Agreements and arrangements under the UNCED follow-up process I 3.4 351 into force. It provides for a certain amount ofoffsetting of biological sinks and sources (afforestation, reforestation and deforestation since 1990) against the obligations ofthe industrialized countries to reduce their emissions (Art. 3 para 3;WBGU, 1998b). Furthermore,Art. 6 ofthe Kyoto Protocol allows projects that increase the absorption through sinks in other Annex I states to also be offset.And finally, the Clean Development Mechanism (CDM) defined in Art. 12 allows for the certification of emissions reductions that are achieved in projects in developing countries. It is still pending whether sink projects may also be offset or just projects to reduce emissions (WBGU, 1998b). Regulating theoffsetting of sinks in accordance with the Kyoto Protocol raises a number of issues on the definition ofoffsettable activities or the measurable carbon stocks. One recommendation for a decision at the 1st COP ofthe protocol on definitions relating to the activities pursuant to Art. 3 para 3 ofthe Kyoto Protocol (afforestation, reforestation, deforestation) andtheoffsetting of additional activities pursuant to Art. 3 para 4 ofthe Kyoto protocol will only be made at the COP ofthe convention once the IPCC has completed its special report (not before 2000) andthe issue has been addressed by the scientific body ofthe convention (SBSTA). A decision on the precise form ofthe CDM, including criteria for the selection of projects andthe modalities for certification are to be decided after the Buenos Aires Action Plan (COP-4) by the year 2000. There was no coordination between the CBD andthe FCCC before adoption ofthe Kyoto Protocol.And no other negotiating processes such as the IFF were taken into consideration. It is to be hoped that this coordination will be established in future. The Council has addressed the topic ofoffsetting biological sinks against the commitments ofthe industrial states according to the Kyoto Protocol in detail in a special report (WBGU, 1998b).The type ofoffsetting of activities in the area ‘land use change and forestry’ as provided in Kyoto Protocol does not take into account the complex dynamics ofthe terrestrial biosphere and may lead to negative incentives both for climate protection andthe conservation of biodiversity. For instance, the transformation of primary forests that are characterized by high carbon content but also high biological diversity, into secondary forests or timber plantations might indirectly be promoted if theoffsettable activities are so defined.This would bring about a loss of biodiversity (WBGU, 1998b). If afforestation projects are included in Art. 12 (CDM) this could create an additional incentive to clear primary forests in order to be able to offset the subsequent planting of plantations (WBGU, 1998b; Schulze et al, 1999). Sink projects in developing countries could however also include forest conservation projects. The protection of an area of forest from logging or degradation would be an offsettable project in line with the CDM if emissions were prevented which otherwise – without the project in question – would have entered the atmosphere. However, if forest conservation projects are offset in the absence of a commitment to produce a complete carbon inventory for the developing country this might lead merely to the spatial shift of emissions: forest destruction will take place somewhere else, outside the project boundaries. This sort of shift is actually very likely, as long as the CDM projects do not address the underlying causes of forest destruction. It is also questionable whether the necessary long-term assurance of forest conservation can be guaranteed. The investors should really be made liable indefinitely for the protected forests. If a forest that was protected under a CDM project is logged towards the end ofthe project period the carbon dioxide amount thus emitted should be a negative offset against the investor state. However, it is more than doubtful whether that sort of liability mechanism is really realizable particularly in developing countries. Furthermore, both the investing country andthe host country have an interest in oversubscribing the emissions reduction thus achieved. This offers in combination with the considerable uncertainty of verifying the sink effect a dangerous incentive for the abuse ofoffsetting forest conservation projects within the CDM. Offsetting afforestation projects under CDM should be prevented as long as there is no offsetting of emissions in developing countries (WBGU, 1998b). Forest protection projects should only be offset once a complete national carbon inventory has been submitted.And it should also be investigated whether the existing GEF mechanism cannot fund to an increasing degree projects to protect natural stocks and sinks, particularly in primary forests and wetlands (WBGU, 1998b). Since the GEF constitutes the financing instrument for both the FCCC andthe CBD, synergetic effects can be used and at the same time the risks associated with offsetting CDM projects avoided. I 3.4.4 Intergovernmental Forum on Forests The United Nations Intergovernmental Forum on Forests (IFF) as the successor body to the Intergovernmental Panel on Forests (IPF) held its 3rd session in May 1999.And it is clear that the negotiations continue to proceed extremely sluggishly as a result of serious differences of opinion.
352 I Global biosphere policy The question what institutional form the outcome ofthe IFF deliberations will take, that is expected to be forthcoming in 2000, remains unanswered.A binding forest conservation agreement under international law could assume the form of an independent FAO convention or become effective as a protocol in the context ofthe CBD. Clarification ofthe institutional questions had up to that point proved to be extremely problematic and so for that reason was postponed until after the substantive discussions, in order not to hold up the negotiations. The Council has spoken out in favour of a Forest Protocol under the auspices ofthe CBD in the past (WBGU, 1995b) and still considers this solution to be the most promising with regard to the goal of a global policy of sustainability. In a forest convention that is to be renegotiated and anchored to the FAO, the main emphasis would likely be on use. Equal rights for conservation and sustainable use of biological diversity as already enshrined in the CBD would have to be renegotiated and established. However, given the lack of international consensus on a CBD protocol a separate forest convention would be preferable to a merely non-binding continuation ofthe discussion in an intergovernmental body. I 3.5 Incentive instruments, funds and international cooperation I 3.5.1 Incentive instruments In Art. 11 ofthe CBD a call is issued to all parties to recognize the importance of incentive instruments and increasingly to deploy social and economic incentive measures for the conservation and sustainable use ofthe individual elements ofthe biosphere. Drawing on that call, the OECD deployed a working group that focused on the economic aspects of biodiversity (Working Group on Economic Aspects of Biodiversity). In December 1998 the draft of a manual was published that discusses the options relating to incentive instruments in biodiversity policy; it is based on 22 case studies. The aim ofthe handbook is to provide policy with guidelines – coordinated with the ecological, social and economic framework conditions – to be able to make increasing use of incentive instruments for the sustainable use of biological diversity (OECD, 1998). In contrast to command-and-control regulations, economic incentive instruments do not prescribe certain actions, as do for example the statutory provisions on the installation of certain filter equipment under the German Emissions and Ambient Pollution Control Act (Bundesimmissionsschutzgesetz). Rather the cost-benefit ratios associated with certain alternative actions are changed. Emissions certificates, such as used successfully in the United States in the context of clean air policy, mean that emissions reductions pay off financially since certificates acquired at an earlier date can be sold. Emissions taxes increase the cost of emissions. The decision of whether to continue with emissions or to buy filters to reduce tax payments ultimately remains the decision ofthe individual decision-maker. By means of that type of economic approach the information advantage that exists at the decentralized level is exploited, particularly to assess alternative actions. Instead of prescribing uniform action by law, with the economic approach it is up to the economic players themselves to decide in accordance with their own cost-benefit analysis what action to take. The CBD calls on parties to make greater use in biosphere policy of instruments that draw on the advantages of economic rationale. A fundamental message from the OECD handbook is therefore that appropriately defined property rights and economic incentives should be utilized, wherever possible, to provide incentives for sustainable use, and that recourse should only be taken to regulations, access restrictions and sustainable use subsidies where this is absolutely essential (OECD, 1998). In light ofthe large number of players that are involved in protecting and using biodiversity andthe complex links between the anthroposphere and biosphere, the OECD handbook is based on a broad understanding of incentive instruments. In addition to economic incentive instruments in the narrow sense (ie property rights, taxes and other levies, certificates) the following measures are also counted under incentive instruments: – strengthening scientific and technical capacities, – including all relevant players in the decision-making process on the conservation and use ofthe biosphere, – ensuring that all available information on biological resources andtheir impairment is provided to decision-makers, – strengthening or creating suitable institutions in order to be able to make the requisite political decisions, – implementing and enforcing incentive measures in the stricter sense, – monitoring biological resources. All ofthese measures are requirements for support for the sustainable use or conservation of biological resources to be forthcoming. Therefore, they constitute the requisite framework conditions for successful deployment ofthe above-mentioned incentive