Saturday, February 4, 2012

Nordic journeys in financing tropical environmentalism

Find a worthy environmental cause around the world, a group of tropical do-gooders looking for cash, a well-intentioned project to fight global warming, you can bet the Norwegians have it on their radar screen. I honestly find it commendable. Someone asks for help protecting the environment and Norway – with generous income available due to its offshore oil operations – raises its hand. It’s sure a nice contrast to America’s “what’s in it for me?” approach or Canada’s “we’re part of the deal until we’re not” plan.

But my hunch is the Norwegians are getting antsy. They’ve put up funds for environmental projects around the world and the going is slow.

That’s the sense I get reading this Reuters story quoting an unnamed Norwegian official complaining that Brazil’s Amazon Fund – which received cash from the Norwegian government – has been far behind in actually disbursing the loans it had planned.

An international fund to protect the Amazon forest launched by Brazil in 2008 has gotten bogged down in red tape and donors are frustrated their $466 million contributions are hardly put to use, a Norwegian official said.

So far Brazil has only used $39 million on 23 sustainable growth projects, with another $53 million under contract. This poor performance has weakened Brazil's voice as a leading advocate for the protection of the developing world's forests with funding from rich nations.

The fund is run by state development bank BNDES, which is Brazil’s largest provider of long-term financing. The funds contracted by BNDES for the Amazon Fund, which is supposed to finance projects that will help provide jobs and reduce deforestation, dropped by half between 2010 and 2011, according to the Reuters story. Loan recipients found the paperwork so abusively cumbersome that they wondered whether it was even worth the effort. It’s probably not surprising that the BNDES is having a harder time finding creditworthy babacu coconut oil production facilities or rubber tapper cooperatives than soy farmers, cattle ranchers and hydroelectric dam developers.

To some extent, the BNDES is between a rock and a hard place. The choice of the BNDES as a the custodian of these funds in 2008 spurred a collective snicker among Brazilian environmentalists, who were quick to point out that the BNDES has traditionally been the financier of the Amazon’s most notorious predators – cattle slaughterhouses owned by the likes of JBS (anyone guess where those cows have been grazing?) or local sawmills (are they using “locally-sourced wood”?) BNDES has taken the cautious approach here and avoided dumping money into dicey fly-by-night sustainability schemes that turn out to be bogus. It’s also trying to make sure the Amazon Fund is making loans that it can later recover rather than simply passing out cash. This isn’t easy.

But for a Norwegian official to travel to Brasilia and tell an English-language wire service that they’re fed up with the delays suggests to me people are starting to ask questions back in Oslo about where all this money’s going. Somebody’s losing patience.

This isn’t the only part of the Amazon where this is happening. Norway was one of the first to join Ecuador’s Yasuni project promising $250 million for a proposal by President Rafael Correa that foreign donors pay the Andean country not to develop oil fields buried under a pristine natural forest. Few others have come forth, and the leftist Correa government is likely preparing for the funds to come up short and the project to be scrapped.

Norway also promised Guyana it would put up as much as $250 million for sustainable development projects such as creating a hydroelectric dam, building a fiber-optic cable, installing solar panels, etc. – in exchange for Guyana keeping a relatively low rate of deforestation. Three years after the agreement went into effect, no funds have been disbursed. Of course Guyana’s a different case – a country with less than a million people with little capacity to administer funds transparently is not Brazil, with nearly 200 million inhabitants and an increasingly sophisticated financial system. But the delay in Guyana is symptomatic of much the same problem. If it’s hard for the BNDES to find creditworthy projects that are good for the earth, it’s going to be that much more difficult for the notoriously corrupt government of Guyana to come up with proposals that can pass the smell test. The Guyanese are not happy about all the bureaucracy and have been complaining for years that the process isn’t quick enough. As noted in The Ecologist, critics believe the government never had the intention of making any proposals but rather believed that they would receive the money to spend themselves.

Opposition leaders in Guyana, and probably in many parts of the world, enjoy pillorying the Norwegians as na├»ve and uninformed do-gooders with more cash than the know what to do with. This is probably true in part, though somewhat unfair given the complexity of what they’re trying to do – take money and turn it into sustainable development. I can understand why it’s taking time. But I can also understand why they’re getting antsy.

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