Climate Change and Forests: Emerging Policy and Market Opportunities

Case Study: The West Coast Development Trust,a New Zealand Example

New Zealand’s West Coast Development Trust shows that when the right economic incentives are in place, forest conservation can compete economically as well as politically with deforestation drivers such as commercial logging . It also shows how funds might be managed in project-based initiatives through the establishment of a trust managed by local community leaders along with donors, local government, business interests, and NGOs. In the late 1990s a major public conservation campaign, the West Coast Forests Campaign, was organized by national and local environmental NGOs to protect the biodiversity of 130,000 hectares of indigenous forests on the west coast of the South Island of New Zealand.1 However, the majority of the local population of approximately 35,000, spread across several small towns and rural areas, supported the continued logging of the forests because of the economic benefits it generated for the community. These benefits included direct employment in logging and processing timber as well as support for industries such as transport and road engineering in a region where economic opportunities were relatively scarce. The government -owned timber company also sponsored local community initiatives. These government-owned indigenous forests were being logged through a combination of clear cutting, high-intensity selective logging, and sustainable forest management. By the late 1990s, the west coast of the South Island was one of the last areas in the country where unsustainable logging of indigenous, oldgrowth , lowland rain forest was taking place. On private land, logging operations case study The West Coast Development Trust, a New Zealand Example sean weaver 272 could be conducted only as ecologically based, sustainable forest management under government license. The government-owned forests on the west coast were exempt from this policy. Given the income logging provided to the local community , the conservation campaign could succeed only if it found a way for equivalent, alternative economic benefits to accrue to the community without logging the forests. The conservation NGOs supported my proposal to protect the forests in the national interest in exchange for economic development assistance from the government to the local community. The original proposal was designed as an asset swap in which a set of government-owned plantations would be transferred to local ownership. In the end the government decided to offer the community the equivalent value of the plantations, NZ$100 million (U.S.$69 million), which the community was able to negotiate upward to NZ$135 million. In return for this funding, the forests became permanently protected areas managed by the New Zealand Department of Conservation. Rather than being given to the community in cash to replace the lost income from logging, the majority of the money was placed in a locally controlled trust fund—the West Coast Development Trust. The trust is managed by the community as investment capital for local development initiatives. Community members are elected to the trust, which invests the funds and distributes the annual interest by means of a credit line to which local businesses can apply for business development finance. Loans are awarded on terms better than those offered by local banks.2 The West Coast Development Trust increased access to finance by the local community, creating an environment conducive to alternative economic development not based on deforestation and forest degradation. The development package also helped to resolve the conflict between conservation and local development for west coast communities, enabling the local culture to move into a new phase of (clean) development and associated attitudes. Following the decision to protect these forests, the government decided to end not only this logging but all logging of indigenous forests on government-owned land. The demand for indigenous New Zealand timber continues to be met by private indigenous forest sources. Because the deal operated outside the carbon market, emission reduction offset credits were not generated, so the benefits to the atmosphere and the climate are absolute and additional. The New Zealand example offers lessons for addressing the relationship between , on the one hand, communities in developing countries that seek to use their natural forest endowments for basic development needs and, on the other, communities or agencies in developed countries that seek to protect their forests in the interest of global climate change mitigation. Natural forests still exist in many developing countries because the deforestation development path—which has generally been the norm since the Industrial case study: new zealand 273 Revolution began—is...