Attracting green dollars

5 min read
08 Dec 2017
5 min read
2219 words
Nepal can make quite a bit of money by using its forests to reap dividends from REDD+

There is little doubt that global temperatures are rising at an alarming rate. There are two main factors that are contributing to this increase: the rise in global carbon emissions from fossil-fuel combustion and the increase in deforestation.

Forests play an important role in the planet’s carbon cycle. When forests are cut, the amount of carbon absorbed by the atmosphere decreases, and the carbon that is stored in the trees is released into the atmosphere as carbon dioxide (CO2). This adds significantly to earth’s greenhouse gas levels—which is responsible for the rise of global temperatures. Increasing global temperatures means bad repercussions of all sorts: from more extreme-weather occurrences (such as flash floods) to islands and coastal cities drowning in the rising seas and oceans. 

In order to stop the global temperature rise and mitigate the effects of climate change, REDD+ (Reducing Emissions from Deforestation and Forest Degradation) was first conceived in 2005 by the United Nations Framework Convention on Climate Change at COP11 (Conference of the Parties to the Convention). 

But what exactly does REDD+ do? It incentivises developed nations to provide financial rewards to developing and underdeveloped nations to slow deforestation trends, boost forest growth, foster conservation and use forests sustainably. The initiative essentially seeks to reduce carbon emissions of manmade greenhouse gases globally. And Nepal, as a partner country of the initiative since 2009, can capitalise on this carbon-trade provision to help mitigate climate change, develop its own forest resources and gain some monetary benefits, too, in the process. And if a new major REDD+ proposal, which is being developed by a host of INGOs and other stakeholders in Nepal gets implemented, the rewards could be quite handsome.

The beginning of a good thing

Three REDD+ pilot projects are already being implemented in the forests of Dolakha, Gorkha and Chitwan. These projects, called the REDD+ Himalayas Project, are spearheaded by ICIMOD and have been in operation since 2015. The objective of these pilot projects is to test the benefit-sharing mechanism of REDD+ and figure out how Nepal can develop measures to mitigate the effects of climate change. 

REDD+ started to get taken up by organisations in Nepal a few years before ICIMOD’s pilots were up and running. Since 2008, REDD+ has been led in Nepal by the REDD+ Implementation Centre, under the Ministry of Forestry and Soil Conservation. The centre is the main body that coordinates all the projects for REDD+ in Nepal, along with a multi-stakeholder forum that includes organisations like ICIMOD, FCPF, WWF, UN-REDD, FECOFUN, among others. The REDD+ body in Nepal is funded by many bilateral and multilateral organisations such as UN-REDD, World Bank Forest Carbon Partnership Facility, Climate Investment Fund, Green Climate Fund and Global Environment Facility. In 2010, Nepal’s Readiness Preparation Proposal was approved by the FCFP. 

The second phase

And currently, with the three successful pilot projects already in place, Nepal is in the final phase of its second readiness phase, in which a National REDD+ Strategy is being drafted. “We are currently working on the Emissions Reduction Project Document (ERPD),” says Ananta Ram Bhandari, Forest Lead at WWF Nepal (WWF Nepal is taking the lead in drafting the document.) Once the ERPD is approved by the FCPF, REDD+ in Nepal will shift from its readiness phase to its investment phase. “In our proposal, we are outlining the possibilities of reducing 14 million tonnes of CO2 from the forests of the Terai Arc Landscape (TAL) in the next five years, by transforming more than two million hectares of land into forests,” says Bhandari.

If all goes well and the ERPD is approved, an Emission Reduction Programme will be implemented in the TAL (which includes 12 districts, namely, Rautahat, Bara, Parsa, Chitwan, Nawalparasi, Rupandehi, Kapilvastu, Dang, Banke, Bardia, Kailali and Kanchanpur).

Green also means dollars

For a developing country like Nepal, REDD+ is a good opportunity to generate income from forests. “The expected emission-reduction target of the proposed ERPD in its first 10 years is 37.3 million tonnes of carbon dioxide. If we are successful in reducing the stated amount of CO2, we will be able to claim 70 million dollars, as we make five dollars for every metric ton we reduce,” says Bhandari.

“With the implementation of REDD+, which is basically carbon trading between countries, Nepal’s forests will start getting developed in accordance with a performance-based financing approach, rather than a grant-based financing approach,” says Ajay Bikram Manandhar, Under Secretary of the REDD+ Implementation Centre. This means that along with adding more forest resources in the country—which will directly influence the lives of some 7 million people, of whom 80 per cent depend directly on forest resources for their livelihood—the forests developed via REDD+ can also help local communities generate various employment opportunities for themselves.

But how is Nepal planning on turning two million hectares of land into forests? By riding on the community-based forest-management model—a model that has successfully worked for Nepal for the last three decades (see box story). The REDD+ Implementation Centre is also working on developing policies that will rope in the private forestry sector for its REDD+ programme.
Currently, three countries—Brazil, Malaysia and Indonesia—are regarded as the trailblazers in the REDD+ economy. Nepal has already proven in the past through the way it ran its community-programmes that forests are entities Nepalis know how to manage well. Now, it has the opportunity to reap the dividends that REDD+ promises by depending primarily on its world-famous forests. 

Community forests: It takes a village

According to a major study published last year by the Ministry of Forestry and Soil Conservation, 29 per cent (1.7 million hectares) of Nepal’s total forest area is covered with community forests. The government plans on expanding this to 40 per cent (2.2 million hectares) by 2025. And as of today, there are 19,000 community forests in the country. Nepal’s community forests make for a success story celebrated around the world, and Nepal’s model is being imitated the world over. But to what do we owe this success?

That success is a result of more than 40 years of effort and effective management systems implemented mostly by the Nepali people themselves. Community forests have grown through three phases.

The first phase focused on the conservation of national forests. Nepal’s forests, which were nationalised under the Private Forest Nationalisation Act in 1957, were decentralised in the 1970s. This was a measure undertaken by the then government, for the nationalisation of private forests—along with the rapidly increasing population—had led to terrible deforestation and forest degradation. In 1976, with the formation of the National Forest Plan, the responsibility for sustainably managing and conserving national forests was entrusted to the local people who lived around the forests. 

With that handover, began the community forests’ second phase, which saw the setting up of the Community Forest User Groups (CFUGs). Later, in 1993, the government formulated the Forest Act 1993, under which the government handed over state-owned forests to the CFUGs, who would not only protect forests, but would also benefit economically from them. This benefit-sharing mechanism resulted in the mushrooming of forest-resource-based enterprises, and almost 70 percent of CFUGs depend on these enterprises for their livelihood. Then, in 2007, the third phase started, wherein community forests were conserved with the further aim of mitigating climate change.

“What makes Nepal’s community forests work is its managerial structure,” says Sanjeev Dhakal, Forest Officer, Community Forest Division, Department of Forests. “With the implementation of community forests, communities were allowed to directly benefit from forest management. A sense of ownership and accountability was instilled in communities, and that has probably driven them to take better care of the forests,” says Dhakal.

The CFUG’s structure is easy to understand and simple to follow. CFUGs are formed with at least one member participant from each household near the community forest. From these user groups, members are selected to form an executive committee, which is a body that takes all the day-to-day decisions regarding the forests and develops guidelines that are to be followed by all members. These guidelines first have to be approved by the district forest officer. All the decisions—whether it’s regarding forest products, community infrastructure development, employment-generation techniques, or poverty reduction programmes—are taken by the executive committee, and the benefits reaped are shared equally among all households.

Successful forest-based enterprises

Rolpa’s community forests, rich in pine, are also the largest resin-generating forests in the country. With an approximate 200 local CFUGs involved in resin collection in Rolpa last year alone, a total of 2.59 million kg of resin was extracted from chir pine trees in Rolpa’s community forests—all of which was exported for Rs 2.64 million. The resin-economy is being practiced in other community forests too. According to the Ministry of Forestry and Soil Conservation’s estimates, about 405,000 hectares Nepal’s forests comprise chir pine trees, from which more than 21,700 metric tonnes of resin can be extracted annually.

Around 35 per cent of Nepal’s population is engaged in some way in community-forestry-management programmes all over the country. It is estimated that every year, the forestry sector generates at least 200,000 full-time jobs, mostly micro enterprises.

“Forest-resource-based micro enterprises are divided into four categories: non-timber forest products (NTFP), eco tourism, food-based products and animal husbandry,” says Dhakal. The resin collected from the community forests of Rolpa are perhaps one of the best examples to show how major a role NTFPs play in generating income for communities living in such remote areas. Other examples of NTFP are timur (pepper), allo (nettle), chyuri (butter tree) and wintergreen, among others.

Timur is found in more than 30 districts, including Rolpa, Rukum, Salyan, Pyuthan, Dang, Surkhet, Gulmi, Baglung and Jajarkot. Besides its use as a spice, timur is exported as zanthoxylum oil, an essential oil, to India. The average volume of the oil that is traded from Nepal is estimated to be around 270 tons to 300 tons every year. And around 8,000 households are engaged in the extraction and export of the oil. Another major NTFP is allo. Every year, Nepal’s forests produce around 1,805 tonnes of allo thread from Rukum, Dadeldhura, Sankhuwasabha, Myagdi, Baitadi and Parbat.

Chyuri trees grow in the millions in almost 50 districts of Nepal, particularly in the community forests of Pyuthan, Nuwakot, Bardiya, Nawalparasi and Dhanusha. From the seeds of these trees is extracted chyuri oil, which is used for various medicinal and herbal purposes. It is estimated that the market value of just the herbal soaps made from chyuri trees is approximately Rs 1.8 million. A similar type of oil, wintergreen, is also extracted from the forests of Panchthar and Rasuwa. Wintergreen costs about Rs 2,000 to Rs 3,000 per litre, and the profit from wintergreen oil production is expected to be around Rs 500,000 per annum. Another high export-revenue-earning medicinal plant, chiraito, is grown in the community forests of Terhathum, Bhojpur and Panchase. More than 300 tons of chiraito is exported annually to countries like India, China, Germany, Sweden and Italy, among others.

Community forests have also been used for ecotourism initiatives, such as in the Baghmara Community Forest and the Chitra Sen Community Forest of Chitwan. Baghmara’s CFUGs have turned their forest into a prime tourist spot, particularly famous for its elephant-rides, which contribute significantly to the livelihood of the community.