Guyana’s Forest Economics

Guyana gets US$50 million per year to preserve its vast rainforests. Nazma Muller finds out what it means for long-term economic growth

The gorge of the Potaro River in Guyana’s interior. Photograph by Nicholas Laughlin

Blue poison-dart frogs. Emerald tree boa constrictors. Black caimans. Three-toed sloths. Regular ole jaguars. These are merely five of the hundreds of species recorded in just one expedition in the forests of Guyana. While the rest of the world is talking about “going green,” the only English-speaking nation in South America can say with conviction, Been there, done that, got the T-shirt.

For decades, Guyana has been seen as the Caribbean’s “friendly green giant.” While malls, factories, and skyscrapers sprang up elsewhere in the region, eighty percent of Guyana’s sprawling 215,000 square kilometres remained under forest cover, largely untouched. The rate of deforestation was relatively low, but with mining (for gold, bauxite, and precious stones), logging, and agriculture the only avenues for earning much-needed foreign exchange, the Guyanese economy depended on exploitation of these natural resources.

The Lost Land of the Jaguar, as a 2008 BBC TV documentary referred to Guyana, is part of an ancient geological formation known as the Guiana Shield, which also includes Suriname and French Guiana, and extends into western and southern Venezuela and northern Brazil. The forests here are the source of twenty per cent of the world’s fresh water, and represent eighteen per cent of the world’s tropical forest carbon (which is stored in the trees).

And with ninety per cent of the Guyanese population living on the Atlantic coast, between one and two metres below sea level, climate change and the resulting rise in sea levels is an urgent national issue. In 2008, then-President Bharrat Jagdeo set up the Office of Climate Change in the Office of the President. “With the increasing intensity and frequency of extreme weather events, the threats that climate change poses have raised the level of awareness and urgency,” explains Shyam Nokta, head of the OCC.

So in June 2009, Jagdeo proposed a Low Carbon Development Strategy (LCDS) for the Guyanese economy. In a visionary move, he suggested that Guyana’s eighteen million hectares of forest could be placed under international protection, in exchange for payments from developed countries through carbon offset deals or climate change partnerships. By November 2009, the campaign had received major support from Norway, which pledged US$250 million over a five-year period. “We are giving the world a workable model for climate change collaboration between North and South,” said Erik Solheim, Norway’s minister of the environment, at the time.

So far, Guyana has met its performance targets, and received US$115 million from Norway, via an admittedly tortuous financial arrangement with international monitoring agencies such as the World Bank, the Inter-American Development Bank, and the United Nations Development Programme. For the last three years, based on independently audited reports, Norway has released an annual sum of approximately US$50 million to the government of Guyana. The fourth audit is due in late 2013.

Where has the money gone? Projects launched so far include the solar electrification of eleven thousand homes in hinterland communities, and the fast-tracking of land titling for Amerindian villages, to strengthen their rights. In 2013, twenty-seven villages out of 170 indigenous communities across Guyana will receive funding for diversifying their local economies, through eco-tourism, agro-processing, and small-scale manufacturing. Also in the works: climate change adaptation efforts, such as upgrading sea and river defence systems.

Mining, however, is still the main contributor to the Guyanese economy. Interestingly, the LCDS does not advocate curtailing mining, explains Nokta. Instead, it looks at how the sector’s performance can be improved and expanded in a manner that would reduce its environmental footprint. The recently created Ministry of Natural Resources and the Environment has taken on a greater role in working with the mining industry to ensure better compliance. And this has improved the working relationship between operators on the ground and the regulators. “It’s not only about the stick, but the carrot as well,” Nokta points out. “It helps when the stakeholders are willing, and understand why they need to do the right thing.

“At the end of the day, it has to be an economically rational decision,” he says. “If we are going to protect our forest for our own benefit, and for the benefit of the international community, then protection and preservation have to also compete with the other potential uses of the forest, the other drivers of the economy.” The figures look promising. In 2008, Guyana — which for so long had been labelled the poorest country in South America — experienced a three per cent increase in growth amid the global recession, and grew an impressive 5.4 per cent in 2011 and 3.7 per cent in 2012.

Guyana’s LCDS is one of the first national-scale efforts to move towards a green economy. By 2015, when the current agreement with Norway will end, the government hopes a second agreement will be forthcoming, as well as initiatives with other countries. Guyana’s Dutch-speaking neighbour, Suriname, has a strong interest in learning about the model Guyana is championing. Nokta says the process to create the LCDS involved intensive discussions with almost every sector of society. “People are excited by the new opportunities. It is the future of Guyana.”

Conservation International Guyana has been supporting the LCDS by providing policy formulation expertise and help in facilitating relationships with international agencies. “One of the most important lessons everyone has learned is that addressing climate change is a complex issue,” says CI executive director Dr David Singh. “Attempting to change the development path of a country is challenging and difficult, even Guyana.”

Singh believes the injection of US$250 million into the Guyanese economy has the potential to be a “game-changer.” However, he says, “To really change the way the world does business and address climate change, large businesses and corporations also have to be involved.”

From the Norwegian end, the Guyana model is the best bet for now. The International Climate and Forest Initiative at the Ministry of the Environment in Norway oversees the entire Norway-Guyana partnership. “We do not know all the answers,” says director Per Fredrik Ilsaas Pharo, “but we do know that without determined, transformational action, catastrophic climate change will become increasingly likely. In trying to design a response commensurate with the challenge at hand, we will surely make mistakes,” he adds. “But we will learn, adapt, and move forward together.”