Kevin Conrad on REDD, irregularities and carbon cowboys in PNG

Kevin Conrad, Papua New Guinea’s Special Envoy and Ambassador for Environment & Climate Change, has spent much of the last three years travelling around the world promoting REDD and carbon trading.

So what does the man that Time magazine calls a “Hero of the environment” and UNEP a “Champion of the Earth” have to say about the current REDD credits crisis in Papua New Guinea? On 6 July 2009, Conrad was in London, speaking at a Chatham House event, “The Politics of Climate Change Agreement”. Natasha Loder, a journalist with The Economist, was there and has written about Conrad’s speech on her blog.

The scandal surrounding the Office of Climate Change and the issuance of REDD carbon credits in Papua New Guinea is important for at least three reasons. First, although the country has a high rate of deforestation, Papua New Guinea remains one of the most heavily forested countries in the world. Second, Papua New Guinea was fundamental in setting up the Coalition for Rainforest Nations, the organisation that introduced REDD to the UN climate negotiations (in 2005 at the 11th Conference of Parties in Montreal). Third, the way countries establish REDD programmes during the lead up to the UN climate negotiations in Copenhagen in December 2009 will be crucial to the discussions about any REDD deal coming out of Copenhagen.

Conrad’s response to the REDD credits fiasco in Papua New Guinea is weak. Conrad acknowledges what happens when the promise of very large sums of money is made in the absence of meaningful regulation: “Carbon cowboys” descended on PNG; there were some “irregularities” at government level; the small were overrun by the strong; and “stakeholders” seeing a gravy train tried to get to the front of the queue. Conrad doesn’t have solutions, just questions. “The question is how do we invest first, before we introduce market forces? How do we first invest in the analysis, the institution building the capacity building, the strengthening of governance?” These are good questions. But Conrad has probably done more than anyone to push a version of REDD that includes carbon trading. Faced with the results of this in Papua New Guinea, Conrad cannot bring himself to point at the problem itself – carbon trading.

Here’s what Conrad said at Chatham House earlier this week:

We found that because Papua New Guinea was advocating a regime shift in forests, we had every carbon cowboy in the world descend upon Papua New Guinea and try to get a deal with some landowners to they could go back and say they were working in Papua New Guinea and that somehow gave them some credibility.

We then, at the same time, had a group of governors who understood our law very well and understood that if the government got all of the money in a consolidated budget that they under our law would then receive 100% of it because it was an export oriented activity.

We have what is called a derivation grant, so money comes in as consolidated revenues and if it is an export it goes to the state. So what they did was rattle the cages, try to destablise the regime as it were, try to bait the government into signing saying that all the REDD money goes to the government first. Surprisingly it then ends up in the governor’s pockets.

But it was a serious issue we had some irregularities, so cabinet had to suspend our executive director, we have to launch an independent review, and we want it to be transparent. But we want to learn from this.

Papua New Guinea is the first of many upcoming instances, whether it is in… Peru. Whether . . . whenever there is prospective of oncoming wealth there is a tendency for the small to become overrun by the strong. That is something we as a global society have to guard against and that is why we have to hold back market forces, until made the necessary infrastructural and capacity investments in each country.
[ . . . ]
That is the question of transforming a development pathway in developing countries and the understanding that that means significant capital needs to be invested. What we are already seeing globally is that when stakeholders see a gravy train on its way, many of them try and restructure the local system using information and misinformation to try and position themselves at the front of the line. Now that is normal human behaviour. But it is important.

What we have to understand we need to first invest in absorptive capability. You can’t just drop money into a third world country and expect that to solve a problem, can’t build a road and provide a car and expect that will solve a villagers challenge of getting product to market. Because it rains and guess what the road disappears the car runs out of fuel, spare parts don’t make it and after half a year they are back at square one and the money has been lost.

The question is how do we invest first, before we introduce market forces? How do we first invest in the analysis, the institution building the capacity building, the strengthening of governance? All of these things in developing countries to varying levels, there are some like Costa Rica that have a head start on that. There are some countries in Africa that have a further way to go and there are many are in between, and Papua New Guinea is one of those.