How a rich-country carbon credit scheme failed Uganda’s rural communities

An open-data investigation shows how an international carbon credit tree-planting scheme dashes the hopes of local communities in southern Uganda

Photo: Dreamstime

The area around Rwoho forest in the south of Uganda is a lush reserve, spanning more than 9,000 ha, or around 12,600 soccer fields. In 2006 a program started to pay locals to farm and reforest some of it, mainly with new timber plantations of pine and mixed native trees, after years of deforestation and soil erosion.

The plan was simple. They should look after them for 22 years or until trees reached a certain diameter. They would get paid for it in small increments. But what appeared first as a boon for the local rural economy and climate change, turned to be a complicated relationship between funders and farmers — one that ultimately failed.

What sounded so simple stopped disappointingly last year. The carbon credit project was meant to be an environmental poster child for the international community to find a way to battle climate change. It didn’t turn out to be an exhibit for rich countries’ efforts to reduce carbon emissions. What seems like was down to poor coordination of funding channels, the project ended up having the very opposite effect that it originally aimed for. Instead of planting trees, they were chopped down, prematurely, by local farmers who became frustrated with the scheme.

The large area dedicated to reforestation — via plantations of pine and mixed native species and grassland areas previously degraded due to deforestation and erosion — was meant to spill earnings right into the pockets of local tree farmers.

Forest reserve in Uganda, Africa (source/illustration: TJ/BH)

New and preserved forests for carbon sequestration ought to pay for it. Today, the need to store carbon is greater than ever. Intergovernmental Panel on Climate Change’s (IPCC) says that some degree of afforestation is essential to limit global warming to 1.5C above pre-industrial levels. Also, since the early 2000s when the Rwoho tree planting scheme started, researchers found that extreme weather events due to climate change increased.

Climate change is moving up on governments’ agendas after record heatwaves and extreme and deadly floods all across the globe.

Researchers studied ‘extreme event attribution’ and an increasing number of meta studies point towards human activity raising the risk of some types of extreme weather, especially those linked to heat — a problem that hurts more in poor regions including developing African nations such as Uganda (where climate change is likely to increase average temperatures in Uganda by up to 1.5 ºC in the next 20 years and by up to 4.3 ºC by the 2080s, researchers estimated)

CMD assists industrialised countries to meet emission reduction commitments. Under CDM, projects that reduce greenhouse gas emissions and contribute to sustainable development can generate Certified Emission Reductions (CERs), a tradable commodity in international carbon markets.

When the Rwoho project launched in 2006, it was meant to put community farmers in charge and allow them to earn a living for a sustainable period. The project plan and total anticipated revenues from the scheme looked good on paper.

A 2006 summary document issued by the Worldbank, the donor, calculated total revenue for the project in Bugamba and Rwoho of around 2,323,791,070 Ugandan Schilling or £471,208 today in 2021.

Needless to says, this didn't transpire. It appears high costs was an issue from the start. Costs for only the first year was budgeted at 1,056,024,960 Ugandan Shilling or £330,078 (the currency conversion for 2006).

Cash flow calculation for the WorldBank-funded project in Bugamba and Rwoho, planned all the way forward to 2048 (but discontinued in 2020)

Our analysis fills in the gaps showing why the money never materialised at the bottom of this particular carbon credit scheme and failed community farmers who performed most of the hard work.

It’s a story of good intentions but also a system riddled with bureaucratic barriers that dashed the hopes of locals and how their frustration led to the opposite of what the carbon credit schemes aimed for.

Carbon credit fund

It all started with so much hope. Under the Clean Development Mechanism (CMD) local community farmers were promised payments from the carbon credit scheme but also other perks such as new infrastructure and jobs.

Critics of CMD say the difficulties of the approach lies in carbon leakage, additionality, transaction costs and bottlenecks, the incentive schemes which fail to penalize emission increases. There can also be local resistance (like for a project in New Delhi in 2012) or effects of market deflation.

Undertaken by Uganda’s National Forestry Authority in association with local community organisations, the scheme was meant to reforest trees in the form of plantations.

Some of the challenges were known from the outset, such as the presence of delicate tree species including Terminalia laxiflora, a species that grow only in this area.

Jeconious Musingwire, a manager at the Western Region National Environmental Management Authority (Nema) explains what drove locals in Rwoho forest to the point of frustration when they cut down the trees that were meant to store carbon

In this collaborative reporting project — E&T worked together with a Ugandan environmental journalist who is based in Uganda — we inquired why the money didn’t reach the pockets of local farmers.

Local sources tell us that bureaucratic hurdles are to blame. The funds were channelled from the Ugandan Ministry of Environment to the Ministry of Finance, we are told. Though not illegal per se, poor handling of funds backfired, ultimately helping to topple the project.

Payment delays frustrated farmers who waited impatiently for the funds to arrive. After some time, these farmers deemed it more beneficial to cut down trees before maturity than waiting empty-handed. Timber sales are lucrative and plot maintenance is time-consuming. At least in the short run, selling wood made more sense to them. However, this is counterproductive for the sustainability of the soil and purpose-defeating for combatting carbon emissions, experts say.

Data on other similar Biocarbon projects point in the direction that the UG-Nile Basin Reforestation (FY06) under which the Rwoho forest reserve project was organised, were provided with skimpy resources from the start — at least compared to other land and water management projects funded by the World Bank.

It’s just one of many hundreds of projects World Bank’s BioCarbon Fund but with $357,742 it’s also one of the least funded projects in its category (see graphic). Whether this had something to do with its failure is unknown. It was one of the 27 land and water management projects listed in the EU’s eConservation records. All of them are now closed. A dozen of them were started in the same year as the Rwoho forestry project (2006).

UG-Nile Basin Reforestation project received the second-lowest funding amount in the category of land and water management projects. Source: World Bank; European Commission Econservation records (data/graphic: BH)

For a lot of work, farmers received tiny payments. Were payout calculations transparent enough when presented to local tree farmers at the beginning of the project? People on the ground express their doubts.

The funds were coming from the European Union through the African Development Bank, one manager at the National Environment Management Agency for the region explains.

The carbon credit fund was meant to make sure that whoever develops the wood lots maintains them, mends them, waters them and so on, gets paid, says Jeconious Musingwire, a manager at the Western Region National Environmental Management Authority.

“Every year, they would be computing the contribution to carbon storage that made the trees take CO2 out of the environment”, he says.

That computation would give these people and estate managers the value they have accrued over time. The computation gave the farmers a small share of funds, less than they have invested and less money than the wood itself would offer if they would cut it down and sell it for cash.

There is an element of inconsistency, he says. After waiting so many years, the farmers got frustrated and opted for using the trees in different ways. Some sold the wood prematurely as timber. The impatience to receive the money was the driving force behind the failed scheme, he thinks. So many people engaged in the tree planting exercise but barriers to release the funds really made some of the farmers impatient. Many just exited from the scheme because they saw no future in it.

If you look at the rotation periods of pine trees, the minimum time to convert a pine plantation is between 15 and 25 years, he says. “If you are patient and wait for this long, you expect a lot of money in annual contribution, he adds. As the hope mounted for financial returns, so did the frustrations caused by the delays.

Allan Bomuhangi at the Climate Vulnerability and Adaptation project in Uganda says that in Rwoho forest, there could have been issues with verification of credits which either delayed or caused failed payment consequently leading to communities cutting down the trees

Carbon projects like the one in the Rwoho forest reserve often failed because of conflict in the benefit-sharing mechanism and permanence issues, Allan Bomuhangi explains, a climate adaptation consultant at the Climate Vulnerability and Adaptation project in Uganda.

Rwoho’s local community was involved in the carbon credit project in two ways: On one hand, in the form of formal participation where community associations were allocated areas by the National Forest Authority (NFA). Communities were entitled to carbon and timber revenues from the area they managed. Then there were non-participants involved through employment on the plantation. In both cases, he says, the NFA assumed the management role and oversaw payments.

This investigation reached out to NFA’s executive director Tom Obong Okello. Okello didn't respond in time for publication.

Who’s to blame?

NFA managers never cut down trees, Bomuhangi says. If the local community managers did that, it could have to do with delayed payments of carbon revenues, which hinged on verified credits by a third party.

“Only a tiny portion of the natural forest managed by RECPA remains after being destroyed by private planters”, Baguma Anaclate

There could have been issues with the verification of credits that either delayed or cancelled the payment; consequently, that may have led to communities cutting down their forests, Allan Bomuhangi thinks.

Baguma Anaclate is the secretary of Rwoho Environmental Conservation and Protection Association (RECPA, a community-based organisation involved in the NFA/World Bank Nile basin restoration project), which received about 11 million shillings in carbon credits in 2014 (around £2,609 back then) under the UN’s Clean Development Mechanism and are expecting more this year, we are told.

Anaclate, also the chairperson of the Rwoho town council, tells us that only a tiny portion of the natural forest managed by RECPA remains after being destroyed by private planters.

RECPA’s 200 members are part of the adjacent communities in Rwoho forest. They access resources in the forest through collaborative forest management (CFM). “The (private planters) cleared the forest. And even all the species have vanished. It’s no longer a forest. It is a farm. Even the natural forest disappeared”, Anaclate says. He says most private planters were politicians who expected quick returns, and when this failed, they cut down the trees. And for some private planters, “instead of planting trees on the NFA land, they resorted to planting crops and clearing the natural forest they found there,” Anaclate adds.

Bwindi’s impenetrable rainforest in southwestern Uganda (photos: Fredrick Mugira)

Allan Bomuhangi says ‘permanence’ is the other issue that can test farmers’ patience. “There are always significant risks to carbon offset projects as carbon sequestered is likely to be released back to the atmosphere before the end of the commitment period”, Bomuhangi says.

Another reason could be that communities in Rwoho abused limitations on when they are allowed to perform thinning, do the harvesting and replanting of trees. It would have also had implications on payments of carbon revenues, he adds.

Ben Henneke, president at the Clean Air Action Corporation and founder of Co-Founder of TIST says the case of frustrated farmers cutting down trees sounds familiar — Henneke’s organisation is active in Africa but have nothing to do with the project in the Rwoho forest reserve.

“With 110,000 farmers [involved with TIST], there’s hardly anything that hasn’t happened”, he says. One problem is that many [African small community farmers] didn’t pay attention when they joined that they were supposed to keep the tree groves for a minimum of 30 years.

Some tree cutting is accepted, he says: “We actually expect them and want them to harvest some of the trees because they need the firewood, they need poles, they need to build the houses. We focus on their needs.”

Their hope and money expectations are sometimes skewed: “[Small farmer] hear about the carbon programme, and the idea that they might get some pre-payments, and that is exciting to them”. The reality is, the actual profit sharing only begins to make it really worthwhile in five to ten years after the farmers have joined, a long time that tests their patience.

Satellite images show where tree lots got wiped out

Satellite images suggest that the whole Rwoho forest reserve area lost large patches of dense tree cover over the past five years. Tree cover loss reached a peak in 2016. The forest lost 426ha (or nearly 600 soccer fields) worth in tree cover. Some were cleared by forest fires (which can also be witnessed on satellite images below). But not all were fire-related.

Data by the World Resource Institute suggests clearing occurred in areas where canopy height was 15 meters or higher — an indication that forest may have been more mature and at their peak in how much carbon they can store. Clearing could be down to thinning, too, experts say. In the north it seems less likely as the gradual removal of forest shows up in the images.

Especially in the north of the Rwoho reserve since 2018, tree cover loss seems an issue. Some of it is due to forest fires but less so in the patches that we saw cut in the north (review satellite images below):

Development of the Rwoho forest reserve since 2016 shows forest lost in the north of the area, some were due to fires.
Forest loss in the north of the area that was part of the carbon credit scheme
The area in the north where the forest got cut (an area of the size of around 176 soccer fields) — left in 2016, right in 2020

The tree lots in Rwoho were managed under the project title ‘sawlogs production grant scheme’.

The bill for the Rwoho carbon credits scheme was footed by the WorldBank’s BioCarbon Fund, a tree-planting and carbon dioxide emission reduction scheme, supporting many other similar schemes around the world. The money was supposed to be channelled to other smaller organisations such as the Rwoho Environmental Conservation and Protection Association (RECPA) which manages 17 per cent of the project area within the framework of a collaborative forest management agreement.

Corporate giants such as Unilever, Mondelez, and Bunge were all deeply involved in the inception of the Biocarbon fund, previous reports say. How much wealthy western businesses benefited from African carbon projects like Uganda’s Rwoho reforestation project is hard to say. The fact is that the BioCarbon Fund purchased a certain volume of carbon emission reductions (CER) credits generated from these projects throughout the lifetime of the Fund by way of emission reduction purchase agreements (ERPA).

Monitoring report by the UNFCCC and contains information on the project outline.

What does the failure of the Rwoho carbon credit scheme mean in a wider context?

The failure of the Rwoho project bears a heavy blow to the reputation of international carbon credit tree planting schemes. But there are lessons to be learned.

Since the dismissal of the Uganda Nile Basin Reforestation Project that had a goal to store 5,881 metric tonnes CO2 equivalent per annum, involved parties — mainly countries — withdrew. Italy, Luxembourg and Spain though enough is enough.

Parties that withdrew from the project

It was meant to be a proud attempt to stop global warming. Rwoho was the first African forestry venture to be registered under the Clean Development Mechanism (CDM) in August 2009. Communities were promised it would generate income from the sale of carbon emission reduction credits and to put locals into employment, for nursery work and weeding, fire protection, thinning, and pruning.

The CDM scheme’s originally outline promised: “To provide a new financing mechanism to overcome the current barriers to establish timber plantations in Uganda and to allow communities to benefit from the CDM”. Now that it didn't work, what lessons should governments draw?

While failure may hurt the global road to NetZero, governments can draw on a few lessons. Key seems to organise the compensation of locals appropriately and swiftly while managing expectations well.

Henneke at TIST says issues of environmental injustice sits at the centre of the problem. Poor-country compensation schemes that fail locals sometimes take the appearance of a “rain cloud where the rain evaporates before it hit the ground. It’s what most government programmes look like that are trying to help poor people: “A lot of money comes out of the cloud, but it doesn’t get to the people who need it”, he says.

Perks including community employment, energy access (via limited access to wood energy from the forest), community health and education opportunities, improvement in water quality, and biodiversity conservation via restoration of degraded forest areas, are all well and nice. But by failing to pay people what they are owed participation faltered.

Henneke says it’s hard for farmers to do something different because they’re so scared if something goes wrong, their family doesn’t eat. “It’s just hard for the rest of us to imagine what that means”, he says.

Reporting:

TechJournalist BH: Award-winning investigative journalist and associate editor, based in London, Munich and Zurich.

Fredrick Mugira: A Ugandan multiple award-winning water and climate change journalist, media trainer and development communication specialist with over 10 years of wide-ranging experience (National Geographic Storytelling Explorer, Pulitzer Center Grantee, CNN/Multichoice African journalism award winner and co-founder InfoNile.org)

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Investigative journalist with a technical edge, interested in open source investigations, satellite imgs, R, python, AI, data journalism and injustice

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Techjournalist

Investigative journalist with a technical edge, interested in open source investigations, satellite imgs, R, python, AI, data journalism and injustice

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