2014 marks the 300th anniversary of the Longitude Prize. This award was offered by the British Government in 1714 and it was one of the greatest and most exciting prizes of its era. The winner would receive the princely sum of twenty thousand British pounds – nearly three million pounds in today’s money – for the discovery of a method to determine the precise longitude of a sailing ship. Although the thought was beyond the wildest dreams of those behind the prize, the announcement – according to US astronaut Neil Armstrong – would ultimately set explorers on a path to the moon.
Unlike latitude, which could be calculated from the angle of the sun, longitude was incredibly hard to establish for sailors of a bygone era who had to rely on ‘dead reckoning’. This uncertainty over how far east or west a sailing vessel was from its port of origin had dire, and sometimes tragic, consequences. Indeed, the prize was in part a reaction to the tragedy that befell Sir Admiral Shovell’s British fleet in 1707, where an inaccurate calculation of longitude led to the fleet being splintered on the rocks off the Scilly Isles with the loss of over two thousand men. The key to solving the puzzle, and therefore winning the prize, was to invent a clock that could keep accurate time at sea.
After decades of painstaking effort, the prize was finally awarded to John Harrison, a lowly carpenter’s son with an unremarkable education who arrived at a solution that had eluded the brilliant minds of men like Galileo and Newton. His marine chronometer was a clock that could keep accurate time at sea despite myriad challenges such as pitching decks, sea salt and fluctuations in temperature and pressure that played havoc with the intricate innards of a precision instrument. The lure of the prize led to quantum leaps in manufacturing and design by focusing brilliant minds and resources on a seemingly insurmountable problem. It is also one of the better known early examples of an incentive (or ‘pull’ mechanism) being used to successfully solve complex problems.
Exploiting this basic response to incentives has played a tremendous role in human history and it is also one of the foundation stones of REDD+. It is this feature – the incentive – that sets REDD+ apart from decades of frustrated and often failed attempts to grapple with tropical deforestation.
We are frequently reminded in venues around the world and in countless papers that ‘REDD+ is an incentive-based mechanism’. Billions of dollars have been pledged to help prepare countries for these incentives. But isn’t there a catch, and a fairly large catch at that? Isn’t the rather uncomfortable truth that this incentive doesn’t really exist at present at the scale required? Where is the long-term, predictable and credible incentive that will assist developing countries to shift their development pathways towards the nirvana of growth decoupled from resource exploitation?
A recent paper by UNEP Finance Initiative, Global Canopy Programme, FFI and IPAM explores this issue in more detail as part of a project looking at the issue of REDD+ demand in the ‘interim’ period before 2020. Although there is no single ‘silver bullet’ in the complex world of REDD+, it argues that we need more focus on creating large-scale interim demand if REDD+ is to succeed at the scale and within the timeframe that science and humanity require.
A number of options are considered in the paper. These range from creating an incentive (or ‘price signal’ as it is sometimes referred to) using products such as Advance Market Commitments, to considering ways to mobilise the upfront finance that is often required to start activities that will ultimately benefit from the incentive.
Of course there are serious challenges to address that fall under the catch-all phrase of ‘capacity building’, but is this really a valid reason to bury our heads in the sand, ostrich-like, over the issue of demand? On the contrary, the paper argues that providing a clear incentive would give forest countries the ability and confidence to mobilise far greater quantities of human, political and financial capital to REDD+. It is because of, not in spite of, these challenges that we need a clear incentive to make the progress we so desperately need.
Well-designed incentives are powerful mechanisms that have consistently helped shape human behaviour and deal with complex problems over the centuries. The paper argues that we urgently need an interim mechanism that can create demand before 2020, otherwise REDD+ will fail when measured against the twin yardsticks of time and scale. If he were still making clocks in 2014, I have a feeling John Harrison might agree.
Bio: Iain Henderson joined the United Nations Environment Programme Finance Initiative (UNEP FI) in Geneva in 2012 to work on REDD+ and Sustainable Land Use. Prior to this, he spent two years in Hong Kong, where he grew up, with WWF’s Forest & Climate Initiative working on finance-related issues. For the first 12 years of his working life, Iain worked in investment banks in London in the Fixed Income, Currencies and Commodities divisions of UBS and Deutsche Bank.