HIS EXCELLENCY BHARRAT JAGDEO
PRESIDENT OF THE REPUBLIC OF GUYANA
Colleagues of the Cabinet
Leader of the Opposition
Other Members of Parliament
Members of the Diplomatic Corp
Special Invitees, Leaders of the Amerindian Community in Guyana
Ladies and Gentlemen
I wish to talk to you today about how Guyana can play a leading role in addressing one of the most important issues facing our country and the world.
Over the coming year, the international community needs to act to avert catastrophic climate change. In December 2009, representatives of almost every country in the world will meet in Copenhagen Denmark to forge a global deal which will provide the framework to achieve this. If the global deal fails to address deforestation, it will be virtually impossible to stabilize the world’s climate.
I want to outline to you today how solutions to deforestation might be found, and to set out how Guyana can help to ensure that the world acts in time whilst ensuring that our own national interests are advanced.
Before I do this, I want to set out the context within which the global deal must be agreed.
The basic facts on climate change are now clear. Over the past 100 years, global temperatures have risen by 0.7 degrees celsius. More than 2,500 of the world’s leading scientists have said that the evidence that this has been caused by human activity is overwhelming. If the world does not act, global temperatures will climb by more than 5 degrees above today’s temperature by 2050. Gláciers will melt and large swathés of the world will be flooded, hundreds of millions of people will starve, hundreds of millions more will become displaced, diseases will spread, agriculture will collapse in many parts of the world, and scarcity of water and other resources will lead to conflict and war.
If this terrifying scenario is to be averted, global temperatures must be stabilized. Scientists have concluded that temperature increases of about 1.3 degrees above today’s global average will be virtually impossible to prevent. But if increases are limited to this amount, the worst extremes of climate change may be avoided.
This means reducing the man-made causes of climate change – the release into the atmosphere of greenhouse gases such as methane and carbon dioxide. These gases are emitted by the use of fossil fuels to generate power and energy for transportation, by agriculture – and by the destruction of tropical forests.
The world needs to emit 80% less greenhouse gases by 2050 on a 90/90 baseline. Achieving these deep reductions will require today’s biggest polluters to cut emissions sharply. Per capita, countries like ours already emit far less than the average needed to stabilize global temperatures, but as we become more prosperous, we too have a responsibility to find ways to avoid the high pollution development path that today’s richer countries followed.
That’s the background, and it presents a compelling case that action is urgently required. What is the world doing about it ?
Action to combat climate change is governed by the United Nations Framework Convention on Climate Change and its Kyoto Protocol. The Protocol places legal obligations on 36 developed countries to limit greenhouse gas emissions. This is achieved through carbon markets, where countries which pollute more than their Kyoto targets obligations can buy carbon credits from those who pollute less. In 2008, carbon markets will probably exceed US$90 billion – financial flows which will stay almost entirely within the developed world.
Yet even if all the countries which ratified the Kyoto Protocol meet their obligations, including steeper emission targets, this will have a limited impact on overall climate change. This is because the biggest future growth in emissions will come from the developing world - caused in major part by growing populations and greater prosperity.
Therefore, a more ambitious global agreement is required when the Kyoto Protocol expires in 2012, and this is the agreement that must be reached at Copenhagen next year.
Unlike Kyoto, Copenhagen must create proportional incentives for all causes of greenhouse gas emissions. In particular, it is essential that it creates incentives to reduce tropical deforestation.
Deforestation causes about a fifth of all greenhouse gas emissions. That is more than the United States or the entire global transport sector. Although the Kyoto Protocol created one mechanism (the CDM) with small incentives for some countries to reduce deforestation, it excluded countries like Guyana that have maintained their forests in a pristine state. This introduced perverse incentives which made it more viable to destroy forests and then re-grow them than to preserve them in the first place. The ineffectiveness of Kyoto is proven by the fact that deforestation continues apace - an area of tropical forest about half the size of Guyana is destroyed every year.
The Government of Guyana supports international proposals that at a minimum, Copenhagen must create incentives to halve tropical deforestation by 2020, and as a country where almost 80% of our territory is tropical rainforest, we recognize that we have a responsibility to work with others to frame a solution.
Two years ago, the leading British economist, Lord Nicholas Stern wrote a ground-breaking review in which he pointed out that even if the human suffering that climate change causes does not compel the international community to act, then the economics should. Lord Stern concluded that the costs of climate change inaction could be ten times greater than the cost of action.
In the days immediately after the publication of the Stern Review, I met with then British Prime Minister Tony Blair. I pointed out that Guyana would be willing to work with other partners to see if we could collectively identify ways to progress many of the recommendations within the Stern Review. Specifically, I spoke of how Lord Stern had correctly pointed out the urgent need to address tropical deforestation, and how this could only be done with national scale action in rainforest countries.
The importance of national scale action is difficult to over-state – for a long time, some thought that the way to start addressing deforestation was to work on pilots to identify and solve the issues associated with deforestation. Of course, these pilots are valuable for many reasons – but they suffer from a fundamental flaw. It is not sustainable to create oases of good practice within deserts of often times, bad national practice. Sometimes this takes observers’ and policy-makers’ attention away from the true reasons why deforestation occurs and the coordinated national scale efforts required to reverse this process.
Given the world’s urgent need for national scale solutions, I suggested that Guyana would be willing to consider placing almost our entire rainforest under long-term protection if the right market-based incentives were created to make this economically worthwhile provided it does not affect the legitimate development aspirations of our people or trespass on their sovereignty over the forests. Of course, placing our forest under long-term protection could only be done with the sanction of the National Assembly and those who live in, and depend on, the forests. But I believe that most Guyanese are rightly proud of our long-term commitment to preserving our forest and would be willing to do this.
As I said in my Independence Day speech this year, we will embark on a national consultation in the early part of 2009 to give all Guyanese an opportunity to understand more about what I have proposed, and to give their opinions on how we can balance our national development with the climate needs of the wider world.
In preparation for this consultation, since August of this year, thanks in part to the support of Britain’s Prince Charles’ Rainforest Project and former US President Clinton’s Climate Initiative, a team of experts from Guyana and the prestigious international consultancy, McKinsey and Company, have been working together to conduct a rigorous, fact based assessment of how to align rainforest countries’ long-term economic interests with those of the wider world.
Put simply, we used Guyana as a case-study for what it would take to make tropical forests worth more alive than dead. We started examining what long-term solutions will enable future governments to deal with the difficult trade-offs between national development and avoiding deforestation. If trees are worth more dead than alive, economically rational decision makers in countries with rainforests will find it hard to resist harvesting timber and converting the land to other productive use, for example to meet global demand for agricultural products.
Nobody should interpret this as Guyana threatening the world by suggesting that we will deliberately destroy our forest. Guyana has one of the lowest deforestation rates in the world and we want this to continue. But in common with other rainforest countries, we face huge development challenges. We need to train our teachers and hospital staff, we need to build schools, hospitals and roads, and we need to create economic opportunities and generate jobs for our citizens. Developing our economy to provide resources to fund these and many other social and economic needs has to be a responsible Government’s top priority. If we are to reconcile this with the world’s need for forests to be kept intact, we must find a way to make national development and sustainable use of our forests complementary, not competing, objectives.
Our analysis over the past several months has focused on three areas:
One, we looked at how we can assist the international community forge a post-Kyoto climate agreement that creates incentives to rapidly slow tropical deforestation.
Two, we are developing rigorous business cases for low carbon investment and employment opportunities in Guyana.
And three, we are addressing the other side of climate change (the adjustment side) – the need to invest heavily in infrastructure to protect our people and productive land from rising sea levels and changing weather patterns.
The work undertaken in each of these areas will provide the foundation for next year’s national consultation.
The first set of outcomes is contained in a report which we will publish here in Georgetown today. The report will then be presented at a meeting next week of the parties to the United Nations Framework Convention on Climate Change. We hope that this report will bring fresh thinking to many of the issues which have bedeviled the forest issue internationally. The rest of the work, including our proposal for how rainforest countries and the developed world can act immediately to combat deforestation, will be published in the New Year.
The paper we publish today recognizes the stark economic reality that deforestation happens across the globe because forests create economic value when they are harvested, despite the fact that deforestation causes enormously expensive climate change costs to the wider world. Aligning national and global interest is the only long-term solution to deforestation.
We have long recognised that proposals to simply slow down deforestation in countries where it is already taking place – through the use of historical baselines – do not take into account the true economic pressures on the forests and will not help countries with low historic rates of deforestation. Instead, we conducted an analysis of the value of our forests by developing a hypothetical model where we estimated the economic value Guyana could realise from its forest (excluding: 1.7m hectares of forests under the jurisdiction of Amerindian Community and 10% of Guyana’s forest with the highest conservation value).
Starting with an analysis of soil types and infrastructure quality in each of our forest regions, we established a range of values for the economic value to the nation from harvesting timber and profitable after-harvest activities, such as farming, ranching and mining. Based on internationally-accepted projections of increases in global demand for these commodities, we determined that our forest could generate economic value to the nation of between $430 million and $2 billion per year. This wide range relates to variability driven by fluctuating prices for commodities such as logs, palm oil and rice – but the most likely economic value to the nation is about US$580 million per year. This estimate is validated by the regular requests we receive from investors who want to use the land in our forests for agricultural development.
However, generating this value for Guyana would incur significant costs for the world through the loss of eco-system services. It would involve a deforestation rate of about 4% - which is less than existing deforestation rates in many similar parts of the world. If this happened, the world’s ability to derive value from bio-diversity – for example, to find cures to disease – or from rainfall – for example, to irrigate North American agriculture - would be diminished. It would also result in the release of over 200 million tons of carbon into the atmosphere every year.
Therefore, we need to protect forests such as ours in a way which doesn’t just rely on our national desire to help the world, sincere as that may be. In the future, we need to recognize forests’ economic value to the world – and create market-based mechanisms which out-compete the activities which currently drive economic value to the nation.
Although it is unlikely that at-scale traded markets for bio-diversity, water regulation or other eco system services will exist for some time, there is a chance that the emerging market for carbon abatement can for some time act as a proxy for providing wider eco-system services to the world.
The figures may seem large, but in fact they represent one of the most cost effective solutions to climate change there is – avoiding a ton of carbon emitted from Guyana’s forest under this model would cost from 2 to 11 US dollars, with the most likely figure about 4 dollars per ton. When compared - for example with costs of about 40 dollars per ton of carbon abatement through offshore wind electricity generation, or the 97 dollars per avoided ton that it will cost to invest in hybrid cars globally - the positive impact of avoiding deforestation becomes clear.
The figures are also compatible with those which other studies around the world have reached – for example the UK Government recently published the Eliasch Review, which concluded that the global cost of halving deforestation is in the range of 18 to 26 billion dollars per year by 2020. Extrapolation from Guyana’s national analysis to cover all the world’s rainforests leads to estimates which fall within Eliasch’s range.
This might lead us to a simplistic conclusion that the way to stop deforestation is to immediately start transferring funds on this scale to rainforest countries.
However, it is important that countries like ours recognize that those working within the United Nations process are grappling with many climate change problems other than deforestation - for example the urgent need for a massive expansion in clean energy generation across the world. This will require an unprecedented shift in the global economy which will create further strains within an already strained global financial system. We therefore need a reasonable, pragmatic approach from both forest countries and the developed world – as forest countries, we need to recognize that it will take time for appropriately capitalized markets to emerge at the scale required, and the developed world needs to recognize that even if it does not happen immediately markets or other payment mechanisms need to reach sufficient scale over time.
But if we work together to recognize these realities, we can identify practical interim measures that build confidence all round on the way to a long-term solution. In Guyana, we have started to develop our proposal on how to do this and will be publishing this at the start of our national consultation.
The proposal builds on the second and third parts of our recent work, where we looked at how Guyana can create new low carbon economic alternatives whilst also dealing with the need to protect people and productive land from changing weather patterns. We will gather further input on this throughout the national consultation, but it is built on the premise that if Guyana is remunerated for the forest climate services we provide, then we have a responsibility to ensure that money earned is spent in a manner which is environmentally sound, financially prudent and delivers a step change in our efforts to create a socially just and prosperous Guyana.
To illustrate this, I believe that we will want to do at least five things.
One, we can move our entire economy to clean energy – building the Amelia Falls Hydro plant will supply us with low carbon electricity for the several decades. This will lead to a significant decrease in the cost of doing business for our companies, cheaper living costs for our consumers – and at a stroke, it will remove over 50% of Guyana’s already limited greenhouse gas emissions.
Two, we can provide unprecedented assistance to forest communities to develop village economies that simultaneously improve opportunities for citizens who live there and secure sustainable use of the forest for the very long term. This can be done through expanding our nascent but extremely attractive eco-tourism offering, for example.
Three, we can support the diversification of our wider economy into low carbon economic sectors through opening up the non-forested part of our country – such as the Intermediate Savannahs - to sectors like aquaculture, fruits and vegetables and bio-ethanol. For historical reasons, these parts of the country are inaccessible as our infrastructure was oriented towards resource extraction within our forest – a new land use strategy will enable us to invest in the infrastructural shift required to move onto a low-carbon development trajectory. This will unlock the commercial viability of these new sectors, whilst also contributing to food security, global energy security and action to combat climate change. It does not mean that we will completely block all economic activity in the forest - simply that activities such as sustainable forestry or mining will be limited in scale, and must be done in accordance with the highest internationally validated and supervised standards.
Four, we can invest heavily in our people’s development – targeting in particular the improvement of our health and education systems. In Guyana, we are rightly proud of the strides we have made in these sectors. But we also know that there is still much to do – in particular to equip our young people for high quality jobs in a competitive, globalised world economy.
And five, we can upgrade our sea defenses and irrigation systems to cope with the challenges that climate change has brought to our country. This relates to the third and final area of our analysis. Few Guyanese citizens are unaware of climate change – most of us live below sea level and almost all our currently productive land is threatened by its location between the sea and the conservancy dam. We saw the risks that this entails most tragically in 2005 when floods caused loss of life and economic damage equivalent to 60% of our GDP. This is the most striking climate change challenge we face - initial results suggest that just protecting the areas most at risk in Regions 4 and 5 would require capital investment in the order of US$400 million.
As we address these areas, we need to recognize the importance of strengthening our national institutions, and ensuring proper parliamentary oversight of financial flows for climate services. Similarly, we need to acknowledge international evidence that large inflows of money into national economies can sometimes cause intense inflationary pressures and other problems so it is vital that we carefully improve our policies and institutions if remuneration for forest climate services emerges over time. There will also be many technical issues that will require much work – such as ensuring that monitoring and verification of forest protection is in accordance with internationally validated standards, or ensuring mechanisms to ensure permanence, where we cannot receive payments for a time only to then cut down forests in the future. These issues are all surmountable if an appropriately strategic solution is created.
None of this is about countries like Guyana seeking aid – if anything, it is about rainforest countries assisting the developed world to solve a problem they mainly created.
Therefore, I hope that thoughtful people at home and internationally will see the work we publish today and the proposal for a solution which we will publish in the New Year for what they are – sincere efforts to start addressing the tension between two fundamental realities: on the one hand, the reality that economic logic says that solving deforestation requires markets to immediately pay forest countries for the services they provide, but on the other hand, the reality that world economy is not yet ready to do this.
There will be much to debate, but the key to success will be ensuring that our national consultation is done in an inclusive manner – as a Government, we will ensure that all forest and national stakeholders are involved. The international community also has a responsibility – they must recognize that the solutions to deforestation will come from within forest countries, and therefore forest communities and other forest country stakeholders must be seen as equal partners in the search for these solutions. If international institutions and mechanisms emerge where forest communities and countries are seen simply as passive recipients of hand-outs, then the battle against climate change will be lost. Poor people understand choices too – they just need to be involved in the decisions that impact them.
Our Amerindian communities will have a particularly important role to play. Not only are they the stewards of large parts of Guyana’s forests, they have been protecting them for centuries and will have extremely valuable insights for the rest of Guyana and the world.
So too will our elected representatives. Successive Guyanese governments of different parties have provided leadership to the world – it was President Hoyte’s vision that led to the creation of Iwokrama, one of the world’s leading rainforest projects. I hope that this will continue.
On Tuesday, I will leave Guyana to lead our delegation at the UN meeting on climate change, where the framework for Copenhagen will be further developed. I will tell the world of my belief that the people of Guyana are ready to play a major role in determining how to combat deforestation, and seek the partnership of others as we move forward together.
Then early in the new year, we will lay out details for how all Guyanese can participate in the national consultation on how to create a low deforestation, low carbon economy. Too often, we Guyanese fail to see the deep qualities present in our society, but I am confident that our consultation will show the world that our people possess world-class vision, creativity and innovative capability, coupled with a sincere commitment to a global good that is bigger than all of us. I believe that we can apply these deep-rooted qualities to the problems of climate change, and working together as a nation, we can be a beacon for the world.
December 5, 2008