Risk Management in REDD+ and afforestation projects

Forest fires in the Amazon region have this year reached well-above long-term averages. Repeated reports in 2019 stated huge areas of severely damaged forest areas across Brazil, Bolivia and Paraguay. No First Climate supported forest protection projects have been directly affected by the fires. Nevertheless, the question still arises of how to counter the risk of forest fires within the framework of certified climate protection projects. We asked First Climate expert, Jacob Bourgeois, about risk management in forest protection and reforestation projects.

“We are cooperating with a number of REDD and afforestation projects in the Amzon region, many of which are in the Brazilian states of Mato Grosso, Pará, Rodônia and Amazonas, which are particularly affected by the current fires,” explains Jacob Bourgeois, Senior Consultant at First Climate. Fortunately, despite their locations, neither the immediate project areas nor their direct surroundings were directly impacted this year. That said, the expert sees indications that the situation on site is changing and that the risk of fire-related forest degradation is likely to increase in the future.

Background: Forest Fires and Tropical Rainforests
“Due to the prevailing climatic conditions, tropical rainforests such as those in the Amazon region are generally not that susceptible to major forest fires,” reports Jacob Bourgeois. Widespread and long-lasting droughts, such as those which have occurred in the Amazon in recent years, have therefore increased the risk of forest fires. “The risk increases with every tree that falls,” says Bourgeois. “Where the leaf canopy is broken up by logging, the forest loses its natural protective layer. The clearing dries up and provides possible more potential fuel for fires”
The First Climate project partners on site also report that the fires which occur mainly affect areas that have already been partially or completely cleared and only very rarely do they reach untouched forest areas. Against this background, the risk of losing protected forest areas that serve as CO2 storage as a result of forest fires can be assessed as rather low. Nonetheless, the question arises of how active risk management can be guaranteed in forest protection and afforestation projects.

Risk Management in REDD+ and afforestation projects:

Three questions to First Climate expert Jacob Bourgeois on the principle of offsetting emissions by protecting forests

Jacob Bourgeois
Senior Consultant

Jacob advises clients with respect to CORSIA compliance, renewable energy strategies, carbon offset methodology and project development, target setting (e.g. SBT), insetting and reporting protocols. Before joining First Climate as a Senior Consultant, Jacob gained experience in impact certification as a Programme Officer for Gold Standard’s Land Use and Forest sector where he managed a portfolio of agriculture and forestry projects and supported technical initiatives on behalf of Gold Standard in the land use space.

The essence of any forestry-based emission reduction project is permanence. Projects must sequester carbon or prevent emissions from deforestation over decades. How does this reflect in the development of these projects?

Jacob: All projects are required to undergo a strict forest-related risk assessment for verification that takes into consideration regional or location-specific risk factors – for example political risks, natural disasters, increasing economic pressure and also the risk of forest loss due to wild fires. All these risks need to be assessed and verified by the auditor and the standard. Not only do the projects have to demonstrate how they plan to cope with the specific risks, they also have to put in place a plan to deal with risks as far as feasible. This might include appropriate fire prevention measures.

 

And how are the identified risks dealt with that are beyond control of the project developer?

Jacob: To cover these risks, all forest protection projects across the globe that are registered under the same standard are required to contribute some of their credits to a non-permanence risk-buffer pool. The volume of credits that each project must contribute can be higher or lower depending on the risk profile of each individual project. Essentially, this is a reserve account of credits that cannot be traded and will only be unlocked in case of reversals. These buffer credits are maintained and retired for only one purpose, which is to compensate for forested land that has already issued credits, but that has suffered a reversal – for example due to a loss of trees in a fire.

 

That is to say a credit always keeps its value in terms of the emission reductions it represents, even if part or all of the project’s forested land was lost?

Jacob: That’s correct. Even if a certain project can’t fulfill the permanence criterion and an already issued credit suffers from a reversal, credits will be drawn from the risk buffer from projects elsewhere to ensure that the buyer’s offset claim remains valid at any point.

What is important for forestry projects when it comes to climate change is not what happens to any one individual tree or hectare of land, but ensuring that the stock of forested land remains the same or increases overall. The risk buffer acts as an insurance mechanism to account for geographically concentrated risks. In most cases, however, only part of a project will be affected by a disaster, so it is usually enough to use a project’s own buffer credits to compensate for lost areas.