REDD: The Amazon’s carbon cowboys

This article is the last in a three-part series that explores the issue of deforestation and climate change. In part one, GlobalPost considered how a proposed international carbon-credit market could slash greenhouse-gas emissions and save the world's surviving forests. Part two highlighted how forest people can benefit from carbon credits, while part three looks at "carbon cowboys" accused of abusing the system.

IQUITOS, Peru — For many impoverished rainforest communities in Latin America, Africa and Asia, REDD — the effort to reduce carbon emissions by preventing deforestation — promises a rare shot at economic development.

For others, it threatens to become yet another resource grab.

As governments struggle to pass laws to regulate the emerging markets in forest carbon, entrepreneurs are striking deals with indigenous groups in need of cash.
Many come from reputable companies that ensure local people’s rights are protected. But in some cases, watchdog groups say that the local people are being duped into signing over their natural resources for empty promises.

The story of one attempt to lock up carbon rights near Iquitos, capital of Peru’s vast Amazonian region of Loreto, highlights the concerns about so-called carbon cowboys.

Loreto, which covers a swath of land about the size of Montana — is home to a patchwork of indigenous ethnic groups speaking more than a dozen different languages. Some are already highly Westernized, while others still live a traditional lifestyle in tiny communities many days’ travel from the bright lights of Iquitos.

Read more: Designing an international carbon market

Under Peruvian law, many of those communities collectively own their huge ancestral territories, covered by dense, virgin tropical rainforest — potentially worth hundreds of millions of dollars in carbon credits.

In March, real-estate developer David John Nilsson, stopped in Iquitos on his way downriver to bid for the carbon rights of the Matses people’s forest.

Nilsson is an Australian citizen based in Queensland, who says he has more than 30 years experience in the real-estate business in his home country and is a licensed estate agent and mortgage adviser. At the time when he met with the Matses, he was acting as the owner of Sustainable Carbon Resources, a Hong Kong-based company set up to market forest carbon offests. That company no longer exists, and Nilsson now operates under the company Amazon Holdings.

The details of the encounter between Nilsson and the Matses remain unclear. But it prompted 30 angry Matses to turn up at the Iquitos office of the Defensoria del Pueblo, Peru’s statutory human-rights watchdog, to complain.

Lizbeth Castro, head of the office, advised the Matses not to sign any document they did not understand. Shortly afterward, Nilsson paid a visit to Castro’s office.

“He shouted. He insulted us, and we told him to leave,” Castro said. “He said he was going to sue us and this would not stand. We told him, no problem, sue us. But we will keep on doing our work.”

Read more: When carbon credits work

Nilsson, currently in Australia, admitted by email to GlobalPost that he “did raise my voice,” but denied threatening to sue Castro or the Defensoria del Pueblo. He also said that he provided Castro with a Spanish translation of the carbon contract, which had originally been in English.

After that encounter, Nilsson abandoned negotiations with the Matses, and sought out another indigenous group, the Yaguas, who also live in poverty, largely abandoned by the Peruvian state, deep in the Amazon.

Nilsson met with various Yagua leaders, including Javier Fasenando, president of FEPYRA, a federation of Yagua communities, to discuss a deal.

A short, graying man with a soft smile, Fasenando said Nilsson promised the Yaguas money for development projects, including fish farms, in return for rights to the “wood” on their land.

In October, Fasenando, signed a thick contract with Amazon Holdings in English, a language he does not understand. For the agreement to enter into legal force, it must be approved by each of FEPYRA’s five member communities. Three have already done so.

Fasenando said that he understood the terms of the agreement. “Those who criticize it come from other communities,” he said. “They are envious.”

But at the end of our interview in Spanish, Fasenando struggled to confirm even the spelling of his own name. Other indigenous leaders confirmed to GlobalPost that he is unable to read or write.

Fasenando also was unable to tell me where FEPYRA’s copy of the agreement was.

Nilsson declined to provide a copy of the contract to GlobalPost, saying that he needed written permission from the Yagua communities involved in the deal.

He also said in an email that he had fully explained the terms of the contract to Fasenando and that the Yaguas had been given the chance to debate the contract among themselves before committing to it. “If the community [sic] do not want to go ahead with the project, I’m OK with this,” he said.

The case is not the first time Nilsson has been involved in controversial business deals in developing nations.

In the 1990s, he was charged in Australia over allegations he had run off from the tiny Pacific island state of Nauru with approximately $1 million of local investors’ money, intended for a land deal. Nilsson told GlobalPost the charges were dismissed by Australia’s federal court, and also provided a document from the Australian police, which he said certified he has no criminal record in that country.

In Loreto, Nilsson’s presence among isolated native villages has prompted bitter infighting among the broader regional indigenous federation in the area, known as Orpio. Some members have been interested in the revenues promised by Nilsson’s project, while others say they don’t trust him. On Jan. 21, Orpio delegates recalled its elected leaders for being too close to the Australian.

“We felt exploited by him,” said Zoila Merino, ORPIO’s new treasurer. “He came to cheat the people. He just wants to get rich from our land.”

Even if the federation approves of Nilsson’s project, the company may have trouble selling the carbon offsets it generates.

Currently, the market for carbon credits is voluntary, meaning that buyers are businesses or individuals that freely choose to offset their carbon footprints.

Even at this early stage, it is largely dominated by suppliers who have been approved by private, independent certification companies for complying with a range of environmental and social safeguards.

That means that it’s extremely difficult to sell carbon credits without independent certification, which validates the social impact for local people, said Gonzalo Castro de la Mata, chairman and CEO of Ecosystem Services, one of Latin America’s foremost forest carbon companies.

“As in any other sectors, there will always be dishonest people that are trying to take advantage of the system,” he said, but added that he believes those projects are weeded out by the certification system. “It is the only way to maintain credibility in the system and to make a positive impact on people and the planet,” he said.