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This article was published by C3.
COP27 in Sharm El-Sheikh, Egypt is due to end Friday, November 18th. Much like COP26 last November in Glasgow, Scotland, it has been greeted by much media attention and fanfare. These global climate conferences always feel momentous, but there is a danger that momentum is lost when the event ends and delegates return to their home countries. On deforestation, for example, COP26 saw a number of bold pledges made, the most eye-catching of which was a consortium of world leaders promising to end and reverse all deforestation by 2030. Unfortunately, within a few weeks, the plan had already fallen behind schedule.
This failure points to a flaw in the way we approach broad-based, big-picture issues to do with the environment. The prevailing narratives about how to tackle these kinds of complex policy problems – getting everyone in a big room to sign up to a ‘plan’ – does not seem to be working. There is a real risk that COP27 slips into the trap of churning out a new set of largely meaningless ‘targets’ and not much else.
If that happens, it will leave a policy gap to be filled by virtue-signalling about ‘removing deforestation from supply chains.’ Detail is hard to come by on what that actually means. In practice, it seems to end up taking the form of gratuitous state interventions of one kind or another, whether it’s punitive sin taxes for those who dare to buy or sell products that fall outside the accepted green orthodoxy of the state (much like soda or tobacco taxes) or even more pernicious policies like import bans.
These approaches are short-sighted. They seek to remove harmful products from the market, without noticing that the alternative products that replace them are often worse for the environment. They make the same mistake as the EU’s Deforestation Due Diligence Proposal, which I wrote about for C3 before, which sought to crack down on palm oil imports, inadvertently forcing the many companies who use it to switch to other vegetable oils which are less land-efficient and therefore accelerate deforestation.
Plus, with food prices already skyrocketing thanks to inflation, increasing costs for consumers further in this way is wildly poor politics. Across the world, and especially in the food and consumer products sectors, manufacturers are already struggling to keep prices down and keep their products affordable. With food inflation as high as 13 percent as of September and the ongoing situation in Ukraine not looking likely to lessen the burden on international supply chains any time soon, now is not the time for governments to pressure companies into making costlier ingredient choices in the forlorn hope of hitting an arbitrary deforestation target.
Instead of meddling in the market, regulators should step back and let capitalism do its thing. Free-market innovation is the only mechanism with a track record of consistent success in tackling environmental issues. For instance, on the issue of palm oil, which seems to have caused so much consternation among European regulators, the deforestation it causes has fallen to a four-year-low (and counting) thanks to almost three-quarters of companies spontaneously making commitments to tackle the issue.
There is already immense pressure on manufacturers to cut deforestation out of their supply chains, so the best thing our lawmakers can do is step back and allow them to do it. Their insistence on interfering in the market will either make no difference or actively make things worse, as we see with palm oil in Europe. Unfortunately, as things stand, it seems like COP27 is set to repeat many of COP26’s mistakes on deforestation meaning the natural world will only continue to suffer for another year.
