There is no doubt that deforestation is a grave problem in Pakistan and no solution has been in sight. But the view is changing, and a UK-based firm has taken the lead in a bid to protect and enhance the forest areas in parts of the country by utilising the internationally accepted currency of carbon credits.
The concept of carbon credits is not a new one. It was formalised into the Kyoto Protocol which introduced recommendations to fight global warming by the United Nations.
The carbon credits system engages private sector investments to encourage community-based efforts in the conservation of forests, adaptation to climate change and, eventually, reduction in environmental degradation.
How will it work?
Carbon credits are certificates that are awarded on the basis of reducing greenhouse gases. Once awarded, they can be traded like stocks or bonds and a financial market for them has emerged over time.
“These certificates can be sold to commercial firms like airlines, oil and gas companies and others who can use the certificates to show their investment in corporate social responsibility (CSR),” explained Syed Mobusher Latif, CFO of Merlin’s Wood.
“Besides, the communities themselves can also trade these certificates as bonds in stock exchanges.”
“The way it will work is that carbon credits will be monitored for at least five years during which satellite pictures will be taken of specific areas and the gain or loss in forest cover estimated,” said Surriekha Khan, director Merlin’s Wood. “After five years, the satellite images will prove if the forests have improved or not.”
Like any sector of the economy, the system of carbon credits too has a complete set of stakeholders. Marketing firms like Merlin’s Wood invite investors to invest in specific projects and third party auditors verify the success of the projects and issue certificates.
The main focus of Merlin’s Wood in generating carbon credits through their venture in Pakistan is through reforestation. These aims match another UN initiative titled REDD (Reducing Emissions from Deforestation and Degradation) which is designed to financially compensate countries that manage to successfully reduce deforestation and emissions of greenhouse gases.
In the first phase, Merlin’s Wood has signed a MOU with the Khyber Pakhtunkhwa government where rampant degradation of forests is estimated to be occurring at the rate of three per cent annually. It has also signed a MOU with the government of Azad Jammu and Kashmir.
Not only do AJK and KP have some of our most significant forests, they are also facing deforestation at a very high rate even though these are traditionally considered safe havens for trees. But over time and with rising pressures of population, much of the forests are in danger of being cut up and used for timber and firewood.
Currently, Pakistan has one of the highest rates of deforestation in the world. The recommended forest cover in a country is 25 per cent but in Pakistan the covered area is less than five per cent.
The striking part, Faisal Raza, a journalist, explained, is that, “Unlike many parts of the world, geographically speaking, Pakistan has had a surplus of forest cover for ages and it has only turned into a deficit recently. In comparison, the world has been in deficit even as far back as the last century.”
Mr Raza, who participated in the UN climate change conference 2011 at Durban, South Africa, was of the opinion that such high rate of deforestation is a result of ignorance and mindsets. “A majority of people still feel that forests and other land and water resources are never ending the gifts of nature,” said Raza.
“Most of the forestation and conservation projects here have never materialised, whereas China has been able to complete more than 1,200 carbon credit projects,” stated Mr Raza, adding now Chinese communities were cashing in on these credits.
So what will Merlin Wood do?
Merlin Wood is planning to develop REDD+ projects over 300,000 hectares of forest and rangeland area in the districts of Battagram, Swat and Mansehra.
Merlin’s Wood has invited Terra Global Capital, a US-based venture capital firm, to invest in the projects. In a recent visit to the country, Leslie L. Durschinger, the CEO of Terra Global, reiterated her commitment to raising finances for various REDD+ projects in KP and AJK.
But she also emphasised that the most serious threats to forestation projects in the country were the lack of political will and absence of adequate community support.
“The other key risks with forest projects are natural disasters,” she said in a meeting with local communities and added that keeping in view the massive environmental degradation in the country, Pakistan cannot afford to fail in the carbon credit initiatives.
Durschinger was emphatic that unless all stakeholders come together to ensure that investors’ money has the intended impact, others might be discouraged from coming to Pakistan with environmentally friendly initiatives and this will become another blow for the country.