Two funds were announced yesterday at the U.N. climate change conference in Bali to combat global warming and its effects.
The World Bank announced plans for a US$300 million fund to prevent carbon emissions from deforestation, and a new UN fund was drafted to assist poor countries in adapting to climate change threats including rising sea levels and droughts.
The World Bank fund will attempt to create a financing mechanism to make forest management a trading commodity. The idea is to allow rich nations to receive carbon credits by funding forest preservation efforts in developing nations like Brazil, Indonesia and the Democratic Republic of Congo.
"If we don’t focus on retaining the world’s remaining tropical forests, we drastically narrow the options for reducing greenhouse gas emissions," World Bank President Robert Zoellick said at fund’s launch.
He continued, "Deforestation and changes in land use are the second leading cause of global warming."
He added that the fund is just the beginning of the solution and quoted economist Nicholas Stern’s estimate that more than US$5 billion a year was needed to halt global deforestation.
The World Bank project is actually a combination of two separate funds. The first is a US$100 million "readiness" fund to provide grants aimed at preparing about 20 countries for participation in a future forest-protection plan that could be included in a future climate change treaty. This supports the measure being called Reducing Emissions from Deforestation and Degradation (REDD).
Funding will pay for surveys of forests, monitoring systems and improved management.
The second part of the World Bank fund is a US$200 million "carbon finance mechanism" allowing developing countries to create pilot programs that will earn credits for reducing deforestation. These credits will be given to countries or entities that have invested in the programs.
US$160 million has already been pledged to the funds from seven developed nations, according to the World Bank.
The funds have drawn criticism from some environmental and indigenous groups who fear the carbon value of these forests might marginalize their inhabitants.
"While the facility can be a good thing, we are very apprehensive on how this will work because of our negative historical and present experiences with similar initiatives," said Victoria Tauli-Corpuz, Chair of the United Nations’ Permanent Forum on Indigenous Issues.
Tauli-Corpuz said the forests being considered are home to 160 million people who should be involved as equal players in the design and management of any projects created.
The U.N. Adaptation Fund will become operational in 2008, though it currently contains a mere US$36 million. However, U.N. projections say funding could rise to as much as US$1-$5 billion a year by 2030 if investment in green technology surges in developing nations.
The Adaptation Fund is raised from a 2% levy on the U.N.’s Clean Development Mechanism, under which rich nations are given credits for investing in clean energy projects in developing nations.
This fund will need major financing in order to address the many challenges of global warming. For instance, building protective barriers around 50 of the coral islands making up the Malidives to protect against rising sea levels could cost and estimated US$1.5 billion, and this is just one of the many adaptations needed.
Critics are concerned that the fund, like others in the past will not receive the money needed. "It will cost US$50 billion a year for all developing countries to adapt to climate change," said Kate Raworth of British aid agency Oxfam.
She said too much talk in Bali had been about the management of the fund and not about the funding levels needed.
She added that aid programs in the past have fallen short of their goals, noting that a separate US$67 million fund to help the poorest nations "is the same amount as people in the United States spend on suntan lotion in a month."
The fund must still be approved by environmental ministers before the end of the Bali climate conference.
Responsibility for the fund will be split between the Global Environment Facility and the World Bank, and will have a 16-member board with heavy representation from developing nations.
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