Reconciling the carbon market and the human right to water: the role of suppressed demand under clean development mechanism and the gold standard.

• Author: Williams, Mark

1. INTRODUCTION II. THE COMPLIANCE AND VOLUNTARY CARBON CREDIT SYSTEMS III. UNDERSTANDING THE THEORY BEHIND SUPPRESSED DEMAND A. Defining Suppressed Demand B. Suppressed Demand Carbon Accounting Approach for Household Water Treatment and Storage Projects 1. Suppressed Demand under the CDM 2. Suppressed Demand under the Gold Standard IV. SUPPRESSED DEMAND & HUMAN RIGHTS A. Equity and Human Rights Considerations 1. Right to enjoy the benefits of scientific progress 2. Right to an adequate standard of living 3. Right to health 4. Right to water B. Normative Content of Human Right to Water 1. Availability 2. Quality/safety 3. Acceptability 4. Physical Accessibility 5. Affordability C. Cross-Cutting Criteria of Human Right to Water 1. Non-Discrimination 2. Participation 3. Accountability 4. Impact 5. Sustainability i. Environmental indicators ii. Social indicators iii. Technological indicators V. CONCLUSION I. INTRODUCTION

   Reconciling the unequal impacts of climate change, while simultaneously enabling the least developing countries (LDCs) to develop, is one of the greatest challenges facing the global community. Countries that have contributed the least to greenhouse gas (GHG) emissions are those that are most vulnerable to the impacts of a changing climate. (1) Yet, because these countries have historically had low emissions, they have not been able to take advantage of funding available through the carbon markets. (2) A new approach has been pioneered in the carbon market to foster development toward cleaner, low-emissions technology in LDCs and to improve the standard of living for millions of people who lack access to basic services, such as clean energy and water. The approach, known as suppressed demand, makes certain projects in LDCs more attractive to the carbon market by imputing a higher level of baseline emissions on the theory that greenhouse gas emissions would be higher if demand for a minimum level of services were not 'suppressed' by poverty. (3)

   The suppressed demand approach was first used to obtain carbon finance for clean energy projects like cookstoves and solar panels but it has recently been promoted as a tool for bringing household water treatment and safe storage (HWTS) projects to the developing countries with the highest needs. (4) These projects seek to promote alternative methods of purifying drinking water other than boiling, which contributes to greenhouse gas emissions through burning wood or other biomass. (5) Through suppressed demand, a higher emissions baseline is assumed in certain cases on the theory that even if the recipients are not currently boiling their water, they would if they had access to the natural or financial means to do so. (6) This article assesses the extent to which the use of the suppressed demand to facilitate carbon financing of clean water projects in poor countries is consistent with the human right to safe drinking water and the goal of environmental sustainability.

   In 2010, the United Nations (U.N.) General Assembly (7) and the U.N. Human Rights Council (8) recognized a human right to safe drinking water and sanitation, highlighting the urgency of the global water and sanitation crisis. (9) The human right to water requires that everyone have access to adequate amounts of safe, accessible, affordable, acceptable water. (10) In recognizing the right, the General Assembly resolution expressed concern that "approximately 884 million people lack access to safe drinking water" and also expressed alarm "that approximately 1.5 million children under five years of age die and 443 million school days are lost each year as a result of water- and sanitation-related diseases." (11) It also called upon "[s]tates and international organizations to provide financial resources, capacity-building and technology transfer, through international assistance and cooperation, in particular to developing countries, in order to scale up efforts to provide safe, clean, accessible, and affordable drinking water and sanitation for all." (12)

   The most recent report on the Millennium Development Goals (MDG) indicates that the world has already met its 2015 target for halving the number of people without access to improved water. (13) An improved water source is defined by the WHO/UNICEF Joint Monitoring Program for Water Supply and Sanitation as one that "by nature of its construction or through active intervention, is protected from outside contamination, in particular from contamination with fecal matter." (14) Although the world may have met its MDG water targets, access to "improved" water sources--the standard used to measure compliance with MDG targets--does not necessarily mean that the water is clean and safe to drink. (15) Instead, due to the methodological challenges of testing water quality, "improved" has been used as a proxy indicator. (16) "Improved" water sources include piped water, public tap or standpipe, tubewell or borehole, protected spring, protected dug well, and rainwater collection. (17) However, because of the way the statistics are reported, an "improved source" could ironically include access to broken tap stands without flowing water. (18) Thus, while it is estimated that approximately 780 million lack access to "improved" water sources, in reality, significantly more lack access to safe water. (19)

   The global imperative to improve access to safe drinking water is without question. In the forty-eight countries designated LDCs by the UN, the majority of people lack access to proper water facilities. (20) Current MDG statistics suggest that in LDCs, 10% of the people rely on surface water, a high-risk "unimproved" water source for drinking and household user. (21) However, building networks of piped infrastructure to provide safe water is often not feasible in many parts of the world. HWTS offers an important interim solution, but one of the biggest challenges in alleviating this problem is how to finance HWTS projects in LDCs. (22)

   The challenge of making clean water available in poor countries is exacerbated by global warming, which places a disproportionate burden on LDCs. (23) Although LDCs contribute little to global warming's, causes, (24) LDCs are less able to finance adaption policies essential in helping to remediate anticipated impacts of global warming. (25) For example, climate change-related drought can reduce water resource availability, while flooding can lead to contamination of water supplies by fecal matter or other pollutants. (26)

   This article explores the relationship between the human right to water and "suppressed demand," a carbon credit approach being used to fund clean water projects in developing countries. (27) The primary conclusion is that although suppressed demand-funded water projects are consistent with the human right to water, they do not guarantee that all essential criteria of the human right to water are fulfilled; at best, they address concerns about water quality and affordability while not focusing on questions of availability, accessibility, and acceptability.

   Part II provides a brief overview of the carbon market, which allows developed countries to meet global greenhouse emission caps through various carbon emission reduction projects. (28) It focuses on the Clean Development Mechanism (CDM), one of the flexibility mechanisms created by the Kyoto Protocol, (29) and the Gold Standard, an independent carbon credit certification scheme that operates in the Kyoto Protocors carbon market as well as in the voluntary carbon market that was created by a coalition of NGOs led by the World Wildlife Fund. (30) It examines how the carbon markets have been criticized for not promoting more sustainable development in LDCs that would enable them to "leap-frog" to cleaner technology.

   The Gold Standard, and more recently the CDM, have approved an approach to carbon accounting known as suppressed demand to address the inequitable distribution of the carbon market benefits. (31) As explained in Part III, the suppressed demand approach to carbon accounting is premised on the assumption that carbon emissions from LDCs would be substantially higher if people within those countries had better access to carbon fuel sources, i.e., if demand for such fuel was not suppressed. Suppressed demand was first employed for clean energy projects, (32) and more recently, the approach has been applied to household water treatment and storage (HWTS) projects. (33) For HWTS projects, the carbon credits are calculated based on the amount of wood or other biomass that would have to be burned to purify a minimum level of drinking water. (34) In other words, the methodology increases the baseline for calculating carbon emissions by imputing to individuals a minimum entitlement to a basic level of energy-related goods and services. (35) Part III goes on to describe the Gold Standard and CDM guidelines for approving HWTS projects. The Gold Standard, which pioneered the approach, has registered two HWTS projects to date. (36) The article focuses on the first such project, the Water for Carbon program by Vestergaard Frandsen, (37) with the goal of highlighting some of the challenges of implementing the concept of suppressed demand.

   Part IV discusses some of the equity-based rationales for suppressed demand and examines how the concept could be considered normatively consistent with human rights. The rights to enjoy the benefits of scientific progress, to an adequate standard of living, and to health are briefly considered before turning to a more thorough analysis under the human right to water. The "Good Practices" criteria developed by the U.N. Special Rapporteur for the Human Right to Safe Drinking Water and Sanitation is the framework of analysis. (38) The thrust of this examination is that while carbon-financed HWTS projects could contribute to the realization of the human right to water, they have significant drawbacks and limitations...