Increasing deforestation in Guyana gives Norway a headache

“The world is looking for a great example somewhere,” Jan Hartke, a consultant to the Clinton Foundation wrote in June 2009. “Wonderfully enough,” he continued, “President Jagdeo’s leadership has quite honestly inspired people around the world, and you really need leadership on something like this if we are able to get progress in Copenhagen. He will be able to show how other countries can follow the emergent Guyana model.”

As we now know, there was no progress in Copenhagen. And Guyana’s “model” is looking increasingly shaky as the rate of deforestation in the country goes up.

REDD-Monitor received the following anonymous contribution which is posted here unedited. REDD-Monitor looks forward to a discussion about the issues raised (but please keep comments polite). What is Norway to do? What should Guyana do in order to ensure that deforestation does not accelerate out of control?

Guyana ‘REDD’: a ‘minor upward variation’ in the problems for Norway

As was foreseen by REDD-Monitor ‘REDD’ in Guyana is rapidly descending into farce. The latest, and perhaps most serious, of a long list of problems is that an independent technical report, released this week, shows that deforestation in Guyana was three times higher than historical levels during the first year of the Norway-Guyana ‘REDD’ agreement, which is intended to reduce emissions from forests.

This presents the Government of Norway with a profound problem. When it signed its Memorandum of Understanding with Guyana in November 2009, an ‘interim’ baseline deforestation rate was set, at a notional 0.45% – even though this was higher than any credible assessment of the actual deforestation rate. Norway gave Guyana $30m for the first year of its agreement, but it was agreed that, for subsequent years, a proper and detailed assessment would take place to determine the actual historical rate of deforestation as assessed by the UN Food and Agriculture Organization, and that Guyana would thence be compensated on a ‘performance basis’ for any lessening of deforestation against the true historical level, to be paid retrospectively, on a yearly basis. The first ‘performance-based payment’ would thus happen in 2011, depending on Guyana’s success in staying below historical baseline rates of deforestation during 2009-10.

The new study, carried out for Norway’s International Forests and Climate Initiative (NICFI) and the Guyana Forest Commission by the Pöyry consultancy, suggests that the actual historical rate of deforestation averaged over several decades was only a mere 0.02% per year – reflecting the low population density in the interior of the country, itself related to the extremely infertile nature of most of Guyana’s soils. More problematic, however, the report suggests that the actual rate of deforestation during the first year of the Norway-Guyana agreement was 0.06%. Whilst this is still low both as a rate and in terms of the actual area of forest lost, it is nevertheless three-times the historical baseline rate. According to the performance measures set out in the Norway-Guyana MoU, Guyana will receive no money this year for ‘reducing emissions from deforestation’ during 2009-10. In any case, the Government of Guyana has never made any explicit commitment to reduce emissions of forest-based carbon.

Guyana’s government will doubtless appeal to a ‘get-out clause’ in an undated technical document provided by NICFI but not available in Guyana, which states that, should the real historical rate of deforestation prove to be very low – as it is now suggested to be – then “minor upward variations” will be tolerated, taking into account the uncertainties of measuring relatively small areas of forest loss over long periods of time. But the Government of Norway will know that it will lose all credibility if it accepts a 300% ‘above baseline’ rate of deforestation as a mere “minor upward variation” – and the technical document anyway fails to stipulate what happens, in terms of REDD payments, should such a situation arise.

But Norway will also no doubt now be looking more closely at the plans being set out by President of Guyana, Bharrat Jagdeo, for spending the Norwegian money. This is supposed to be based partly on the Low Carbon Development Strategy (LCDS), which was originally developed by the increasingly discredited McKinsey and Co, and funded by UK’s Department for International Development and the the Clinton Foundation. Other than the Government of Norway, and in spite of the President’s frequent overseas travels and speeches, no other donors have stepped forward to provide the US$580 million per year which the LCDS claims Guyana sacrifices as ‘opportunity cost’ for not cutting down its forests. In a parallel process, even the World Bank’s Forest Carbon Partnership Facility has all but stalled, with not a single cent having yet been disbursed for REDD+ preparation in Guyana.

The Norwegian funding – now looking increasingly doubtful – is thus critical to the credibility of the LCDS, which President Jagdeo has very personally led, and almost daily promotes to his country through the media. Whilst Norwegian officials initially appeared to be unworried by the abbreviated rationales for expenditure as set out in the LCDS (exemplified by a mere one and half pages description for the US$600-650 million construction cost for the Amaila Falls dam, among the highest costs of a hydro-electric dam per megawatt in the world), they have no doubt become troubled as some of President Jagdeo’s projects have started to evolve. Of the US$30 million Norwegian funding for 2010, which has already been transferred to the ‘Guyana REDD+ Investment Fund (GRIF)’ account managed by the World Bank, President Jagdeo wants US$ 15-19 million to purchase government equity in the Amaila Falls dam project – for access to the site of which, a road is already being constructed under a contract that was illegally awarded to a Florida-based real estate company with no previous experience of such projects, and before the legally necessary Environmental and Social Impact Assessment had been conducted, and the necessary permit issued by Guyana’s Environmental Protection Agency. Whilst the President wants the Norwegian funding immediately, it is uncertain if the access road will be completed in the scheduled eight months, and it is unlikely that money could anyway be invested in equity in the dam until later in 2011.

Under another LCDS project, US$4 million of the first tranche of Norwegian money is to be invested in ‘demarcation’ of Amerindian lands through a project to be run by the Ministry of Amerindian Affairs and the Guyana Lands and Surveys Commission under the supervision of UNDP which will administer the grant from the GRIF, and reliant on government survey staff. Experts that have seen the UNDP proposal document for this project have expressed astonishment at its legal, technical and administrative weakness, and lack of inclusion of low-cost community mapping by the indigenous communities themselves, which has been carried out successfully by many Amerindian villages in the past. A proposal for a US$1.5 million project for electrification of some Amerindian households through provision of solar panels is, say observers, very similar to a project that was recently financed by the IADB, and that there is a risk of ‘double funding’ of the same activities. A proposal for a US$1.5 million new biodiversity research centre seems surprising and possibly unnecessary in a small country that already has two such centres, one at the University of Guyana, the other at the Iwokrama International Rainforest Centre. None of the projects have yet been approved by the GRIF steering committee, whose terms of reference are still under discussion.

Meanwhile, under the current constitution, President Jagdeo should step down this year, and fresh presidential elections held. Some observers believe that the President wishes to hold on to the reins of power, either by moving into the Prime Minister’s job in a ‘Putin/Medvedev-like’ arrangement, or possibly by revising the constitution to allow him to stand for further terms as President. For either of these scenarios – and anyway to reinforce the electoral prospects of his Peoples Progressive Party – vote-winning projects and handouts in the coming months could be critical. The ‘floating vote’ of the substantial Amerindian population could be particularly critical in a country where Party voting patterns are strongly divided down racial (South Asian vs. Afro-Caribbean) lines.

As well as the huge political stakes that President Jagdeo holds in the LCDS and the Norwegian funding, he also appears to have ‘borrowed’ against future receipts in order to fund existing projects – such as the Amaila Falls dam access road. The recently announced national budget assumes that at least $40m more will be forthcoming from Norway this year (even though an early draft of the Pöyry report, co-commissioned by the Guyanese authorities, had already started to raise doubts about whether Guyana would qualify for any more of Norway’s funding in 2011). Promises and allocations have probably been made to business colleagues and political allies from this and last year’s Norwegian funds – and keeping these promises could be necessary for a successful re-election campaign. Although all Norwegian funds are to be approved by the Guyana REDD+ Investment Fund – the Office of Climate Change, which is located within the President’s office, will oversee the proposals to the GRIF and will give direction to the chairman of the GRIF Steering Committee, Tarchand Balgobin, who is a close associate within Jagdeo’s ruling party.

Norwegian officials will thus no doubt be coming under immense pressure to ease through the projects, and to find a ‘creative’ way to overcome the problems that they have so far paid $30 million into the GRIF, even though deforestation increased, and that according to the terms of their agreement, no money should be paid to Guyana in 2011. An ‘audit’ of the Government of Guyana’s conformance with the terms of the MoU, to be carried out by the US-based Rainforest Alliance, has still not been published. To add to their woes, as REDD-Monitor recently reported, the Guyanese government is busy handing out concessions to logging and mining companies that will see millions of hectares of forest damaged or destroyed – and thus the rise in deforestation (as well as degradation from logging operations) looks set to continue.

The world will be watching closely to see whether Norway acts to retain the integrity and credibility of its ‘REDD’ initiative in the important test-case country of Guyana, or succumbs to political pressure from a President who seems to be confident that he can persuade Norway to set aside or water down the conditionalities in the MoU.