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Clay Ogg is a leading author and researcher, recently retired from the U.S. National Center for Environmental Economics in Washington, D.C., whose studies focus on benefiting farmers, forests, and consumers. Here he tells us about widespread government subsidies that are -- perversely -- driving forest destruction across the tropics, and what we can do to stop them.
Government farm subsidies in tropical countries have grown to where they dwarf forest preservation programs by about a hundred to one. These massive farm subsidies are now the biggest global driver of tropical deforestation.
Astonishingly, the explosive growth of tropical farm subsidies occurred during the past decade -- at the same time that international climate agreements have called for eliminating deforestation drivers.
Farm subsidies in key countries, such as Brazil and Indonesia, now outspend forest-preservation programs, including REDD programs to reduce carbon emissions, by over 100 to 1.
Smarter Farm Programs
Fortunately, nations can work together to build remedies into their farm programs that greatly benefit both farmers and forests.
For example, farming subsidies that encourage land and fertilizer use are undermining crop prices and income-support goals for farm products -- directly harming farmers.
To prevent this, Europe and the U.S. collaborated for decades as part of their trade agreements, to avoid perverse subsidies for their farmers.
Even better, some countries have designed new “decoupled” subsidies that stop encouraging farmers to plow up more land or apply more fertilizer.
And in the U.S. and Brazil, conservation compliance programs go much further in leveraging forest preservation.
Conservation compliance denies some or all subsidies for the entire farm if a farmer destroys protected wetlands, tropical forests, or savannas. The larger the subsidy, the more powerful is this sanction.
While decoupling measures reform subsidy programs broadly, conservation compliance can target greenhouse-gas hotspots, such as Indonesia’s vast peat bogs -- which produce enormous carbon emissions and clouds of noxious haze when burned.
With decoupling measures, nations such as Indonesia that seek to expand production of certain crops, can balance those production ambitions with conservation-compliance sanctions targeted to greenhouse-gas hotspots.
Trade Reform Synergies
Most tropical countries experiencing rapid forest loss have recently increased farm subsidies -- a lose-lose proposition for the environment and farmers.
For example, popular fertilizer subsidies, which aim to support both farmers and consumers, are particularly guilty in encouraging nitrous oxide pollution, a potent greenhouse gas -- which is an inevitable by-product of using nitrogen fertilizer.
In addition, fertilizer subsidies on newly converted cropland encourage deforestation.
Denying fertilizer subsidies on new cropland would prevent them from promoting more deforestation.
In industrial nations, the OECD (Organization for Economic Cooperation and Development) tracks success in decoupling farm subsidies, and researchers have found that farmers benefit from these reforms.
Beyond this, economists conclude that fertilizer subsidies are less efficient in increasing crop production compared to research, education, and rural roads.
Thus, again and again, from many different perspectives, farm subsidies are counterproductive in harming the environment, promoting tropical deforestation, and hitting farmers where it hurts the most -- in their pocketbooks.
Yet despite clear economic opportunities to reform farm subsidies, Indonesia and other countries seek to greatly expand palm oil and other crop production. Nearly a fourth of gross farm income in Indonesia comes from government subsidies, and these are not decoupled subsidies.
Targeting conservation-compliance sanctions to focus on greenhouse gas-hotspots, such as peat bogs, would allow Indonesia to balance its agricultural-expansion ambitions while reducing carbon emissions.
For example, only a quarter of Southeast Asia’s deforestation occurs on peat bogs. Yet carbon emissions associated with peat bog burning and drainage are enormous -- equal to a fourth of all emissions from deforestation globally.
Together, deforestation and peat-bog drainage account for 15 percent of the world’s carbon emissions -- and tackling these emission sources is a crucial part of any strategy to combat harmful climate change.
Overall, conservation compliance is highly effective -- it only gets activated when a farmer contemplates forest destruction. And it is much easy to focus conservation compliance on the forests that most need urgent protection.
For example, Brazil’s conservation-compliance program has so far saved an estimated 270,000 hectares (685,000 acres) of tropical forest from destruction.
Transforming Deforestation Drivers
Rapid growth of farm subsidies undermines international agreements that attempt to address deforestation drivers, and subsidies also undermine crop prices -- hurting farmers.
For such reasons, countries need to work together to reform subsidies, to prevent farm programs from encouraging fertilizer use and from causing more forest destruction.
And conservation compliance goes further, transforming deforestation drivers into forest savers. The larger the subsidy, the larger is the leverage of conservation compliance, as it protects tropical forests by denying subsidies to farmers who destroy them.
Thus, there is enormous scope to relieve pressure on tropical forests, reduce harmful carbon emissions, and help farmers all at once.
To do this we need to strongly support efforts to reform farm subsidies in tropical nations and encourage highly beneficial programs such as conservation compliance.