Corruption and REDD: “The large and menacing elephant in the room”

One of the difficulties that REDD faces is corruption. “Talking about corruption in many of the countries participating in REDD+ isn’t easy; often it’s the large and menacing elephant in the room,” points out Rick Jacobsen of Global Witness.

Transparency International’s new report “Keeping REDD+ Clean: A Step-By-Step Guide to Preventing Corruption”, aims to stop corruption in REDD before the money starts flowing. The report can be read and downloaded here.

Transparency International defines corruption as “the abuse of entrusted power for private gain”, which by including actors outside the state is broader than the World Bank’s definition, “the abuse of public office for private gain”. The report focusses only on addressing corruption in countries on the receiving end of REDD payments and is aimed at the “readiness phase”. While a focus on corruption in countries receiving REDD finance is urgently needed, REDD-Monitor looks forward to a follow-up report looking at corruption in REDD at the international level. A useful place to start would be Larry Lohmann’s 2010 paper, “Regulation as Corruption in the Carbon Offset Markets”.

Transparency International’s report is structured in four modules:

1. Introduction to Assessing Corruption Risks

2. Introduction to REDD+ and Forest Carbon Projects

3. Introduction to Corruption Risks in National REDD+ and Forest Carbon Projects

4. Identifying, Prioritising, Analysing and Addressing Corruption Risks in Forest Carbon Projects and REDD+

Module 2 gives examples of voluntary forest carbon and socio-economic standards, with the comment that,

Overall, standards are aimed at providing guidance to developers and piece [sic] of mind to buyers that the key challenges of additionality, permanence, leakage, double counting, accounting and co-benefits have been addressed.

However, Transparency International’s report does not investigate whether the standards actually address all these issues. The assumption is that the standard setting organisations are omniscient (how else could they know whether a project is additional and permanent?) and above corruption. But as the experience with the Forest Stewardship Council illustrates, a conflict of interest occurs when the company that wants to be certified as complying to a standard is paying the company that assesses whether or not it meets the standard. Clearly, it is in the assessors’ interests not to raise too many problems. This fundamental problem is being carried through to the voluntary REDD credits market.

Transparency International assessed ten of the most rapidly deforesting countries against a number of global governance indicators (this is similar to the REDD-Monitor’s 2008 “Rainforest Risk register”). The results illustrate the scale of the problem:

This is an important report. It does not attempt to provide quick and easy solutions to corruption in REDD, presumably because there are none. As a briefing by U4 earlier this year concluded, “It is highly unlikely that we will find a country where forms of corruption linked to REDD+ are non-existent”. Instead Transparency International provides a detailed series of steps and exercises to be worked through to assess the risk of corruption in specific countries. The question remains whether such processes will be carried out in sufficient detail to limit corruption in REDD. And if so, will the necessary government regulatory and policing structure be in place to address the corruption?

Rick Jacobsen of Global Witness wrote a short note on Transparency International’s website to introduce the report:

REDD+ corruption risks are real, but so are the solutions

By Rick Jacobsen, Global Witness – a partner organisation of Transparency International, October 2012

Back in 2009, when REDD+ was in its early days and talk of billion dollar markets for forest carbon was common, we began to hear disturbing reports emerging from Papua New Guinea. The government’s newly established Office of Climate Change had sold a huge number of REDD+ credits, apparently without legal mandate and before a framework for implementing REDD+ had even been established in the country. Other reports came of rogue businessmen manipulating local villagers into handing over the rights to the carbon in their forests. The term “carbon cowboy” quickly became a part of the REDD+ lexicon.

It is often said that REDD+ could be a real opportunity to protect forests and address poverty in forested areas. The concept has gained traction around the world and has generated unprecedented levels of interest in and funding for forest protection. But, as the situation in Papua New Guinea makes very clear, REDD+ faces some major challenges in overcoming corruption and illegality.

The forest sector is particularly vulnerable to corruption. Global Witness and its Liberian partners recently documented how in Liberia 40 per cent of the country’s forests were quietly handed out as private logging permits in just two years. Evidence of forgery, violations of legal statutes and neglect of due process abounds. Similarly in Democratic Republic of Congo, permits meant for small-scale local logging have been given away to international logging companies eager to bypass more strenuous regulation under other types of licenses and a moratorium on new industrial logging concessions. These developments in Liberia and DRC, both members of major multi-lateral REDD+ programmes, illustrate the risks posed by weak governance.

REDD+ could also create additional opportunities for corruption: new streams of money, an increase in the economic value of forests and land, the complexity of dealing with carbon rights, payments and measurements. Transparency International’s new guide to preventing corruption in REDD+ can help governments, the private sector and NGOs to address old and new risks at the national level. Talking about corruption in many of the countries participating in REDD+ isn’t easy; often it’s the large and menacing elephant in the room. But the best way to begin addressing these risks is to shed light on them, as Transparency International’s guide ably does.