The Ticos, Their Trees, And Climate Change

In 1949, Costa Rica abolished its armed forces, thereby becoming an exception to the typical mid-century Latin American nation. A small country, its economy depended largely on coffee and bananas. Due to its isolation and the scarcity of native American slave labor during the Spanish colonization, Costa Rica avoided the oligarchical latifundia system pervasive throughout much of the rest of Latin America. Rather, the private lands of the country were largely held in relatively small parcels by educated and hard-working Ticos (as the Costa Ricans call themselves).

Notwithstanding the many coffee and banana plantations, 75 percent of Costa Rica was covered in forests in 1940. The forests range from tropical jungles along the Caribbean coast to the cloud forests of the central volcanic cordillera and are the home of some of the most diverse ecosystems on the planet.

By 1987, however, due to intensive agriculture and an exploding population, the forest cover had dropped to 21 percent of the territory of the country. Lacking significant mineral resources, and facing stiff competition from large banana and coffee cartels in South America, Costa Rican policymakers began to focus on preservation and restoration of ecosystems as a means to bring in tourist dollars. The policies have been spectacularly successful, with forest cover now back to around 50 percent and one hectare in four protected in a national park or forest reserve. The goals of the forest policy are fourfold: to protect and enhance biodiversity, to conserve water resources, to assure scenic and aesthetic values, and to sequester carbon.

In the late 1990’s, the government began a program to subsidize private landowners who maintain forest cover on their property. This program to incentivize avoided deforestation is funded through a gasoline tax and through grants from other countries, most notably Germany and the World Bank. Nonetheless, there are not sufficient funds to expand the program throughout the entire country.

Using Tico creativity and tenacity, the Costa Rican government is negotiating arrangements with NGOs under which the carbon sequestered by avoided deforestation on private lands can be quantified and form the basis for credits to be sold in the international carbon markets. The proceeds from the sales will go into the fund for the avoided deforestation subsidies. The government has a well-developed program for inspection and monitoring the subsidized forest cover. In particular, the relatively small size of individual landholdings and the effectiveness of the monitoring and inspection minimizes “leakage” of the sequestered carbon (i.e., the landowner simply cutting down trees somewhere else). Satellite imagery is also used to assure that the forest cover remains in place.

Although avoided deforestation credits were explicitly left out of the Kyoto Protocol trading scheme, there is an increasing recognition that avoided deforestation is a critical “wedge” in the suite of options to mitigate carbon emissions. After all, approximately 20 percent of the manmade carbon contribution to the atmosphere each year is the result of deforestation. Last fall, the Work Bank published a lengthy report linking avoided deforestation to amelioration of poverty, and suggesting that using avoided deforestation as the basis for carbon credits presents a significant opportunity to combat carbon emissions and alleviate economic deprivation. In addition, Costa Rica, along with a number of other tropical countries, have banded together to seek solutions to deforestation, including participating in the carbon markets.

Costa Rica’s avoided deforestation incentive program is but one of a growing number of innovative approaches to greenhouse gas mitigation which have effectively outgrown the strictures of the Kyoto Protocol. The post-Kyoto international climate change regime will be a much more effective instrument – less bluster and more substance – if these innovative programs are rolled into the options available to deal with manmade contribution to the reservoir of greenhouse gases in the atmosphere.

There are many opportunities for corporations to participate in the development of these innovative approaches, including funding of carbon mitigation, research and development, partnering with governments and NGOs, and participating directly in the formulation of national and state climate change policies. Creative solutions are out there, waiting to be implemented. Just look at the Ticos and their trees.

(Contributed by Jim Holtkamp, Environmental Compliance Attorney in the Salt Lake City Office)