Carbon finance from

Rhett Butler – the founder of what is probably the world’s most widely visited rainforest website, – has written a thought-provoking piece on “avoided deforestation” strategies for poor countries. He argues that what is “at stake [is] potentially billions of dollars for developing countries and the future of the world’s climate”.


Well, read on. According to Butler, the country that would benefit most under such an ambitious scheme would be…


Its mix of abject poverty and high rates of deforestation means that Southeast Asia’s most widely criticised military dictatorship is seen as a good candidate for an “avoided deforestation” scheme.

Butler writes (my emphasis added):

Its status as a pariah state aside, Burma could earn hundreds of millions of dollars for cutting its deforestation rate under a carbon-trading initiative proposed by a coalition of developing countries and under discussion this week at U.N. climate talks in Nairobi, Kenya.

Burma…has one of the highest deforestation rates in the world…Under a proposed carbon finance initiative, mitigating these emissions could be worth anywhere from $128 million to over a $1.8 billion to industrialized countries.

…By reducing deforestation that would otherwise occur in developing countries, industrialized countries could effectively “offset” emissions limits set under international agreements like the Kyoto Protocol. Money from industrialized countries would flow into forest conservation fund that Burma could drawn upon depending on its success in reducing its deforestation rate. The strategy could help fight climate change at a low cost while, at the same time improving living standards for some of the world’s poorest people, safeguarding biodiversity, and preserving other ecosystem services.

Carbon finance could boost per capita GDP in Burma from 5-20 percent.

Controversial ideas, no doubt, and the type of initiative that would, under current circumstances, put some people in Burma in a very cash-rich position. What Butler overlooks is that almost all logging in Burma happens in the mountainous parts of the States – and in Shan and Kachin areas, in particular. Big and unfathomable questions remain:

  • Will the junta share any newfound carbon wealth with ceasefire groups?
  • Will it make payments so that its sworn enemies, like the KNU, can profitably disavow logging as a way of making money?
  • Who will be responsible for ensuring that the desired “trickle-down” actually occurs?
  • Can the Burmese junta legitimately negotiate on behalf of all of the people and firms who actually cause deforestation?

I can accept that this is the type of idea that may, at some abstract level, appear like a worthwhile strategy for environmental protection and wealth creation. Based on my experiences in the areas of Burma where the most logging occurs, and where logging would supposedly be “banned”, I really doubt that a workable scheme, that actually stops logging and leads to improved conditions inside Burma, is possible under current conditions. Logging occurs because it is profitable and strategically desirable for many ethnic groups, gives the junta a massive stream of almost untraceable revenue, and suits the interests and agendas of Chinese firms and the Chinese government.

The whole point of the “avoided deforestation” scheme is to increase per capita GDP. But, in Burma, like many other authoritarian states, per capita GDP is a fuzzy concept at the best of times. Equitable shares of revenue are a fantasy. And in this context, plans to arbitarily increase GDP by between 5 and 20 per cent sound like they come from wonderland. Any such plans need to be made with a full awareness that the Burmese generals, and their business associates, have no track record of wealth redistribution.

Throwing money at the Burmese regime will almost certainly lead to a negligible environmental benefit simply because the most heavily logged areas are those where government control is most tenuous. Does the junta have the capacity to stop other interests in the country (of Shan, Chinese, Wa or Kachin stripes) from doing what they can to make money in their own areas? What about in areas where fighting continues, or where it could start again any other week?

All of the big questions remain – the ecologists and environmental economists can’t avoid them if they want to do business in Burma.