Deforestation: The World’s Blind Spot

So deforestation is, to put it mildly, a big deal. Yet there remains relatively little interest in deforestation among the general public and investors. Global Google searches for “deforestation” are as little as one tenth as common as searches for “CO2”.⁹ In the past five years researchers have published under 100,000 research papers or books touching on deforestation,¹⁰ but over 500,000 on CO2.¹¹ In 2019 and 2020 only 2% of the $600 billion of climate investments went to efforts to reduce emissions from deforestation and forest degradation.¹² Financial institutions with assets of $130 trillion have committed to net zero,¹³ but institutions with just $9 trillion to eliminating deforestation.¹⁴

Perhaps the crisis in nature is, in some respect, less urgent than the climate crisis? Hardly. We cannot get to a net-zero world, or restrict global warming to 1.5 degrees centigrade above pre-industrial levels, without ending deforestation.¹⁵ Changes in land use, principally deforestation and agricultural conversion, account for 10-25% of global greenhouse-gas emissions.¹⁶ Deforestation has turned the Amazon rainforest from a carbon sink to a carbon source;¹⁷ it may be close to ecosystem collapse.¹⁸

In short, ending deforestation is as essential.¹⁹ To keep the target of 1.5 degrees alive, we need to halt deforestation very soon. Biodiversity and nonhuman animals also have intrinsic value, meaning that they are worth preserving.²⁰ Roughly 80% of land-based wildlife lives in forests.²¹

So why, then, are people not very interested in deforestation? The fundamental reason is that it is complex. The objective regarding CO2 emissions is easy to understand (even if hard to implement). Emissions are too high, and they need to fall. An emissions cut in Europe is pretty much as useful as an emissions cut in America. CO2 is “fungible,” mixing in the air globally.

The issues at play with regard to deforestation are more subtle. There is no “net zero” equivalent. An acre of deforestation has different climatic impacts depending on where it takes place.²² Cutting down a forest, and then replanting it, does not leave the climate in the same place as it was before (new forest is less of a carbon sink than older forests) - the damage is thus irreversible. Commercial forestry is good if sustainably managed, but it is nothing like as good as virgin forest for either carbon capture or biodiversity. Some forest-based economic activities can be good, if resources are harvested in a sustainable way, promoting livelihoods and development.

With so little interest in stopping deforestation, it is hardly a surprise that tools for tackling it are underdeveloped. In recent decades the world has relied on two methods to reduce deforestation: technological advancement and governmental regulation. Neither has yet achieved nearly enough ₋ and it is naïve to assume that this will change in the future.

The second factor is regulation. Sometimes this can make a positive difference. As new research published by the London School of Economics shows, Indonesia introduced a moratorium on palm oil, logging and timber concessions in 2011.²⁴ Its rate of deforestation has fallen by about half since then.²⁵ There has also been progress at an international level: the United Nations Programme on Reducing Emissions from Deforestation and Forest Degradation (UNREDD)²⁶, for instance, supports national-level programmes to reduce deforestation. It has had some²⁷ clear²⁸ successes.²⁹

Yet any progress at a governmental level can be fragile. Just look at Brazil. Before the late 2010s Brazil had made decent progress in reducing annual deforestation.³⁰ The election of Jair Bolsonaro, who took office as president in 2019, radically changed this. Deforestation began to soar once again. In addition, one perennial concern is that efforts by one government to reduce deforestation may simply result in “leaking” of deforestation to another place.³¹

We do not pretend that progress on this topic is easy. Even if companies are in principle interested in stopping deforestation, following through with commitments requires constant monitoring and enforcement. It means being transparent about suppliers ₋ and owning up to mistakes when they happen. And it means educating consumers about the damage that deforestation causes (evidence from a new paper by Harvard researchers suggest that people generally support action to cut deforestation).³⁶ Investors can also help countries realise economic value from the ecosystem services that forests deliver, so that forests deliver financial benefits standing as well as cut down.

We expect investment in natural-climate solutions to grow significantly in the years ahead. Markets that measure and value ecosystem services are maturing, including but not limited to carbon. Investors will have an important role to play in scaling a new global industry for planetary repair, attempting to generate sustainable economic returns alongside vital climate and biodiversity outcomes, all while ensuring the active participation and consent of local and indigenous communities.

Action is urgently required ₋ in particular, the participation of more financial institutions. Without the efforts of the private sector, the world will not realise the damage that deforestation is doing before it is too late.