Have you ever thought about how the consumption of some of our favourite products can be linked to deforestation? Or how political decisions and policies can influence such linkages? The EU consumes significant amounts of products made from agricultural commodities, such as cocoa, palm oil, and soy, and the related agricultural expansion of these commodities causes vast forest loss in countries of production in Africa, Latin America, and Southeast Asia. Various trading companies operate supply chains across the globe and move the products to Europe for our consumption, making them important actors in controlling forest loss linked to agricultural products. In the coming years, new EU regulations will set increased obligations for traders in order to reduce EU market-driven forest loss. However, it is not sure how traders will react to the new regulations and how their decisions could influence the impact of the EU regulation to limit EU market-driven deforestation.
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In recent years, the concept of ‘governance’ rather than ‘government’ has become a popular term for describing the interactions between stakeholders in the sustainable development policy arena. In this context, especially in the arena of forest management, it is used to describe the structures and processes that steer, or co-ordinate the relations between multi-stakeholders (government, business, civil society). Usually, governance refers to human actors, but there are other forces that exercise influence over how forests are managed. One of the most important of all these, is that most essential resource: money. This brief report outlines the role that public finance, and most importantly the fiscal instruments developed by governments, can have a considerable influence over the fate of the world’s forests.
Research undertaken by the author in 2016-2017 investigated the extent to which fiscal incentives encouraged, or discouraged, private sector involvement in the United Nations Framework Convention on Climate Change (UNFCCC) initiative known as REDD+ (“Reducing emissions from deforestation and forest degradation and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries”).
In Indonesia, REDD+ has been recognized as a potentially significant source of revenue, while at the same time providing an important incentive to contribute to reductions in global deforestation. However, in a series of interviews and surveys, forest-based business stakeholders identified a number of issues impacting on their ability to undertake activities that would lead to reducing deforestation and forest degradation, and emissions.