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The Kyoto Protocols Learning Curve

Wed, 10/14/2009

In order to create a global system for sustainable ecosystem management, a global framework on regulation of the use of ecosystem services is a prerequisite. Without a global framework it will not be possible to create the major change that is needed to bring balance between the bio-capacity of the earth and the overuse of ecosystems.

Some of the reasons why a global framework is essential are the need for maximising the global usage of ecosystem services, define clarity on the ownership of ecosystem services and generate funds for the conservation and sustainable management of ecosystems. Without maximising the use of ecosystem services, balance will not be created between the bio-capacity and the usage. No country or entity will take the responsibility to create a change. Without clarity on ownership funding, it is not possible to conserve and manage ecosystems sustainably.

An example of a global framework on one specific ecosystem service is the Kyoto Protocol, which is currently being executed. The Kyoto Protocol does not include all ecosystems and ecosystem services, but focuses solely on climate change. This is, however, related to the ecosystem service Climate Regulation. Since the Kyoto Protocol is operational it is advisable to reflect on it, analyse the results and learn lessons, which can be used as input for a global framework for sustainable ecosystem management.

The Kyoto Protocol was drafted by the parties of United Nations Framework Convention on Climate Change (UNFCCC) in 1997 and entered into force in 2005. The Kyoto Protocol continues until 2012. The main elements of the Kyoto Protocol are:

Achieving an average reduction of the emission of greenhouse gases in developed countries of 5.2% in the period 2008-2012 compared to the emissions in the year 1990. Emission reduction targets are defined for developed countries. These emission reductions can be achieved in the specific developed country itself (through for instance energy efficiency measures and renewable energy) and in developing countries, by enabling emission reduction projects (renewable energy) in these countries. Countries and regions are free to define subsystems which facilitate and regulate the trading of emissions reductions.

A more detailed description of the Kyoto Protocol and its subsystems is provided on http://unfccc.int/kyoto_protocol/items

By the end of the Kyoto Protocol in 2012, a new international framework needs to be in place that will result in strong emission reductions, in order to mitigate climate change. In December 2009 all eyes will be focused on Copenhagen, where the 15th UNFCCC Conference of the Parties (COP15) will take place and members will negotiate a framework that will succeed the Kyoto Protocol, and contain global agreements that will cover the period 2013 - 2020.

In this article we will draw conclusions from the Kyoto Protocol and its subsystems and translate them into does and don’ts for a global framework for sustainable ecosystem management. By this we take valuable lessons from the past and try to create the basics for a successful global framework. Where the Kyoto Protocol is mentioned it can also be read as the Kyoto Protocol and its subsystems. Since our aim is to define a global framework for sustainable ecosystem management which does not only cover climate change but all relevant ecosystem services, the terms Kyoto Protocol framework for sustainable ecosystem management are both used.

Targets for every country
The Kyoto Protocol defined emission reduction targets for developed (industrialised) countries. For developing countries no targets are defined. The reason is that the developed nations felt that they were the main cause of extensive CO₂ emissions and that it is relatively cheap to generate emission reductions in developing countries. Next to this, strict targets would jeopardise economic growth of the developing world. This makes the Kyoto Protocol less effective than it could be, since the emission from developing countries are increasing strongly. Next to the general increase in emissions coming from developing countries, strongly growing economies such as China and India cause enormous amounts of greenhouse gas emissions which will probably continue to increase for a long time. China is about to become the largest emitter of greenhouse gases, together with the United States. But this picture can be delusive. China’s position as emitter is solely caused by the number of its population. The level of emissions per capita is still a fraction compared to that of the average American. Next to this, it is true that China is building coal plants at an astonishing pace. By the same token the Chinese are also the biggest producers of green energy (wind and solar).

Knowing this we come to the conclusion that a new sustainable framework for ecosystem management needs to become valid, in which targets for both developed and developing countries should be formulated. Because of the growth of developing countries, in terms of wealth, inhabitants and demands for goods and energy they cannot be neglected in the attempt to achieve reductions in the usage of ecosystems (services) anymore.

The economies of the developing countries will benefit from the inclusion of targets. A well implemented framework will result in financial flows to those countries that sustainably manage ecosystems and provide significant amount of ecosystem services. Since most of the valuable ecosystems are located in developing countries, they will financially benefit from a new framework.

Global means Global
The second lesson is that we need to define a truly global framework, which is accepted and implemented by every country. If large countries, with significant impact on ecosystem services, do not participate, any new framework will fail to meet its objectives. The United States did not ratify the Kyoto Protocol, while it is the largest emitter of greenhouse gases in the world. According to the United States the Protocol is inefficient and the costs are too high to meet the targets of the Kyoto Protocol. Also it is not acceptable that developing countries do not have binding emission reduction targets. The costs may be significant on the short-run, but they will increase tremendously if strong and globally implemented measures are not taken immediately.

Individual countries need to overlook their own short-term financial interests and let long-term global welfare prevail. This will not be easy to achieve and gives the international society an important and difficult task. For the sake of a sustainable planet this is, however, a necessity.

Equal division of ecosystem services
The individual emission reduction targets specified in the Kyoto Protocol are a result of extensive negotiations between the member countries. In an attempt to have a significant number of countries ratify the Protocol, certain countries were provided appealing terms. Therefore, the end result was not an equal division of emission reduction targets but a mere political outcome. By this the Kyoto Protocol could come into force in 2005, but future problems were already included. More and more countries will raise objections against the lack of transparency and unequal assignment of emission reduction targets. An equal division of emission reduction targets or right to use ecosystem services will in the long term probably cause fewer objections, although it will result in very strong objections at the start.

From an ethical point of view, we believe that the principle of equality is the only acceptable way to deal with the growing discrepancy between the planet's bio-capacity and the demand for ecosystem services. The rationale behind this belief is the following. Without access to ecosystem services it is impossible to live on planet earth. The ability to live is what we consider a generic right for all human beings. There is no reason why one person would be more entitled to live than another person. Since ecosystem services are a necessity for all people they are part of the generic right to live. One could even argue that the right to a certain amount of ecosystem services should be part of the Universal Declaration of Human Rights.

The division of rights to use ecosystem services, in other words the assignment of individual targets or caps (a cap is a maximum amount of ecosystem services that a country, organisation or individual consumer is entitled to use) should therefore be based on the principle of equality.

Under the Kyoto Protocol many countries have different targets, which are the outcome of the earlier explained negotiation and political process, in which equality did not play a leading role. This made the system complex to implement and even more complex to explain to the public. Regardless of whether countries are developed or developing, using many or few ecosystem services, we suggest an equal division of the rights to use ecosystem services, based on the number of capita per country.

Maximising usage instead of reduction targets
The ability to provide ecosystem services and the amount of ecosystem services that the planet produce or provide is called the planet's bio-capacity. As a result of the overexploitation and destruction of ecosystems the bio-capacity of the planet is decreasing. On the other hand, the demand for ecosystem services is increasing as a result of a growing global population and increasing wealth levels. In order to bring the bio-capacity and the usage of ecosystem services in balance, the amount of ecosystem services used by countries, organisations, and individuals need to be maximised.

A simple and straightforward way to maximise the global use of ecosystem services, according to the earlier described principle of equality, is to divide them based on the number of capita of countries.

Payment for ecosystem services
The Kyoto Protocol contains several (global, regional and national) subsystems, which facilitate countries and organisations to meet their emission reduction targets. Several of these subsystems provide facilities for the payment and trading of emission rights and/or emission reductions. Through these subsystems countries and organisations that use less greenhouse gas emissions than they are entitled to can capitalise on this by selling their emission rights or achieved emission reductions. Such a financial process is a driver for reduction projects and measures.

Not all the greenhouse gas emission rights, under the Kyoto Protocol, are paid for. The threshold levels (maximum levels) are provided for free, although from 2013 it is expected that in some sectors emissions rights will be auctioned or sold. In that case those organisations who can afford it will be able to buy more emission rights. Since most of the emission rights are provided for free, they are not regarded as a financial asset or liability and lead to reduction.

A framework for sustainable ecosystem management or for an ecosystem service framework like the Kyoto Protocol needs to contain payments for all ecosystem services used, regardless to whether they are below or above a threshold or target. There are three reasons for this. First of all, payment for the total usage of ecosystem services is required to create enough funds to guarantee the long term availability of the ecosystem services through well maintained ecosystems. If every country, organisation and eventually every individual were to pay for the ecosystem services used, significant funds will be created.

The second reason why payment for the usage of ecosystem services is likely to be successful is that it is a direct incentive to use less of the services. Every reduction achieved results in less costs and therefore a financial benefit. It can be compared with an energy invoice. An energy reduction measure will result in a lower invoice.

The third reason for implementing payment for ecosystem services is that is creates a solid foundation for investments in the maintenance of ecosystems. Even from an investors perspective it can become interesting to maintain ecosystems, since it can generate future return on investment.

From a project based approach to a bio-capacity based approach
The Kyoto Protocol contains mechanisms for the development of (renewable energy, energy efficiency and forestry) projects that result in achieved emission reductions, which can be traded amongst participants of the Protocol. These mechanisms enable individual countries, organisations and consumers to purchase additional greenhouse gas emission reductions from individual projects. The projects result in less greenhouse gas emissions and therefore have a clear effect on fighting climate change. However, the downside is that those who can afford it will buy extensive amounts or rights to emit greenhouse gases, leaving only small amounts of emission rights for those who cannot afford it. The additional emission reductions achieved by projects does not positively affect the right to emit greenhouse gases of the entire population, but only affects the rights of a small group who can afford to buy the achieved emission reductions.

Although in principle there is nothing against paying for more emission rights, or ecosystem services rights, we believe it can be made beneficial for the entire global population, by becoming more transparent and effective. The way to do that is to change from a project based approach to a global bio-capacity approach. In this new bio-capacity based approach it will be possible to acquire additional ecosystem service rights, but not from individual projects.

A bio-capacity based approach works as follows:
First the global bio-capacity will be increased when projects are carried out (e.g. an ecosystem rehabilitation project). Based on this growing bio-capacity the maximum ecosystem usage rights for all countries on the planet will be adapted to this growing bio-capacity, so the entire population benefits from a single project. The ecosystem service rights, which are divided based on the principle of equality, can be traded between countries, organizations, and individuals.

The advantage of this approach is that a growing bio-capacity will be reflected in every country's ecosystem usage rights and at the same time trading can take place. The country or entity responsible for creating the additional bio-capacity is rewarded for it through the payments for ecosystem services, as described earlier in this article. Permanent sustainable management of ecosystems is supported through this method, since continuous payments are provided. The Kyoto Protocol does not provide funding for the ecosystem services, but only for the additional amount of greenhouse gas emission reductions achieved.

The Kyoto Protocol and its subsystems provide us with some very important and useful lessons, which can and should be used for a successful follow-up and for a new global system for sustainable ecosystem management. Major hurdles to overcome are the defining of a common global goal and to get all countries to focus on this global goal instead of a short term, nationally driven focus.

Denis Slieker, The Forest Enterprise Foundation