Advice given by international consultants McKinsey & Company to
governments of forested nations could harm a scheme to stem destruction
of the rainforest, known as REDD, according to a new report released Thursday by the Rainforest Foundation UK.
McKinsey has provided services to Brazil, Indonesia, Democratic Republic of Congo (DRC) and Guyana in the context of a global plan to reduce emissions from deforestation and forest degradation (REDD) which may be agreed at the United Nations climate change summit starting today in Cancun, Mexico.
The report, "How McKinsey ‘cost curves’ are distorting REDD," says that McKinsey’s advice is based on flawed analysis that hides key costs of programs to reduce deforestation and could lead to greater destruction of natural forests by logging and agribusinesses, further marginalisation of millions of poor farmers and the weakening environmental regulations.
Although the proposed REDD programs are not yet operational, McKinsey’s analysis has been included wholesale into national plans to reduce deforestation in a number of countries, which have been approved for initial financial support by World Bank and UN agencies.
The report says that McKinsey’s model, called the ‘cost-curve’, may substantially understate the real costs of programs to reduce tropical deforestation, particularly projects targeting subsistence or ‘slash-and-burn’ farmers. This could lead to shoestring programs that have a devastating impact on hundreds of millions of people who depend on the forest for their daily needs.
"McKinsey claims that huge carbon reductions can be made at minimal cost by targeting ‘slash and burn’ farming, but the sums do not add up. Probably the only way that McKinsey’s supposed bargain-basement carbon savings from programs to reduce deforestation could be achieved is by evicting millions of people from their subsistence farms," Simon Counsell, Executive Director of Rainforest Foundation UK, said.
The report also shows that McKinsey suggested weakening existing environmental legislation related to logging in Guyana, the heavily forested South American nation; and expanding industrial logging and palm oil plantations in the world’s second largest rainforest in the Congo Basin. Proposals included in a report with the Indonesian government could see wealthier forest users paid many times more than poorer communities for protecting an equal size of forest.
The McKinsey advice is based on a ‘carbon mitigation cost-curve’, a visual representation of the cost and potential of carbon reductions by different means, which has become influential in climate change discussions.
"McKinsey’s flawed analysis could be dangerous in the fight against climate change, as it makes it appear much cheaper and easier to tackle tropical deforestation than it would be in reality and it might lead us to postpone the real actions that need to be taken at home to prevent climate change. Priorities for reducing carbon emissions need to be based on the real costs of the different options, rather than on junk economic theory," Counsell said.
The report’s key recommendation is that McKinsey’s cost-curve, in its current form, should be abandoned as a tool for designing national plans to reduce deforestation, which should be created through genuine consultation with all stakeholders, especially communities dependent on the forest, and analysis of the real costs of avoiding deforestation.
The full report is available at the link below.
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