From The Netherlands to the Andes: A Carbon Project in Ecuador

by Patricia Granda

THE FACE FOUNDATION, or “Forest Absorbing Carbon Dioxide Emissions”, was established in 1990 by the Board of Management of the Dutch Electricity Generating Companies, N.V. Sep. The original idea was to set up 150,000 hectares of tree plantations to compensate for the emissions from a new 600 MW coal fired electricity generation plant to be set up in The Netherlands. “For reasons of land availability and cost-effectiveness,” FACE explained,
“greater emphasis has been placed on collaboration with developing countries and countries in transition.”

Since 2000, the FACE Foundation has been producing and selling carbon credits from tree plantations independently, without Sep funding. It trades the credits through two Dutch companies: Business for Climate (set up by FACE in 2002 jointly with Triodos Bank and Kegado BV) and Triodos ClimateClearing House.

The FACE Foundation has five projects worldwide: in Malaysia, the Netherlands, the Czech Republic, Ecuador and Uganda. The FACE Programme for Forestation in Ecuador S.A., or PROFAFOR, currently the largest, is a company incorporated in Ecuador in 1993, with FACE finance, to establish tree plantations to “fix” CO2 from the atmosphere. PROFAFOR has not been
approved as a UN Clean Development Mechanism project. But it does see itself as “potentially CDM-compliant” – as sequestering carbon over and above what would have been the case otherwise, as providing social, economic and environmental benefits, and so on.

PROFAFOR originally thought to plant 75,000 ha of trees, but later revised this goal downward to 25,000 ha. So far contracts have been signed for the plantation of 24,000 ha, and 22,000 ha have actually been planted. Initially, PROFAFOR activities were focused on the Andean region, or Sierra, and 8,000 hectares have been planted under contract with 39 indigenous mountain communities. However, since 2000, contracts have alsobeen signed in Ecuador’s coastal region.

Q. Well, planting trees is bound to be a good thing for everybody involved, isn’t it?

It’s not so simple. The Sierra sites used by PROFAFOR are located in a biome known by the colonial Spanish term paramo – which denotes high altitude plains or barren plateaus without woodlands. This zone was never forested and supports few trees. The dominant vegetation is Andean grassesfrom the genuses Festuca, Stipa, Calamagrostis and Deyeuxia.

The dark, volcanic paramo soils have a complex particulate structure that, in the cold, moist climate of the Sierra, enables them to retain a great deal of water and organic matter. The soils have a far greater capacity to hold water than the vegetation covering them, although a layer of plants is important to keep moisture in the soils during dry seasons. In the humid but not high-rainfall Sierra environment, paramo soils are believed to bethe main water reservoirs for the local inhabitants.

Although indigenous agriculture has been practiced for hundreds of years up to 3,500 metres (the Sacred Valley of Cuzco, a shrine of indigenous agriculture, lies at around 3,000 metres), the ecological balance of the paramo above 3,200 metres is very fragile. If the plant cover is removed even temporarily, evaporation from the surface increases and organic matter in the soil begins to decompose, resulting in reduced capacity to hold water. Once dry, the soils cannot recover their original structure andorganic content, even when they get wet again.

The monoculture tree plantations PROFAFOR sets up to fix carbon are a bizarre and damaging innovation in this environment. The species used are exotics used in industrial plantation exotics. Some 90 per cent are pine, either Pinus radiata (particularly in the provinces of Carchi and Chimborazo) or, to a lesser extent, Pinus patula (mainly planted in Cañar and Loja). Eucalyptus and cypress species make up another four per cent.

Q. But what’s wrong with pine trees? PROFAFOR says that experiments with
pine in different places get different results and that “it cannot be categorically stated that pine is noxious for paramo soils.”

PROFAFOR’s non-indigenous pines dry out and crack the soils, not only because they disturb the existing vegetative cover, but also because their nature is to use a great deal of water. Organic matter and biological activity decline, uncompensated for by the fall of pine needles. Soils tend to be transformed from water retainers to water repellents, and surrounding flora and fauna are deprived of food habitat.

The threat is not only to local hydrology, but also, ironically, to local carbon storage capacity. Subject to less extreme variations in temperature and humidity than the drier Southern Andean zone known by the indigenous term puna, the paramo stores in its thick layers of soil vast amounts of carbon – perhaps 1,700 tonnes per hectare in the case of Carchi province,
more than a tropical forest – but only as long as the soils are not exposed to the air and to increased erosion through planting operations and firebreaks.

In addition, the carbon in the trees is at risk from fire. In the community of SigSig in Azuay province, fires have already killed or stunted the growth of many pines. And fires are likely to recur continuously, given a fire-prone natural flora, traditional burning practices used to encourage fodder regrowth, strong winds, firebreaks that are too few and too narrow, and the lack of permanent wardens or fire-fighting equipment. The yellowish needles appearing on numerous local stands of Pinus patula signal the species’ poor adaptation to the Andean environment, possibly indicating lack of a crucial micronutrient or of the mycorrhizal fungi that facilitate the tree’s nutrient absorption in its native environment. Animals have meanwhile broken off many terminal shoots, giving rise to a bushy growth which may prevent the trees from developing trunks suitable for thesawmill. Growth is also noticeably slow.

Q. Wait a minute! Are you telling me that a project which was designed
to absorb carbon may actually be EMITTING carbon?

That was exactly the conclusion reached by scholar Veronica Vidal in a recent doctoral dissertation on environmental management at the Autonomous University of Barcelona. Vidal found not only that the soils under PROFAFOR plantations are releasing more carbon than the firm takes account of, but also that the pine plantations are capable of absorbing less carbon than it claims. She concluded that the net carbon balance in PROFAFOR plantations may well be negative: “We are facing a lose-lose situation, in which those who most lose are the future generations that will have to face the problems of climate change.”

Q. But I've heard that according to PROFAFOR, local soils have been “degraded by
extensive use”, and planting pine and eucalyptus in the paramo will restore
them and prevent erosion.

Although some of the sites used by PROFAFOR, situated between roughly 3,200 and 4,800 metres, have been used for grazing, they have not usually been cultivated, due to their remoteness and harsh climate. The idea that the soils on these sites, which still fulfil their original functions, are being degraded in any way that pine plantations could remedy is simply
false. As for erosion, it is the pine plantations and their firebreaks themselves that are likely to create the greater problem. Under the PROFAFOR project, villagers are obliged to construct firebreaks in which the pajonal grasses protecting the soil of the paramo are uprooted in a strip bordering the plantation, leaving the soil exposed.

Q. Wait, I’m getting confused here. PROFAFOR says in its promotional material that this environment is in bad shape. And, after all, doesn’t their claim stand to reason, with
the zone’s history of overexploitation? I know that following the Spanish conquest, many indigenous peoples had to retreat to high altitudes because Hispanic and mestizo communities were spreading out in the inter-Andean valleys and the Spaniards were taking over land for large estates or private ranches. And I understand that the land reform laws of 1964 and
1973 helped intensify the exploitation of the paramo even further by transferring higher, less productive areas of hacienda lands to indigenous peoples. Today, I hear, agriculture is being practiced up to 3,900 metres and cattle-raising up to 4,500 metres . On its plantation sites, PROFAFOR says, the land is so degraded that farming is just “not profitable and the
land is not suitable for subsistence activities”. In this context, surely pine trees will be both an ecological and an economic improvement, no? And a way, as PROFAFOR puts it, of “taking advantage of land that is not being used and that could generate income to the local economy”?

Well, confusion is only to be expected in a situation like this, in which PROFAFOR is saying one thing (largely to an international audience) andlocal people are saying another thing (largely to themselves).

But it’s useful to remember that there’s a long global history to the kind of claim that PROFAFOR is making, that a certain set of common lands are “waste”, “degraded” or “unused”, and are idly waiting to be brought intothe commodity market before they can become “productive”.

It’s a claim that was used in the Americas during the colonial era to seize indigenous people’s cropland and hunting and gathering grounds and transform them into the private property of Europeans. It was used again in India, with more mixed success, during the colonial era there, and in Africa as well. And it was used in Europe during the great eras of enclosure 200 and more years ago. In each of these cases the claim concealed and justified takeovers of land that was not only usable and ecologically rich, but used for all sorts of livelihood purposes. And the same is true of the paramo.

Q. That doesn’t fit very well with PROFAFOR’s claim that it would have liked to use native species but that “the majority of native species have almost disappeared, and local knowledge of indigenous tree species has been lost with the trees.”

Well, now that you mention it, although the paramo is a zone that has never been forested, people there in fact retain a remarkable knowledge of native trees. In one PROFAFOR area, San Sebastián de SigSig in Azuay province, villagers are easily able to name and describe uses for a dozen native species. Yet the only Andean tree species used by the PROFAFOR project,
and on a very small percentage of its sites, is Polylepis incana. This is a sub-paramo species and it too is being planted in monoculture.

Q. Well, that’s interesting, but so what? The English-language PROFAFOR brochure says that local people “have a say in species selection and they prefer planting non-indigenous pine and eucalyptus species.” And I also notice that when it arrived, PROFAFOR gained the immediate support of what is now the Ministry of the Environment, too. The Ecuadorean government saw PROFAFOR as contributing to its own plans for afforesting or reforesting250,000 hectares in the Andean zone over 15 years.

Well, I don’t want to try to explain the government’s position, but to see what local people think of the pine plantations now, we need to look at thestory of how the project was introduced and what happened next.

Q. Yes, let’s get on to that. Because whatever ecological problems you think these plantations create, surely they must be bringing social benefits to these marginalized mountain communities!

That’s certainly the way the plantations were presented. PROFAFOR said the communities would get both income and employment from the project. In addition to payments per planted hectare, they would get seedlings, technical assistance and training. They would have work for many years. They would have access to the plantations to collect mushrooms, resins,
firewood and wood from thinning. And after 20-30 years they would be allowed to harvest the trees and sell the timber. All PROFAFOR asked in return was 100 per cent of the rights to the carbon fixed in the trees. It sounded terrific.

Q. I have a feeling you’re going to tell me that things didn’t turn out as promised.

That’s an understatement. Let’s start by looking at what happened in three communities that that signed contracts with the company between 1997 and 2000. Communities were offered payments of between US$165 and $189 per hectare planted. But the cost of plants and technical assistance during the first three first years of plantation was then deducted, leaving the
communities about half of what they were initially offered.

When SigSig community asked how much technicians were being paid for this technical assistance, they were told that PROFAFOR did not have the “capacity to ask for these reports, and that it was an administrative matter.” Meanwhile, the price of the planting stock doubled or tripled. And in the end it was the commune, and not PROFAFOR, as specified in the contract, that had to transport the stock from the nursery.

Q. Well, but little bitty misunderstandings like this will crop up in every business transaction. You just have to get on with it. What does this have to do with the big global picture of addressing climate change?

A lot, actually, particularly if this pattern is characteristic of carbon projects. Nor does the story end there. After having deducted the cost of the seedlings and technical assistance, PROFAFOR was obligated to pay 80 per cent of the remainder in three instalments during the first year after the contract was signed – as long as it wasn’t necessary to replant more than 25 per cent of
the seedlings. The remaining 20 per cent was then to be handed over to the community following complete fulfilment of the activities foreseen” by the company for the second and third year after the contract was signed.

There were several problems here that villagers weren’t ready for. First, when trees die because they “do not adapt”, the community has to take on the cost of new seedlings for re-plantation. This happens quite frequently, because of the quality of the plants, the cold and windy conditions of the high-altitude plantation areas, or for other reasons. According to Mary Milne of the Centre for International Forestry Research, the re-plantation rate for PROFAFOR is between 15 and 30 per cent and costs range betweenUS$865 and $5820, which have to be absorbed by the communities.”

A bigger problem is that because of the necessity of guaranteeing a long lifetime for the carbon sequestered in PROFAFOR’s trees, each community has to maintain the trees itself for 20-30 years before being allowed to harvest them and sell the timber. (More recent PROFAFOR contracts demand even longer terms, of up to 99 years.) But the money runs out long before
that. Nor are the communities given any information on where or how they might market the timber.

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"AT AN ASSEMBLY, this engineer came, he told us that thousands of dollars
would enter the commune [for tree-planting] … that afterwards we were going
to have sources of work till after the harvest, that we were going to
collect who knows how much money. And the assembly signed . . . you know,
sometimes we country people, we don’t know, we fall for it naively . . .”

--SigSig community member

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But it’s not only a money matter. Essentially what the PROFAFOR contract
does is ensure that the community turns over communal land and communal
labour to the company for carbon production for free.

Q. How does that work?

Well, take land first. Under the contract, PROFAFOR gets – rent-free – large tracts of community land which then cannot be turned to any other purpose than the production of carbon credits for the international marketfor 20 or 30 years.

This is not farmland. Cultivation goes on in other zones of communal property where the land has already been divided up among families. But PROFAFOR’s claim that the land is “degraded”, “not being used” or “is not suitable for subsistence activities”, and that it is idly waiting to be transformed into an asset by being “incorporated into the nationaleconomy”, is simply false.

In addition to having important hydrological functions, much of the land is
used for grazing or could be rented out for that purpose. When the
plantations are set up, families owning cattle may have to rent other lands
for their animals, purchase fodder, or reduce their herds. This has an impact on family savings, not only because the monetary compensation villagers get from PROFAFOR is too small and must be used immediately for plantation expenses, but also because, by its nature, cash cannot play the role of the more stable, less liquid, traditional savings embodied in family cattle.

Small wonder that local people feel that they have essentially transferred the land and its potential to generate savings for exclusive PROFAFOR use. As one said, "“We cannot touch or do anything on the area signed over.”"

Q. OK, but you also said PROFAFOR also appropriates communities’ labour for free. How does that happen? PROFAFOR says that the locals get goodwages for the work they do on its plantations.

PROFAFOR maintains that it provides thousands of jobs to indigenous communities in Ecuador. But a lot of these jobs are extremely onerous and unremunerated tasks that the communities find themselves unwillingly takingon because of debt.

In fact, PROFAFOR has not only failed to provide the jobs it has offered, but has also forced communities to hire people from outside to carry out PROFAFOR work. Local people, it turns out, often do not possess the necessary technical skills PROFAFOR management plans require.8 PROFAFOR’s trainings – workshops for two leaders from each community, held in hotels
or other venues in nearby cities –are widely seen as insufficient and too theoretical. In addition, the plantations are often too remote or subject to too extreme climatic conditions for local people to work on themselves.

Where tasks remain incomplete, the community has to fall back on its own unpaid labour pool -- – a system called minga –[see box below] -- to fulfil its contractual obligations. Essentially, villagers are forced to exploit their own systemof free communal labour in order to escape debt.

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Minga: Organizing Labour without a Market

Minga is a communal pool of nonmarketed labour typical of the indigenous
communities of the Andes. Among the Quichuas, minga is directed at a
specific collective material objective: planting and harvesting, or
building or maintaining access routes, irrigation channels, schools or
health centres. It is a complex mechanism for social interaction in which,
generally for one day each week, both men and women, adults and children,
are mobilized.

People working under minga receive no money. Rather, the system is one of
reciprocity and mutual help. When minga is granted to achieve individual
purposes, the mingado, or beneficiary, enters into an obligation to return
minga to the mingueros, or workers, at some point in the future.

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As one villager from Chuchuqui said:

"they paid for dibbling for pine only -- not for eucalyptus. And they did not pay me, I worked under minga . . . Where we could not work, they hired people from Quito and Chimborazo and the community paid the workers.”

Q. But surely the communities must have made some money out of the deal?

Well, it’s instructive to try to do the math. Look at what happened to SigSig. The community was to receive about US$75,000 for 400 hectares of Pinus patula plantation to be sited on land a three- to four-hour walk from the settlement’s centre, at approximately 3,700 m. Plotting, dibbling, planting and construction of the fire-break was carried out between June
1998 and December 1999. But some the seedlings didn’t take, and the community had to hire outside labor to replant, using the funds supplied by PROFAFOR. The community built a house in the area of the plantation mid-1999 and a guard was hired for the first two years.

Then, in 2000 and again in 2004, fires swept through large parts of the plantation. The community had to take on most of the costs of replanting –including labour, transportation and food – with PROFAFOR picking up only the costs of seedlings. The community has also had to take responsibility for replantings due to maladapted trees dying. Yet the 20 per cent of the
funds that should have been disbursed to the community three years after the contract was signed in 1998 have still not been received. And the plantation has to be maintained for nearly 15 more years until harvest. To top it off, if the community decides not to continue carrying out
PROFAFOR’s plantation work at that time, it must hand over 30 per cent of the income from the sale of the timber to the company.

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"WE MADE AN ASSESSMENT, and . . . it was like a bucket of cold water. On
doing our accounts, we realized how much money we have put in, and the
trees are still small. . . . Although we have no money left, . . . we have
to look for a warden to look after the plants and pay him, we have to
prune, we have to put down manure, all the care and then the harvest. . . .
we ourselves have to find a [timber] market. . . . How is that! We are
depleting our land, we are providing labour, harvesting and also giving 30
per cent.”

--SigSig community member

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In a workshop conducted with SigSig residents, an attempt was made to draw
up a balance, showing how much the community had gained and lost from its
agreement with PROFAFOR, although much of what the community put into the
plantations cannot be satisfactorily quantified, such as the minga and the
work of the community leaders. Calculations were made for plotting,
dibbling, firebreaks, right of way, replanting, seedlings, maintenance,
management, training and so forth.

The community concluded that, even without taking account of the value of
the environmental liabilities the project has saddled local inhabitants
with, or the cost of the plantations for another 15 years in terms of
labour, inputs, insurance, security, tools, harvest and timber marketing,
its losses already amount to over US$10,000.

Q. Isn’t there anything the community can do to save the situation?

PROFAFOR has a lot of power in this context. Once a contract is signed, there isn’t much communities can do to modify it, even when, as in SigSig, the agreement with the company was signed by only fifty community memberswhen there were over two hundred registered.

PROFAFOR can even claim payment of compensation if its staff decide that a community has not fulfilled its obligations. This compensation can amount to up to TRIPLE the original payments to the communities, or many tens ofthousands of dollars.

One villager reported:

“"When I told the engineer Franco Condoy that we wanted to undo this agreement, he told us: You cannot rid yourselves of the agreement, thecommune is mortgaged.”"

According to Ecuadorian law, Condoy is wrong. Communal property of indigenous communities is not subject to mortgages or land tax. Mortgages can only be contracted with private estate and land holders, individuals or corporate bodies.

In practice, however, Condoy is right, since even contracts involving common property are subject to penalty clauses and fines in the event of a breach, and PROFAFOR is well able to enforce mortgage-like arrangements by taking advantage of the inter-ethnic power relations which are a legacy of the colonial era in the region.

In one community, Caguanapamba, where the leaders who had signed the contract mismanaged the PROFAFOR funds they were entrusted with, community members did not get paid for the first planting operation and many seedlings were lost. The leader who succeeded them will now have to use the last instalment of funding in order to pay off the people who did theoriginal planting. To complete the firebreak, he has had to rent a machine with community funds and rely on labour from minga.

Q. All right, all right, I can see that things haven’t all gone according to plan with carbon sinks in the Andes. But so what? Can you draw any general conclusions from all this?

In Ecuador, as elsewhere in the South, “carbon-saving” projects funded by industrialized countries, with their promises of income and “development”,have attracted a lot of official attention.

The theory is that Southern countries have a hitherto unrecognised and unpriced resource in the form of spare or unused carbon-absorbing potential. By bringing this dormant, unexploited resource into something called “the market”, the theory goes, the South will be able to transform
it into living capital or exchange it for cash or other things, adding to its wealth and to that of world society as a whole.

Over hundreds of square kilometres of the Ecuadorian Andes, new transactions involving carbon are indeed being made. But for the most part, they are not textbook “market” transactions, nor do they address climate change, nor have they resulted in communities realizing new value out offormerly unused assets.

What has happened instead is that common land, community labour and much of the paltry but crucial savings of peasant communities have been transferred to a private firm for production of a new commodity which, although largely notional, has the material effect of shoring up an anachronistic pattern of fossil fuel use in The Netherlands. While claiming to “absorb” carbon,
PROFAFOR has in fact been absorbing Andean wealth while helping to enlarge the North’s ecological footprint in the South. Indirectly, it is also transferring wealth from future generations to the present, through its failure to address climate change.

The mechanisms that have done the real work in making this transfer possible are not the abstract, benign “wealth-creating” trade mechanisms of economics texts or manuals on “markets in environmental services”. On the contrary, they are mechanisms that compel, discriminate, narrow choices, increase dependence, reduce transparency, and centralize power and knowledge in bureaucracies and expert institutions –-- just the sort of thing that this ghostly entity called “the market” is always advertised as freeing usfrom. These mechanisms include:

• •Unfamiliar tree species planted in exclusive monocultures and requiring
  extensive technical intervention.
• Non-transparent and exploitative written legal contracts backed by
  historically-ingrained unequal power relations, through which a private
  company retains 100 per cent of the carbon sink credits from plantations
  while local communities take on debt and responsibilities for maintenance
  and managing environmental impacts.
• An internationally-disseminated discourse according to which the lands to
  be used for plantations have been “degraded” by excessive use and where
  subsistence activities such as cattle-raising are “not profitable”.
• Expert procedures of “verification” of carbon flows that by their nature
  are resistant to public scrutiny.

One last technocratic mechanism that makes PROFAFOR’s manufacture of carbon credits possible is “forest certification”, a seal of environmental and social approval that was granted to 20,000 ha of PROFAFOR’s plantations in 1999 by the Forest Stewardship Council (FSC). The FSC is an independent international body with membership from both industry and NGOs, but the actual job of deciding whether a plantation meets FSC standards falls to private firms hired by the plantation company. In PROFAFOR’s case, this was the Societe Generale de Surveillance (SGS), which has also certifiedPROFAFOR’s carbon sequestration.

These certifications are important for PROFAFOR’s international transactions, since they reassure buyers who will never visit the Andes that PROFAFOR’s product is a valid, environmentally- friendly commodity. Buyers of FSC-certified products generally assume that they come from plantations that “strive to strengthen and diversify the local economy” and
“maintain or enhance the long-term social and economic well-being of forest
workers and local communities”. They assume that workers have been
adequately trained. They assume that local communities have been comprehensively advised in advance about the impacts of the relevant project and participate fully in decision-making (FSC Principles). Finally, they assume that an environmental impact assessment has been conducted,
that threatened species have been identified, and so on.

The SGS certifiers boosted PROFAFOR’s credibility on all these points, noting as one of PROFAFOR’s strong points the “participation of local communities in decision-making.” While recognizing that pine and eucalyptus can contribute to the degradation of soils rather than to their protection,they also praised PROFAFOR’s continued “commitment” to use native species.

Local communities’ lack of power to intervene in the certification process helps lubricate PROFAFOR’S international trade in carbon credits. No community member interviewed in 2004 even knew of the existence of the FSC, nor of its Principles and Criteria, nor how they might be enforced. The public summaries of the visits by SGS are available on the internet only up to the visit of the year 2000, and only in English. Asked for information at its office, PROFAFOR demands that a signed memorandum be submittedbeforehand, and even then fails to provide the information requested.

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This blog is extracted from the research of Patricia Granda, who studied
the FACE-PROFAFOR project for Accion Ecologica, an Ecuadorian NGO, and the
World Rainforest Movement. For more information contact
larrylohmann@gn.apc.org.

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