[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]






   FIRE AND RAIN: HOW THE DESTRUCTION OF TROPICAL FORESTS IS FUELING 
                             CLIMATE CHANGE

=======================================================================

                                HEARING

                               before the
                          SELECT COMMITTEE ON
                          ENERGY INDEPENDENCE
                           AND GLOBAL WARMING
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 14, 2008

                               __________

                           Serial No. 110-25


             Printed for the use of the Select Committee on
                 Energy Independence and Global Warming

                        globalwarming.house.gov


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                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon              F. JAMES SENSENBRENNER, Jr., 
JAY INSLEE, Washington                   Wisconsin
JOHN B. LARSON, Connecticut            Ranking Member
HILDA L. SOLIS, California           JOHN B. SHADEGG, Arizona
STEPHANIE HERSETH SANDLIN,           GREG WALDEN, Oregon
  South Dakota                       CANDICE S. MILLER, Michigan
EMANUEL CLEAVER, Missouri            JOHN SULLIVAN, Oklahoma
JOHN J. HALL, New York               MARSHA BLACKBURN, Tennessee
JERRY McNERNEY, California
                                 ------                                

                           Professional Staff

                   Gerard J. Waldron, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Thomas Weimer, Minority Staff Director














                            C O N T E N T S

                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, Prepared statement..............     2

                               Witnesses

Mr. Stuart Eizenstat, Partner, Covington and Burlington, 
  Sustainable Forestry Management................................     4
    Prepared Testimony...........................................     7
Dr. Thomas Lovejoy, President, The Heinz Center..................    13
    Prepared Testimony...........................................    15
    Answers to submitted questions...............................    47
Ms. Stephanie Meeks, Acting President and CEO, The Nature 
  Conservancy....................................................    20
    Prepared Testimony...........................................    22
    Answers to submitted questions...............................    50
 
  HEARING ON FIRE AND RAIN: HOW THE DESTRUCTION OF TROPICAL 
               FORESTS IS FUELING CLIMATE CHANGE

                              ----------                              


                      THURSDAY, FEBRUARY 14, 2008

                   House of Representatives
            Select Committee on Energy Independence
                                         and Global Warming
                                                    Washington, DC.
    The Committee met, pursuant to call, at 2 p.m., in 430 
Dirksen Senate Office Building, Hon. Edward Markey (chairman of 
the Committee) presiding.
    Present: Representatives Markey, Blumenauer, Cleaver, 
Inslee and McNerney.
    Staff present: Ana Unruh-Cohen, Joel Beauvais, Morgan Gray.
    The Chairman. This hearing of the Select Committee on 
Energy Independence and Global Warning is now in order.
    Our intention here, because of the press of business on the 
House floor, is not to lose the opportunity to hear from such 
expert witnesses. So I am going to forego my opening statement, 
and I am going to just begin by asking our witnesses if they 
would begin their testimony.
    And with a little bit of luck, the floor schedule will 
allow other members to come over here in order for them to 
benefit from hearing your wisdom. But because there are eight 
roll calls that could be called in the very near future, I want 
to ensure that your record is enshrined in perpetuity in the 
Congressional Record.
    [The prepared statement of Mr. Markey follows:]
    

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    So let me begin. I will go first to Stuart Eizenstat, who 
going all the way back to the Carter administration has been a 
wise and sage counsel, not only on issues related to the 
environment but on so many issues across the spectrum that it 
is impossible to list them all.
    So it is our great honor to have you back before us, Mr. 
Eizenstat. And whenever you are ready, please begin.

  STATEMENTS OF MR. STUART EIZENSTAT, PARTNER, COVINGTON AND 
    BURLINGTON, SUSTAINABLE FORESTRY MANAGEMENT; DR. THOMAS 
LOVEJOY, PRESIDENT, THE HEINZ CENTER; AND MS. STEPHANIE MEEKS, 
        ACTING PRESIDENT AND CEO, THE NATURE CONSERVANCY

                 STATEMENT OF STUART EIZENSTAT

    Mr. Eizenstat. Thank you, Mr. Chairman, and thank you for 
holding this hearing. As you know, I led the U.S. delegation 
for the negotiation of the Kyoto protocol. And at that time, 
forests were a major source of contention in those 
negotiations, and emissions from deforestation were indeed 
ultimately excluded. But much has changed since then, and today 
we have an opportunity to fill a gap left open by Kyoto, and I 
think Bali indicated a universal desire, including by the 
United States, to have forestry and avoided deforestation, an 
important part of the post-Kyoto world.
    I am on the Advisory Board, Mr. Chairman, of Sustainable 
Forestry Management. I have been working with a variety of 
environmental groups, Environmental Defense, The Nature 
Conservancy, Conservation International, Defenders of Wildlife, 
the Wildlife Conservation Society, and major companies like 
Shell, AIG, PG&E, AEP, and Duke Energy, to develop a forced 
carbon set of principles.
    Two very quick observations. The first is that the forest 
sector is key to dealing with our climate change problem, 
because it--deforestation accounts for about 20 percent of 
global greenhouse gas emissions. That is as much as the entire 
transportation sector worldwide.
    Second, we can't solve the climate problem if we don't 
include forests. Despite its massive contribution to the 
climate change problem, deforestation in developing countries 
is excluded currently from the international climate regime by 
the rules governing Kyoto, and that makes no sense 
scientifically, economically, or politically.
    Finding a way to bring deforestation and forest restoration 
into the climate regime offers the only meaningful path for 
many developing countries to participate in international 
efforts to deal with climate change. And without that, there 
will be no effective post-2012 international climate regime.
    Mr. Sensenbrenner will remember when we were in Kyoto 
together--and I think, Mr. Chairman, you were there as well--
that one of the big problems we had was dealing with the 
strangehold that China had, and India, on developing countries, 
many of whom wanted to take commitments and were not permitted 
to.
    This is a way in deforestation to break that logjam, 
because there are a whole group of nations, including the 
rainforest nations, that want to take these commitments. Plus, 
this offers an approach to get developing countries into a 
post-Kyoto regime through sectoral approaches.
    If they won't take economy-wide commitments, they may take 
sectoral commitments, forestry being one, but also 
transportation, utilities, and others. This is also a low-cost 
mitigation option available for U.S. companies to reduce the 
cost of their compliance with any ultimate U.S. cap and trade 
system.
    There are two main options for financing efforts to reduce 
emissions from deforestation. The first is an international 
fund channeling money to developing countries to finance forest 
protection efforts. This can be done by foreign assistance and 
a variety of other things, but the important thing is that it 
is a public sector effort, a government-to-government effort.
    The second option is a market-based mechanism that channels 
private sector capital to developing countries to fund forest 
protection efforts. The idea is that in any cap and trade 
system you design it so it recognizes credits for efforts to 
reduce emissions from deforestation, and, therefore, you 
leverage potentially significant flows of private sector 
capital to reduce emissions from deforestation.
    In looking at these two options, there are a couple of key 
points. First, to have a meaningful impact on deforestation, 
you have to assemble a substantial amount of capital, because 
the pressures on developing countries to cut their forests 
down, make room for soybean production and export, is 
tremendous.
    The Stern Report, Nicholas Stern for the U.K., estimated 
that it would take somewhere between $5- and $10 billion per 
year to provide sufficient offsetting incentives to reduce the 
incentive to deforest. And I seriously question whether the 
world and the U.S. are willing to finance that level. I doubt 
that they are.
    Although multilateral and bilateral funding are certainly 
good if we can do it, we should look for ways to harness the 
carbon market, which just last year was some $60 billion to 
deliver capital on a scale needed to impact on the problem.
    But having said that, both have a role. You can do both. 
But market-based mechanisms to me are far more powerful and 
leveraging private sector investments. Second, we have to pay 
careful attention to monitoring and quantifying changes in 
forest cover and forest carbon, and to the development of 
appropriate accounting frameworks to ensure environmental 
integrity.
    In contrast to what occurred at Kyoto, significant progress 
has been made in the development of remote sensing and 
satellite capabilities and accounting methodologies--Brazil now 
being a world-class leader--to quantify changes in land cover 
and forest carbon stocks with confidence.
    Third, integrated approaches are going to be necessary, and 
so we have to look at not just avoid a deforestation but 
afforestation and reforestation projects as well, which are 
permitted.
    A breakthrough in Bali, agreed to by this administration as 
well, was that the most significant recognition by all 
countries is that whatever climate change regime ultimately 
emerges after Kyoto, it should include provisions for what were 
called at Bali ``reduced emissions from deforestation and 
forest degradation.''
    This represents, Mr. Chairman, Mr. Congressman, an 
important step in filling the gap left open by Kyoto and 
includes deforestation in an international climate policy. So I 
appreciate very much you focusing on this. There are a number 
of issues that we will undoubtedly discuss on issues of leakage 
and permanence.
    But the fact is that we have come light years since Kyoto. 
And this was evidenced again at Bali, recognizing that we are 
not going to solve climate change when 20 percent of all the 
emissions for CO2 come from this sector, when it 
provides U.S. companies with a flexible low-cost way of 
offsetting the burdens that they will be under for any U.S. 
program. And that it is a way of involving developing countries 
who refused to play at Kyoto but are now willing to do so.
    Thank you.
    [The prepared statement of Mr. Eizenstat follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    The Chairman. Thank you, Mr. Eizenstat.
    Our second witness, Dr. Thomas Lovejoy, is the President of 
The Heinz Center for Science, Economics, and the Environment. 
He is a world-renowned expert on climate change issues.
    We welcome you, Dr. Lovejoy. Whenever you are ready, please 
begin.

                  STATEMENT OF THOMAS LOVEJOY

    Mr. Lovejoy. Mr. Chairman, Mr. Congressman, thank you for 
the opportunity to talk a bit about the relationship between 
forests and climate change. Tropical forests are a hugely 
important part of the picture, as we have heard. Like out of 
five additional molecules of CO2 come from tropical 
deforestation.
    And to underscore it, those kinds of emissions make Brazil 
the third largest emitter, and Indonesia the fourth. Or to put 
it another way, were the remaining Amazon forests to be 
deforested, that is equivalent to 15 years of the annual global 
increase of greenhouse gases.
    The Amazon is also, in turn, vulnerable to climate change. 
And the IPCC synthesis report states very clearly that if 
global temperature rises to 4\1/2\ degrees Fahrenheit over pre-
industrial that there will be massive Amazon dieback, creating 
a positive feedback and greater release of greenhouse gases to 
the atmosphere.
    We are currently essentially stuck with additional climate 
change that will bring us to 2.7 degrees Fahrenheit. Most 
projections look to 2030 with 3.6, so we are not very far away 
from that kind of calamity. And in 2005, the Amazon was subject 
to the greatest drought in recorded history, and many of us 
consider that phenomenon a preview of what climate change could 
bring.
    There is an additional aspect to the Amazon, which other 
tropical forests do not have, or at least not to the same 
degree, and that the Amazon literally makes half of its own 
rainfall. And we now know in the last two to three years that a 
significant portion of that rainfall ends up, once it is 
bounced off the Andes, going down to southern Brazil, where it 
is critical for a large part of their agro industry.
    So there is a role here in climate continentally, as well 
as globally, and there is an additional incentive there for the 
Brazilian government to take the Amazon deforestation issue 
even more seriously.
    So there is a mixed picture in the Amazon, which I know you 
are about to go to. A lot of positive things have happened in 
Brazil, so that today 40 percent of the Brazilian Amazon is 
under some form of protection. But at the same time, every year 
something like 8,000 square miles, roughly an area larger than 
the State of New Jersey, undergoes deforestation. Major 
economic forces driving that, particularly soybeans and a 
renewed vitality in the cattle industry. And so the big issue 
there is how you actually tilt that situation so they go 
towards one of the goals in Brazil of zero deforestation.
    Public opinion is largely in favor of conserving the Amazon 
and managing it, as opposed to letting it be deforested. And I 
think the kinds of things we have been talking about here which 
would provide funding for positive incentives for those living 
in the Amazon to basically use the forest while maintaining it, 
is in the end the key. There has got to be feed from that into 
political will.
    And there are wonderful bright spots, like the state of 
Amazonas, 2.3 times the size of Texas, where you will be on 
Saturday, where the governor has a really great vision of how 
his state will have a future with the forest and without major 
deforestation.
    So there is an opportunity here I think with one of the 
more sophisticated nations of the world, namely Brazil, to work 
out a partnership that might go beyond what it could mean for 
the future of the Amazon in that forest and climate change to 
actually taking it to something at the global level for all the 
tropical forest nations.
    Thank you very much.
    [The prepared statement of Mr. Lovejoy follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    The Chairman. Thank you so much, Dr. Lovejoy.
    And our final witness is Ms. Stephanie Meeks, who is the 
Acting President and CEO of The Nature Conservancy. And that 
program oversees forest conservation programs around the world.
    We welcome you for all of the wonderful work that you do, 
and your organization does. And whenever you are ready, please 
begin.

                  STATEMENT OF STEPHANIE MEEKS

    Ms. Meeks. Thank you, Mr. Chairman. Through on-the-ground 
conservation work in all 50 states, and in more than 30 
countries, The Nature Conservancy has protected more than 117 
million acres of land, 5,000 miles of river, and has more than 
100 marine projects around the world in places that are already 
feeling the effects of climate change. We are proud to be 
supported in this work by more than a million members in the 
United States and partners.
    Climate change is the most urgent environmental challenge 
that our world faces today. Every acre of land and mile of 
coast protected by The Nature Conservancy will be affected by 
climate change, and The Conservancy urges Congress to act 
quickly to cap and reduce emissions to levels that are 
sustainable for people and nature.
    I am grateful for the opportunity to testify today on 
reducing emissions from deforestation and degradation. The 
Conservancy considers this strategy to be one of the most 
promising ways to combat climate change in the near term. 
Emissions from deforestation and land use change exceed those 
of the entire transportation sector, as we have already heard. 
And reducing these emissions can and must play a significant 
role in a comprehensive solution on climate change that 
involves all major sources of emissions and all major emitters.
    Through our work on the ground, The Nature Conservancy has 
demonstrated that activities to reduce deforestation can 
provide real and verifiable emissions reductions. As a leader 
on forest carbon, our conservation work includes five large-
scale projects in Belize, Bolivia, and Brazil. These projects 
have reduced, and continue to reduce, emissions from 
deforestation while also protecting more than one and a half 
million acres of forest that harbors unique plants, animals, 
and natural communities, while bringing benefits such as jobs, 
infrastructure, and training to local communities.
    Through these projects and with our partners, we have 
advanced rigorous standards to ensure that emissions reductions 
achieved are real and verifiable. We are currently working in 
Indonesia and in the Brazilian state of Mato Grosso to help 
those governments develop pilot programs to reduce 
deforestation emissions.
    In addition to our project work, The Nature Conservancy has 
joined The World Bank's Forest Carbon Partnership Facility in 
order to pilot effective approaches and a successful funding 
mechanism. To date, 10 donor governments have also contributed. 
The partnership would be further advanced by a decision by the 
U.S. Government to join.
    These experiences have provided valuable lessons for the 
development of policies to help reduce emissions from 
deforestation. I would like to share with you some of these 
recommendations. First, policies to combat deforestation and 
forest degradation should aim for emissions reductions on a 
scale sufficiently significant to mitigate climate change.
    U.S. legislation should encourage tropical forest nations 
to develop national scale accounting programs to reduce 
deforestation by accepting credits from these countries. 
Second, policies must mobilize sufficient and stable levels of 
funding through market mechanisms as well as through non-market 
mechanisms such as development assistance.
    Third, policies and programs should respect, protect, and 
build upon the rights and needs in indigenous peoples in local 
communities, and should support activities that contribute 
additional environmental benefits. Fourth, policies should 
encourage early action to reduce deforestation while these 
forests are intact, and this potential solution to mitigating 
climate change is still at our disposal.
    In summary, it is critical for U.S. climate legislation to 
address the challenge of tropical deforestation by opening 
access to the U.S. carbon market. This approach will offer many 
benefits. It will directly address the 20 percent of global 
emissions that result from deforestation and land use. It can 
unleash billions of dollars in private sector carbon finance to 
save the world's forests and other irreplaceable biodiversity 
from destruction.
    It can help reduce the costs of domestic climate policy for 
U.S. companies and the economy. It will be an essential part of 
winning a global deal on climate change that ensures action by 
all major emitting countries. And, finally, it will improve the 
quality of life for local people by reducing the negative 
impacts of deforestation on communities.
    Mechanisms to reduce emissions from deforestation and 
forest degradation are among the most promising ways to reduce 
greenhouse gas emissions in the near term. They can and must 
play a significant role in a comprehensive solution to climate 
change.
    Thank you for the opportunity to testify here today, and my 
written testimony provides more detail on The Conservancy's 
views on these and related issues.
    [The prepared statement of Ms. Meeks follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    The Chairman. Thank you, Ms. Meeks, very much.
    There are now eight roll calls that are about to be 
conducted on the House floor. And I am afraid--I know that Mr. 
Eizenstat has to leave in 55 minutes, and that will actually 
most likely consume the entire time that it takes for those 
roll calls to be conducted. So I would just like to ask you, 
Mr. Eizenstat, what do you see as the future trajectory for 
international negotiations to create policies that prevent 
deforestation?
    Mr. Eizenstat. Well, first of all, I think it will be 
critically important for the U.S. to show leadership by passing 
its own cap and trade program. If we don't do that, then it is 
very difficult to make the rest of the world, Mr. Chairman, 
serious about their responsibilities.
    Second, what I would like to see--and it is embedded in the 
Warner-Lieberman legislation--is that there is a two and a half 
percent provision for international forest credits, and then 
there is a 15 percent provision, which allows international 
trading, but it is silent as to whether forestry credits could 
be included.
    As you, Mr. Chairman, help shape the House legislation, it 
will be absolutely critical for you to assure that the House 
legislation includes an even more robust allowance for 
international trading in forestry credits. The reason being 
that that will help provide U.S. companies who will be bound by 
our own cap and trade program to have the flexibility to trade, 
if they wish, internationally with rainforest countries and 
others, and provide the kind of incentive that all three of us 
are suggesting is necessary to prevent these countries from 
cutting their own forests down.
    It has a dual advantage. The advantage is that it helps 
lower the cost of compliance for U.S. companies, and it 
provides incentives and financial incentives for the tropical 
forest countries, the Brazils, the Indonesias, the Papua New 
Guineas, and others, not to cut down their forests. That has to 
be embedded into our own legislation.
    As we then evolve on the----
    The Chairman. I hate to do this, Stuart, but if I don't 
leave right now I will miss the roll call.
    Mr. Eizenstat. I would not want you to be absent.
    The Chairman. And I do apologize to you. The----
    Mr. Eizenstat. I am more than happy to stay until 3:30 or 
so, but----
    The Chairman. Okay. Well, we will be coming back just 
around that time. And I did want to have an opportunity to have 
your entire opening statement and whatever questions we could 
ask of you.
    But at this point, we are going to take a recess for about 
45 minutes or so.
    Mr. Eizenstat. Yes.
    The Chairman. And then, we will reconvene.
    Mr. Eizenstat. Again, I think the key thing is your 
leadership on the House bill and getting forestry credits 
included in the House bill. That is absolutely critical to 
getting the international buy-in.
    The Chairman. Got it. Thank you.
    [Recess.]
    The Chairman. This hearing in the Select Committee on 
Energy Independence and Global Warming is once again reconvened 
to talk about how the destruction of tropical forests is 
fueling climate change.
    The chair will recognize himself for a round of questions.
    Dr. Lovejoy, it is clear that an effective economic signal 
for preserving forests is necessary. From your experience, what 
policies would be the most effective?
    Mr. Lovejoy. Well, in terms of the economic signal, I think 
it is very important that the money get channeled to the people 
and the region you are trying to protect, that it doesn't get 
sort of set up in some distant capital. It has just got to 
connect pretty directly to the people who are living there.
    And I think an additional way to think about it is it 
probably should be set up as something which is an annual 
payment rather than a one-time payment, so that sort of a 
payment for a service or rent or something like that.
    And, you know, we, the larger conservation community, The 
Natural Conservancy, etcetera, have certainly, you know, long 
experience in doing individual projects around the world. And I 
would say that the vast majority of those have succeeded in the 
end. They may have encountered problems that they didn't 
anticipate in advance, but as long as they sort of didn't turn 
their back on their project, and just pay no more attention, 
they were able to address whatever new factor was involved.
    So I think the other question that needs some real thought 
is to--is how to avoid the so-called leakage problem, where you 
protect the forests in one place, and so the force of 
destruction is moved somewhere else. So I think the whole 
notion of working things out at the national level, where it 
all can be monitored, and most of the leakage will be contained 
within the country, is probably the way to go.
    The Chairman. You mentioned earlier the Amazonia and the 
high esteem for which you hold the governor.
    Mr. Lovejoy. Yes. The state of Amazonas, yes.
    The Chairman. The state of Amazonas. That is not the 
national level, and so how--in that context, just in the 
Brazilian context, how would you recommend that a program be 
established that ensures that there is no leakage, as you are 
looking at that central question?
    Mr. Lovejoy. I mean, the interesting thing about what they 
are doing in Amazonas is they are doing a combination of 
things, which include setting up protected areas, areas which 
are particularly set aside for sustainable use but not forest 
destruction. And they also are making payments to communities 
that are maintaining and using their forests. So you sort of 
have a prototype there.
    And I think it could be scaled up to the national level, if 
the Brazilian government is willing to do that. And the art of 
the game here is to really turn it into a partnership with 
Brazil, which could then go on I think and provide leadership 
to the rainforest nations generally.
    The Chairman. So what--if you could tell me, what is the 
relationship, from your perspective, between the national 
government and Brazil and this regional government that is 
demonstrating concern about the deforestation in the Amazon? 
What would you recommend that the United States do to help to 
encourage, create a national participation in planning 
strategies to deal with these regional issues?
    Mr. Lovejoy. Well, I think basically what you want to do is 
find ways to encourage the national government to buy into the 
kinds of initiatives that are happening in that and in a couple 
other of the Amazon states. I mean, in a sense, it is analogous 
to the leadership of California and the New England states on 
climate change in this country, which I think we are going to 
see within a year or two transformed into a national policy.
    So I think those things are best determined in 
conversations rather than in sort of public statements. I mean, 
the Brazilian government has opened the door to this idea of 
avoid a deforestation payment, and so I think, you know, some 
kind of a discussion where it is all put in a very positive way 
could lead them to take some major steps.
    And, particularly, I would encourage your CODEL to put a 
little spotlight on the Amazon as a rain machine for the agro 
industry and hydropower in central and southern Brazil. And I 
have provided a video for you to take on the CODEL, which 
actually shows this happening and makes it real to anybody. It 
is not a whole bunch of numbers or graphs. It is an actual 
model of how water moves around the planet.
    The Chairman. Beautiful. Now, did you agree with Mr. 
Eizenstat's recommendations as to how these issues should be 
handled? Anything you would add to or modify that he said in 
terms of how we should be handling these issues, and how we 
need an international component to any legislation which we 
pass?
    Mr. Lovejoy. Well, I do completely agree with him. One, 
that it will be much easier to achieve meaningful programs 
internationally with forests once the U.S. is seen to be taking 
leadership with its own cap and trade bill. And, second, that 
it is important to have some provision for inclusion of forests 
in these bills, but there has got to be a balance between that 
and actually tackling the energy base in this country. 
Otherwise, we could easily get backwash from countries saying, 
``Well, you are not really addressing the problem.''
    The Chairman. You are saying we have to act in a 
responsible fashion?
    Mr. Lovejoy. Yes, indeed.
    The Chairman. Yes. So, you can't preach temperance from a 
barstool.
    Mr. Lovejoy. That is right.
    The Chairman. You can't have a beer in your hand while you 
are telling people it is bad for you to drink. So I agree with 
that 100 percent, and that was his--I think that was what Mr. 
Eizenstat said. That is his first recommendation, that we pass 
a mandatory----
    Mr. Lovejoy. Yes, absolutely.
    The Chairman [continuing]. Auction and trade bill.
    Ms. Meeks, a critical issue that Congress will face when 
including forest conservation in climate legislation is making 
sure the protections for forests are permanent. So from your 
experience with projects around the world, how should Congress 
deal with this issue for permanent protection?
    Dr. Lovejoy was just saying that the payments should 
perhaps be on a yearly basis, so the incentive is there for the 
next year as well, and that it was performance-based. Do you 
have any recommendations as to how a formula could be 
constructed?
    Ms. Meeks. well, we would agree with that, with what Dr. 
Lovejoy said. And in addition--and we have had experience with 
this issue in a couple of different places that I would point 
your attention to--in carbon projects that we have done in the 
United States, as an example, where permanent conservation 
easements allow for that permanence and that guarantee that you 
are alluding to.
    And internationally it is a little bit different. I can 
point to one example that I referenced in my opening testimony. 
In Bolivia, the Noel Kempff Mercado Climate Action Project, 
where we actually worked with the government to buy additional 
acres surrounding a national park, and they became part of the 
national park system. And so that contributes to the permanence 
there, and that project is actually endowed and is monitored 
over time.
    So at a project level, there are a number of different ways 
to get at the permanence question. Scaling up, though, it is 
also a question that can be addressed at the national level. 
And we strongly advocate that forest carbon--the markets be set 
up in a way that take advantage of national government's 
ability to put policies in place to deal with forestry and 
agricultural issues on a national scale. And in that context, 
it is easier to deal with the permanence issue, because what 
might happen in one project can be amended or adjusted for in 
another place.
    The Chairman. Okay. Dr. Lovejoy, or Ms. Meeks, has there 
ever been a calculation made as to the totality of the role 
which illegal logging plays in deforestation?
    Mr. Lovejoy. I certainly think there are estimates of it. 
And, you know, in the Brazilian Amazon, I would guess that at 
least half of the annual deforestation is due to illegal 
logging.
    The Chairman. Ms. Meeks.
    Ms. Meeks. I was--we do have some numbers on that, and I 
can send them to you. They are significant globally, in the 
Amazon of course, and in Indonesia that is also a very critical 
issue.
    The Chairman. And when international negotiations are being 
conducted, what focus is placed upon illegal logging in terms 
of trying to reach agreements that, you know, go across 
nations?
    Ms. Meeks. Well, it is quite substantial. In Indonesia, 
where The Nature Conservancy has done some work, we are working 
at the state level, just as Dr. Lovejoy was talking about in 
Amazonas, with the government there to put into place forest 
policies that would address such issues as illegal logging. And 
so that is a central part of coming up with a forest management 
regime that would be part of a comprehensive plan that deals 
for--that sets up the enabling conditions for a forest carbon 
program.
    The Chairman. And earlier this year there were reports that 
in Brazil, which had been making progress in controlling 
deforestation, but they received satellite images, that showed 
that the rates of clear cutting had increased dramatically in 
recent months.
    So what sort of technologies would you recommend, or 
mechanisms be put in place, that make it possible for us to 
ensure that deforestation can be noticed in a very time-
sensitive fashion as it is happening, so that it can be stopped 
rather than reporting it after the fact? Do you have any 
recommendations as to what would be the best technologies or 
mechanisms to accomplish that goal?
    Mr. Lovejoy. Well, if I might start this discussion--
Stephanie I am sure will have things to add--what you need is 
real-time remote sensing data. Brazil is noted for the 
excellence and reliability of its annual estimates of 
deforestation rates, but it is always after the fact, too late 
to do anything with it to enforce the beginning of some illegal 
deforestation.
    One of the Brazilian states 10 or 15 years ago actually had 
a real-time operation in place with daily monitoring. It was 
the state of Mato Grosso. And as soon as clearing would begin 
to appear, they would send the helicopters out. And they 
actually had gotten to a point where the GPS data that they 
could take when they were--the helicopter arrived would stand 
up in the Brazilian courts. And it worked very well, and then 
it was just allowed to fall apart.
    But it basically shows that if you really want to do it, 
you can.
    Ms. Meeks. Well, I think that is right, and I would only 
add that technology is really on our side in this regard. It 
has become a lot easier to monitor what is happening in forests 
globally, and at any point in time we can see what is 
happening.
    And so to this issue of permanence and what is happening on 
the ground, technology has come a long way. And it is not 
terribly expensive. The government of Australia has initiated a 
surveillance of their entire nation and their forests and land 
use changes, and it only costs a couple million dollars a year. 
So it is both effective and cost effective.
    The Chairman. So do you believe that the technology to have 
real-time monitoring exists today, but the money hasn't been 
invested in it in a sufficient way to deploy it, or that we 
need to actually develop better technologies in order to 
monitor? Do you think the--in other words, do you think the 
technologies already exist? Or do we need to improve on those 
technologies in order to develop this real-time capacity?
    Ms. Meeks. I think the technologies exist today, and the 
piece that is missing is that a lot of countries have not 
developed their internal capacity to implement and use these 
technologies.
    The Chairman. I see.
    Mr. Lovejoy. So, actually, one thing that relates to all of 
this is NASA's programs that used to be called Mission to 
Planet Earth. And those have been allowed to be neglected in 
favor of other activities. And, you know, there are other 
aspects of monitoring this planet that need attention at the 
same time.
    The Chairman. When you say that NASA has allowed these 
programs to deteriorate, what do you mean by that?
    Mr. Lovejoy. Well, I mean, take Landsat, for example. I 
mean, basically we have one Landsat up there in space going 
around, is way overdue for its allotted life-span. And the next 
one is not slated for any near time, so it could wink out 
tomorrow. I mean, that is not a good way to----
    The Chairman. Could capacity on already-deployed satellites 
be reprogrammed in order to provide the same information?
    Mr. Lovejoy. I am certain that is possible, and some of the 
sort of classified satellites could certainly provide 
information, too.
    The Chairman. Okay. I think that is a good project for the 
Select Committee to work on to determine how we can get inside 
of the total satellite deployment of the United States and find 
a way to give you that up-to-date information.
    The chair's time has expired. The chair recognizes the 
gentleman from Washington State, Mr. Inslee.
    Mr. Inslee. Thank you. I want to ask about carbon 
sequestration forests, and we have been trying to get a handle 
on how we really assure additionality if we are going to have 
programs that give credits for maintenance of forests. So I 
guess just if I can ask your advice on how we--is additionality 
something we should in fact insist on if we are going to give 
credits for maintenance of forests? Should we ensure that we 
have some program to assure that it is an additional asset that 
would not otherwise be maintained? And, if so, how do we do 
that?
    Mr. Lovejoy. If I understand your question correctly, I 
mean, there is sort of actually two parts to it. One is in a 
sense the reforestation part, which is, all things being equal, 
is real additionality. And then, the other part of it is what 
we were touching on before. You know, if you really increase 
the protected area forest in a region, is that merely going to 
be offset by some deforestation as the logging companies or 
whatever go elsewhere?
    Mr. Inslee. You just go next door.
    Mr. Lovejoy. Yes. And that I think is best dealt with at 
the national level, and----
    Mr. Inslee. In other words, you said a national acres----
    Mr. Lovejoy. National forest carbon accounting. It is not 
hard to do.
    Mr. Inslee. So you would say, ``We will give you credit if 
your entire nation state will increase its forest land by X 
acres.''
    Mr. Lovejoy. That would be one way to do it. And the other 
way would be to give some credit if they sharply and markedly 
decrease their rate of deforestation.
    Mr. Inslee. But in the real world, how do you do that? I 
mean, right now there are these exchanges going on today. So 
let us say I am a landowner, and I want to sell my development 
rights and get a credit, and some utility wants to buy that 
credit, if you will.
    I can't sell a national asset. I can sell you my property 
development rights, if you will, but I can't guarantee my 
neighbors aren't going to do it. Do you have to have a national 
repository, then, of that asset somehow?
    Mr. Lovejoy. Well, I think you need the national 
accounting.
    Mr. Inslee. But how do you--in real life, let us say I am a 
land--I have got a forest lot, and I want to sell to you, XYZ 
Utility, my development rights, so you can claim a credit if 
you will. I can't--when I sell you that, I can't guarantee that 
my next-door neighbor isn't--once I sell my development rights, 
I can't guarantee he'll just go clear-cut his land. So how do 
we really--what are we really buying then?
    Mr. Lovejoy. Well, I mean, that is why you actually need to 
take it to the level of national responsibility, which sets up 
immediate internal political pressures to do it right.
    Mr. Inslee. So what we are really going to have to do to 
make this work, it seems to me, is a national scheme where if I 
am a utility I might go to Bolivia and buy a certain number of 
acres from Bolivia, and they have got to administer it somehow. 
Is that what it boils down to?
    Mr. Lovejoy. Yes. And within the context of Bolivia 
actually having its own national accounting and not having some 
kind of offset going on there.
    Mr. Inslee. Right. But in the European system right now, I 
suspect they are not really doing that. They are cutting deals 
right now to buy certain acres from the landowner, and not 
protecting against the guy next door just doing a clear cut.
    Mr. Lovejoy. My understanding is that is a fundamental 
weakness.
    Mr. Inslee. Right.
    Mr. Lovejoy. Stephanie.
    Ms. Meeks. Well, I might just add--I mean, you can deal 
for--with the additionality question and the leakage question 
at the project scale, and it gets back to doing this baseline 
monitoring at the beginning. What is currently happening in 
this forest plot or in this county or in this state or in this 
nation? And then, monitoring the changes against that over 
time.
    The challenge at the project level, of course, is that it 
doesn't get to any meaningful scale of actually taking 
advantage of the carbon mitigation that could happen through 
avoided deforestation. But I think that one of the things that 
we have to make sure that we do is create the financial 
mechanisms for countries to care about this, and then they will 
institute the policies that will drive behavior that will lead 
to this good result.
    Mr. Inslee. Second question: when you do this, is it good 
enough to put land to say, ``I will maintain this as a wood 
lot, but I will be taking successive harvest off of it and then 
replanting?'' Should that qualify for a carbon sequestration 
credit?
    Ms. Meeks. It can in determining the way the--either at the 
project scale or the national scale as part of a forest 
management plan. Forestry doesn't have to cease to exist, but 
it has to be done in a way that accounts for the growth of new 
trees, as trees are being harvested.
    Mr. Inslee. Thank you.
    The Chairman. The gentleman's time has expired. The chair 
recognizes the gentleman from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Mr. Inslee actually delved into the area of my interest and 
concern. Is there, in your opinion, a political mechanism by 
which the United States can move these primarily Third World 
countries, which creates a whole new economic issue, separate 
and distinct from the other problems of global warming? But is 
there a way that we can negotiate with these countries 
concerning deforestation, considering the fact that we don't 
have one of the sterling reputations around the world for 
moving progressively on this issue?
    Ms. Meeks. Well, I--to your point, I think the most 
important thing that the Congress can do is to help enact 
legislation that will put the United States back on very firm 
footing in international negotiations and give us the right to 
talk about this issue with developing countries.
    At the very beginning, Chairman Markey asked, ``What is the 
most important market signal that Congress could send through 
legislation?'' And I think that is recognizing the value of 
forest carbon, and that it is every bit as valuable as carbon 
emitted from other sectors, and in so doing creating this 
market that will enable Third World and developing countries to 
participate in the solution to climate change.
    Mr. Lovejoy. So I would merely add to that that, you know, 
once we have sort of achieved a certain amount of credibility 
on the climate change issue, that then it will become possible 
to do a lot of additional activity which could include, you 
know, technological help, remote sensing, data help, and even 
sort of working things out on a one-to-one basis with 
particular nations. We can get ahead of a more patient and slow 
international negotiation process, and actually get some things 
done.
    Mr. Cleaver. So before we can--before we would have any 
impact anywhere, you are saying we need to have the moral high 
ground to discuss this with countries? I mean----
    Mr. Lovejoy. I mean, I think that is fundamentally true, 
but I--you know, it is not too soon to start talking about it 
in parallel as we work up to what I think is clearly going to 
be national legislation within a year or two.
    Mr. Cleaver. After November. Is there something that the 
United States can give to those--to the countries that are just 
systematically wiping out the rainforest that would enable them 
to feel economically secure enough to discontinue it? Is there 
foreign aid that we can provide that would discourage--let us 
do it on the positive side--that would encourage the 
governments and its people to not only back away from 
destroying the rainforest, but trying to rebuild it or allow 
God to rebuild it?
    Mr. Lovejoy. Sir, my answer to that is an emphatic yes. 
There are a whole array of things one can do, and one of the 
really interesting things that is often overlooked is that part 
of the key here is improving the economic opportunity and 
quality of life of cities in these rainforest regions, because 
if there is reasonable economic activity and quality of life in 
cities, a lot of that population will be attracted to that and 
not be out in the countryside engaging in deforestation.
    Ms. Meeks. And I would only add, I think you have hit on a 
very important point. Part of the solution can be foreign aid 
and overseas development assistance. But it strikes us that the 
scale of the problem or the opportunity, depending on how you 
look at it here, is so vast that involving private markets will 
be a much more efficient and ultimately a more effective way of 
getting enough financial incentives into the system to really 
change this at a fundamental level, which is what we are 
talking about.
    Mr. Cleaver. Thank you, Mr. Chairman.
    The Chairman. Okay. The gentleman's time has expired.
    Does the gentleman from Washington State have additional 
questions he would like to pose to the witnesses?
    Mr. Inslee. I do thank you, Mr. Chair. I appreciate it.
    I saw somewhere, and it may be in your testimony or in a 
committee report, about the cost of carbon--CO2 
reduction was $3 a ton by--when you engage in a project 
maintaining forest land, it is $3 a ton, which is like a low 
price relative to other, you know, sources of energy and the 
like.
    And it looked to me like it is probably lower than, you 
know, 60 percent of the other costs of other alternatives. Am I 
reading that right? And, if so, should it be the first thing 
that we look at after efficiency and conservation and the real, 
real cheap stuff to do that actually has a negative cost?
    You know, according to this McKenzie report, 40 percent of 
what we have to do actually has a negative cost. So that $3 is 
still competing with a lot of things that actually make us 
money over the long run. But that appeared to be the cheapest--
about the cheapest that had some cost. Could you guys respond 
to that?
    Ms. Meeks. Well, I think that is a really important point, 
and that is why avoided deforestation is a win-win-win 
strategy, because it keeps carbon from being released into the 
atmosphere. It is one of the cheapest opportunities that we 
have in front of us for dealing with greenhouse gas emissions.
    And in terms of forest carbon, you have the added benefit 
of biodiversity conservation and the community improvement 
values that we were talking about a few minutes ago. So I think 
that is very key, and it is why we wanted to be here and are 
grateful to have the opportunity to talk with you about this 
today, because it just really seems like a no-brainer to us 
that we would want to include forest carbon as one of the 
options for the United States and moving forward.
    Mr. Lovejoy. So if I may add to that, you know, there are 
people who worry that the inclusion of forests will just knock 
the bottom out of the carbon market and make it--just flood it, 
take it down to a price where nothing will happen. I think in 
fact, as the real urgency of climate change hits home, that we 
won't be able to find enough carbon to sequester, and that we 
won't have to worry about that price.
    Mr. Inslee. Thank you.
    Mr. Cleaver. While the Chairman is away----
    The Chairman. The chair recognizes the gentleman from 
Missouri, Mr. Cleaver----
    Mr. Cleaver. Thank you.
    The Chairman [continuing]. For a round of questions.
    Mr. Cleaver. Thank you.
    What do you think would be the biggest, the greatest 
surprise in the Amazon Basin to members of Congress? What would 
we be awestruck by?
    Mr. Lovejoy. I think it is the relationship of the Amazon 
to the continental climate as well as the global climate. And 
it turns out that the Amazon actually makes half of its own 
rainfall. It is quite extraordinary, and it is well nailed down 
scientifically by good Brazilian science, in fact.
    So there does come a point where if there is too much 
deforestation all of that begins to unravel, and it is not 
enough rainfall to maintain a rainforest, and you have some 
terrible feedback loops going. If you can avoid getting to that 
point, you will also be securing a significant portion of the 
rainfall south of the Amazon in Brazil and in northern 
Argentina, which is really important for their agro industry, 
and it is really important for their hydropower.
    And their only--this particular message is a surprise to 
most people at this point, but it gives the Brazilians an 
additional incentive to collaborate in these larger exercises 
we have been talking about.
    Mr. Cleaver. I have family members in Tanzania that live 
around in the city of Arusha and around Kilamanjaro, which is 
not a rainforest, but there is some deforestation going on. And 
the people go in and they kill--the people who live in the area 
they go in and they kill animals that are on the endangered 
list, endangered species list.
    And I will never forget saying to a cousin of mine, ``You 
know, the leopard is really endangered. And, you know, you 
guys, you know, need to be careful. I mean, you are killing too 
many.'' And he said to me, ``The appreciation for the leopard 
increases with your distance from the bush.''
    And I think that is the kind of thing we run into when 
people around in the rainforest are, you know, starving, 
logging is the only way they can, you know, get a meal, and 
even then it is--they are going to be ripped off. But we have a 
conundrum. How do we, you know, convince people that it is in 
the best interest not only of their community, their nation, 
but it is also in the best interest of the world that this stop 
when they--when they are saying, ``You know, it is easy for you 
to say, you know, you are living in Missouri.''
    Mr. Lovejoy. My answer to that is simply, you know, those 
words will not solve that problem. You have to create economic 
opportunities for those people that do not involve destroying 
the forest, and that is one of the real attractions of the 
kinds of carbon money we are talking about here where somebody 
can have a piece of forest, they can use it for forestry, they 
can use it for ecotourism, they can use it for non-timber 
forest products, and still get an income for maintaining it in 
forest. And you add all of that up and it begins to be pretty 
reasonable.
    Mr. Cleaver. Well, that is--actually, you went in the exact 
direction that I was hoping, because ecotourism is something 
that I would suggest to my own family. You know, not safaris, 
but ecotourism, where you go out and actually live in and with 
the world as it was originally designed. And so it is a very 
painful reality that people will destroy that which they need 
to survive in order to survive temporarily.
    The Chairman. Great. Let me just ask this--the Select 
Committee is going to Brazil for five days beginning tomorrow. 
Tell us from your perspective, what should we be looking for? 
What recommendations should we be making? What would you give 
us as your words of counsel, as we land in Brazil tomorrow 
evening?
    Mr. Lovejoy. Well, I guess I get to answer that first, 
having been doing that for about 43 years. Just have real 
conversations with the people there. I mean, you would do that 
anyway, but there are some pretty sophisticated people, and you 
will find them, you know, starting with the Amazonas state 
government officials that you will meet with, and some of the 
scientists you are going to see at the National Institute for 
their Amazon Research. And these are world-class scientists who 
have been working on these issues for years.
    And the kind of interest that you displayed in this hearing 
I think will win them over in no time, and you will be having 
some very fruitful discussions.
    The Chairman. Ms. Meeks.
    Ms. Meeks. I would be interested in having you ask them the 
question that you asked us at the beginning of this hearing, 
which is: what does the United States need to do in order to 
get a country like Brazil to take their deforestation 
seriously? And what kind of market mechanisms would they be 
looking to for their level of interest? Answering some of these 
questions about leakage and additionality and permanence that 
you have asked us today.
    I agree with Dr. Lovejoy. I think there is a number of 
sophisticated people in countries around the world who are 
wrestling with these issues, and I think it would be very 
interesting for the Committee to hear from them directly on 
what direction from the United States would be helpful to their 
governments in order to move in the right direction.
    The Chairman. Okay. Thank you.
    Do any of the Committee members have any final questions 
for our witnesses? No? Thank you.
    Well, we thank you so much. When Speaker Pelosi created the 
Select Committee on Global Warming, I never thought that our 
travels would actually bring us over to the Senate side for a 
hearing, which is about as distant, actually, from the other 
side of the Capitol as you can get. So I would like to thank 
Senator Kennedy for making this hearing room available to us.
    It was a very congested afternoon in the United States 
House of Representatives to do anything other than this already 
predetermined business. And so I think that what we have 
learned here today, and which each of you have pointed out 
quite eloquently, is that deforestation is something that if we 
can develop a strategy can pay huge dividends in the battle 
against global warming.
    And as the gentleman from Washington State made reference 
to, that along with things like energy efficiency, it just is 
all part of the strategy of working smarter, not harder. The 
assets are there. If we think about it in a very strategic way 
we can derive tremendous benefits from it.
    We thank you for the dedication that you have made to this 
issue for your lifelong commitment to these issues, and we hope 
that we can work with you in the next year, because Speaker 
Pelosi is committed to passing a mandatory cap and auction and 
trade bill. And this issue of deforestation is obviously going 
to have to be a central part of any strategy which we adopt 
nationally.
    So we thank you. We apologize for the long intercession, 
but it was unavoidable.
    With that, this hearing is adjourned. Thank you.
    [Whereupon, at 4:54 p.m., the Committee was adjourned.]

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