In January of this year – precisely one Covid-19 lifetime ago – I wrote about the power of trees to sequester carbon in my article entitled, The Premier Technology For Sequestering Carbon.
This train of thought led me to learn more about the carbon credit market and innovative firms like Pachama – a YCombinator-supported venture applying AI algorithms to satellite imagery of forests to estimate carbon sequestration – Bluesource – the largest carbon credit developer in the U.S. – and South Pole – a Swiss firm that develops carbon credit projects internationally.
I was originally drawn to the ideas of trees as cheap and easy-to-implement carbon sequestration tools by the work of Thomas Crowther and colleagues at ETH Zurich. The Swiss researchers published a paper estimating that planting 1.2 trillion trees has the capacity to reverse the last decade’s worth of carbon emissions.
From a politician’s perspective, a call for a vote on planting more trees is one of the easiest imaginable. It’s no wonder that in this year’s State of the Union Address, President Trump promised support for the One Trillion Tree Initiative.
But research from Stanford University published today in the prestigious journal Nature Sustainability, suggests that the success of a tree planting program is highly dependent on politicians skillfully designing and implementing a sensible framework of rules to shape the incentives of would-be tree planters.
“If policies to incentivize tree plantations are poorly designed or poorly enforced, there is a high risk of not only wasting public money but also releasing more carbon and losing biodiversity,” said study co-author Eric Lambin, the George and Setsuko Ishiyama Provostial Professor in Stanford’s School of Earth, Energy & Environmental Sciences.
The problem identified by Lambin and his co-authors relates to replacing complex, multi-species native forest land with monoculture plantations. In the research, Lambin and his team analyzed data from an actual afforestation project implemented by the Chilean government between 1974-2012.
The Chilean project subsidized 75% of the costs of afforestation and provided support to plantation owners for ongoing management costs but did not establish an appropriately funded oversight and enforcement structure.
Weakness in oversight meant that the afforestation policy led to cases of native forests being cut down and replaced with non-native monoculture plantations. Monoculture stands did not sequester as much carbon dioxide as complex native forests did, so while area covered by trees was greater after the project, net carbon storage actually dropped and biodiversity fell.*
A short documentary film by the Economist points out that the incentives of countries struggling to meet Paris Agreement carbon dioxide emission targets by tree planting campaigns look suspicious. Ireland, for example, has promised to cut emissions by 20%, but has only reduced them by about 5%. Planning a large-scale tree planting campaign would allow Ireland to immediately book expected future emission reductions — thereby helping the country get closer to its stated goal — even if the plantings were a monoculture whose growth was enhanced by fossil fuel-based fertilizers.
Unsurprisingly, the Irish campaign has resulted in community push-back.
In this column, my overarching theme is that capitalism – the economic manifestation of humans’ amazing capacity to adapt – can save our species and other species on which we rely from the 100% certainty of climate change.
In my view, capitalism is a natural process in that it is an outgrowth of natural human tendencies. However, these natural tendencies are necessarily shaped by rules governing our societies.
Governments can decide that fracking firms with a broken and unworkable business model can be propped up directly with generous tax incentives and indirectly by central bank actions to remove price signals from bond markets. Governments can decide that the political importance of an economically unviable industry should be prioritized over questions of the public health while in the midst of a once-in-a-century health crisis.
Alternatively, governments can establish frameworks that create valuable incentives for producers and users to reduce their carbon footprints or to provide capital to projects promising carbon sequestration benefits.
These rules make a big difference to the execution of the programs put in place as the Stanford researchers saw very clearly in their data.
There is no time left to embark on ineffectual policies that are politically easy, but which offer no real solutions to the issues brought about with absolute certainty by climate change. To put the awesome power of capitalism to work, we must create a framework that allows its efforts to be directed in a genuinely productive way.
Intelligent investors take note.
* Plantations are to trees roughly similar to what CAFOs are to cattle. A memorable book written by a German forester called The Hidden Life of Trees makes a strong case that trees growing naturally in a native forest communicate with one another, offer help to individuals that are struggling, and warn their neighbors about predators. Plantations, on the other hand, appear to be much less robust, communicative, and, as the Stanford researchers found, efficient at sequestering atmospheric carbon dioxide.