Adopt a carbon tax to protect tropical forests

Background

International investments in natural climate solutions such as conservation, restoration and land management remain low in many tropical countries. The authors point to research which shows that only 3% of global finance for climate change mitigation went towards natural climate solutions in 2017-18. They recommend constituting a national level carbon tax on fossil fuel companies to generate revenue to fund natural climate solutions.

Research Goals & Methods

The authors discuss the Costa Rican and Colombian experience with instituting a carbon tax and present two scenarios to show how other countries could also benefit from a carbon tax.

Conclusions & Takeaways

Costa Rica instituted a 3.5% carbon tax on fossil fuel companies as early as 1997 which today generates $26.5 million per year. The tax revenue is used to pay landowners for conservation and restoration activities through the National Forest Fund. Colombia instituted a carbon tax in 2016, charging $5 per ton of emitted carbon, and collected a total of $239 million in 2017 and 2018. The tax revenue is used for forest conservation along with marine conservation and strengthening the protected areas system in the country.

The authors develop two scenarios to show what might happen if each of the 17 ‘megadiverse’ countries (Australia, Brazil, China, Colombia, Ecuador, United States, Philippines, India, Indonesia, Madagascar, Malaysia, Mexico, Papua New Guinea, Peru, Democratic Republic of Congo, South Africa and Venezuela) instituted a carbon tax. They find that such a tax could yield up to $13 billion each year for natural climate solutions. While it can be political challenging to institute taxes that increase the cost of living, especially in developing countries, the authors suggest that part of the funds that are collected could be used for socioeconomic development to justify the tax. They conclude by asking that multilateral agencies encourage tropical countries to institute carbon taxes and support them in implementing these taxes.