The United Nations and a coalition of financial institutions warned that huge losses, both financial and environmental, could result from a failure to agree on a climate change agreement that spurs private sector investment in efforts to reduce deforestation and forest degradation.

An ineffective climate change regime on forests would entail losses in the global economy of $1 trillion per year by 2100. [un.org]

In a report entitled "REDDy-Set-Grow Part II: Recommendations for international climate change negotiators," the UN Environment Programme's Finance Initiative (UNEP FI) – in partnership with over 200 financial companies – urged negotiators at the UN Framework Convention on Climate Change (UNFCCC) to remain committed to the international policy framework on the reduction of deforestation and forest degradation reduction known as REDD+.

The report points out that any post-Kyoto climate convention negotiated in Durban, South Africa, later this year must include text that clarifies the fundamental role of private engagement and investment in funding REDD+, as well as effective measures to tackle the causes deforestation by changing behaviour in the private sector towards sustainable land use.

The Kyoto Protocol is an addition to the UNFCCC that contains legally binding measures to reduce greenhouse gas emissions, and whose first commitment period is due to expire next year. Negotiations on the second commitment phase of the Protocol are ongoing.

A positive outcome in Durban would also send an encouraging signal to the next year's UN Conference on Sustainable Development (Rio+20) in Brazil, where one of the two key themes will be the Green Economy in the context of sustainable development and poverty eradication, according to the new report.

An ineffective climate change regime on forests would entail losses in the global economy of $1 trillion per year by 2100, and affect a large portion of the estimated 1 billion people who rely on forests for their livelihood, according research done previously, the report adds.

By contrast, a healthy forestry-based carbon market could mobilize investment for the protection and rehabilitation of natural forests to the tune of more than $10 billion by 2020.

"The fundamental reason for current levels of deforestation worldwide is that cleared forests translate into economic opportunity for farmers, local communities and governments while standing forests do not," said Christian del Valle, the Director of Environmental Markets & Forestry at BNP Paribas.

"There is a price for soybeans, palm oil, beef and other products grown on deforested lands, but not for the many critically important services provided by healthy forests, including the sequestration and storing of carbon. With the possibility of a global funding mechanism for REDD+ we now have, at the global level, the unprecedented opportunity to address this imbalance. I hope we do not miss it so that natural forests are given the value they deserve."