Plantation project makes neither scientific nor economic sense
It’s such a simple idea: plant a tree, let it grow, and each year it will capture more and more carbon from the atmosphere.
This is the logic behind a proposal by the investment company Arbaro Fund to the Green Climate Fund (GCF), an entity under the United Nations climate body that is designed to aid developing countries. But Arbaro’s plans are on a far larger scale: using $200 million from GCF and other (largely public) sources, the company aims to create 75,000 hectares (more than 185,000 acres) of commercial tree plantations across seven countries, including Paraguay, Ghana, and Uganda.
Arbaro claims that the plantations will capture 20 million tons of carbon. But this figure relies on several overly optimistic assumptions. A far more likely outcome, as evidenced by a great number of existing plantation projects in Latin America and Sub-Saharan Africa and a wealth of scientific literature, is that the plantations will sequester far less carbon. This is due to several factors: land clearance before planting and the displacement of the former land use (e.g. agriculture) into forest areas (Arbaro’s calculations include zero baseline losses or “leakage”), a loss of soil carbon and productivity over time due to erosion and nutrient exhaustion, and the fact that a significant proportion of the wood is likely to either be burned as charcoal or biomass or in wildfires that are exacerbated by large areas of plantation.
Further still, Arbaro’s business plan hinges on an “exit” from its investments just 15 years after the date of the fund’s creation (2018), when capital and profits will be returned to investors. Afterward, neither Arbaro nor GCF will have any say over what happens to the plantations or the wood once it is harvested from them, and therefore there can be no guarantee that any of the carbon stored in the trees would remain stored for any length of time. Climate finance should be ensuring mitigation over meaningful timescales, not a maximum of 15 years!
Arbaro is a relative sapling in the plantations finance world, with just two investments representing a total productive area of 15,000 hectares (37,000 acres) in Paraguay, Ghana, and Sierra Leone, but those investments offer some clues as to what direction the fund’s future expansion could take. The plantations in Paraguay are eucalyptus, an invasive, fast-growing, thirsty, fire-prone, and exotic tree species. Meanwhile, in West Africa, some of the wood is produced for the biomass energy and charcoal sectors. Further still, Arbaro’s co-founder and part-owner, Unique Forestry, has large-scale investments in Paraguay through PAYCO Forestry, which uses eucalyptus plantations to support the intensification of highly unsustainable livestock production (in part through selling carbon credits) and produces woodfuel, which is likely used to dry one of PAYCO’s other products, genetically modified soybeans. There have also been reports of violent land conflicts with Indigenous Peoples and peasant communities over PAYCO’s operations.
A long history of conflict-ridden plantation projects in the countries targeted by Arbaro, in addition to the company’s track record and that of its owners, tells us that the large-scale expansion of plantations that GCF is being asked to finance will be no different. Women are likely to pay the highest price, as they are disproportionately affected by large-scale changes in land use, especially where agriculture and access to grazing is displaced. Women are also more likely to be denied land rights and lack access to legal support. Arbaro’s offer of limited employment opportunities and “benefit sharing” cannot compensate for this.
This proposal is part of a dangerous trend whereby GCF is prioritizing private-sector equity investments over traditional grant-making to more accountable bodies. In Arbaro’s case, this has been taken to another level, as the equity stake that GCF buys in Arbaro will then be reinvested into another 8-12 projects/companies across the seven target countries. This means that GCF will be two steps removed from the actual forestry companies that are creating the plantations. In fact, other than identifying seven countries and a vague idea about producing timber for the as-yet-unidentified55 panel board and veneer market, Arbaro gives no indication of which companies or areas it is planning to invest in. Such investment decisions, despite being funded with public money, would be left entirely up to Arbaro and implemented by unknown private companies that are unaccountable to GCF.
The case against GCF’s involvement in the Arbaro Fund is overwhelming: Arbaro’s carbon mitigation claims are highly questionable and over frankly laughable timescales, its existing investments paint a worrying picture of damaging eucalyptus plantations being used to support carbon-intensive industries, and there is no public accountability to ensure that impacts on communities and biodiversity are avoided.
GCF’s mission is to drive a paradigm shift in the global response to climate change through transformational, low-emissions, and climate-resilient development; Arbaro’s plantations achieve none of these.
The Global Forest Coalition is an international coalition of NGOs and Indigenous Peoples’ Organizations defending social justice and the rights of forest peoples in forest policies. This commentary was co-authored by the Global Forest Coalition and member groups HEÑÓI (Paraguay), Iniciativa Amotocodie (Paraguay), Sobrevivencia/Friends of the Earth (Paraguay), The Development Institute (Ghana), and The National Association of Professional Environmentalists (NAPE, Uganda).
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