What the heck is a carbon right?

CIFOR scientist Ashwin Ravikumar explores the issue of carbon rights - the question of who pays, and who gets compensated for the climate change mitigation services provided by stored carbon.

It’s tough to wrap your head around the concept of owning something like carbon, or having “carbon rights.”

Unlike resources such as water, it’s not clear what direct value carbon has.

You can’t drink it or eat it. You wouldn’t sell it directly on a market as a physical commodity.

Instead, carbon sequestered from the atmosphere by plants and stored in biomass has value because it provides humanity with at least one key service: mitigation of damaging climate change.

In other words, humanity should be willing to pay for the service of climate change mitigation provided by carbon stored in trees and other biomass.

If the international community decides that it is indeed willing to pay for this service – through carbon taxes, mandatory cap-and-trade carbon markets, or some other mechanism – to whom would that money be owed and under what circumstances?

This is the essence of the carbon rights question.

Your land, your carbon?

If the international community decides that it is indeed willing to pay for this service – through carbon taxes, mandatory cap-and-trade carbon markets, or some other mechanism – to whom would that money be owed and under what circumstances?

Even before international carbon markets were seen as mechanisms to support forest conservation, there were precedents for how to deal with rights to land-linked resources.

Across the tropics, forests are often owned by governments. Rather than allowing private timber firms, indigenous communities, and other would-be land users to own forests outright, governments have favored concession systems where only specific use and management rights are allocated.

Just as fully owning forested land has not been necessary for companies to be entitled to harvest and sell timber in the past, it is not necessary to own the land in order to own the carbon rights.

The fact that we don’t need to tie carbon rights to land rights is liberating in one sense – it makes it so that governments can think creatively about who ought to benefit from schemes like Payment for Ecosystem Services (PES) and REDD+ and craft policies accordingly.

On the other hand, this opportunity comes with challenges, as there are so many conceivable ways to allocate carbon rights.

Governments could hold carbon rights themselves, and distribute funds from carbon credit sales however they deem best. Concessionaires can be given rights. Rights could be assigned to indigenous people with collective titles. Or private property titles could be used as the main criterion for assigning carbon rights. These strategies are not mutually exclusive, and mixed approaches are conceivable.

What’s happening already?

In our recent study, we looked at what’s happening in Brazil, Cameroon, Indonesia, Peru, and Vietnam. Since none of these countries have fully resolved the carbon rights issue, the debate is ongoing.

Of these countries, only Peru and Indonesia make explicit attempts to define carbon rights in national legislation.  In the other countries, carbon is instead tied implicitly to other rights, like natural resources including forestry resources and environmental services.

In most cases, there are multiple laws that might be relevant for carbon rights, and therefore, ongoing debate.

These debates can be technical and legalistic.

In Brazil, for example, the Law on Management of Public Forests has language strongly suggesting that the State is the owner of carbon stored or sequestered in forests, even if there’s a company that has a management concession there.

However, indigenous communities are an exception to this, with constitutional guarantees to all land-based rights like carbon. There is debate about whether indigenous communities can negotiate sales of carbon credits autonomously or not.

In Peru, multiple relevant laws co-exist. A recent PES law states that not only land owners but concessionaires and even NGOs that administer land are entitled to benefit from carbon as an ecosystem service. At the same time, the government holds the rights to carbon in protected areas.

This leaves questions about what happens if an NGO has a REDD+ project in a protected area. It seems that assigning carbon rights in these cases will require negotiation between NGOs, the government, and possibly local communities.

Indonesia has legislation that explicitly discusses carbon rights in the context of REDD+, but there is debate about how the government will allocate funds, and the central questions about who will hold the rights to carbon remain unresolved.

Meanwhile, Vietnamese law has emphasized payments for forest environmental services like watershed protection without explicitly discussing carbon.

The way forward - do we really need carbon rights for conservation?

To the extent that REDD+ and other initiatives are to function by compensating actors for carbon sequestration and storage per se, then defining and allocating carbon rights is essential.

The challenges that the countries we analyzed are facing in clarifying carbon rights shows how legally complex these issues can be.

Importantly, fundamental concerns about justice and equity remain: how we define carbon rights reflects who we believe ought to benefit from REDD+.

Should the benefits of REDD+ payments flow to individuals who happen to own private property in forested areas?

Is it essential to direct funds directly to indigenous communities? Or should revenues from REDD+ go directly to governments to support public goods and services?

These are questions that go beyond the purview of science, and require decision-makers to think carefully about what values they and their constituents hold.

Understanding the complexity of carbon rights in the law is just a starting point for asking these fundamental questions.

Ashwin Ravikumar is a scientist at CIFOR. This article is republished from CIFOR’s Forest News blog.

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