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Financing Forest Protection

A shot from within a green forest on a sunny day

Forests are incredibly important to our natural world. They’re home to much of the life on Earth and through photosynthesis, they perform the critical task of removing carbon dioxide from the atmosphere and releasing oxygen. Tragically, humanity hasn’t treated forests with the respect they deserve given the vital role they play in our lives.

In 2020, the planet lost an area of tree cover larger than the United Kingdom, including more than 4.2 million hectares of primary tropical forests. Before diving into a forest protection solution which KlimaDAO will empower, here are a few more forest facts you may not be aware of:

  1. Forests cover one-third of the world’s land area and host more than half of the world’s land-based plant and animal species.

  2. A quarter of all modern medicines come from tropical forest plants, including two-thirds of all cancer-fighting drugs. As well as saving people’s lives, these medicinal plants are worth a staggering US$108 billion a year.

  3. Forests have an abundant supply of nutritious foods, such as nuts, fruits, seeds and even insects which are rich in protein and important minerals such as calcium and iron. These natural products help forest communities and millions of other people to remain healthy.

  4. Trees in forests are natural aqueducts, redistributing up to 95 percent of the water they absorb to where it’s needed most. They hold water in the soil, preventing erosion, and later release it back into the atmosphere, producing a cooling effect.

  5. Trees are a great carbon sink, with the world’s forests removing an estimated 2.1 Gigatonnes of carbon dioxide annually—that’s 2.1 billion tonnes! This plays a fundamental role in balancing the world’s carbon cycle and helping to combat climate change

Understanding the Solution

Clearly, forests are worth protecting. So why is there so much forest being destroyed or unsustainably harvested for various products? Simply put: opportunity costs. If the value of the biomass itself, in its natural state, was worth more to landowners than utilizing the biomass for other purposes, the trees would stand.

Carbon markets play a crucial role in delivering finance to landowners to maintain their existing forests, or rehabilitate degraded land by reforesting previously wild areas. In short, carbon offsets are a financial tool whereby we can place higher value on forests than what they’re worth by tearing them down.

Financing forest protection is a powerful lever in the fight against climate change as well. Consider the emissions abatement potential of various nature-based solutions, below.

A chart explaining various carbon sequestry solutions and their potential impact
Interestingly, Avoided deforestation & peatland impact has the greatest abatement potential.

Intuitively, people understand that trees sequester carbon. What people don’t appreciate enough is the role that deforestation itself plays in emissions. While reforestation could help remove 1 GtCO2 per year until 2030, avoiding deforestation in the first place could help save 3.6 GtCO2 from being emitted! We need to finance forest protection. Indeed, as much as 50x more land is needed for reforestation to generate the same climate mitigation outcomes as protecting existing tropical forests themselves, given their years of maturing carbon stocks, including soil carbon.

The Role of the Voluntary Carbon Market & KlimaDAO

We need to 15x, at a minimum, the size of the VCM in order to hit the targets of the landmark Paris Agreement. It’s no wonder then that analysts see carbon credits as a $50 billion market by 2030, as we outlined in our article Introducing KLIMA, a liquidity engine for carbon markets. Klima DAO stands to accelerate value pressure on the voluntary carbon market, deliver greater sums of finance for forest carbon project developers, and ultimately help secure one of the world’s most precious resources, forests.

Every KLIMA token will be covered by 1 tonne of carbon offset. Given current carbon market characteristics, many of these offsets will be generated via forest carbon projects, including reforestation initiatives and forest protection.

Sources & Further Reading


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