"The Forest for the Trees"

I just read “The Forest for the Trees” by William Powers and it is a good 101 on forest carbon. In a nutshell, saving forests isn’t currently integrated into market decision-making, but it could be through an appropriately designed carbon market. Here's a sample (it could clearly use more paragraph breaks - I will try to highlight to break it up).

The good news stemming from [the Coase] theorem is that it makes preventing deforestation a viable — and relatively affordable — complement to time and cost-intensive traditional climate change approaches, which seek to reduce emissions from economic activity, such as manufacturing. Tropical forests are currently being destroyed for very little profit. One hectare of rainforest cleared for ranchland crops or palm oil plantations yields as little as $25 or as much as $3,000, respectively. The latter is certainly a good sum, yet requires significant investment of materials, agriculture, and production to reap the rewards; but even the former can be a windfall amount for a poor Amazonian peasant, enough to feed a family for a month. On global markets, however, this resource is monumentally underpriced. On the European cap-and-trade carbon market (the European Trading System, or ETS), the right to emit one ton of carbon dioxide trades today at more than $20. With each hectare of intact rainforest storing around 500 tons of carbon dioxide, that means each hectare has a value of $10,000 as carbon dioxide storage unit, far more than the value of even the most productive tea or soy plantation. As a recent World Bank report put it, “farmers are destroying a $10,000 asset to create one worth $200.” To the peasant farmer or multinational agribusiness, of course, that makes perfect sense, because that $10,000 is still purely theoretical. It can’t put food on the table or deliver dividends to shareholders. The bad news, then, is that these markets—though fundamentally connected by the very fact that climate change is a global problem—remain unlinked.

I also liked this idea – seems like a happy medium on the challenging issue of how many offsets should be allowed:

Since 20 percent of global warming comes from deforestation, under an avoided deforestation system a maximum of 20 percent of any polluter’s emissions reductions toward an overall cap may come from paying to safeguard forest carbon.