Missing the forest for the trees

There is little argument from either side of the Tasmanian forestry debate that the state's forests represent its most valuable assets. The 30-year old dispute (or conflict, as some like to call it) centres, instead, on the conservation value of significant parts of this forest estate, and the way this should be managed.

Intensive harvesting practices, such as clearfelling in old-growth native forests, have been put under the spotlight by years of protests and activism by environmental organisations. The combined impact of these protests, the global financial crisis and a series of other market factors, have aggravated an already entrenched situation of stagnation for the Tasmanian forestry industry, and spurred new hope that at last peace could be brought in the Tasmanian forestry debate.

In an attempt to facilitate this process, a group of parties from the environmental movement and forestry industry, collectively representing less than 5 per cent of the Tasmanian population, have engaged in a 18 month-long "peace" process. This culminated last October in a Statement of Principles, later drafted in a Signatories Agreement reached through the independent facilitation of ACTU's Bill Kelty, and released June 22 this year.

The agreement, effectively a proposal for a transition process for the Tasmanian forestry industry, calls upon state and federal government to commit funding for the conservation of up to 570,000 Ha of forests identified as high-conservation value by the environmental movement signatories and a range of compensation mechanisms to help the forestry industry absorb the impact of reduced saw-log quotas on existing timber supply contracts.

After keeping it at arm's length for over one year, state and federal governments have seized upon this process with a Heads of Agreement, released on July 24 after two days of negotiations featuring both heads of government, Tasmania's minister for forestry and the federal minister for the environment.

The agreement, earmarking 430,000 Ha of forest to an interim reserve status (subject to verification) and providing up to $276 million of Commonwealth funds to the state government for immediate relief of forestry industry contractors, buyout of timber supply contracts and a range of regional development initiatives, is to be sealed through an intergovernmental agreement towards the end of this week.

But the arrival at this agreement poses an interesting question of due democratic process: can a 30-years-old conflict be resolved as a result of an agreement, negotiated largely within closed quarters, and sealed without parliamentary scrutiny, either at the state or federal level, or a broader public consultation process?

This question becomes all the more important as first the Statement of Principles, then the Signatories Agreement and now the Heads of Agreement, all ignore the opportunity to deliver an organic, long-lasting, and largely self-sustaining transition in the Tasmanian forestry industry presented by recent national and international developments in carbon markets.

Largely overlooked in compliance (like the Kyoto-protocol), the area of legal logging concessions (as opposed to afforestation and reforestation activities and reduced impact from illegal logging) is catered for by voluntary carbon markets, such as the Verified Carbon Standard (VCS), through an array of mechanisms, grouped under the program area of Improved Forest Management (IFM).

IFM mechanisms, designed to capture the greenhouse gas (GHG) mitigation benefits of a range of virtuous forest management practices (mostly as avoided GHG emissions from the preservation of existing forest carbon stocks), provide an incentive for implementation of these activities through access to carbon finance.

The IFM project activities covered range from the introduction of low-impact harvesting techniques (Reduced Impact Logging or RIL), multi-specie and multi-age selective harvesting (conversion of low productivity to high productivity forests or LtHP), and extended rotation age (ERA), all the way to the protection of forests that would be logged in the absence of carbon finance (conversion of logged to protected forests, LtPF).

The latter mechanism, after the GreenCollar IFM-LtPF general methodology (co-authored by this writer) was released following successful completion of the VCS double approval process in February this year, has seen issuance of the first ever LtPF verified carbon credits for a conservation project implemented in the Tasmanian midlands.

The benefits of IFM-type mechanisms are multi-fold, both in terms of conservation and forest industry transition outcomes.

Most importantly, incentives are provided on a project basis, and directly, to the holders of legal harvesting rights in recognition of these implementing (and maintaining as documented by strict monitoring and verification procedures) sustainable management practices or forgo harvesting rights through implementation of conservation projects.

Moreover, the development of landscape-level multi-project baselines, through the programmatic approach (first developed for small-scale CDM initiatives), allows to reduce enormously transaction costs (baseline development and documentation in project design documents) and deliver a mosaic of initiatives, where in addition to full protection of high-conservation value forested areas, buffer zones can be created whereby harvesting occurs according the principles of sustainable, reduced-impact forest management practices.

The ability to refer to landscape-level baselines also has the potential to deliver a self-sustaining virtuous cycle of project implementation initiatives, through aggregation and over-the-fence replication of IFM projects in neighboring properties.

Recent domestic developments, from the National Carbon Offsetting Scheme (NCOS) to the Carbon Farming Initiative (CFI), and the proposed $23/tCO2e carbon tax, can give these initiatives access to carbon finance through either national and international markets, in both cases largely based on private funding.

How does the proposed Tasmanian forest peace agreement affect all this?

The principle of additionality, the tenet of carbon market mechanisms, requires for the project activity to be a clear departure from business-as-usual practices, as documented in carefully designed and deeply scrutinised project baselines.

In other words, the economic incentive represented by access to carbon finance, has to be demonstrated by project proponents as being instrumental in shifting the economic decision-making towards the implementation of activities with greenhouse gas mitigation benefits and not an additional source of income for activities that can be expected to be anyway implemented under business as usual conditions (including through implementation of moratoriums or regulations).

This principle regulates the core objective of carbon market mechanisms, which is to help demonstrate, and through this establish as mainstream practices, initiatives which bring genuine and additional greenhouse gas mitigation benefits.

Funds obtained through carbon markets are to directly support project activities; the establishment and management of newly-protected areas; the compensation of holders of harvesting rights; and the re-tooling and re-training of actors in the forestry industry towards novel sustainable forest management practices.

All these provisions – albeit in the form of a one-off transfer of federal funds, limited to $276 million – are arguably included in the proposed peace agreement, but the only conservation outcome on the table is that of putting into interim informal reserve (eg. not permanent and still subject to verification) only up to 430,000 Ha of the original 570,000 Ha of high-conservation value forest identified by the environmental movement signatories to the agreement. This without any significant change in forest management practices (beyond a large-scale shift to plantations due to occur anyway under market forces) being enforced or promoted.

The same 430,000 Ha of state forest estate – even at current, relatively low carbon market prices – have the potential to yield a much larger flow of funds to the Tasmanian forestry industry, and the Tasmanian economy at large, that can be devoted to both conservation and re-tooling of the industry towards sustainability.

The actual carbon market value of this 430,000 Ha, and the whole of the Tasmanian forest estate, will soon be assessed as part of a Forest Carbon Opportunities Study, first announced last year as part of the 2010-11 State Budget, and finally published for tender by the Tasmanian Department of Premier and Cabinet this week.

Before pre-empting access of a significant fraction of the state forest estate to carbon market finance, and before committing $276 million of federal funds by signing an intergovernmental agreement, both state and federal governments would be wise to wait for the completion of this study and factor its outcomes into their decision-making on the best path forward for achieving long-lasting peace and prosperity for the Tasmanian forest sector.

Dr Attilio Pigneri is a technical director at GreenCollar Climate Solutions (GCS)