Guyana is a REDD+ best-case scenario
Among the earliest proponents of REDD+ for High Forest Cover/Low Deforestation (HFLD) countries, Guyana and Norway became the world’s first countries to sign a bilateral, national scale, payment-for-performance, avoided deforestation agreement in 2009. More recent events - highlighting the marginal profitability of even well-financed and experienced timber concessionaires - provide the opportunity for Guyana to use REDD+ to pivot further toward a green forest economy, based on replacing low-return log exports with forest carbon REDD+ ecosystem service payments. By capitalizing on its strategic advantages, conservation and REDD+ can generate significantly more revenue for Guyana than wholesale log exports by foreign timber concessionaires.
A country of less than 750,000 people, Guyana’s vast forest estate covers 18.5 million hectares (an area the size of the US state of Washington) of which 7.4 million hectares were under timber concession agreements at this time last year. The changing fortune of fully one third of those concessions in 2016 provides the opportunity to demonstrate a clear financial advantage of REDD+ over log exports and advance REDD+ as a pillar of Guyana’s green development, more than replacing timber’s historic contribution to GDP.
Guyana’s high operating costs – little existing infrastructure; widely spaced and small girth commercial trees; dense, expensive to process and relatively low-value timber – result in marginal profitability that has kept investments in the timber sector to a minimum. One indication of the marginal profitability of logging is that most timber companies harvest at a fraction of their allowable rates. Over its 25 years of operations in Guyana, Barama Company Limited produced less than 20% of its allowable cut.
Even allowing for harvesting, active timber concessions in Guyana exhibit significantly higher deforestation rates than areas without timber concessions, because roads built of necessity by timber operators provide free access to goldminers who can and do ignore forestry regulations. Furthermore, in Guyana, all timber concessions are overlain with mining concessions, and mining rights take precedence.
In 2016, 2.3 million hectares of timber concessions were returned to the State. During the course of the year, the Guyana Forestry Commission (GFC) moved in stages to repossess 700,000 hectares from Baishanlin International Forest Development Inc. for failure to pay even the few GFC fees from which they were not exempted. Then in October, Barama, the country’s biggest forest operator, announced it would not seek to extend its lease on 1.6 million hectares of concessions after 25 years of operations in Guyana, citing lack of profitability.
For the right to exploit 1.6 million hectares of forests, Barama had paid the GFC roughly US$1.25 million annually in export duties on log and wood products valued at US$10 million, having been granted exemptions on all other duties, taxes, and fees in their original direct foreign investment deal. The indication by the Government of Guyana that a renewal of the concessions would be subject to the same fees and taxes paid by the local timber industry resulted in Barama walking away from all their concessions.
On the other side of the equation, the competitive advantage of REDD+ benefits over timber revenues in Guyana are clear and measurable. The high carbon content of Guyana’s forests – more than three times the carbon density of rainforests in the Peruvian Amazon – mean Guyana’s forests are rich in REDD+ benefits, including carbon sequestration.
“The combination of Guyana’s marginally profitable timber industry and forests with very high carbon content – averaging 280 tons of carbon per hectare – make Guyana the ideal location for REDD+,” says Chuck Hutchinson of WWF-Guyana. Another distinct REDD+ advantage is Guyana’s advanced readiness. The Measurement, Reporting and Verification System (MRVS) developed under the Guyana Norway Agreement (GNA) provides accurate and verifiable nation-wide annual reporting on forest cover, deforestation, and forest degradation.
Although the original GNA focused on avoided deforestation and did not monetize forest degradation emissions, we believe that a renegotiated agreement could also provide incentives for verifiable emissions reductions. Based on the data from Guyana’s reference level submission to the UNFCCC and Barama’s production figures, 400,000 tons of CO2 equivalent of verifiable emissions from forest degradation would be avoided if Barama’s former timber concessions were converted to REDD+ concessions, according to Hutchinson.
At US$5/ton, that emissions reduction would be worth US$2.0 million annually, a 60% increase in revenue over the total of Barama payments. Including the Baishanlin concessions would add an additional million.
Although Baishanlin used almost entirely Chinese labor in their concessions, they also bought logs from community and small-scale loggers; Barama employed some 500 Guyanese directly in their harvesting operations and bought logs from local suppliers. If Guyana is to successfully switch to a REDD+ based monetization of forests over log exports, the loss of jobs and opportunities for small scale operators must be addressed. The key to making REDD+ a viable alternative is to develop effective means to use the extra revenues REDD+ generates to foster community benefits and rural development.
One opportunity is to redeploy tree spotters and fellers in reforestation. Over 90% of deforestation in Guyana is caused by gold mining. These lands are generally left in a severely degraded state, stripped of topsoil and organic material of any kind, and, most often, with rivers and streams converted to a series of flooded pits. Without interventions, these mined out areas take decades, if not longer, to return to carbon-sequestering forests.
To date there have been only limited efforts to reforest mined out areas. Redeploying timber industry workers in reforestation efforts could pay Guyana doubly under REDD+ – by reducing forest degradation emissions from logging and by reversing deforestation emissions from mining.
The unique characteristics of Guyana’s forests – high carbon content and low timber value - make Guyana the ideal REDD+ model. The GNA provides the immediate opportunity to replace a logging industry that has long struggled to be profitable, with a source of revenue that provides the resources and the impetus to pivot to a new green and truly sustainable future.