Rainforest protection plans are rewarding industries that destroy forests

Posted by tracy.frauzel — 6 April 2011 at 4:57pm - Comments
Destruction in the Indonesian Rainforests
All rights reserved. Credit: © Greenpeace
Destruction in the Indonesian Rainforests

You’d be forgiven for remembering the UN Copenhagen climate talks (in December 2009) only for their epic failure to deliver a global agreement to reduce carbon emissions. But there was at least one important issue agreed which has the potential to have a significant impact on the climate - as well as protecting biodiversity.

Six rich nations - Australia, France, Japan, Norway, Britain and the US - agreed to pledge $3.5 billion to "slow, halt and eventually reverse" deforestation in poorer countries.

Since nearly one fifth of global carbon emissions come from deforestation and forest degradation, stopping rainforest destruction is one way to make a major reduction in global emissions - fast. Plus, the agreement also protects forests with the greatest biodiversity on the planet and the thousands of people who call these incredible ecosystems their home.

The majority of the world’s remaining rainforests are in developing countries, so it makes sense that the wealthiest nations help provide money to protect these unique environments. This rich six are also responsible for a greater share of the global emissions leading to climate change, and purchase a majority of the products responsible for rainforest destruction.

A year after the Copenhagen summit, during the UN climate talks in Cancun, Mexico (December 2010), a formal agreement and strategy to provide money for forests was created along with safeguards to protect the biodiversity and people living in them. Suddenly things didn’t seem so bad...

In order to be able to apply for money from this forest protection fund, rainforest countries have to submit a plan that details how this capital will be used to protect their forests and reduce emissions.

Now if I was creating a funding proposal, it would only make sense to solicit help from supposed experts who have the respect of the donors. So this is what several rainforest countries did. But this is also where the process started to go wrong.

Enter McKinsey

Several rainforest nations called in management consulting firm McKinsey. When donor governments started talking about money for forest protection a few years ago, McKinsey began to position itself as the consultants of choice on this issue.

With global network of offices, an accepted approach to carbon economics, and many of Fortune magazine’s ‘most admired’ companies on their client list, rainforest nations could feel confident that bringing in McKinsey would provide the credibility needed to get their funding proposals past the donor countries.

It has taken our experts working in both rainforest and donor countries several months to go through these plans for forest funding. They looked at plans provided by IndonesiaPapua New Guinea, Guyana and the Democratic Republic of Congo. They are all riddled with errors and inaccuracies, make unproven assumptions, and do not include the safeguards set out by nations at the Cancun climate talks.

They are all based on McKinsey advice.

Worst still, McKinsey’s advice does not address the real drivers of deforestation and would not lead to an end in forest destruction or degradation in any of the cases we investigated. These forest protection plans could actually fund increased deforestation and increased emissions. 

You can read all the details in our report Bad Influence: How McKinsey-inspired Plans Lead To Rainforest Destruction, plus the UCL Energy Institute report Marginal Abatement Cost Curves: A Call For Caution, commissioned by Greenpeace. (You can also see infographics from the report illustrating McKinsey's cost curve and more online here)

There is good news though. It’s not too late to turn this around as much of the money to implement these proposals has not yet been handed out.

McKinsey can make amends, salvage its reputation and help put rainforest countries on the right path to forest protection and emissions reduction by reviewing and revising their findings.

Please write to McKinsey and ask them to stop their work on forests until they have addressed all the findings in our report and start giving advice that leads to reduced deforestation and emissions.

In the meantime rainforest nations and donor countries should not commission or fund any further work from McKinsey until the company’s advice prioritises ending deforestation and preventing forest destruction in areas at risk.

McKinsey in the Democratic Republic of Congo (DRC)

McKinsey co-authored a forest funding study for the Congo and you don’t need to be an economist or management consultant to spot the major flaw in the study.

The DRC government wants to lift the moratorium on logging expansion. The McKinsey co-authored study allows for a significant increase in industrial logging and would see at least 10 million hectares given to logging companies. 

It seems so implausible that this level of expansion is included in a proposal to protect forests and reduce emissions that I had to check this recommendation several times. And that is what it says right here in the Democratic Republic of Congo’s REDD+ Potential report December 2009 (pdf), page 35 item 86.i.

McKinsey in Indonesia

Based on McKinsey’s advice, the Indonesian proposal allows for an increase in plantations claiming this would reduce overall emissions. The problem is that the proposal isn’t clear about whether these plantations could be planted in rainforest, increasing the release of carbon.

It also allows companies to be paid for some creative paperwork. If a company claims it is going to create a plantation in a currently forested area (whether they were or not), and then says they are going to move the creation of the plantation to a non-forested area, the company gets paid.

McKinsey in Guyana

McKinsey was given credit for an "independent fact based assessment" for the Guyanese forest funding proposal. The fact that McKinsey received £313,000 from the UK Department for International Development for work on Guyana suggests they played a much larger role in the proposal.

Guyana is asking to be paid to keep its rainforests standing based on the economic value of the forests if they were cleared for timber, agriculture and other development. The problem is that the proposal overestimates the future rate of clearance - 20 times the current rate of deforestation.

Because the future clearance rate is set unrealistically high, anything under this rate would look like a reduction while in real terms logging rates could actually increase.

McKinsey in Papua New Guinea

More of the same I’m afraid. The documents McKinsey worked on advocate the continuation of large-scale commercial logging and a moratorium on new logging concessions is rejected. There are no measures to address mining in Papua New Guinea, even though it is a major driver of deforestation.

You can download the full report here: Bad Influence Report - PDF (4.6 MB)

View infographics from the report illustrating McKinsey's cost curve and more here >>

And please do write to McKinsey and ask them to stop their work on forests now here >>

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