By Chris Stephenson, Consultant/Adviser, Carbon Markets

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With a renewed focus on nature-based activities and credits, what might this mean for farmers and communities at the heart of the climate crisis?

I wanted to begin by highlighting a few key numbers relevant to today’s topic. Across the developing world alone are some 500 million smallholder farms, 73 per cent of which are under 1ha in size. And around 70% of the world’s food is produced by rural communities farming small plots of land. By 2030, demand for food is expected to increase by 35%, water by 40% and energy by 50%.[1] [2]

As these numbers illustrate, the herculean efforts required to tackle climate change and increase food production can only be achieved by engaging and directly involving these same farmer communities. Both from a climate justice perspective, where the impacts are typically felt most severely by vulnerable and marginalised communities, and from a sustainability perspective, where the potential for carbon sequestration in soils and biomass is significant.

 

Citrus Swallowtail (Papilio Demodocus). Credit: Chris Stephenson

 

Meanwhile, civil society, governmental and corporate actors are sounding the alarm, ever louder, that time is running out to tackle the climate emergency. Yet, as delegates gear up for the UN Climate Change Conference (COP26) in Glasgow this November, one of the most important aspects of the historic Paris Agreement (PA) – signed in late 2016, and ratified by 190 of its 195 signatories – is not yet operational.

Added to this have been emerging criticisms of the UK in its role as host of COP26. These have centred on it lacking a “whole government approach”, in light of recent coal mine approvals, airport expansion plans and a reduction in the aid budget from 0.7 to 0.5% of GDP.

For those keen to use markets to bring efficiencies, transparency and to channel resources to low abatement cost opportunities, Article 6 of the PA outlines the framework for voluntary cooperation between Parties. And it is Article 6.4, in particular, that opens up the possibility for trading mitigation outcomes (tCO₂e, or perhaps RECs for example) between Parties. While piloting has begun in earnest and will inform the UN negotiations, several hurdles remain.

The key to a successful COP26, and wider efforts to deliver on the UN’s Global Goals, will be to complete the Paris Rulebook. This means agreeing on the modalities and accounting rules, and the process to increase ambition in Nationally Determined Contributions (NDC) to the PA. Additional priorities speak to the ongoing transparency and environmental integrity concerns of stakeholders.

Whether one works on emerging compliance schemes, or voluntary carbon market (VCM) projects, this common set of rules is very much needed. As such, collaborative approaches involving corporates and the finance industry can definitely improve the management of risk and thus help scale (as some have suggested by 15 or 160 times) the voluntary market. This would deliver a material benefit to the climate in the Giga-, rather than the Mega-tonnes. Given the potential for innovation and the track record in deploying capital, such developments are critical in meeting the scale of the challenge.

Similarly, efforts to link diverse Standards, registries, systems and reporting frameworks will also be required going forward, with a few efforts already at the piloting stage. Other notable announcements have focused on the development of standardised and benchmark contracts, promotion of secondary trading to bring liquidity, and efforts to promote greater price transparency (e.g. through spot and futures exchanges) in addition to the more opaque, bilateral transactions common in the past.

What’s clear is that the flurry [3] of recent climate action, pledges and carbon market activity has been palpable. And none more so than with Nature-based Solutions (NbS) – an area where Plan Vivo has been actively working for 25 years. As various market participants forge ahead with Net Zero pledges – many employing NbS – several working groups and consultations have taken place to help understand and navigate this somewhat confusing landscape.

 

A kudu crossing the river in Liwonde National Park, Malawi. Credit: Chris Stephenson

 

Through 2020, Plan Vivo participated in an EDF-led Steering Group, comprised of voluntary standards, civil society, private sector and observer organisations. It was tasked with assessing the main challenges facing the VCM as it begins to integrate with and sit alongside, the various (expected) PA mechanisms.

It’s true that different perspectives remain – particularly regarding the nature of claims and the merits of corresponding adjustments for purely voluntary transactions. In any case, in December this concluded with the publication of a set of recommendations and areas for future work. The simple fact of bringing different stakeholders together around a shared understanding of the core underlying issues is a success in itself.  Additional assessments of credit “quality” have been published recently by the SEI / GHG Management Institute, while EDF, WWF and Oeko Institute are reportedly developing their own ‘rating system’ to guide corporate purchasing decisions.

While not as close to the flurry of excitement leading up to the Copenhagen Summit of 2009 (COP15), I did witness first-hand the relative slump and spate of divestments that resulted from the widespread disappointment in not reaching an agreement on that occasion.

This time around, however, I see renewed vigour and momentum from all sides. Resolving the aforementioned loose ends is therefore critical for the global community if we want to realistically limit temperature increases “to well below 2 °C above pre-industrial levels” and support communities on the front line of the climate emergency.

These targets are firmly rooted in the latest science, with coordinated efforts to develop realistic and achievable trajectories for key sectors and industries (see Science-based Targets Initiative). Nevertheless, while global ambition is assumed to increase over time, let’s not forget that these are aspirational targets – the PA lacks a binding emissions cap, as was the case during the Kyoto era, with its financial penalties for non-compliance.

 

Figure 1. Timeline of the Evolution of the Voluntary Carbon Markets developed by a working group
of the International Carbon Reduction and Offset Alliance (ICROA). See graphic here 
Source: ICROA, 2020

 

Figure 2. 2030 Emission Gaps as of September 2020. According to Climate Action Tracker (2020), a substantial gap remains between "the levels of emissions in 2025 and 2030 projected in the Nationally determined contributions (NDCs) submitted to the UNFCCC and the lower levels that would be consistent with the temperature limit of the Paris Agreement". 
Source: Climate Action Tracker, 2020

  

 

Various sources draw attention to the sizeable emissions gap (see graphic above) projected to be in the tens of GtCO₂ annually by 2030, and a current trajectory closer to 3 or 4 degrees of warming by the end of the century.

So while some focus on the questionable track record in delivering on climate pledges, governments and multilateral organisations are simultaneously having to deal with budget cuts and the ramifications of the global pandemic. These impacts will be felt, in many as yet unknown ways, by the same rural vulnerable communities impacted by a rapidly changing climate.

COP26 President Alok Sharma has sought to assuage such concerns, raised by developing countries and SIDS, and captured in the slogan “1.5 to stay alive”. In a recent speech, he acknowledged issues ranging from accessible and affordable finance to the need to address “loss and damage”. On the subject of international financial support, he added that “honouring our commitment to raising $100billion a year [is] absolutely essential." Only time will tell if donors step up to the plate.

 

Where the rubber hits the road

A few years ago, through my work at the Plan Vivo Foundation, I was able to visit a diverse range of rural contexts across the developing world. In a region in Chiapas, Mexico I recall being struck by the news that the planting season had skipped from March to August, causing significant disruption to the local economy.

 

Chris and field technicians doing fieldwork in Northern Malawi. Credit: Chris Stephenson

 

Elsewhere, I have seen how communities have organised to reverse unsustainable farming and grazing practices, mangrove and tree cutting activities, through integrated management and formalising user rights. I’ve seen how teams of local youth volunteers have been trained to patrol and manage fire risks. In many contexts, farmers have for the first time drawn up participatory land use maps (from where Plan Vivo derives its name) detailing how best to preserve, access, and sustainably extract the natural resources they rely on and share with others.

What’s more, I’ve been heartened by some incredible leadership journeys. Empowered individuals realising their entrepreneurial spirit through establishing grassroots organisations, securing seed financing, and organising communities around well-defined environmental goals. I’ve seen such schemes gain traction, as trust is built with neighbouring communities and outside parties, and conflicts dealt with through clear, structured remediation processes. Exploring these inspirational, multi-generational stories has been the most gratifying element of my work experience in this space.

That said, juxtaposed with the UN-led process mentioned above, is the remark often heard on the ground that it’s folly to wait for governments and distant international bodies to reimagine one’s local environment. How can they protect against commodity price swings, local climate change, poachers, fire or human migration patterns?

And that’s precisely why Plan Vivo has always stood for local participation and empowerment as a core focus of its Standard, since its inception. This aims to promote the recognition and strengthening of land and carbon rights while preserving traditional knowledge. Of course, this is complemented by creating spaces and knowledge exchanges to drive innovation, capacity-building and greater cooperation amongst diverse sets of stakeholders.

Through initiatives that value equitable benefit-sharing arrangements, I’ve seen how direct, long-term investments in livelihood development initiatives can really bear fruit. Shifting the time horizon for financial support from 3-4 years, common in international development contexts, to 15-20+ years. This is another attribute that functions to overcome suspicions and trust issues. Having tracked financial flows in this way, ensuring funds reach participating farmers equitably, it is surprising how few carbon schemes today can and do report on these numbers.

I would argue that a new focus on transparency should not limit itself to technical carbon and accounting concerns, corresponding adjustments and the precise nature of private sector claims, but should rather involve greater efforts to ensure meaningful flows of finance reach the often overlooked participants on the ground.

 

Reflections closer to home

This year, grounded by the pandemic like many others, I was attracted by the lure of a horticultural adventure. As such, I clumsily attempted to grow Peruvian maize (14ft tall, yet alas no cobs), and brightly-coloured heirloom tomato varieties (some success, though many succumbed to late blight). As I emerged somewhat jaded from the worst year in 40 for British farmers, and battles with an armada of pests, critters, fungal diseases, and other impediments, it offered a timely reminder of the unpredictable power of Mother Nature and humanity’s heavy footprint.

 

Guinea fowl from Gorongosa, Mozambique. Credit: Chris Stephenson

 

Having spent time with anacondas, capybara, piranhas and aardvarks in Brazil’s Pantanal some twenty years prior, last year’s fires unleashed havoc on these wetlands, the Amazon region and important forests across Argentina, Bolivia, Brazil and Paraguay. I was similarly disheartened last week by reports of the continued worldwide destruction of our most precious primary forests and the wealth of communities, fauna and flora they support.

As one source illustrates, the unparalleled loss of ecosystems and biodiversity is hard to comprehend: “the population sizes of mammals, birds, fish, amphibians and reptiles have seen an alarming average drop of 68% since 1970.”[4]

Human development, erratic rainfall patterns and extreme temperatures will increasingly shape the fortunes of resource-dependent communities and smallholder farmers worldwide. As such it’s imperative to bolster and prioritise these vital custodians, stewards, farmers, producers and communities. These actors have the knowledge and agency to deliver a suite of local and global benefits as the world’s institutions ramp up their programmes and frameworks for climate action.

In sum, we should not succumb to a race to package for markets that which cannot be commoditised, and that which may suffer from doing so.  While efforts to scale climate action and markets are much needed and very welcome, there are aspects of NbS initiatives that don’t lend themselves well to a commoditised, finance sector-led market, focused primarily on price and standardisation.

Additional efforts can and should focus on how to safeguard, differentiate and value in the market a much wider suite of non-carbon benefits (e.g. sustainable livelihoods, biodiversity conservation) that motivate and incentivise participants and lead to long-term success on the ground. While making a meaningful dent in the emission gap is vital, let’s not forget the complexity of living systems and remember that a tonne of carbon is in reality a lot more than just that.

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Notes

[1] http://www.fao.org/3/i2953e/i2953e.pdf

[2] https://www.undp.org/content/undp/en/home/blog/2017/2/15/Rural-communities-a-hotspot-for-sustainable-development-.html

[3] A somewhat fitting definition is offered up by the dictionary - Flurry: flur·​ry | \ ˈflər-ē - a small swirling mass of something, especially snow or leaves, moved by sudden gusts of wind.

[4] https://livingplanet.panda.org/en-gb/