About 3.7 million hectares of the world's forests were cleared last year due to deforestation, as seen here in the Yari Plains of Caqueta, Colombia. Reuters
About 3.7 million hectares of the world's forests were cleared last year due to deforestation, as seen here in the Yari Plains of Caqueta, Colombia. Reuters
About 3.7 million hectares of the world's forests were cleared last year due to deforestation, as seen here in the Yari Plains of Caqueta, Colombia. Reuters
About 3.7 million hectares of the world's forests were cleared last year due to deforestation, as seen here in the Yari Plains of Caqueta, Colombia. Reuters

With an area almost the size of Switzerland lost last year, is there hope for our forests?


Daniel Bardsley
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The tropics lost an area of primary forest almost the size of Switzerland last year, according to recent figures from the World Resources Institute.

Despite decades-long campaigns against deforestation and in the face of temperature increases in part driven by the felling of forests, 3.7 million hectares were cleared.

Community support is key, and conservation areas remain our best tool for halting deforestation
Dr James Deutsch,
CEO of the Rainforest Trust

The WRI said there were increases in deforestation in Bolivia, Laos and Nicaragua in 2023, but Brazil and Colombia both significantly reduced the amount of logging.

According to the environmental organisation WWF, forest destruction accounts for about 10 per cent of the temperature increases the world is experiencing, because it causes the release of vast amounts of carbon that had been stored by the trees.

Estimates suggest 137 animal and plant species are driven to extinction each day as a result of deforestation, with creatures that see their habitat destroyed having nowhere else to go.

Why it's happening

Much of the destruction is blamed on clearances for agriculture and the growing of crops, including soya, which is often to feed animals, and palm oil.

A key issue is what Georg Winkel, professor of forest and nature conservation policy at Wageningen University and Research in the Netherlands, describes as “imported and exported” deforestation.

Countries may deforest their own territory to produce goods or commodities that are exported to other nations.

Linked to this is the forest transition theory, which suggests that forest cover falls most rapidly when a developing country is experiencing its fastest economic and demographic (or population) growth.

Later, once a country is richer and its population has stabilised, forest cover may rebound slightly, with the country importing goods that have been produced through deforestation in other nations.

A report from the World Resources Institute details primary forest loss by nation. World Resources Institute
A report from the World Resources Institute details primary forest loss by nation. World Resources Institute

Prof Winkel described international trade patterns as “important drivers” of logging and said tackling them was central to efforts to reduce deforestation.

“We have global production of agricultural commodities, where land seems to be available, forests are not protected and land seems fertile,” Prof Winkel said.

“From an environmental perspective we want to make sure these large-scale old forests remain for the future because of the biodiversity and carbon storage, but populations are growing and there’s an interest in the population in becoming wealthy.”

Hope remains

Brazil, home to the Amazon basin, one of the most prized and threatened areas of primary rainforest in the world, has seen its deforestation rates fall thanks to a clampdown on illegal logging by the country’s president, Luiz Inacio Lula da Silva, who returned to power at the beginning of 2023. In Gustavo Petro, Colombia too has a president keen to reduce deforestation.

In response to the WRI report, Dr James Deutsch, chief executive of the Rainforest Trust, said the statistics showed that deforestation could be slowed or stopped “given high-level political leadership, good governance and direct action”.

“Community support is key, and conservation areas, including indigenous territories and titled land, remain our best tool for halting deforestation,” he added.

Meanwhile, the EU is aiming to reduce its contribution to deforestation by introducing the EU Deforestation Regulation (EUDR), which the European Commission, has called “an important turning point in the global fight against deforestation”.

Due by the end of 2024, it would bar key commodities, including palm oil, rubber and coffee, from being imported into the EU if their production has contributed to deforestation.

The UK has also announced regulations aimed at stopping imports of essential commodities linked to illegal deforestation.

Challenges to come

The EU’s rules have faced pushback from countries that export to the bloc as well as from trade associations. As a result, implementation is likely to be gradual.

One potential consequence of the rules could be that suppliers develop separate supply chains, said Dr Kristjan Jespersen, an associate professor at the Copenhagen Business School in Denmark and the chief Engagement officer at Loh-Grønager Partners, a London-based hedge fund.

“[There could be] clean products going to Europe and deforestation products being sent to other parts of the world that are not as demanding. That’s the tension happening right now,” he said.

“If you have people willing to pay the same price but with less regulatory requirements, you will see products [going] to China or India, where the [consumers] are more price sensitive … The producers are very rational and will distribute their products globally.”

Organisations including the Rainforest Alliance and the Fair Trade Advocacy Office, while welcoming the EU’s rules, have said that smallholders – who produce a third of the world’s food – must not “bear a disproportionate burden for compliance” or risk being pushed out of the market.

Brazil in transition

Prof Winkel suggested that Brazil may be moving towards the later stages of the development process, evidenced by a slowing of its population growth.

In the early 1960s, the country’s population was increasing by about three per cent a year, but the rate now is about 0.5 per cent.

“Brazil and other forest-rich emerging economies have become more wealthy and population growth slowed down,” Prof Winkel said.

Data shows a steady rise in forest losses in the Democratic Republic of the Congo. World Resources Institute
Data shows a steady rise in forest losses in the Democratic Republic of the Congo. World Resources Institute

“There’s lots of inequality, but I’m carefully optimistic there will be a forest transition and large parts of the Amazon will remain forested, but part will be secondary forest, managed forest.

“Policies tackling harmful investments and trade, and consumers that are sensitive to environmental issues, will play a key role there as well.”

An African future

Prof Winkel said there may be even greater pressure in future on forested areas of Africa, such as the Congo Basin, which is the continent's largest forested area and stores more carbon than even the Amazon.

The UN Environment Programme states that the basin’s peat swamps alone contain about 29 billion tonnes of carbon – equivalent of three years’ worth of global greenhouse emissions.

Each year the whole basin absorbs about 1.5 billion tonnes of carbon, which is well over twice the annual emissions of Saudi Arabia.

Africa is experiencing some of the fastest population growth in the world; jumping from about 818 million in 2000 to 1.39 billion in 2020, and the UN forecasts that, by the middle of the century, it will have reached 2.5 billion.

This, Prof Winkel said, will inevitably lead to more challenges down the line.

“In the end, it’s more and more people plus our human desire to consume more and more, and capitalist logic of exploring and investing in land where it is still available, that drives deforestation,” he said.

“There is no easy solution to these challenges but we have to tackle them from different perspectives.”

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Will the pound fall to parity with the dollar?

The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.

Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.

New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.

“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.

The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.

The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.

Bloomberg

Updated: April 12, 2024, 6:00 PM