34Smith School of Enterprise and the EnvironmentSmith which progress could be made.The Kyoto Protocol established two separate programs for forest carbon. Annex I nations may generate carbon removal credits from certain land use, land use change and forestry (LULUCF) activities. In the developing world, the CDM rewards certain afforestation and reforestation projects by allowing them to generate emissions credits that can be sold to Annex I nations. These programs are inadequate, however, to effectively and comprehensively address the role of forests in the carbon cycle. Significant sources of forest emissions and forest sinks remain outside the scope of either program. Neither program, for example, addresses the massive amounts of carbon lost to tropical deforestation in the developing world. To increase the scope of coverage, some countries have encouraged adoption of an international program for reductions in emissions from deforestation and degradation (REDD) from developing countries. Others have suggested expanding that to include not just avoided emissions, but increases in carbon sequestration via forest planting and management (REDD+). Recent work at the Smith School for Enterprise and the Environment proposes a still more comprehensive approach, the Forest Program for Inventories in National Carbon (PINC) that applies to all forest carbon sequestration activities in Annex 1 and non-Annex 1 countries alike [35]. The Agreement developed at Cancun is based around a REDD+ scheme. Although there is much to do before it is truly operational, the Agreements do provide guidance for countries preparing to be REDD+ ready.Previous proposals differ with respect to the funding mechanism for forest carbon sequestration. Some proposals suggest a dedicated fund with resources provided by Annex 1 countries. Others have suggested that an international forest carbon program should be linked to the international emissions allowance trading program; i.e., reductions in deforestation and gains in sequestration would be rewarded with payments in the form of marketable GHG emissions allowances. The magnitude of finances required indicates the need for the involvement of the private sector. The CO2 market could provide an incentive that would motivate the private sector to contribute to scale. The establishment of these new market mechanisms will be a point of discussion next year at COP17 in South Africa.There is a general trend in the discussions towards a focus on national accomplishments rather than on project-by-project assessments. This has two important implications. First, it will be up to individual nations to develop domestic forest carbon policies and programs in response to the international forestry agreement. Second, the rewards for accomplishments will accrue to national governments. The challenge for national governments, then, in promoting forest carbon sequestration is designing a program that reliably induces landowners to protect and expand their forest carbon inventories - whether through regulations, subsidies, information campaigns, tax policy, or other mechanisms - and to take steps that will conserve and expand forest carbon stocks. In nations with large holdings of public land it may also be possible to use direct management by the government to increase carbon sequestration. Careful design of domestic programs for both private and public lands will be key to the success of the international forest carbon sequestration initiatives. It will also determine the extent to which individual countries benefit in terms of environment quality, resource management and economic development. Chapter 5

EnvironmentSmith School of Enterprise and the Environment35Chapter 5: Next Steps