Pines on the Páramo: The Disastrous Local Effects of the Carbon Market

In northern Ecuador, a pine tree plantation was planted to absorb enough carbon to "offset" the emissions of coal-fired power plants on the other side of the globe. Despite the questionable scientific reasoning behind such "carbon offsetting" projects, the local indigenous community expected the plantation would help improve local economic conditions. Instead, everything went terribly wrong.

July 14, 2008

Manuel drives up the winding cobblestone road in the northern highlands of Ecuador, expertly steering the rickety truck while discussing local politics. Thirty minutes into the drive, the páramo suddenly unfolded before us. The páramo, an ecosystem unique to the Northern Andes at altitudes between 3,100 and 5,000 meters, is a burst of life where least expected.

Tough grasses called paja, moss, and arboles de papel (paper trees) dominate the landscape, which literally oozes with water. The frequent rains and snowmelt from surrounding peaks feed rushing streams and lakes of all sizes. About 15 minutes after Manuel, our guide, parked the car and we began hiking, it started storming.

As we scrambled up yet another grassy ledge, the scenery abruptly changed. In front of our eyes were thousands of pine trees. Pine trees with no needles. Burnt pine trees. The burnt pine tree plantation near the Kichwa community of Mojandita is all that remains of a carbon-offset project started by the local branch of a Dutch foundation.

The carbon-offset market is based on the claim that carbon emitted in one part of the world (by cars, factories, etc.) can be compensated for by carbon-absorbing trees in another part of the world. Supporters are billing the carbon-offset market as a way to reduce carbon emissions and fight global warming. But critics say the market may actually intensify the environmental crisis.

Mojandita, a small Kichwa village in the Ecuadorian páramo.

The carbon market allows companies to maintain current pollution levels as long they are “offset” by a carbon-absorbing project in somewhere else in the world—in this case, by the Mojandita pine plantation. Rather than reducing emissions or finding alternative sources of energy, corporations and governments are simply trying to buy a green seal of approval.

Over the past decade, a variety of public and private initiatives—from the Kyoto Protocol to entire cities going “carbon-neutral”—have jumped on the carbon-offset bandwagon. The carbon-offset economy is expanding rapidly, and its possibilities for growth are potentially limitless given the infinite opportunities for carbon trading and the lucrative investment opportunities for speculating on carbon credits in the international futures market.

A report published by economists Franck Lecocq and Phillipe Ambrosi found that the carbon market had already reached a value of $10 billion in 2005. The market tripled to $30 billion in 2007, and some experts predict it will grow to $3 trillion over the next two decades. Noting that the carbon market involves the buying and selling of an element of the air itself in a theoretically infinite market, Ivonne Ramos, the president of Ecuadorian environmental organization Acción Ecólogica, remarked the carbon credit market “represents the climax of capitalism.”

The central premise of the offset market is the assumption that all carbon is equivalent, measurable, and exchangeable. A 2001 report by the Royal Society, the United Kingdom’s foremost academy of science, criticized the off-set market as short-sighted and lacking scientific basis, warning: “Projects designed to enhance land carbon sinks [organic matter, such as trees, that has the capacity to absorb carbon and release oxygen] should not be allowed to divert financial and political resources away from long-term solutions to the problem of reducing the concentration of greenhouse gases in the atmosphere, namely the reduction in the use of fossil fuels.” With tree plantations, which have become one of the preferred “carbon sinks” of the offset market, the situation is even worse.

The signatory nations of the Kyoto Protocol—an international agreement to reduce carbon emissions—agreed to establish Clean Development Mechanisms (CDM). These mechanisms allow developed countries to exceed their carbon emissions quotas by supporting “emission reduction projects in developing countries.” But the architects of Kyoto were concerned native forests would be harvested for lumber and then replaced with profitable tree plantations for carbon credits. Therefore, the agreement originally strictly limited forestry-based projects. Unfortunately, according to a World Rainforest Movement Bulletin, the CDM Executive Board removed some of the restrictions governing forestry-based projects from the Kyoto Protocol, and this sector may soon account for a much larger portion of CDM projects.

In the voluntary market, carbon-offset tree plantations are already a big business. The voluntary market includes individuals, groups, rock concerts, or even whole cities that decide to compensate for their projected carbon emissions by supporting environmental projects. A World Rainforest Movement Bulletin states, “40% of carbon credits generated in the voluntary market comes from tree-related projects.”

The restrictions in the Kyoto Protocol were the result of campaigns by environmental groups who sought to limit the use of forestry projects such as tree plantations as a mechanism to offset carbon emissions. The Lecocq and Ambrosi study explains such projects “favor fast-growing industrial plantations of alien species over community based, sustainable forest management.” That is exactly what happened in Mojandita.

“Planting Forests” and Absorbing Carbon

It was in this context that the Profafor—the Ecuadorian branch of a Dutch carbon offset company—arrived to the northern sierra looking to cash in on the world’s new carbon economy.

In 1990, a consortium of Dutch electricity companies created the Forest Absorbing Carbon Dioxide Emissions Foundation (FACE) to offset the expected carbon emissions of a new coal-fired electric plant to be built in the Netherlands.

In an apparent attempt to head off public criticism of the new plant, FACE said it would plant 375,000 acres of tree plantations around the world to absorb mass amounts of carbon dioxide. “More Forest. Less CO2” is the foundation’s motto—ignoring the vast difference between natural forests and tree plantations. FACE is now independent from the Dutch consortium and sells carbon credits to third parties, including logging companies.

In 1993, FACE established the private enterprise Profafor, an abbreviation for the FACE Program for Forestation in Ecuador, to administer its carbon business in this Andean nation. Profafor began negotiating a contract with Mojandita, an indigenous Kichwa community in the northern highland province of Imbabura, the same year.

The contract called for a 350-acre tree plantation of monoculture pine, signed by community representatives and agreed upon by all residents. Under the terms of the agreement, the community was responsible for all management and care for the plantation. The company, meanwhile, provided training, obtained certification for the plantation, and paid a lease on the land used by the plantation. Profafor assured the community the new plantation would be good for the local environment.

Josefina Lema, community leader, used native seeds to make this mosaic.

Profafor’s general manager Luis Fernando Jara told me the company does not own land or plantations, as this would be “too costly an investment.” Instead, they sign long-term contracts of at least 20 years with landowners: indigenous communities, large property-owners, and farmers’ cooperatives. Profafor maintains the right to sell all of the carbon, while the landowners have rights to all other plantation byproducts. As FACE claims on its website, “Undertaking good forestry projects also yields socio-economic benefits for forest-dependent people and most often contributes to the local biodiversity levels. This win-win-win scenario is worth pursuing in FACE’s view.” Kichwa campesino leader Josefina Lema admits that at first “everything sounded so beautiful.”

Jara says problems between Profafor and the communities they contracted with, including Mojandita, began almost immediately. Jara accuses the communities of not honoring the terms of the contract. When dealing with collective landholdings, Luis says it is “difficult to work with communities because their leadership changes” and the agreements are “not recognized five years later.” But since the campesinos cannot afford lawyers to sort out the disagreements, Luis says Profafor and the community would usually try to “talk it out.”

A penalty clause in the agreements allows the company “to unilaterally terminate a contract and demand as compensation the payment of amounts that are greater than those initially offered [to the community].” Jara says Profafor has never exercised this stipulation, but a report by Acción Ecológica suggests otherwise. The report found the company leveraged penalties to garner higher profits from its investment—sometimes demanding three times the sum the company paid out to the community in penalty fees.

Community members also complain they never saw the “socio-economic benefits” promised by the project. These benefits were supposed to accrue from the payments offered by Profafor for the use of the land and from the cash won from the plantation’s byproducts—mainly, lumber from thinning and the final harvest. For a plot of 1,000 acres the company offered $75,600 for the lease of the land, but since the community is contractually obligated to pay for expensive items and services, such as seeds and technical assistance, the final payment by Profafor was $38,800—or nearly half the amount originally agreed.

What’s more, the cash from the byproducts never materialized. After ten years, the pine trees still had not reached maturity and there was definitely no wood to thin and sell. This is not unusual for pine trees, especially outside their native habitat. This inconvienient fact was not, however, communicated to Mojandita residents when the contract was signed.

Profafor’s promises of preserving the area’s biodiversity also came up short. Mojandita residents, in fact, say the pine plantation has hurt the local environment, particularly its water resources.

The páramo is a key source of the region’s water for drinking and irrigation. According to Conservation International, the páramo provides Quito, Ecuador’s capital, with half of its water supply. According to residents, after the nonnative pines were planted, much of the local vegetation within the perimeters of the plantation died. The pines blocked sun to the native paja grasslands and absorbed excess water, thus drying the land. Since these plants play a vital role in the water cycle, the death of so much native vegetation also constricted water supply to neighboring communities.

Global warming is compounding the páramo’s diminishing water supply, according to research by the World Bank. The climate crisis is changing cloud formation patterns and reducing the amount of water from rain and fog that plants in this highland wetland can absorb. Melting and disappearing Andean glaciers, which play a crucial role in regulating water supply, are making this situation even worse.

The pine plantation was supposed to be an effort to fight off global warming by absorbing carbon. As Profafor reportedly told community members, “pines are special trees that cleaned the air.” But Acción Ecológica concluded that the pine plantation could have actually resulted in a net loss of carbon absorption, seriously undermining the stated purpose of the project. When the trees are planted, the report explains, vegetation is removed and the soil is exposed to the air, resulting in the release of large quantities of carbon. And since the pines exhibit deficient growth in the páramo and are prone to fire, which also releases carbon, it is possible that the pine plantation represents a net loss in carbon absorption.

And then it happened: after ten years of dashed hopes, misunderstandings, and the degradation of the páramo, came the fire.

Fire on the Páramo

The summer of 2003 was a dry one. An old man from Mojandita went to the top of the páramo to perform a Kichwa rain ritual. His neighbors tried to stop him; they had a bad feeling about him going alone—perhaps, a premonition. But he went anyway, in the middle of the night, returning the next morning. Unfortunately, he left behind the candles he used for the ceremony, still burning.

The candles triggered a forest fire unlike any in residents’ memory. Over half the pine plantation burned, and everything around it was scorched. Josefina Lema blames the pine trees. She explains the páramo is generally resistant to forest fires due to the extreme wetness of the land and the fact that native species such as the paja grasses can survive fire. Pine trees, on the other hand, are not so fire-resistant; the pine needles that covered the ground, preventing native plants from growing, also served as perfect kindling. The fire would have been nowhere near as drastic if not for the total transformation of the páramo caused by the monoculture pine plantation—a powder keg that finally exploded.

The paja has grown back on the fire-ravaged pine plantation.

Eight years after the fire, the pine trees are still standing, burnt a grayish black color and totally devoid of pine needles. Given Profafor’s aggressive pursuit of the penalty clauses in the contracts, it is not surprising the company immediately threatened legal action and demanded that Mojandita pay for the burnt plantation.

The community, which has a history of involvement in both the indigenous and environmental movements, went directly to the regional and national indigenous federations (ECUARUNARI and CONAIE, respectively) as well as to Acción Ecológica. The organizations signed a letter addressed to Profafor explaining the fire was an accident and that part of the fault lay in the plantation itself. The letter also threatened a mass mobilization if the company pushed for legal action.

The letter must have done the trick, because Mojandita has not heard from Profafor since it was sent. The residents vow to never replant the pines or any similar tree plantation and have been warning other communities against getting involved with Profafor.

Carbon-offset companies will continue to promote projects like the Profafor plantation as long as it is cheaper for industries in the North, such as the Dutch electricity sector, to buy carbon-offset credits or even directly sponsor a forestry project in the South than it is for them to reduce emissions at the source. According to the Acción Ecológica report, “the cost of a ton of carbon absorbed through a tree plantation in the tropics may be up to 200 times lower than the same ton reduced in those industries.”

But if projects such as the Profafor tree plantation in Ecuador are not scientifically proven to reduce global carbon emissions, and if the way in which they are planned ignores the local ecological characteristics and degrades the local ecosystem, is the carbon-offset model a real solution to global warming? It seems that there is no escaping reality: the only proven way to slow down or possibly reverse the global environmental crisis is by both reducing dependence on fossil fuels and preserving our forests. There is just no easy way out.

Meanwhile, in Mojandita, the resilient native vegetation is starting to grow back and the community has gained a renewed sense of awareness about the importance of preserving the páramo.

Thea Riofrancos has been working in Quito, Ecuador with The Latin American Information Agency and as an editor for the Politics and Society section of the new web-based magazine Caterwaul Quarterly. Starting this Fall, she will be a PhD student in political science at the University of Pennsylvania.

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