1.1 Climate Change Issues, the UNFCCC and the Kyoto protocol. Potential gains for Bolivia from CDM

Global warming caused by GHG emissions and its possible effects on the economies of the countries which are considered vulnerable have aroused concern and a sense that it is necessary to act urgently. The predictions of the scientists say that many coastal areas will be flooded and that droughts or unstable rainfall will be more severe than in the past. Guided by these assessments, the global community signed, in the earth Summit of Rio-92, the Framework Convention on Climate Change (UNFCCC). Since then it has met annually in the so-called Conferences of the Parties (COP) to take decisions on how and to what extent GHG emissions can be reduced. In the third Conference of the Parties (COP-3), the Kyoto Protocol was adopted setting legally binding emission reduction targets for developed countries (Annex 1 countries) and three flexible mechanisms to provide for transboundary trading by Annex 1 countries of emission credits (CER). One of them includes the use of forests as carbon sinks (article 12 which defines the clean development Mechanism CDM). This last issue has been very controversial for ratification, and the lack of agreement on it was one of the causes of the collapse of the COP-6 held in The Hague in 2000.

Bolivia’s government sees the inclusion of forest sinks in the CDM as a trade opportunity, and a chance to obtain funds and technologies from the developed world, and has based its negotiation strategy, within the UNFCCC, on the ratification of this point. It stated this in Kyoto and in The Hague in 2000.

An additional reason for Bolivia’s interest in actively participating in the UNFCCC is its vulnerability, due to Bolivia’s large food dependence on rain fed agriculture, the melting of the mountain glaciers and its susceptibility to drought or floods. Because of these factors the country has been classified as vulnerable to Climate Change.

1.2 Objectives of the report

This report forms part of a wider study on effective negotiations by developing countries in trade organisations particularly GATT and the WTO, and in Multilateral Environmental Agreements, particularly the UNFCCC which includes cases studies of three developing countries: Bolivia, Ghana and Zimbabwe. The key questions/issues that this study aims to address are:

• What forms of participation by Bolivia in the UNFCCC have been successful and efficient in resource use and what types of assistance can improve its capacity?
• What negotiating strategies have been used by Bolivia to introduce tropical forestry carbon offsets in CDM and how have political and technical problems been overcome?
• What are the difficulties of making the policy and legal changes demanded under the UNFCCC?
• What are the most acute constraints to more effective participation of Bolivia’s delegates? and thus, which measures should be recommended for more effective participation?
• Which policy changes are needed to improve implementation and how can donors help?
• What are the likely impacts of the outcomes of the negotiations for poverty alleviation?
• How to establish and maintain a research and a negotiating capacity in Bolivia.

This report first describes the country’s socio-economic setting and the institutional framework in which the UNFCCC actions take place. Then it presents the situation of the country in terms of GHG emissions and its vulnerability to Climate Change. The substantive part begins by analyzing the way by which Bolivia has participated in the different events related to UNFCCC, the implementation of the commitments and the current institutional arrangements that Bolivia has created to deal with this Global issue.

The analysis focuses on the participation of Bolivia in the 6th Conference of Parties (the one held in The Hague) because this was the one where most of the negotiation and preparation skills were displayed. This part of the analysis covers the formulation of the Bolivian position, the consultation process for defining the position, the characteristics of the delegation, the negotiation techniques used, the work within the coalitions of like-minded countries, and the post-The Hague reactions. The study assesses the net gains/ losses for the country and the potential implications for poverty alleviation of working within this agreement. The report ends with a discussion of constraints, lessons for better practice, and policy implications, and points to some research issues that require further attention