UK prince calls for agency to help forests

By Lisa Murray in Jakarta and Fiona Harvey in London
Published: November 3 2008 17:56

Britain’s Prince Charles has called for the establishment of an international agency to issue long-term environmental bonds to provide emergency funding to rainforest nations and protect the world’s endangered forests.
During a visit to Indonesia on Monday, the Prince of Wales said the proceeds of such a fund would be used to reduce developing nations’ reliance on industries such as palm oil and logging, which lead to the destruction of forests.

Users in developed economies, he said in a speech in Jakarta, should be buying the bonds to pay developing countries for using their forests “in the same way as [consumers] pay for our water, gas and electricity”.
Prince Charles said long-term environmental bonds could be an emergency fund-raising tool. He said the bonds would be guaranteed by developed countries to make them attractive to investors.
He claimed to have already lined up some interested buyers, having worked closely with the P8, a group of 10 leading global pension funds which account for more than US$2,000bn (€1,573bn, £1,260bn) under management.
“I know that there is an appetite for quality, long-term investments that would help combat climate change,” Prince Charles told an audience including Indonesia’s president, Susilo Bambang Yudhoyono.
But, it is unclear whether such bonds would be attractive to developed countries in the grip of the financial crisis. Past attempts to reach a deal by which rich countries pay for poor countries to preserve their forests have floundered.
The issue is complicated by the difficulty of ensuring that forests are protected and not cut down illegally as well as the fact that preserving one section of forest from loggers can merely lead them to move to another area. Countries have mooted awarding carbon credits to forests that could be traded in the world’s emissions trading schemes, but traders are concerned that such credits would flood the market, bringing the price of all credits drastically low.
Countries are also currently negotiating the inclusion of a Reducing Emissions from Deforestation and Degradation (REDD) scheme in the successor to the Kyoto protocol, allowing those with high rates of deforestation to sell carbon credits if they stop, or reduce, land clearing, which releases huge amounts of carbon dioxide into the atmosphere.
But such a scheme, even if it were adopted, would still be years away from being able to provide the incentive for countries to stop clearing land for profitable palm oil plantations.
Copyright The Financial Times Limited 2008