With rigorous economic research and practical policy solutions, we focus on the issues and institutions that are critical to global development. Explore our core themes and topics to learn more about our work.
In timely and incisive analysis, our experts parse the latest development news and devise practical solutions to new and emerging challenges. Our events convene the top thinkers and doers in global development.
Climate change affects the world’s poorest first and worst. Yet it is a problem the whole world shares that can only be addressed through international cooperation. CGD’s work on climate finance looks at economic incentives that benefit us all—by helping developing countries work together with other governments, institutions, and corporations to reduce emissions.
In this paper we combine fourteen years of high-resolution satellite data on forest loss with individual-level survey data on malaria in more than 60,000 rural children in 17 countries in Africa, and fever in more than 470,000 rural children in 41 countries in Latin America, Africa, and Asia. We did not find that deforestation increases malaria prevalence nor that intermediate levels of forest cover have higher malaria prevalence.
Deforestation isn’t associated with higher malaria prevalence in children in 17 African countries. Nor is it associated with higher fever in children in 41 countries across Africa, Asia, and Latin America. That’s the surprising conclusion of our new CGD working paper.
This means that, at least in Africa where 88 percent of malaria cases occur, public health efforts to reduce malaria should continue to focus on proven anti-malarial interventions. These include insecticide-treated bed nets, indoor spraying, housing improvements, and prompt clinical treatment, which along with other interventions have reduced the incidence of this killer disease by 41 percent between 2000-2015.
For advocates of forest conservation in Africa, there are many good reasons to keep forests standing. These include carbon storage, biodiversity habitat, and clean water provision, alongside other goods and services, as elaborated in my (Jonah’s) book, Why Forests? Why Now? However, forest conservation might not have anti-malarial benefits, at least not in Africa.
But increased malaria risk might not necessarily translate to higher rates of malaria in humans (i.e., “prevalence”). That’s because there’s considerably nuance in the effects listed above. For example, deforested areas may be favored by some mosquito species but not others; deforestation is generally considered to increase the density of malaria-transmitting mosquitoes in Africa and Latin America but decrease their density in Asia. In addition, many other factors besides deforestation also affect malaria prevalence in humans, including climate, community demographics, access to health facilities, and people’s behaviors to avoid malaria.
Nine previous studies have compared deforestation to malaria prevalence in humans (see table below). These studies generally analyzed small amounts of data from a handful of countries—four from Brazil, two from Indonesia, and one each from Malaysia and Paraguay, as well as one study that compared national-level statistics across 67 countries. Most, though not all, found that more deforestation is associated with more malaria. So, it was a surprise to find no association between deforestation and malaria in our study.
So then, why might studies find that deforestation leads to higher malaria rates in South America and Southeast Asia but not in Africa? The explanation, we speculate in our paper, may have something to do with the difference between how deforestation happens in Africa versus elsewhere. Deforestation in Africa is largely driven by the slow expansion of rotational agriculture for domestic use by long-time smallholder farmers in stable socio-economic settings rather than by rapid clearing for market-driven agricultural exports by new frontier migrants as in Latin America and Asia. We hope that this hypothesis can be supported or refuted by future work.
How we got there
We came to our conclusions by assembling massive data sets on deforestation and malaria. Our data set on deforestation included annual tree-cover loss between 2001-2015 in 1.5 million ~5.5-kilometer grid-cells across the tropics, compiled from Global Forest Watch as part of a previous CGD working paper. We also obtained data from malaria tests of around 60,000 children in rural Africa and fever recall surveys of around 470,000 children across the rural Tropics conducted under the auspices of USAID’s Demographic and Health Surveys. We combined these two data sets in a multivariate regression analysis that also considered temperature, precipitation, housing quality, water source, access to health services, child age, and bed-net usage.
In addition to our main comparison of deforestation and malaria, we also tested hypotheses generated in advance from previous studies. Did smaller cuts lead to more malaria on a per-hectare basis than larger cuts? Did deforestation have a bigger effect in places with more forest? Did deforestation have a bigger effect on fever in African and Latin America than Asia? The answer to all three questions is a resounding “no.”
We’d originally also planned to compare the cost-effectiveness of preventing malaria through forest conservation to the cost-effectiveness of common interventions such as bed nets and spraying, as measured in disability-adjusted life years (DALY) per dollar. But since deforestation wasn’t found to affect malaria rates, the DALY-per-dollar benefit was essentially zero.
Bolstering credibility with a pre-analysis plan
We expected our findings were bound to be controversial, no matter what we found. A previous study of deforestation and malaria in the Brazilian Amazon generated some heated back-and-forth. So to bolster the integrity and credibility of our research we used a pre-analysis plan. That is, we wrote down and time-stamped all our hypotheses, methods, models, and variables in advance. Then we stuck with them.
Pre-analysis plans are common and even required for some types of clinical research. But they are still new to social sciences, including economics, where common research practice often involves testing many possible combinations of variables and model specifications. If the authors of such a study only report tests showing favorable results while relegating the results of other tests to the digital trash bin (“data mining” or “p-hacking”), they can inadvertently or deliberately place a thumb on the scale to achieve desired results. This is what we wanted to avoid by writing and following a pre-analysis plan. Since prominent repositories for pre-analysis plans hosted by the American Economic Association and the International Initiative for Impact Evaluation compile pre-analysis plans for randomized controlled trials (RCTs) but not other types of studies, we published our pre-analysis plan on the CGD website (available in two parts, here and here).
It has also been claimed that the use of pre-analysis plans can make null findings less likely to be rejected for publication. We certainly hope this is the case—research on important topics ought to be equally likely to be submitted, published, and reported on no matter what the finding. At stake in a full and accurate understanding of deforestation and malaria are the lives and health of millions of people and the conservation of millions of hectares of forest.
Comparing deforestation to malaria prevalence in humans
Positive association between deforestation or forest cover reduction and malaria?
Wayant et al., Geospatial Health, 2010
Univariate correlation between NDVI-forest cover change interaction and malaria case rates over 260 months in two departments in Paraguay
Forest cover change
Pattanayak et al., ERID working paper, 2010
Conditional correlation in cross-sectional regressions of primary and secondary forest area and 500 household surveys in Flores, Indonesia
Forest cover, family size, number of children, gender, native born, child age, caregiver age, caregiver health, caregiver education, household wealth, housing quality, village public health facility, village population, village area, village elevation
Olson et al., Emerging Infectious Diseases, 2010
Conditional correlation in cross-sectional regressions of deforestation and malaria incidence across 54 health districts in Mancio Lima County in Acre, Brazil
Deforested land area, deforestation, access to care, area
Hahn et al., PLoS ONE, 2014a
Cross-sectional regression of deforestation and incidence in 602 municipalities of the Brazilian Amazon
Deforested land area, deforestation, Paved road density, unpaved road density, area affected by fire,
Valle and Clark, PLoS ONE, 2013 (see also Hahn et al., 2014b, Valle 2014)
Association between forest cover and malaria incidence across 401 20km radii around towns in the Brazilian Amazon
Forest cover, deforestation, population, lagged precipitation, lagged drought index
Garg, job market paper, 2014
Panel regression between occurrence of village-level outbreak and MODIS monthly hectares of district-level deforestation across four islands of Indonesia
Deforestation, village poverty, village health, access to hospital, population density, rice field area, proximity to river, elevation, rainfall
Terrazas et al., Malaria Journal, 2015
Correlation between incidence of malaria and average annual deforestation rate across 62 municipalities of the state of Amazonas, Brazil
Forest cover, deforestation human development, education, income, poverty, unemployment, health surveillance, watercourses
Fornace et al., Emerging Infectious Diseases, 2016
Association between incidence of P. knowlesi and historical forest loss within a 1-5 km radius of 405 villages in Sabah, Malaysia
Forest cover, deforestation, elevation
Austin et al., AIMS Environmental Science, 2017
Structural equation model of malaria prevalence rate in 2013 vs self reported changes in forest cover (FAO FRA) 2012-2013 across 67 countries
Forest cover change, latitude, GDP per capita, Sub-Saharan Africa, agriculture as % of GDP, rural population growth, public health conditions
Bauhoff and Busch, CGD Working Paper, 2017
Conditional correlation in cross-sectional regression of deforestation and malaria prevalence in 60,305 children in 17 African countries; fever in 469,539 children in 41 countries
Forest cover, deforestation, temperature, precipitation, child age, floor type, water source
Since 2008, programs for Reducing Emissions from Deforestation and Forest Degradation Plus (REDD+) have pioneered the use of performance payments to reduce tropical deforestation. While these programs generated hopes of slowing climate change and protecting indigenous peoples’ access to their lands, they also generated fears over misuse of funds, abuses of rights, displacement and commodification of the environment.
In response, international forest agreements have been “aidified”—moving away from their initial “hands-off” approach and adopting detailed implementation plans and preparatory phases. This shift has had consequences for the pace of implementation, for slowing deforestation, and for the status of indigenous peoples living in and near these forests.
A new CGD working paper—“Guyana’s REDD+ Agreement with Norway: Perceptions of and Impacts on Indigenous Communities”—describes how this process unfolded in Guyana. In this case, it seems that neither hopes nor fears were fully realized. But the consequences are still significant, as the imperatives of preserving the forest and securing indigenous rights have entered the country’s political discourse and survived a significant change in government.
In 2009, when Norway and Guyana signed a $250 million agreement to preserve tropical forests, the two governments envisioned a financial mechanism that would rapidly channel resources into this nation of 770,000 people—with a forest the size of England—to support low-carbon economic development and preempt pressures that might otherwise lead to deforestation. Adding urgency to this initiative, a government report based on analysis by McKinsey consultants warned that deforestation could rise from less than 0.3% to over 4% annually due to agricultural expansion.
The Guyana-Norway agreement was promoted as another “hands-off” agreement, similar to Norway’s previous agreement with Brazil. It established a contribution of $5 per ton of greenhouse gas emissions averted for keeping deforestation below a historical rate—in this case a target of less than 0.275% of Guyana’s standing forests. But in practical terms, the agreement was increasingly “hands-on.” In particular, Guyana had to establish a strategic framework, engage in a national consultation process, improve governance, and channel funds through an intermediary—the World Bank— which added further conditions for disbursements.
The consequence of this “hands-on” design was to slow implementation and limit adaptability. Norway had disbursed about $125 million in performance payments by 2016, but much of this money was held for investment in the Amaila Hydropower project (which was subsequently cancelled) and most of the rest was held up in the Guyana REDD+ Investment Fund (GRIF). The GRIF is administered by the World Bank, which focused its attention on compliance rather than technical support. As for adaptability, in retrospect, the biggest problem was the program’s failure to anticipate and address the threat posed by gold mining (see Figure 1).
We cannot know if a more “hands-off” REDD+ program would have worked better. It might have been more agile, spending less time on compliance with procedure and more attention on the actual trends which required timely action. However, it could also have stalled if the government failed to exploit this flexibility effectively.
Deforestation on Amerindian Lands, Gold Production, and Gold Prices (1995-2015)
Source: Guyana Forestry Commission (2015); Kitco; and Guyana Geology and Mines Commission
Few harms—or benefits—for Indigenous peoples
Given the slow pace of implementation, it is not surprising that the main fears voiced by indigenous groups have not materialized, nor have their hopes. The Government’s new national strategy did not lead to land seizures or threaten traditional cultivation practices. But it also did not generate many benefits. For example, under the Amerindian Land Titling Project, only 15 certificates of title were issued to Amerindian villages—well below the program’s original goal of 68. The national consultation process was unprecedented, involving 0.5% of the population, but was short-lived and criticized as “one-way.” A key element of the national strategy, the Amaila Falls hydropower project, was ultimately cancelled, eliminating jobs and financing that were supposed to benefit indigenous communities, but also relieving a significant pressure on the forest. At this stage, Amerindian groups seem to have lost interest in REDD+, with leaders skeptical that anything will materialize.
Forest protection and indigenous rights on the agenda
The author of the paper, Tim Laing, argues that the main consequence of the REDD+ agreement in Guyana may have been to secure a place in the national debate for climate change, forest protection, and indigenous rights. The national low-carbon development strategy launched in 2009 was closely associated with President Bharrat Jagdeo, who negotiated and signed the REDD+ agreement. The consultation process was criticized in particular for not engaging opposition members in Parliament. Yet, the government elected in 2015 (and led by parties that were in opposition to Jagdeo) has preserved the main elements of the low-carbon approach in its Green State Development Strategy. Smaller-scale forest conservation projects and efforts to address mining are also underway, but ultimately the biggest impact on Guyana’s forests and indigenous peoples will depend on national policies, not local projects.
Testing the “hands-on” approach
We will never know if a more “hands-off” approach with greater flexibility could have moved faster and with more agility to forestall deforestation—or what impact it would have had on indigenous peoples. However, we will get to see the results of being “hands-on.” The most lasting effects of REDD+ implementation in Guyana over the last nine years are typical of the “preparatory phases” envisioned by the UNFCCC prior to full-scale performance payments. These measures include establishing a forest monitoring system; adopting a low-carbon development strategy; and structuring a multi-stakeholder consultation process. Alone, these measures are unlikely to slow deforestation or protect indigenous peoples. Rather, progress will depend on the government tackling unresolved issues involving land rights and conflicts with extractive industries. In this regard, the interests of REDD+ and indigenous peoples appear closely aligned. Guyana needs REDD+ and rights.
This report examines the impact of the REDD+ agreement between Guyana and Norway on indigenous communities in the country. It aims to understand the concerns, hopes, and fears of indigenous communities at the start of the agreement, and the effects, if any, that communities have faced from REDD+.
Fuel subsidies are bad for the planet, expensive, and often regressive. With new, high-frequency price data researchers explore why they’re also so hard to kill.
Economists rarely reach the kind of consensus that we see on the topic of fuel subsidies. Bottom line: they’re a really bad idea. On the one hand, they encourage us to burn more fossil fuels and kill the planet, and on the other hand, they’re a massive drain of fiscal resources—equivalent to 6.5 percent of global GDP according to the most eye-popping IMF estimates—that are very poorly targeted at the poor.
Yet attempts to roll back subsidies often provoke strong political backlash. Movements from the Arab Spring in Jordan to Occupy Nigeria have marshalled popular resistance to raising fuel prices, and generally won.
So in the wake of the Paris accord, are countries doing anything to unravel these inefficient subsidies? At a CGD event this week organized by my colleague Todd Moss, Michael Ross of UCLA presented his multi-year project with Paasha Mahdavi of Georgetown and others to gather high-frequency gasoline prices from 157 countries around the world since 2003.
Global fuel subsidies are falling—but mostly due to a falling market price in the face of fixed price ceilings, not politically difficult reform
Two things jump out from the visualizations of their data that Ross, coauthor Chad Hazlett, and Mahdavi present in their recent paper in the journal Nature Energy.
First, the price you pay at the pump in most countries is higher than the global benchmark price of fuel, i.e., most countries are net taxers—not subsidizers of fuel. As it turns out, 95 percent of global fuel subsidies are concentrated in just 22 countries, all of which are also oil exporters. (Note the definition of a subsidy here is more restrictive than the expansive definition that IMF researchers use to get to 6.5 percent of GDP.)
Figure 1: Gasoline prices by country and benchmark price trends over time – Ross et al (2017)
Source: reproduced from Ross et al (2017): “Individual country price trends are shown in grey, and the global benchmark price is plotted in red. Countries fall into two groups: those with prices above the benchmark (who tax gasoline) and those below it (who subsidize it). The overall shape of many trend lines is driven by changes in benchmark price. In general, countries that tax gasoline also allow the price to fluctuate in tandem with global prices, while those that subsidize gasoline keep their prices fixed for long periods. All prices are in constant 2015 USD per litre.”
Second, the lower lines are much less squiggly. That means that countries which subsidize fuel, by charging a retail price below the world price, tend not to let the price move with market fluctuations—whereas taxes are more often defined in proportional terms.
Fixing the retail price has an interesting side-effect: when the world price of fuel drops, the subsidy—defined as the gap between the world price and the retail price—automatically falls. Cheaper gas masquerades as subsidy reform! Mahdavi et al note that most reductions in fuel subsidies since 2014 have come from this phenomenon—which is fine from a fiscal perspective, but isn't going to save the planet or our lungs from air pollution.
Figure 2: Net taxes and subsidies by country in 2003 versus 2015 – Ross et al (2017)
Source: reproduced from Ross et al (2017): “Eighty-three countries increased their net taxes or reduced their net subsidies between the first six months of 2015 and the first six months of 2003; they are shown in blue and lie above the 45◦ dashed line. By contrast, 46 countries reduced net taxes or increased net subsidies over the same period, and are shown in dark orange below the 45◦ line. While most countries had net taxes in both periods (placing them in the upper-right quadrant), 14 countries had subsidies in both periods (placing them in the lower-left quadrant). Just two countries changed from net taxers to net subsidizers (lower-right quadrant) while two others changed from net subsidizers to net taxers (upper-left quadrant). Text size is proportional to average gasoline consumption.”
Overall, are things getting better or not? The short answer is yes, but slowly. From 2003 to 2015, most countries started and ended as net taxers. And countries gradually raised gas taxes, shown by the cloud of names above the diagonal line in the upper-right quadrant. But most countries who started off with net subsidies kept those subsidies, as see in the population of the bottom left quadrant relative to the upper left.
So why do governments subsidize fuel? And why are climate-killing, anti-poor subsidies considered vaguely left-of-center and populist?
The proximate cause is obvious: attempts to remove subsidies are often met with angry protests. Subsidies are politically popular. But at a deeper level, why?
Trust in government appears to be one factor. In a forthcoming paper in Comparative Political Studies, Jordan Kyle looks at public support for replacing fuel subsidies in Indonesia with a targeted transfer program—in which, crucially, monies would have to pass through local government. Kyle documents large variation in corruption in existing programs and finds that this corruption is highly predictive of support for fuel subsidy reform. In villages where transfers tend to go missing, poor households in particular would prefer to keep inefficient fuel subsidies than move to a transfer system.
In a separate project in Tanzania with colleagues Nancy Birdsall, Jim Fishkin from Stanford, and Mujobu Moyo, we found hints of a similar dynamic: citizens who have more trust in the current government were more supportive of exporting Tanzania’s recently discovered natural gas reserves and using the money for other purposes—whereas those with low trust were somewhat more inclined toward using the gas on shore or subsidizing fuel.
The technocratic hope, embodied in India’s Aadhaar system of biometric identification, is that new technology will make it possible to replace inefficient subsidies with reliable electronic transfers that don’t leak and are beyond the reach of local corruption and rent-seeking. My colleagues Neeraj Mittal, Anit Mukherjee, and Alan Gelb have documented in detail how the Indian government has pursued this goal with the reform of cooking fuel subsidies. The politics of Aadhaar remain contentious to say the least.
Using their price data, Ross and Mahdavi have now turned to exploring the determinants of successful (i.e. lasting) reform, asking who raises the retail price of gas and when? That work is still in process, but preliminary results suggest a few factors. Reform is more likely when prices are low (so a price hike is less painful), countries face sovereign risk (so the expense of subsidies bites), and elections are far off.
At the end of the seminar, Ross noted that so far their model has very little explanatory power. A slew of political and economic factors can't seem to predict when fuel subsidy reform will happen. And that seems to be a good metaphor for experts’ understanding of this topic more broadly. Fuel subsidies are bad economics. They cost gobs of money, increase carbon emissions, and fail to reach the poor. But they remain popular, often with the people we think benefit the least.
Yesterday, the German Social Democrats (SPD) voted in favour of pursuing in-depth coalition talks with Angela Merkel’s Conservatives (CDU). Although the chancellor’s battle for political survival is far from over (as the final coalition agreement will have to be backed by the majority of SPD’s 443,000 party members), it is likely that we will see a remaking of a grand coalition. Here we look what that would mean for Germany’s leadership on development.
After coalition talks for a “Jamaica-coalition” with the Greens and the Liberals failed in mid-November, nearly four months after the elections, Angela Merkel’s CDU hadn’t formed a new government. Having turned to the SPD since, with which she governed twice already, and which initially rejected another term of a grand coalition, it appears as if they’ve now reached a preliminary coalition agreement for another grand coalition which does look promising for development. However, for the actual in-depth negotiations, we have four policy recommendations which should find their way into the final coalition contract:
Continue to welcome migrants and improve integration—this will be a win-win for both migrants and Germany
Use increased defense spending for German support for UN peacekeeping
Continue to invest in global public goods for the environment through subsidies for renewables and energy R&D
Use the billions of freed up ODA due to decreasing refugee hosting cost to increase funding for multilaterals
Is Germany’s leadership on migration under threat?
Germany is a development leader, mainly due to its migration policy and its openness to refugees and asylum seekers, as this year’s Commitment to Development Index (CDI) has demonstrated. Migration and integration are dominant themes in Germany’s political discourse, which is not highly surprising after Germany’s intake of a very high number of refugees and asylum seekers in 2015. As a consequence of this and the concomitant success of the right wing populist party AfD entering parliament for the first time, the CDU has now taken less liberal positions on migration. The main battleground during coalition talks was how many additional refugees Germany should accept in the coming years. The final preliminary coalition agreement states that the number of refugees should not exceed 220,000 annually (this excludes labor migrants and the potential additional people seeking asylum from persecution, which cannot be capped for constitutional reasons). Even adding labor market migrants on top, this would be a massive decrease from the record 2 million immigrants that came to Germany in 2015 (we calculate this to be equivalent to “880,000 poverty weighted migrants” from the extremely poor countries, because of the many refugees coming from poor Syria).
In order to limit the numbers to this cap, several measures are listed. These include:
Better international development cooperation
Increased humanitarian commitment
Bigger commitment to international peacekeeping (incl. international police missions)
Fair trade and agricultural policy (fair trade deals)
Intensified contributions to the protection of the climate
Restrictive arms exports
We welcome all these commitments and measures, which are in itself are all part of our Commitment to Development Index (CDI). However, the fact that these policies are linked to the reduction in the numbers of migrants is problematic:
The preliminary coalition agreement aims to set up a commission to address the refugee crisis “root causes.” A recent paper by CGD’s Michael Clemens finds that aid spending is not generally in line with the root causes rhetoric and that the sectoral split of aid to migrant-origin countries is no different to that of aid spending other countries. Also, they find aid can only deter migration, and improve growth, employment, and security to a limited degree. As research suggests, people are more likely to migrate when their country of origin gets richer, contrary to the belief of many donors that using Official Development Assistance (ODA) to improve living conditions in sending countries will deter people from migrating. Donors should use aid not to deter migration but make it better for both host country and migrants.
The coalition agreement leaves the backdoor open for welcoming labor migrants (as they are not included in the suggested cap of 220,000 migrants annually) which an aging society like Germany could benefit from. While the preliminary coalition agreement presents several additional measures to support economic performance in Germany, research suggests that using the potential of its refugees and migrants can be beneficiary to the economy. Therefore, the artificial distinction between labor migrants, which according to the preliminary coalition agreement should be attracted to the German labor market, and asylum seekers and refugees is contradictory. Unlocking the potential of refugees to contribute to the labor market and the host state through tax and social security contributions will be beneficial to the host nation, the migrant and the country of origin (via remittances. etc.). We therefore encourage the grand coalition to keep its openness towards migrants, not only to live up to its humanitarian obligations but also to support its labor market with both low- and high-skilled workers.
One group of skilled workers desperately in demand are nurses and caregivers, which is reflected in the fact that the care sector is discussed with a whole paragraph in the preliminary agreement. By 2030, the German health industry is estimated to lack around 3 million skilled workers. One step towards a long-term, better balanced and sustainable health sector would be the introduction of a Global Skills Partnership. Pilot projects could combines training for nurses or caregivers funded by a donor country (Germany) with the permit to work temporarily in this country. Such mechanisms benefits both Germany and the chosen country of origin, decrease pressure on health systems in aging societies and equip migrants with skills and experience.
Further, the coalition aims to reduce and limit arms exports. As the CDI 2017 demonstrates, this is an important step as Germany has room for improvement in restricting arms exports to poor and undemocratic countries. In the past, it has sold arms to countries which are supporting sides in the Yemeni Civil war. Its proposed export ban to participants in this conflict is a step into the right direction. Also encouraging are the commitment of both the CDU and SPD to work towards a joint European strategy on arms exports.
Germany should step up its commitment to the environment
Experts predict that it is unlikely that Germany will meet the 2020 Paris agreement of reducing emissions by 40 percent. The new coalition is committed to close the gap between current emissions and their 2020 pledge as quickly as possible. But, even though it is shameful that a rich country like Germany will not meet its pledge and expects developing countries to meet theirs, Germany only emits 2 percent of greenhouse gases globally and might be in a better position to provide global public goods to lower greenhouse gases. The coalition wants 65 percent of energy to come from renewables until 2030, mostly through photovoltaics and offshore wind energy. We hope that this will be achieved through renewable energy subsidies, which are a global public good, and many economists agree that high solar energy subsidies in Germany have produced net social benefits for the world. A recent study estimated these benefits to be around $18.8 billion. The same study quantified the effect of Germany’s national subsidies for solar adoption globally and found that roughly a third of solar adoption due to technical improvement result from German subsidies. Most of the solar adoption occurs outside of Germany—those spillovers are classic global public goods and beneficial to developing countries.
Better international development cooperation is welcome, but what does it mean?
Germany will have to massively ramp up overseas development spending, and fast, as the Coalition aims to continue to meet its 0.7 percent commitment, the absolute value of which will only increase due to robust GDP growth at 2 percent. But more importantly, the 0.7 percent target was only met for the first time in 2016, because of a rapid increase in refugees hosting costs; Germany spent $6.2 billion (or 25 percent) of all their ODA in 2016 on refugee hosting costs. In order to maintain the 0.7 target when only 220,000 refugees arrive, overseas development assistance would have to increase rapidly. There is a unique opportunity to redirect this $5 billion or so to multilaterals: the preliminary coalition talks frequently mention better aid, more international cooperation and so on. Yet, Germany only spends about $5 billion (or 20 percent) of all ODA on multilaterals (international average: 29 percent of all ODA is multilateral). Germany’s own development agency will likely be overwhelmed by such a rapid increase in funding. All else being equal spending through multilaterals has advantages: one can piggyback on the existing infrastructure of multilaterals, that have the economies of scale. And a recent review paper on multilateral vs. bilateral aid found that multilateral spending is less politicised, more demand-driven, more selective in terms of poverty criteria, much less fragmented and is better in terms of global public goods provision. Germany should live up to its repeated calls for international cooperation that can be found in both party manifestos and the coalition agreement, and channel the freed up budget for refugee costs to multilaterals.
What’s next for the coalition agreement?
After last night’s SPD party congress, the conservatives and social democrats will now start negotiating on the final coalition deal that has the potential to have a big impact on development. Still, a final agreement and ultimately a new government could be in jeopardy as the leader of the SPD initiated a game of chicken: the party’s president decided that its members should have the final say about whether or not to accept the coalition agreement, and if the conservatives do not make sufficient concessions in the negotiations ahead, and the party members reject the coalition agreements, there will likely be re-elections. However, experts believe the party base will agree to the coalition agreement given that in 2013, 78 percent of party members voted for a renewal of the grand coalition. If Germany indeed has a new government by Easter, it should ensure to continue its path towards being a global leader on development and the provision of global public goods, as outlined in the preliminary coalition agreement.
Of course, the world hasn’t stood still since we hit “send” on our manuscript in October 2016. The scientific and economic literature on the importance of forests for climate and development continues to grow. More noticeably, near-term politics have shifted in decidedly unhelpful ways, dominated by the new American presidential administration. However, the fundamental messages of our book remain as important and urgent as ever: tropical forests are an undervalued asset for fighting climate change and promoting development, and payment-for-performance finance holds promise as a way for rich countries to partner with developing countries to reduce deforestation.
If we were to write a second edition to Why Forests? Why Now? today we’d have plenty of new material to add. Chapter by chapter, here’s a roundup of a few of the most significant developments of 2017:
New evidence confirms that tropical deforestation is a big part of the climate problem—and tropical forests are an even bigger part of the solution.
In Chapter 2 we described how carbon dioxide emissions from tropical deforestation are a large share of the climate problem and keeping tropical forests standing can be an even larger share of the potential solution. New research is showing how deforestation warms the planet in more ways than just by releasing carbon dioxide: Natalie Mahawold and her colleagues quantified how tropical deforestation affects the climate through methane and nitrous oxide emissions, while Natalie Schultz and her colleagues quantified the effect of deforestation on local temperatures, with daytime heating exceeding nighttime cooling, especially in the tropics. New studies have affirmed the critical role of forest protection in meeting the goals of the Paris climate agreement: avoiding deforestation and other land-based climate solutions can contribute more than one-third of the abatement needed to meet a 2 ˚C climate goal, according to Bronson Griscom and his colleagues, and one-quarter of the abatement needed to meet a 1.5 ˚C target, according to Stephanie Roe and her colleagues.
Even more links have emerged between tropical forests and development.
Forests are still the best option for carbon capture and storage.
In Chapter 5 we showed how reducing deforestation can make the global response to climate change cheaper, cooler, and faster. We illustrated how forest protection is far more ready than other carbon-capture-and-storage prospects with a comparison to the ill-fated Kemper “clean coal” plant in Mississippi. After years of delays, cost overruns, and corruption allegations, the Kemper CCS project was finally shuttered in June 2017. The pan-tropical modeling by Jonah Busch and Jens Engelmann that underpinned the book’s estimates of how much deforestation could be reduced where and at what cost was published in Environmental Research Letters in December.
A field trial shows that paying to keep trees standing pays off.
In Chapter 6 we recounted the history of decades of initiatives intended to “make forests worth more alive than dead”—non-timber forest products, bioprospecting, ecotourism, and the like. A new paper by Seema Jayachandran and her colleagues was the first to evaluate the cost-effectiveness of payments for ecosystem services using the gold-standard randomized controlled trial method, finding that emissions could be avoided for $2.60 per ton of carbon dioxide by paying landowners in Uganda to keep trees standing on their property. This adds another strand to a rope of evidence finding that forest protection offers plentiful emission reductions for less than $10/ton.
New research indicates that formalizing indigenous land rights can make a difference in reducing deforestation.
In Chapter 7 we presented approaches that have been shown to stop deforestation, both in Brazil and beyond. These include designating protected areas, recognizing the territories of indigenous peoples, enforcing forest laws, and paying land owners for their forests’ ecosystem services, as well as limiting the destructive potential of roads and clearing for the production of agricultural commodities. Empirical evidence on the effect of formalizing greater land rights for indigenous people is nascent, but that’s starting to change. Allan Blackman and his colleagues showed that awarding land title to indigenous people reduced deforestation in Peru.
Progress toward deforestation-free commodity supply chains is moving slowly.
In Chapter 8 we described how global demand for commodities produced in the tropics is a key driver of deforestation, and how perverse policies in consumer countries such as biofuel subsidies exacerbate the problem. We also identified “demand-side” policies that could be part of the solution by providing incentives for legal and sustainable production. A 2016 assessment documented slow progress toward achieving corporate targets to get deforestation out of commodity supply chains, and multi-stakeholder coalitions are now focusing their attention on implementation at the scale of subnational jurisdictions.
The action on REDD+ is now at the country level.
In Chapter 9 we recounted the fraught history of international negotiations on forests, and how the link to climate change shifted a confrontational dynamic to one of cooperation on Reducing Emissions from Deforestation and forest Degradation (REDD+). With endorsement of REDD+ in the Paris Agreement, the center of gravity has shifted to country-level implementation in the context of Nationally Determined Contributions toward the goals of the Agreement. More than two dozen countries have now submitted reference levels to the UNFCCC as a step towards eligibility for results-based payments under REDD+, although many are incomplete.
Forest politics remain volatile in Brazil and Indonesia.
In Chapter 10 we analyzed the political economy of forest resource management in developing countries, with a particular focus on Brazil and Indonesia. In both countries, domestic constituencies for forest conservation have continued to struggle against the forces of deforestation-as-usual, while international actors have applied a mixture of carrots and sticks to incentivize reform. In Brazil, an uptick in deforestation in 2016, attributed in part to law enforcement leniency in the midst of a broader political and economic crisis, led to a decrease in performance-based REDD+ payments in accordance with the provisions of its agreement with Norway. In 2016, Indonesia became the first country in the world to obtain the right to issue licenses for the export of legally certified timber to the European Union, reflecting progress in addressing illegal logging. In 2017, government efforts to protect carbon-rich peatlands were dealt a setback when, in the face of industry pressure, the Supreme Court struck down a 2017 ministerial regulation imposing new obligations on holders of fast-growing timber concessions.
In the US, hopes for action on forests and climate have shifted to non-federal leadership.
In Chapter 11 we focused on the politics of REDD+ finance in rich countries, describing how recognition of reduced tropical deforestation as a cost-effective climate mitigation option layered on top of existing rationales for international cooperation to protect forests, such as conservation of biodiversity. In 2017, support for international cooperation on forests weathered national elections in Norway, Germany, and the United Kingdom. In contrast, the unexpected results of the US 2016 presidential election, and the subsequent announcement of the Trump administration’s intention to withdraw from the Paris Agreement, dashed any hopes of stepping up US finance for forests and climate change. However, the abdication of climate leadership at the federal level has injected new energy into non-federal initiatives such as the State of California’s cap-and-trade program, which is now linked to the Canadian provinces of Quebec and Ontario, and retains the possibility of including international forest offsets in the future.
The missing piece? It’s still finance.
In Chapter 12 we described how the availability of international finance has fallen far short of the amount needed to constitute meaningful incentives for change in tropical forest countries, and how disbursement of pledged REDD+ funds has been slowed by a process of “aidification” by donor agencies. In 2017, the board of the Green Climate Fund approved a $500 million pilot program for results-based payments for REDD+, while a handful of countries inched their way toward concluding the first Emission Reduction Performance Agreements under the Forest Carbon Partnership Facility’s Carbon Fund. And a report assessing progress toward Goals 8 and 9 of the New York Declaration on Forests revealed the continuing large gap between forest mitigation potential and available funding. So finance remains the missing piece.
2018 will no doubt be another exciting year for tropical forests, climate, and development. We invite you to start it off right by downloading a free copy of Why Forests? Why Now?