Remote remedies: curbing global deforestation and biodiversity loss via EU markets – Sitra

The Challenge of Deforestation and International Demand

The world is currently facing a climate and biodiversity crisis, with deforestation rates remaining unchecked. The agricultural sector, driven by international demand, plays a significant role in this crisis. For instance, about 90% of Finland’s food-related biodiversity footprint comes from outside its borders. This means that economies like the EU are “offshoring” the impact of their citizens’ consumption.

The EU’s Deforestation Regulation (EUDR)

In response to this crisis, the EU has introduced the ambitious EU Deforestation Regulation (EUDR) to clean up its supply chains. The legislation targets key commodities linked to deforestation, such as beef, soy, palm oil, cocoa, coffee, rubber, and timber, which account for around 80% of tropical deforestation in international trade.

Effectiveness of the EUDR

However, questions remain about the effectiveness of the EUDR. While it may reduce the risk of deforestation in the EU supply chain, researchers are questioning whether deeper cuts in EU demand are necessary to protect the world’s forests.

Exploring Policy Options to Halt Global Deforestation

A new project between Sitra, the Stockholm Environment Institute at the University of York, and Leiden University aims to explore a range of near-term policy options that can tip the balance in favor of forests and global biodiversity. The project will assess the global impact of potential EU interventions using policy reviews, global supply chain modeling, and indicators for forest loss and biodiversity impacts.

Potential Policy Interventions

One potential intervention is the transition to a circular economy, which includes minimizing food waste and loss to reduce EU demand for bulk food commodities like soy and palm oil. Substitutes and smaller packaging can also address the impacts associated with cocoa and coffee. Efforts to promote the recovery of critical materials, such as recycling rubber from discarded car tires, can significantly reduce pressures on Southeast Asian forests.

However, a shift to renewable materials, like timber, presents new challenges. While timber construction can reduce emissions associated with concrete or steel, substituting timber could lead to additional land use change and loss of carbon sinks. Therefore, circular solutions that promote fewer materials, longer lifetimes, and more reused and recycled timber are crucial.

Overall, a mix of policy interventions is needed to have a profound effect. Each intervention should be part of a broader toolbox to address deforestation and biodiversity loss.

Assessing the Impacts of Policy Change

The project will undertake a policy mapping and assessment exercise to understand how changing EU policies may impact trade and production flows that contribute to land use change, deforestation, emissions, and biodiversity. Four case studies will be conducted:

1. Circular economy interventions
2. Extending the Carbon Border Adjustment Mechanism (CBAM)
3. Sustainable domestic production
4. EU Deforestation Regulation ‘plus’

These case studies will be used to create modelled scenarios that assess the potential impact of EU policy changes on deforestation, emissions, and biodiversity.

Conclusion

The research project aims to identify tangible policy measures that can extend current EU action on deforestation and international biodiversity loss. Failure to address these issues will have long-term consequences for all people on the planet. The interventions identified in this project have the potential to serve as a model for other trade and consumption markets. Global action is needed to address deforestation and biodiversity loss, and the EU can take a leading role in driving rapid action.

The research is expected to be completed by the end of 2024, and the results will be published in a project report.

Authors:

• Chris West – Deputy Director (Research), Stockholm Environment Institute, University of York
• Robin Vrijhoeven – MSc student Industrial Ecology, Leiden University
• Oliver Taherzadeh – Assistant Professor, Institute of Environmental Sciences, Leiden University
• Tim Forslund – Specialist, The Finnish Innovation Fund Sitra