McKinsey and the Political Economy of Rainforest Destruction
Management consultancies are ubiquitous and powerful transnational actors in global politics: advising governments and corporations, shifting risk and vigorously propagating ideas about how the world should be ordered.
In the realm of climate policy, none have been more influential than McKinsey&Co. The McKinsey ‘Climate Desk’ came up with the now ubiquitous carbon emissions marginal abatement cost curve. McKinsey has picked up numerous consultancies advising governments and other actors on emissions reduction issues. Visually appealing (at least to policy wonks), the x-axis on the McKinsey cost curve shows just how much CO2 equivalent could be avoided by any one activity (that is, the abatement potential) and the y-axis shows the cost per tonne. The McKinsey cost curves are a relatively simple visual depiction of how different countries – and the world at large – can reduce carbon emissions.
Unfortunately, while the McKinsey cost curve approach might be visually appealing, as a systematic 'call for caution' recently produced by the UCL Energy Institute of University College London has shown, it is also inherently flawed in vital respects – particularly in relation to how it engages with the carbon mitigation potential of rainforests.
In the context of the development of an international mechanism for the reduction of emissions from deforestation and degradation of forests (REDD) McKinsey’s advice is proving significant. It seems probable that key rainforest nations are creating national REDD plans that are influenced by the McKinsey approach. Just this week the DRC’s Environment Minister Jose Endundo confirmed to Bloomberg that his government had simply ‘adopted the McKinsey scenarios’.
The content and accuracy of the cost curves is absolutely conditioned by the assumptions and data that underpin the values attached to each sector. McKinsey insist that their aim is ‘to provide a fact base on emissions-reduction opportunities and their associated cost and investment needs’ reflecting ‘the best-informed view on abatement measures and their local applicability’, but this neutral language disguises the reality that the cost curves necessarily reflect a distinct political economy that may be determined by McKinsey’s own policy preferences (for detail of this critique see for example here and here).
For example, by only reflecting opportunity costs and ignoring non-monetised value (like so-called 'eco-system services'), transaction costs, implementation costs and institutional costs, the McKinsey influenced approach risks systematically favoring large scale commercial drivers of deforestation and targeting the poorest and least powerful, such as subsistence farmers practising traditional shifting cultivation.
Perversely, the cost logic of the McKinsey approach also has the effect of potentially leading to a rise in large scale deforestation and an increase in monoculture plantations. The danger is that by equating primary forest with plantations as no more than different forms of carbon abatement technology which are comparable solely in terms of monetized opportunity cost, that the establishment of plantations can appear the more rational option.
Under McKinsey influenced plans, there is the very real and bizarre prospect that the expansion of monoculture plantations will continue at the expense of primary rainforest, but that this will be represented to the global community as REDD in action.
