Tree Credits
Community Based Tree Planting

by Ferdinand Swart, EcoDesignCenter, Dehiwale, Sri Lanka
www.tree-credits.org

Lord Nicholas Stern: “The two defining challenges of our century are climate change and poverty. And if we fail on one, we will fail on the other”. 2009

Ban Ki Moon, UN chief: “Like in Microfinance, women can be agents of climate change too.”
December 2, 2009,

“When we plant trees, we plant the seeds of peace and seeds of hope.” Prof. Wangari Maathai, founder of the Green Belt Movement, Nobel peace price winner

The tree credits concept was developed in 2009  with the aim to tackle poverty and global warming in one go, and also to develop systems which minimize wastage and unnecessary travel. Based on an environmental outlook, it aims to restore habitats and biodiversity as well.

The core of the concept is to plant trees through micro finance (MFIs) channels. If people plant  trees they get an interest free loan or a fixed saving account or cash, depending on the setting. The amount is related to the number of trees growing.
Community tree groups should be formed, who should indentify suitable spots and land to grow trees and plans made; from starting sapling nurseries to the planting, watering and nursing all are activities favourite among women and children who have often few access to cash.
Best to pay the tree credits in small fixed amount each month, to provide a maximum of security. Even a tiny, but regular income might be enough to rise out of poverty. The tree growers get rewarded for a 10 year period or even longer if the UN-REDD+ scheme is in operation as long as the trees  grow and store carbon.

As example in SriLanka I proposed to give US$ 1.- per tree as an interest free loan in year 1 and thereafter a monthly cash pay of $0.01 per tree for a 10 year period. If for 10 years 500 trees – the maximum allowed – are planted each years, this will result in a maximum income  of $86.- a month per account holder in year 10. Of which a maximum of $42  will be reserved to pay off the loan part of $1 per tree (60 monthly instalments with 5year grace period). The trees should be insured against climate change related disasters.

Note that the proposed payment for planting are well below commercial forestry fees but higher than what is usually paid for casual labour to plant trees.

The amount which is paid monthly for 10 years is usually enough to repay loan and reflects on the one hand the value of the carbon stored and on the other the cost of maintenance. Eventually these payments should be covered by the REDD scheme.
The MFIs get compensated for their loss of income from interest and for their operational costs at all levels by a special fund, fed by “climate” as well as “poverty” monies.  And a large part of these funds can be loans because if it gets its share of the sale of any forest products like fruits or rubber and after 10 year timber the venture might turn a serious profit. Typically the timber proceeds will be shared by the landowner, the care taker of the trees,  the local tree group (being the administrator) and by the financiers/investors (tree credit fund?).

The costs for the MFIs could and should be low. Finances for such scheme might carry low interest rates, because of its a solid security in the form of trees and carbon credits for repayment and solid MFI administration and might be easy to get as well because it targets all the right goals: poverty, women, climate, biodiversity and community development. Trees are easy to count and well integrating the tree credit concept into existing microfinance schemes should further lower operational costs below 20%.
MFIs have spread around most of the world last 20 years and the concept has proved to be viable. However reaching the poorest, especially those outside the money economy (incl. children) is difficult with saving based scheme; trees, which grow, could give the perfect security for a loan, even if not grown on own land.
Both its penetration as well as its methods to form saving groups with a degree of social control, its bookkeeping and management skills and its decentralised operations make MFIs ideal to implement rural climate measures, like tree planting (and many others involving improved cooking, composting and agricultural methods). Since their prime target group: poor rural women are the first to feel the brunt of global warming, like more droughts and floods, MFIs might even consider it as their special responsibility to defend the interest of these clients and help them to fight climate change.

“Trees are the most cost effective way to unbind CO2 and to fight global warming” Stern 2009
Tree planting can have a real impact, not only locally, trees attract rain and cool the environment, if we double the tree/forest cover globally by 2050 the actual excess CO2 problem caused by exhaust fumes, could be solved (if……….. the big polluters clean up their acts and limit polution growth as well) without radically altering our lifestyles or growth prospects (see P.Hoff, 2009).
This massive tree planting (or better to speak of tree growing, because protecting natural up-shoots is even more effective for reforestation) should not result in large contractors moving in and planting massive monoculture forests, excluding the community. It should be a community efford. Also there might need to be a maximum of trees each account holder can plant each year, to exclude rich landowners (however they could lease there land against future timber proceeds).

The existing MFI saving groups might facilitate monitoring of the scheme based on a yearly tree count, audited on district and national level and ultimately by the new Indian satellite, which might be able to count the trees soon.  All payments, also overheads are linked to the number of trees really growing and thus the carbon stored. Eventually the timber should be harvested and put to good use, so it will not decay and release it carbon. A recent scientific breakthrough in the search for petrol from wood waste is very promising.

The tree credit concept puts much emphasis on biodiversity and we are against monoculture plantations;  we like to mix trees with agriculture (great results in Africa), rubber plantations mixed with fruit and timber trees and use words like permaculture and fruit forest. But also shade trees in towns and along roads are essential to improve the local climates.

Scope: a pilot project with SEEDS in SriLanka is being prepared, interest among FMIs in general is not great. Some trials of the concept have started this year (www.treesforcredits.org) but I insist to go through existing, proven and efficient channels, because to have an real impact on the global climate, it is essential to be able to scale up quickly and to avoid any wastage through travel etc.
I am still researching if such a scheme can be financed from regular carbon credits, but if scaled up, we have to tap in into the billions promised as climate aid by the rich countries.

Ferdinand Swart, Dutch, born 7-7-54. MSc Industrial Design, TUDelft. Since 1983 mostly in SriLanka, initially involved in community development and microfinance (in1989) and since 1990 co-owner of factory making wooden toys and others. Also I got involved in replanting rain forest, organizing foreign volunteers and helping various eco-ventures. srifer@gmail.com

Some tree fact and figures:
•Lots of trees in the community mean shade, cooler climate, more rain. a more pleasant
surroundings and a soothing effect on the mind.
•Trees enhance property values (in US +20%) and shops sell more in shaded
streets
•Trees cool down the air outside (5-10C) and especially inside houses when
shaded by trees.
•Trees will bring deep water to the surface; they help recharge ground water and
sustain stream flow.
•Trees prevent and/or reduce erosion of soil and cleanse water pollution.
•Trees planted as windbreaks significantly increase crop yields and stresses such
as wind, heat, and topsoil and moisture loss are also reduced.
•Intercropping with Leguminous trees might more than double agricultural output
(Faidherbia Albida and maize intercropped in Kenya, ICRAF)
•Over a 50-year life span, a single tree will produce about $30,000 in oxygen,
recycle $35,000 worth of water, and clean up $60,000 worth of air pollution – a
$125,000 value per tree, excluding other financial and enjoyment factors (Canadian
figures)
•Trees provide a home for many animals and helps biodiversity.