This article is taken from World Energy (WE) number 46 – Water stories

Based on growth projections and current or announced policies, emissions from the energy industry will continue to increase in the coming decades. In fact, with contributions averaging 475g CO2 per kilowatt hour (kWh), global electricity grid emissions would need to decrease to 50 g/kWh to meet the target of limiting global warming to 1.5 C set by the Paris Agreement. This does not bode well for achieving the Sustainable Development Goals (SDGs), in particular SDG 7, the goal concerned with affordable and clean energy for all. According to the UN SDGs Platform, 840 million people lack access to electricity and 3 billion people still use highly inefficient and polluting cooking systems. The energy sector thus finds itself in a difficult situation, as it must change drastically if it is to provide energy for all while at the same time it reduces emissions. 

Forests are key to rectifying this situation. Traditionally viewed as sources of biomass such as timber and wood fuel, forests are increasingly being recognized for their importance to the energy sector, in particular for hydropower. They provide key provisioning services such as freshwater and regulation services such as water purification, erosion prevention and controlled water flow that can reduce costs and increase the lifespan of existing plants. Carbon sequestration and storage potential also make them allies for achieving targets set by the Paris Agreement. Proper management of forests for wood fuel production and their services for the hydropower industry can benefit communities, biodiversity and climate change and contribute to achieving SDGs 6 clean water and sanitation, 13 climate action and 15 improved life on land. 

The challenge is to incentivize the energy sector, governments and local communities to improve their practices. Market schemes that support sustainable forest and water management such as Payment for Ecosystem Services (PES) are one way this could be achieved. However, this needs to be a collective effort among all sectors of society. 

The ecosystem services provided by forests range from the provision of freshwater and biodiversity habitats to carbon sequestration and erosion control. These ecosystem services are vital to human existence and are affected by changes in land use, climate, human populations and demand. Today, forest ecosystems, which have been drawing increasing global attention due to their loss from land conversion and forest fires, are some of the largest ecosystem services providers. Forests sequester around two billion tons of carbon dioxide per year and also provide water, with an estimated 75 percent of global accessible freshwater coming from forested watersheds that deliver water to over 90 percent of the world’s urban centers.  

In the energy sector, woodfuel and hydropower are the sub-sectors most relevant to forests. As of 2017, 18.5 percent of the total final energy consumption globally was estimated to be renewable energy, with 7.5 percent coming from traditional biomass such as woodfuel, 3.6 percent from hydropower and the rest from other renewable sources. According to the 2019 World Energy Outlook report, the use of renewable energy not including traditional biomass use is set to increase mainly due to increased use of bioenergy, which includes pellets, biogas, biomethane and biofuels and is an important sector for biomass from forestry industries.  

While this projection is promising, however, the same report highlights that actions to reduce emissions also need to increase. The energy sector, in general, should prioritize better management of existing systems, better planning of new infrastructure, improved efficiency and increased use of renewable energy sources. These solutions translate into major interventions, changes in consumer behavior and investments. This means that, in order to succeed, all sectors of society must be involved. Moreover, change must also be catalyzed through incentives that reward best practices in the energy sector. These could come from governments, financing institutions and international organizations.

Under this scenario, how can forests help? Forests are increasingly recognized as cost-effective green infrastructure from which many benefits can be derived, particularly in a changing environment. By investing in protecting the ecosystem services provided by forests, the energy sector is enabling carbon sequestration and quality water supply, thereby ensuring the energy, water and food security of communities. Properly managed forest ecosystems could provide habitats for species, better water quality and quantity for fish species and increased water for irrigation and human consumption. 

Ideally, existing natural forests are managed and conserved properly for ecosystem services delivery. This is because reforested, afforested or restored watersheds can function differently from “pristine” ecosystems, and there can be trade-offs between managing for different ecosystem services. Natural forests are diverse, often with mixed species and different age classes, which means they are more resilient and consistent in their provision of ecosystem services. Planted forests—especially those with the fast-growing exotic species preferred for carbon sequestration—use high quantities of water. Therefore, management regimes involving species selection, density and thinning/harvesting should be taken into consideration to optimize ecosystem service benefits and reduce trade-offs. 

A good example of how active management of forests can optimize ecosystem services and reduce trade-offs is Sweden’s use of bioenergy. Three-eighths of Swedish energy comes from bioenergy mostly provided by biomass from forests managed and harvested for the lumber, pulp and paper industries.  To achieve this, Sweden has been implementing active forest management that involves replanting harvested areas, conserving about one quarter of the forest during harvesting and sustainably using harvested wood. This type of management makes forests more resilient to fires and infestations and has resulted in increased land productivity, forest biomass and carbon storage capacity. The government and the public were key in financing and supporting the bioenergy sector, increasing its potential for growth and resulting in an opportunity for the energy sector. Globally, the lessons from Sweden could be applied in other countries with boreal forests in order to increase the use of wood as a renewable and clean source of energy.

In the case of hydropower, maintaining the delivery of ecosystem services from forests is perhaps a more urgent matter. Hydropower is widely used, and some countries in central and eastern Africa and South America depend on hydropower for almost 100 percent of their electricity. Considering that hydropower relies on water flows for electricity generation and that forests and trees can influence rainfall, contribute to reducing soil erosion and sediment runoff and regulate water flow, it is safe to say that hydropower generation is highly dependent on the link between forests and water. Sustainable forest management to maintain the forest-water-energy link is incredibly important to mitigate climate change impacts, which will increase hydrological risks. For example, changing rain patterns may lead to increased floods and droughts and affect the reliability of the system to provide electricity. This was the case in Malawi in 2017 where the levels of the Shire River, critically decreased due to drought, affected electricity generation and resulted in power outages for weeks. Deforestation in the river catchment area has been recognized as a major driver in the reduction of water quantity and quality.

Sustainable forest management in watersheds could also lead to major costs savings for hydropower. Reduced sedimentation in source water prevents sediment buildup in reservoirs, leading to decreased maintenance costs such as dredging and repairing. In India, a study showed that key soil and water conservation measures in forested watersheds have the potential to reduce up to 44 percent of sediment transported from upstream areas into reservoirs. It was also estimated that high sediment inflows account for up to 5 percent of capital costs towards operations and maintenance. 

A study in the Ecuadorian Amazon showed that the Coca-Codo Sinclair dam, which supplied 30 percent of the total national energy consumption in 2017, depends on the protected native forest areas within the watershed. Without the 209,818 hectares (ha) of protected areas, maintenance and operations costs of the dam would increase by up to USD 2.14 million per year. Furthermore, implementing conservation, restoration and silvopastoral systems in the watershed through the National Incentives Plan (a PES scheme) could result in net profits for hydropower reaching USD 16.7 million while land degradation could result in losses of up to USD 6.3 million. This evidence shows that there is a case for investing in sustainable forest management.

ITAIPU Binacional is a hydroelectric power company shared by both Brazil and Paraguay. It is located in the Paraná River and has a management method focused on watersheds. According to ITAIPU’s 2018 Sustainability Report, their investments in social and environmental projects to ensure the quantity and quality of water in the reservoir have resulted in the increased lifespan of the reservoir to more than 180 years. 

These efforts include working with communities in areas such as forest restoration projects in adjacent watersheds that feed the reservoir, the creation of biological corridors and the conservation of agricultural soils. The results in this report also show that the protection of 101,000 ha of forests for water contributes to providing biodiversity habitats and maintaining remnants of the Atlantic Forest in Paraguay, Brazil and Argentina. Both sides of the reservoir have been recognized as UNESCO biosphere reserves, and the company has been to UNFCCC COP24 and COP25 to share its experiences, best practices and lessons learned. 

As we move forward, it is imperative that energy projects be designed with future social and environmental conditions in mind. ITAIPU Binacional is an example of the energy sector doing so. These are long-term investments that, if designed for sustainable development, could contribute to ensuring food, energy and water security for people. Recent studies show that basin-scale planning for hydropower can minimize the impacts of dams, especially in mega diverse river basins such as the Amazon, Congo and Mekong basins, which are experiencing a boom in hydropower construction. Incentivizing sustainable forest management in these planning processes is crucial, as is the need for market schemes that evolve with the sector and include climate change considerations. 

Currently, new schemes are being developed with the basin scale concept in mind. The Cloud Forest Blue Energy Mechanism, which is being developed by Conservation International and The Nature Conservancy, is an example. In Latin America, 50 percent of cloud forests have been lost due to land degradation from mining, cattle and agriculture. These tropical and sub-tropical forests are particularly useful for water ecosystem services. Their mechanism for capturing water from fog and their low evapotranspiration result in additional water reaching the watershed. They generate up to 50 percent of the available surface water that flows into reservoirs in Latin America, regulating inflow and flow regularity of hydropower plants.

PES schemes that target cloud forests and hydropower have been implemented with mixed results in countries such as Costa Rica and Mexico. The Cloud Forest Blue Energy Mechanism, as explained by the Global Innovation Lab for Climate Finance, uses a “pay-for-success” approach where a hydropower plant pays for measured reduced sedimentation, increased water flow and improved water regulation provided by cloud forests within the plant’s catchment area. The aim is to reverse the trend in deforestation while contributing to climate change mitigation and adaptation. The innovation comes from the “pay-for-success” approach, which is new in developing countries, new in performance metrics used and its comprehensive implementation structure.  

For these schemes to work, monitoring of forest-water interactions at basin and local scales needs to become common practice in the hydropower industry. International organizations currently involved in forest and water monitoring, government agencies, academia and environmental civil society organizations will have an important role to play in this regard. 

Governments are stepping up and recognizing the importance of forest and water management for sustainable development. Evidence of this is the 25 percent of forests globally that are managed with soil and water objectives as a priority and the 49 percent of 168 (Intended) Nationally Determined Contributions ((I)NDCs) to the Paris Agreement that refer to forest and water management, integrated (water) resource management and the water ecosystem services provided by forests. The energy sector and international organizations are also stepping up. At the UNFCCC COP24 in December 2018, the Sustainable Water and Energy Solutions partnership was launched. Led by ITAIPU Binacional and the United Nations Department of Economic and Social Affairs, it aims to share best practices and enhance capacity and cooperation across sectors to address SDGs 6 and 7 and their interlinkages with other SDGs. 

The energy sector has an important task ahead. Best practices that target landscape management approaches that include sustainable forest management for the provision of water related services should be widely adopted in current and future projects. Participating in market mechanisms such as PES schemes that focus on these landscape management approaches will also be important for individual plants and could have significant returns on investment. Furthermore, engagement from the energy sector with governments, financial institutions, international organizations and other productive sectors such as the forestry sector and the general public will be of paramount importance to champion best practices to close the energy and emissions gap. In summary, the energy sector is at a crossroads where it could continue with its business as usual practices or it could grow in a direction that can create economic opportunities for the sector while contributing to sustainable development for all.

Sara Casallas Ramirez is a Forests and Water Consultant at the Food and Agriculture Organization of the United Nations (FAO). She specializes in water resources management policy and implementation.  

Elaine Springgay is the Forestry Officer for Forests and Water at the Food and Agriculture Organization of the United Nations (FAO) and has been instrumental in the development of FAO’s Forest and Water Program.