Deforestation in Brazil Carl De Souza/Getty Images

Putting a Price on Rainforests

With the right incentives, people will pay to preserve and renew tropical forests, one of the planet’s best means of storing carbon dioxide. But placing a value on the role trees play in mitigating climate change will require a robust credit market, and there is danger in postponing its creation.

NEW YORK – In early October, shortly after Hurricane Maria made landfall in Puerto Rico, Tesla CEO Elon Musk said on Twitter that his company could, given the opportunity, rebuild the island’s electrical grid using solar power. Coming in the midst of so much human suffering, it was a bold claim. But from a technological perspective, the timing was perfect. By late October, solar panels and high-capacity batteries had been installed at San Juan’s Hospital del Niño, and additional projects are in the works.

This type of response to a natural disaster – replacing a fossil-fuel-reliant power grid with renewable energy – should be applauded. But no matter how clean and efficient renewable energy sources may be, they will never fully mitigate the climatic effects that are bringing more hurricanes like Maria ashore.

There is another way to do that, and it is far cheaper than what Musk has proposed.

Puerto Rico is home to one of the most efficient and inexpensive tools available in the fight against climate change: rainforests. On the island’s eastern tip, the nearly 29,000-acre El Yunque National Forest is one of the Caribbean’s most important systems for capturing and storing carbon.

Maria destroyed the forest, too. But tech CEOs have not tweeted about restoring that resource, because, at the moment, they see no viable business model for saving trees.

But what if such a model did exist? What if there were ways to make tropical forests worth more alive than dead?

The World’s Opinion Page

Help support Project Syndicate’s mission

subscribe now

Global leaders have been pondering this question for years. And, at UN climate talks, they have come up with a novel solution: an initiative called Reducing Emissions from Deforestation and Forest Degradation (REDD+). The idea is simple: with the right incentives, people, governments, and industries will preserve and restore tropical forests, rather than plow them under. In return, the world gets more carbon sinks to soak up greenhouse gasses.

REDD+, which has been around in various forms for nearly a decade, provides a payment structure for preservation and restoration efforts. By putting an economic value on forests for the role they play in large-scale carbon capture and storage, REDD+ allows standing trees to compete with lucrative land uses – such as logging or agriculture – that result in deforestation.

The first large-scale REDD+ program, an agreement between Norway and Brazil, was initiated in 2008. Norway agreed to provide $1 billion in “performance-based payments” to Brazil for successfully protecting its rainforests. The money from Norway was released in installments, as Brazil conserved its forests. The results were impressive: Brazil reduced the average rate of Amazon deforestation by over 60% over the last decade, absorbing about 3.6 billion tons of carbon dioxide, more than any other country. And Norway was able to help mitigate global carbon dioxide emissions.

But, despite the success of the pilot partnership, the REDD+ program today is in dire need of capital. In many ways, the solution is similar to Musk’s solar proposal in Puerto Rico. Only this time, the innovation is not technical, but financial.

Creating a market for REDD+ credits would create investment opportunities in tropical forest preservation for heavily polluting companies and industries. With an adequate policy framework, REDD+ credits could be offered through existing compliance markets – such as the carbon credit markets in California or South Korea – unlocking billions in additional capital for reforestation efforts.

Developing such a framework would also enable REDD+ to become part of future compliance systems, like the one being developed by the global airline industry to cap emissions, or the carbon-permit market that China plans to launch later this year. Integration into these markets could also tap new funding streams for forest conservation and reforestation, as it would allow financial intermediaries, like the REDD+ Acceleration Fund, to connect REDD+ projects directly with the private sector.

At the moment, most of this is aspirational. REDD+ is merely a set of guidelines, and a forest credit market will require rules and standards to govern how protection and reforestation allowances are allocated to buyers and integrated into current markets. Global leaders gathering this week for the UN climate change conference in Bonn, Germany, can aid these efforts by continuing to support the development of effective and transparent accounting mechanisms for REDD+ projects.

There is danger in delay. In the two years since the Paris climate agreement was adopted, deforestation increased sharply in Indonesia and parts of the Amazon, where much of the world’s largest and most vital tropical forests stand. According to the Union of Concerned Scientists, tropical deforestation is responsible for three billion tons of additional atmospheric CO2 annually – more than the world’s entire transportation sector.

No technology is as effective at storing carbon as tropical forests, and saving and restoring them offers one of the cheapest large-scale forms of emissions abatement or capture, while providing a host of other environmental and social benefits. To take advantage of this crucial hedge against a warming planet, more trees must remain standing. For those of us who believe that a forest credit market could provide critical means of protecting our planet our Musk moment is here. We must be similarly bold.;

Handpicked to read next

  1. Television sets showing a news report on Xi Jinping's speech Anthony Wallace/Getty Images

    Empowering China’s New Miracle Workers

    China’s success in the next five years will depend largely on how well the government manages the tensions underlying its complex agenda. In particular, China’s leaders will need to balance a muscular Communist Party, setting standards and protecting the public interest, with an empowered market, driving the economy into the future.

  2. United States Supreme Court Hisham Ibrahim/Getty Images

    The Sovereignty that Really Matters

    The preference of some countries to isolate themselves within their borders is anachronistic and self-defeating, but it would be a serious mistake for others, fearing contagion, to respond by imposing strict isolation. Even in states that have succumbed to reductionist discourses, much of the population has not.

  3.  The price of Euro and US dollars Daniel Leal Olivas/Getty Images

    Resurrecting Creditor Adjustment

    When the Bretton Woods Agreement was hashed out in 1944, it was agreed that countries with current-account deficits should be able to limit temporarily purchases of goods from countries running surpluses. In the ensuing 73 years, the so-called "scarce-currency clause" has been largely forgotten; but it may be time to bring it back.

  4. Leaders of the Russian Revolution in Red Square Keystone France/Getty Images

    Trump’s Republican Collaborators

    Republican leaders have a choice: they can either continue to collaborate with President Donald Trump, thereby courting disaster, or they can renounce him, finally putting their country’s democracy ahead of loyalty to their party tribe. They are hardly the first politicians to face such a decision.

  5. Angela Merkel, Theresa May and Emmanuel Macron John Thys/Getty Images

    How Money Could Unblock the Brexit Talks

    With talks on the UK's withdrawal from the EU stalled, negotiators should shift to the temporary “transition” Prime Minister Theresa May officially requested last month. Above all, the negotiators should focus immediately on the British budget contributions that will be required to make an orderly transition possible.

  6. Ksenia Sobchak Mladlen Antonov/Getty Images

    Is Vladimir Putin Losing His Grip?

    In recent decades, as President Vladimir Putin has entrenched his authority, Russia has seemed to be moving backward socially and economically. But while the Kremlin knows that it must reverse this trajectory, genuine reform would be incompatible with the kleptocratic character of Putin’s regime.

  7. Right-wing parties hold conference Thomas Lohnes/Getty Images

    Rage Against the Elites

    • With the advantage of hindsight, four recent books bring to bear diverse perspectives on the West’s current populist moment. 
    • Taken together, they help us to understand what that moment is and how it arrived, while reminding us that history is contingent, not inevitable

    Global Bookmark

    Distinguished thinkers review the world’s most important new books on politics, economics, and international affairs.

  8. Treasury Secretary Steven Mnuchin Bill Clark/Getty Images

    Don’t Bank on Bankruptcy for Banks

    As a part of their efforts to roll back the 2010 Dodd-Frank Act, congressional Republicans have approved a measure that would have courts, rather than regulators, oversee megabank bankruptcies. It is now up to the Trump administration to decide if it wants to set the stage for a repeat of the Lehman Brothers collapse in 2008.