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OPINION: Look to Ecuador – not just Glasgow – to protect tropical forests

by Jose Maria Ortiz | Palladium
Monday, 13 December 2021 12:55 GMT

Archive photo: A banana farmer tends to his plants in La Lima July 8, 2009. REUTERS/Daniel LeClair

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* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Helping banana farmers tap into carbon markets is a real step toward net-zero emissions

By Jose Maria Ortiz

Jose Maria Ortiz is managing director of Palladium

While delegates and lawmakers from around the world converged on Glasgow for COP26, I chose instead to head to Ecuador, where I spent a week working on sustainable solutions to the deforestation problem in the tropics.

In Ecuador, where 75% of land area is natural forests and the biggest exports are agriculture related, the country is ripe for the carbon markets. They just need the right support.

The irony is that while we attempted to solve the climate crisis in Glasgow, it can’t be done without the buy-in and the work of smallholder farmers whose land is key to achieving the net zero outcomes we’re all chasing.

Without a reason or proper financial support, these farmers will never buy into what COP26 is selling. It’s not because they don’t want to capitalise on the nature they have at their fingertips, or that they don’t understand how the markets work. It’s simply because those markets aren’t accessible.

We need a simplified global trading system for carbon.

The same way that farmers sell bananas on the international market where the profit margins are highest, we need a system that allows farmers to monetise and maximise the value in restoring and preserving nature, and support more sustainable agriculture practices.

In Ecuador, I met farmers who check the markets daily for the prices of cocoa or palm oil before selling to buyers; who want to evolve their agriculture practices and ensure that they are sustainable; and who would benefit exponentially from transitioning to nature-based solutions if given the opportunity to put a price on restoring their land.

Much like checking the New York Stock Exchange for the price of palm oil, there needs to be a transparent way to check on the price of not cutting down their timber or planting new forests.

Currently, the system is complicated, with a focus on national emissions, making it complex to trade carbon globally. If we’re to hit net zero targets by 2050, the world needs decisive action to create a transparent mechanism to account for carbon footprints and force polluters to reduce their emissions and offset the residuals.

This shift could create a huge market for sustainable businesses and countries that have a positive footprint, making polluters less competitive and putting them at risk of bankruptcy. But it must start with our farmers who need a clear incentive and means to monetise carbon.

Farmers and communities need clear and simple rules to produce and trade. They need to understand who their potential buyers are and what that process looks like. Today, neither are clear.

Politicians and implementers are so focused on avoiding “greenwashing” and maximising carbon sequestration that they’re forgetting about the process to get there.

As a result, we’ve created overly complex rules around carbon credits both for the companies that need to buy them, as well as for the people that need to produce them. This complexity only deters people from entering into a market in the first place.

Simplifying creates both the demand and the incentive for companies to buy and farmers to continue their work sustainably.

Even if we agree globally on carbon credit products today, there are no clear trading rules. This doesn’t just make the creation of a global market difficult; it makes it impossible.

To avoid chaos, it’s imperative that we establish global carbon trading markets that allow capital to flow to the most efficient producers of nature-based outcomes.

The final component? Finance. Once the market exists and farmers and communities can access it, we need to ensure that they have the finance to plant trees and transition to more sustainable supply chains.

We need to give our banana farmers in Ecuador the means and financial incentive to go carbon neutral or negative, making their harvesting processes and their land more sustainable, and ensuring that buyers and end consumers pay for the environmental services they produce as much as for the value of the agricultural commodities.

Yes, COP26 was and will continue to be important, but the reality is that tackling climate change won’t be possible unless we support farmers and communities to change their behaviours and ensure that the global market is ready for them once they do.