Some Latin American Nations Rally Against Greenhouse Gas Trading Plan

A small coalition of Latin American nations against a greenhouse gas trading plan might threaten a last-minute agreement the United Nations Climate Conference to protect the world's forests. They say the financing mechanism for the accord is unfair to indigenous communities.

A binding agreement to mitigate climate change through forest conservation might be in jeopardy as international talks wrap up in Cancun, Mexico. Prolonging deliberations are concerns about how this plan will be financed, with Bolivia spearheading a campaign to reject a carbon market to fund forest protection.

A U.N.-backed plan, Reducing Emissions from Deforestation and Forest Degradation, or REDD, would enable developed nations to offset their own emissions and receive carbon credits to trade, paying developing countries to conserve their forests. REDD projects might include, for example, moratoria on deforestation or sustainable exploitation of forests to help keep carbon dioxide in the atmosphere at lower levels.

Bolivian President Evo Morales addressed international delegations on Thursday.

Mr. Morales said any forest agreement must ensure the human, civil, economic and political rights of indigenous peoples.

Bolivia along with Cuba, Ecuador, Nicaragua and Venezuela say that funding REDD through a carbon-market would encourage land grabs. The coalition has criticized the idea of carbon markets, calling it a capitalist plan that benefits only the rich and powerful.

Janet Redman from the Washington-based Institute for Policy Studies supports the coalition against REDD, saying that carbon markets will not improve local development.

"It doesn't deliver; it's not additional," said Redman. "It's been used for some incredibly harmful projects for communities who live in the local area. So to put the last remaining forests on the market seems to me an incredibly irresponsible thing to do."

Experts from environmental bodies at the United Nations and the World Bank say that rather than debating how to finance the plan, what is needed is action an array of financing mechanisms - including government funding, philanthropy and a carbon market.

Pavan Sukhdev, head of the U.N. Green Economy Initiative, says that a carbon market is essential to the success of REDD. He says that the market has failed to deliver and reach a steady carbon price because emissions caps in cap-and-trade plans are too lenient.

"Cap-and-trade is the approach we've adopted," said Sukhdev. "And if caps are too lenient, we can trade away 'till kingdom come, but you will not get the right price because you've created too much supply. It's a bit like a central bank flooding the market with too much money. You won't get the right interest rates."

In five years of deliberations over REDD, some entities have moved ahead with their own plans, saying that forests cannot wait for politics.

The U.S. state of California, for example, recently signed a memorandum of understanding with the Mexican state of Chiapas and the Brazilian state of Acre to develop links between California's cap-and-trade program and the two Latin American REDD projects.

Daniel Nepstad, a forest ecologist from the Amazon Environmental Research Institute and an architect of REDD, says the best innovations are happening on this state-to-state level, but that private investment is desperately needed to fill the gap.

"Public funding is very difficult," said Nepstad. "It comes out through a political process; it comes out unevenly. And the efficiency and volume of private investment will be necessary to achieve the full potential of REDD. And right now, there aren't those mechanisms."

Analysts say that an agreement on REDD might side step the details of financing through broad language, so that a general framework is set leaving the issue of a financing mechanism to be decided at a later date.