Attempting to combine financial profits and environmental concerns, Norwegian investors are now acquiring huge land areas in the East African country of Tanzania. They are well in the process of planting fast-growing trees that will fix CO₂ from the atmosphere and thus contribute to preventing global climate change. In this way, the forest plantations could offset conventional greenhouse gas emissions, and this may yield a huge income through the sale of emissions credits to polluting industries in Norway and other rich countries. This new and potentially very lucrative market is not yet put in function, but will probably be established as early as this autumn when the parties to the international climate negotiations meet for their sixth conference (COP-6) in The Hague, the Dutch capital.

The Kyoto Protocol was signed in December 1997, and is the first international attempt to limit emissions of greenhouse gases to the atmosphere. However, the Protocol deals not only with emissions of greenhouse gases by sources, but also provides for the inclusion of CO₂ removals by sinks (e.g. forests) in the national carbon budgets. In addition, it is suggested that rich countries with commitments under the agreement shall be given the opportunity to invest in projects that reduce emissions - or increase carbon sequestration in terrestrial sinks - in countries without assignments. This mechanism is meant to introduce cost-effective climate change measures for industrialised countries, but it also requires the projects to contribute to sustainable development in the host country. These principles are the motive behind Tree Farms' investments in East Africa, and they form the point of departure for this report on the company's forestry projects in Tanzania.

Two days after the Kyoto Protocol was signed, Tree Farms - then named Fjordgløtt - arranged a private placement that expanded the company's capitalisation from 990,000 Norwegian kroner (NOK) (USD 112,170) to NOK 13 million (USD 1,5 million). Presumably, this was done in the hope that trade in carbon credits based on the fixation of carbon in forests or plantations in developing countries could give a large extra income from the company's operations in East Africa. Five months later, Tree Farms invited external investors to buy shares, and one third of the new issues were bought by TRG, a company controlled by Norwegian financier Kjell Inge Røkke.

As described in the Kyoto Protocol, the Clean Development Mechanism requires projects to be certified by so-called operational entities, to be designated by the Conference of the Parties. One company that has already initiated this process, and has started verifying carbon budgets for such projects, is the world's largest bureau of certification, the Société Générale de Surveillance (SGS). Tree Farms is now using this company to develop a model for carbon fixation in the plantations in Tanzania. The work is based on calculations of the amount of CO₂ that will eventually be stored in the mature plantations, and measurements of the carbon stock of the existing vegetation cover, which must then be subtracted to give net sequestration. The model takes into account the harvesting rotations by the fact that logged areas are immediately planted with new trees, so that there is a fairly constant carbon stock in the forest plantations at any given time.

Although Tree Farms has reached far in the certification process, the fate of the company's CDM projects depends on another important, but not yet clarified principle of the Kyoto Protocol; the requirement of additionality. This implies that, in order to qualify for carbon credits, projects must be additional to any that would occur in the absence of the certified project activity, requiring various scenarios or baselines for emissions and removals of greenhouse gases to be worked out. It is obviously very difficult to objectively establish such a reference or baseline, but in the case of Tree Farms, the condition will probably be that tree planting operations would not have been conducted if the option of trading CDM-based credits had not existed. If, on the other hand, the company's land parcels would have been afforested regardless of the Clean Development Mechanism, the project cannot yield carbon credits. However, the exact set of regulations and procedures for CDM projects, including how to interpret and implement the additionality principle, has not yet been adopted. That will not happen before the sixth Conference of the Parties to the international climate negotiations (COP-6) in The Hague.

Norwegian and international forestry interests are lobbying strongly for allowing forest plantations in developing countries to yield tradable credits that can be sold to polluting industries in Annex I countries. The race for so-called carbon profits has at times made international climate negotiations resemble "trade shows", where "instead of focusing on how to prevent global warming, attendees jostled to get a piece of a lucrative emerging market: trading in pollution credits." For Norway, the establishment of such a market will be of great interest, since it is considered economically unrealistic for the country not to exceed its Kyoto assignment of a one-percent increase in emissions from 1990 to 2008-2012 through domestic measures alone. Recent figures from Norway's Central Bureau of Statistics show that building two new gas-fired power plants would contribute to a 29% increase in greenhouse gas emissions in the commitment period. Access to cheap emissions credits, e.g. from forest plantations in developing countries or clean technology measures in former East Bloc countries, rather than implementing costly emissions reductions for domestic industries, would therefore be of great economic interest to Norway.

At present, however, only Industrikraft Midt-Norge has plans to offset parts of its projected power plant emissions with carbon credits from afforestation projects in developing countries. These plans were confirmed both by Tree Farms and by Industrikraft Midt-Norge after the companies in April informed the Norwegian Foreign Ministry of an options contract on credit trade. Still, NorWatch has information indicating that also other Norwegian companies have shown an interest in Tree Farms' plantation projects in Tanzania.

Tree Farms AS, which was known as Fjordgløtt AS until 1997, has its head office in Namsos, Norway, and was founded by forestry analyst Mads Asprem in 1995. The company has concentrated its operations to East Africa, and after a preliminary study financed by NORAD, the company set itself up in Tanzania and Uganda in 1996, and later in Malawi. Tree Farms executives emphasise that efforts are mainly directed towards Tanzania, where the company has established several subsidiaries. One of these is Escarpment Forestry Company Ltd. (EFC), which is responsible for the afforestation activities.

The trees are planted in three separate areas south of Sao Hill, in the Mufindi and Kilombero Districts (see Figure 2). These areas are located in the Tanzanian highlands at about 2,000 metres above sea level, where precipitation is large but mainly confined to the periods from March-May (the rainy season) and November-December (the short rains). The moist climate makes for favourable growth conditions, and the company has therefore concentrated on the water-intensive and fast-growing species Pinus patula (pine) and Eucalyptus saligna (eucalyptus). The company also intends to plant some local tree species.

So far, the Tree Farms subsidiary EFC has only planted about 1,700 hectares (ha), but the company is in the process of acquiring far larger areas. Altogether, EFC is negotiating for nearly 90,000 ha of land, and applications are being processed at various levels of the Tanzanian administrative system. According to the company, there are also plans to acquire land parcels for plantations in other parts of Tanzania. These plans, however, have been suspended indefinitely until the company becomes self-financing and forest-based CDM projects are approved in the international climate negotiations.

In order to acquire ownership rights to the plantation areas, Tree Farms must enter into a land-lease contract with Tanzanian authorities. The agreement is based on fixed national standards, according to which the company commits itself to using the lands solely for forestry activities. The contract is signed for a 99-year period, and throughout this period, the company must pay an annual land rent to the Government. The annual land rent paid to the Tanzanian Government is fixed at USD 1.9 per hectare, and is thus lower than the rent at Tree Farms' project in Uganda.

Yet, the company is pushing the authorities in order to reduce the rent by as much as 50% from the already low present level. Since the regulations and procedures of the Kyoto Protocol are unknown to most of the players in Tanzania, it is very likely that the authorities are missing out on huge gains by letting lands for 99 years at prices far below the expected profits to Tree Farms.

Tree Farms is acquiring land parcels in three separate areas in southern Tanzania, totalling 87,568 ha. The lands consist of grass-covered savannahs, and are basically uninhabited and little used by the local population. The villages around the project areas have been consulted, and the company's land-lease applications are now pending at various levels of the country's administrative system. The villagers have been promised jobs, health services, education material, and improved road connections. Thus far, Tree Farms has used the local work force to plant about 1,900 ha of eucalyptus and pines, and has constructed new road sections in the plantation areas. The villagers, however, are disappointed that no promises have been met regarding health and education services.

When Tree Farms started planting in 1996/1997, they did so on a grand scale. In the course of a few planting seasons, the company had afforested some 1,500 ha, and up to 500 workers from the three surrounding villages were given employment opportunities. These were tasked with nursing the trees and planting the tree saplings on the savannahs. Some were also hired to build roads, and others worked as watchmen, responsible for looking after the plantations. The watchmen make sure that no animals stray into the areas, and that the villagers do not harm the juvenile trees. Moreover, guards have been hired to watch for fires and prevent them from spreading towards the plantations.

Instead of contract workers, the company employs villagers as casual workers. Since the afforestation activities take place only between December and March, the work cannot replace the traditional dependence on agriculture and animal husbandry. Furthermore, wages are too low for anything besides the daily subsistence. Each worker gets TZS 800 (USD 1.00) a day, which is less than the Government's recommended minimum wage of TZS 835 (USD 1.05). Still, the villagers of Uchindile, Idete, and Mapanda identified a far greater problem than the low wages: Many workers had not been paid at all.

In all three villages, there was widespread disappointment with the company's payment routines. The casual workers are paid according to a daily rate, and are supposed to receive their wages once a month. However, some of the workers that NorWatch was in contact with had as much as eight months of unpaid wages from Tree Farms' subsidiary EFC, while others complained that payments had been irregular and unpredictable ever since the company started its afforestation projects. At the same time, some of the villagers were starting to develop a general distrust towards promises that the projects would benefit the local communities. This scepticism had also been there initially, before the company informed about its social profile. The chairman of the Mapanda village council put it this way: "When the company arrived, many inhabitants were sceptical about giving away our land areas. But after being told about all the benefits of the project, the village council agreed to cede the lands we were not cultivating."

The options contract between Tree Farms and Industrikraft Midt-Norge has a carbon credit price of slightly less than NOK 40 (USD 4.5) per ton CO₂. Over a 25-year period, this would give the company a carbon profit of about USD 27 million for the Uchindile forest plantation, whereas the Tanzanian government would be left with USD 565,000 in rent payments. Hence, Tree Farms' expected gains from the trade in carbon credits, is in glaring contrast with the government's revenues from land rent. Furthermore, Tanzania must relinquish the option of using the plantation areas in its own CO₂ budgets when, as is likely, the Kyoto Protocol is expanded to include developing countries in the next commitment period. Tree Farms' lands are thus set aside for storing Norwegian greenhouse gas emissions, and future land conflicts cannot justify the use of the "carbon plantations" to serve other needs.

A number of critics, both among scientists and environmentalists, have been sceptical of the idea that man-made emissions of greenhouse gases are to be offset through the storage of CO₂ in forests and plantations. The objections are based primarily on the scientific uncertainty with regard to the role of vegetation and soils in climate regulation (the complexity of the carbon cycle in forests is illustrated in Fig. 3), but questions have also been raised as to the ecological impacts of tree planting. Several studies have reported nutrient depletion and water deficiency as a result of eucalyptus and pine plantations.^{, ,} Besides, the planting of exotic monocultures leads to local reduction of biodiversity, and hence, conflicts with international aims to preserve the diversity of plants and animals. Based on these general considerations, it is necessary to assess Tree Farms' projects in Tanzania in a broader perspective.

The principle of sustainable development is a precondition for any CDM project, but it is particularly relevant with regard to forest measures, which may potentially affect a number of other environmental concerns. Tree Farms' plantation projects will e.g. cause the lush grass cover to be replaced with monocultures consisting of eucalyptus and pines. This will not just mean a direct reduction in the number of plant species, but will also affect animal life, by removing the diversity of habitats and forage resources. However, it is difficult to predict what actual impacts this may have on local biodiversity, since very few ecological studies have been carried out in this part of Tanzania. The impact assessment for the Uchindile plantation does mention that there are three plant species within Tree Farms' project area that are endangered (two orchids and one Aloe species), but as far as NorWatch knows, no conservation measures have been prescribed for these species. Nor are there plans to fund further scientific studies in any of the company's three plantation areas.

In chapter 2, it was pointed out that the Kyoto Protocol requires any net emissions reductions to be additional to any that would occur in the absence of the project activity, and that Tree Farms' position with regard to this presupposition is unclear. This is confirmed by Managing Director Odd Ivar Løvhaugen, who emphasises that the company's investments should not be considered solely as climate measures. Mr. Løvhaugen recalls that Tree Farms set up in Tanzania as long ago as 1996, more than a year before the Kyoto Protocol was signed. The company considers any trade in carbon credits as an opportunity for additional earnings, but regards conventional forestry its main purpose and source of income. Tree Farms' ambitions for the Tanzanian forestry industry is that it develops in the same way as in Chile and New Zealand, who at present are leading exporters of plantation timber. Hence, Mr. Løvhaugen says that Tree Farms would have invested in the country's forestry sector regardless of the Clean Development Mechanism. The company's management is nevertheless very confident that the tree-planting operations in Tanzania will gain approval as CDM project activities, and they have also received positive indications from SGS consultants.

The Norwegian CDM projects in Tanzania will have a negative impact on local biodiversity, and they represent uncertain carbon sinks. Forest fires are a constant and significant threat, and the plantation areas cannot be guaranteed to remain untouched and uninhabited for all time. Tree Farms' calculations disregard the carbon content of soils and roots, which is probably of great significance to the total carbon budget. It is possible, however, that the company may credit the amount of carbon stored in wood products, even though this appears to be an even more uncertain and unstable storage method than fixation in forest plantations. In that case, emissions from the production of these wood products should also be included in the carbon budget.

This report has shown that Tree Farms' activities in Tanzania in many ways take place under conditions that differ widely from corresponding afforestation projects in Uganda. The villages that surround the company's plantation areas in Tanzania, and who hold ownership rights to the lands, have approved the land-lease applications, and in contrast to the Ugandan project - where some 8,000 people are engaged in agriculture or fisheries within the Tree Farms plantation areas - the land parcels in Tanzania are largely uninhabited and little used by the local population. The rent paid to the government is very low, however, and is in glaring contrast to the expected profits from the trade in carbon credits. Furthermore, the Norwegian company can be reproached for its wage payment practices, which has led to complaints from more than 100 workers of the surrounding villages, who have not received the pay they are entitled to. In addition, the report has presented a number of theoretical considerations about trading in carbon credits based on carbon storage in forest plantations in developing countries.

The exact set of regulations in the Kyoto Protocol has not yet been finally negotiated, and it is therefore difficult to assess Tree Farms' projects in Tanzania with regard to the Clean Development Mechanism. Some important principles, however, are explicitly stated in the Protocol, i. a. that (i) CDM projects must contribute to the ultimate objective of the Convention, which implies that the measures must result in long-term emissions reductions, (ii) the projects are to contribute to sustainable development in the host country, and (iii) emissions reductions must be additional to any that would occur in the absence of the project activity. The present report has argued that Tree Farms' activities in Tanzania can be said to conflict with all these points. It is particularly interesting that the company says the afforestation activities would have taken place regardless of the Kyoto Protocol's Clean Development Mechanism. Is it then defensible for Industrikraft Midt-Norge, which intends to purchase carbon credits from Tree Farms, to be provided the opportunity to increase its emissions by as much as is sequestered in the forest plantations in Tanzania? Or is this project a "loophole" which, instead of contributing to a better climate, implies the establishment of a new and profitable market favouring Norwegian industry and investors?

The debate about global climate change is well suited to illustrate the traditional conflicts between environment and profits, developing and industrialised countries. On the one hand, powerful industrial companies are fighting to establish a market for carbon credits based on temporal and uncertain climate measures. On the other hand are climate experts and the environmental movement, together with those people who will be most severely affected by global climate change. Which voices carry the most weight will be seen later this year, when the international climate negotiations continue in The Hague. But there is every reason to fear that some parties will say that concerns over the global climate and the world's poor are best addressed through credits trading and afforestation. This report has shown, however, that this is not always - or necessarily - the case. Carbon offsets for some may cause upsets for others.

The industrial revolution has brought material abundance to the people of many nations. Powered primarily by the burning of fossil fuels, it has also brought air pollution on a massive scale and the release of carbon dioxide to the atmosphere at unprecedented rates. We are gradually learning to combat the air pollution, but carbon dioxide is another question. Carbon dioxide is a basic and unalterable result of burning fossil fuels. Our entire strategy of powering society is called into question by the concern that the accumulation of carbon dioxide will cause series of disasters to the earth’s climate.

The following describes global climate change's impact on Bangladesh and the adverse effects monoculture plantations of the type which might be used to "mitigate" global warming have had on the country.

2. Global climate change and its impact in Bangladesh

The consequences of a global rise in temperature on Bangladesh are many, depending on the extent of the rise. Most notably, the mean sea level is expected to rise and the local climate is expected to become more severe in nature. These changes are going to have profound impact on the population, environment and economy of Bangladesh. First, sea level rises mean that the country will face an increased risk of flooding over a larger proportion of its area than at present. (Department of Environment, 1997).

Sea level rise will also cause intrusion of salt water that will damage fresh water ecosystems and affect both dry-season and monsoon crops. More frequent storms, cyclones and droughts will increase the intensity and frequency of natural disasters. In 1997, the negotiators of the Kyoto Protocol came up with an ingeniously-named project: the "Clean Development Mechanism". For the lay person, the message was that the governments of the world had finally agreed to create a mechanism that would allow atmospherically non-polluting development. But what this wording hides is anything but clean.

This mechanism is in fact a license to pollute. In Kyoto, industrialized countries committed themselves to reduce greenhouse gas emissions, but they simultaneously invented a way out of those same commitments. The mechanism is simple: instead of cutting emissions at source, they would "compensate for" emissions by implementing projects in other countries.

Some of the possible projects involve forests, tree plantations and soils that would allegedly act as "carbon sinks". Bangladesh has already been pushed by MDBs to take some of these projects -- mainly monoculture plantations -- to "absorb" some of the CO₂ which has been emitted by more developed countries (MDCs) to the atmosphere. Due to its inability to repay its huge debts to the International Monetary Fund, the World Bank and the Asian Development Bank, it seems that Bangladesh has no other option but to accept environmentally damaging forestry projects.

In the Indian sub-continent many forests were once considered to be the property of the gods and permission from the local priest was required before one could fell a tree. Such a tradition made the British colonizers, who badly needed hardwood such as teak, impatient during the 18^th century when they consolidated their power in India. The British quest for teak was very determined. Eventually the property of the gods was converted to a commercial product. Demand for hardwood increased many times with increased industrialization. For example, a huge quantity of hardwood was needed for railway sleepers. In defiance of communal ownership of forests, the British expropriated millions of hectares of communally-owned forest. Villagers and indigenous forest communities lost control over trees, lost their homes, saw their medicinal plants taken away and their knowledge reduced to nothing.

Confiscation of forests by British colonialists took place throughout the second half of the nineteenth century. Massive confiscation of forest land by the state took place almost everywhere in South and Southeast Asia (even in uncolonized Thailand). Gradually, the fruits of the Asian forests were transferred to the rich Western countries. The colonizers began the process of confiscation of forest and Western companies consolidated control over the forest.

After the end of the direct colonial era, the developed countries and their local allies wanted to ensure continued supplies of wood from rural areas in Asian countries. They used both the multilateral development banks (MDBs) and various mechanisms such as International Tropical Timber Organization (ITTO), the Tropical Forestry Action Plan (TFAP) Now the Clean Development Mechanism (CDM) is set to allow MDBs and transnational corporations to extract still more wood and wood materials from less-developed countries. Proposed carbon-sink projects under the CDMwould menace diversified forests from the most biologically rich countries like Bangladesh and would provide more inducements to this poverty-stricken country to set up monoculture plantations just for the benefits of climate-polluting countries.

4. Monoculture Forestry Practice in Bangladesh

The full extent of the devastation caused by the commercial use of forest land or monoculture forestry in Bangladesh has still not been properly appreciated. In the Chittagong Hill Tracts (CHT) in the southern part of Bangladesh, a remarkable loss of forest resources is attributed to commercial exploitation of immature trees for sale on the black market with the blessing of the Bangladesh Forest Department. The commercial use of forest land for monocultures of rubber and fuelwood have also had a significant negative impact on Bangladesh's environment.

Rubber Monoculture: Commercial forestry, including monocultures of rubber and fuelwood, has been a majorcause of deforestation. Rubber plantations began in the Chittagong Hill Tracts on an experimental basis in 1959. In 1969 the Rubber Development Project began on a commercial basis. The government initially wanted to take over 40,000 acres of land for rubber plantations. But by 1988, only 25,000 acres could be brought under rubber plantations.

The Second Development Project for rubber plantations began in the Modhupur Forest area (in the central part of Bangladesh) in 1987. Yet whenever the rubber plantation authorities and the Forest Department tried to take possession of lands used by the local people, conflicts arose. Indeed, many local tribal people became concerned for their tenure on their traditional homelands because of attempts to take over "prescribed" lands for rubber or fuelwood plantations or woodlots. Allegations abounded of attempts by the authorities, some successful, to annex homesteads, croplands and registered lands for rubber plantations. In the end, the plan to bring 15,000 acres under rubber plantations could not be implemented Only a little over 7,000 acres of forest lands were made available the plantations.

Cultivation of natural rubber does not have much economic and environmental justification in Bangladesh. When they resumed support for the crop, the authoritiesclaimed that it would be profitable economically and the production would match that of Malaysia. But when Bangladesh went into rubber production in the Chittagong Hill Tracts and Sylhet (in the northeastern part of Bangladesh) production was much lower than projected.

Rubber plantation, if practiced as monoculture, is ecologically sensitive. On the one hand, rubber has been planted as monoculture in the traditional sal (Shorea robusta) forest in the Modhupur tract -- although the trees have not been much cared for. The unique biological diversity of the sal forest has been severely damaged. Since 1986, when rubber plantation began in the area, sal coppices which could have generated natural forest have been clearcut in many places. Until recently, coppices were also cut to make way for commercial fuelwood plantations. During the cutting, stumps were uprooted to be sent to the brick fields, thus destroying any possibility of regeneration of the sal forest.

Creation of mixed forest with local varieties instead of monoculture rubber plantations would be more economic and helpful for preserving the environment. Alienation of forest people and other local people from the rubber plantations, together with destruction of natural patches, has jeopardized intimate people-forest relations and antagonized the locals. The volunteers of Friends of the Earth Bangladesh have been able to draw attention of the Asian Development Bank (ADB), a prospective funder for the Second Development Project for Rubber Plantations, to the social and environmental hazards already created through ongoing rubber plantation activities. Consequently, the ADB abandoned the project after an initial survey and analysis.

Teak Monoculture: The teak plantations of the Chittagong Hill Tracts and elsewhere, when planted as a monoculture, are not free from criticism. Despite the fact that teak is a valuable tree, it is criticized for massive soil erosion and sediment pollution of waterways in many parts of Bangladesh. Teak leaves cause an acidic reaction in the soil which inhibits undergrowth. During the rainy season rainfall causes severe erosion of top soil and siltation in the Kaptai Lake. If costs and benefits are analyzed, teak is in no way parallel to the indigenous species.

Woodlot (Fuelwood) Monoculture: Commercial woodlot plantations have been introduced on forest land to meet the fuelwood requirements of local communities. Such plantations are one component of the ADB-funded Nursery Development Project, which was started in 1989 and ended in 1995. Introduction of exotic species through the project’s woodlot plantations has been a source of controversy and debate.

Under the US$48 million dollar project, US$11.6 million was allocated for woodlot plantations in sal forest areas. A total of 16,000 acres of sal forest in many different parts of Bangladesh, mainly in the central part of the country, were to be brought under woodlot plantation. Today woodlot blocks can be found in the Sal forest of the Modhupur area and elsewhere. Exotic varieties such as eucalyptus have taken the place of naturally-regenerated native trees.

The main criticism of woodlot plantations is that they have threatened the habitat of forest communities such as the Garo people in the Modhupur Forest. Such communities are considered to be illegal squatters on forest land and their rights have been ignored when woodlot plantations are installed.

Severe ecological problems caused by woodlots have also been reported. In many places throughout the sal forest, coppices of sal trees and other indigenous species were clearcut for the preparation of woodlot blocks. This destroyed the possibility of regeneration of natural forest in many places.

The impact of clearing forests for woodlots and rubber plantations is enormous for wildlife and biodiversity. A rare subspecies of golden langur monkey resides in a limited area of the Modhupur Forest. Its habitat is threatened both by rubber cultivation and by firewood production through woodlots.

Bangladesh is one of the first signatories of the Convention on Biological Diversity, and has thus committed itself to conserving natural and biological resources. What has been reported from the Modhupur Forest and other forest areas demonstrates that Bangladesh has explicitly violated this commitment.

5. Conclusion

Tree-planting, as it is carried out officially in Bangladesh, is neither a road to economic sustainability nor an effective means of carbon sequestration to stabilize the global temperature, now rising day by day due to rich countries’ unscrupulous development actions and plans. The "carbon-sink" agenda is a political ploy of Northern countries to keep the concerned world public’s eyes off the real problem.