic terms:
Who Gets Paid For Not Cutting Down Trees?
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How much do people near the forests know about this? Not very much, apparently. From a Financial Times article (archive):