HOW BLOCKCHAIN CAN HELP PROTECT OUR VEGETATION
Clean technologies are clearly a huge part of any solution.
Whilst great progress is being made, it is important we are mindful that even with heavy government support and billion-dollar investor backing, it will be some time before we see innovations such as CO2-to-fuel and artificial photosynthesis rolled out to the mass market.
And time is not something we have.
We therefore need to consider alternative solutions, and in fact the world’s greatest clean tech solution stands before our very eyes: trees.
How about if we not only protected but also optimised trees – using blockchain? It presents a very interesting opportunity, and here’s why:
1. It creates a single market for forest data apt for tracking progress
As they say, what gets measured gets done. The first step is would be to digitise the EU’s 182 million hectares of forest in its entirety. We need the data on everything from forest inventories (animals and plants) to carbon capture, and to secure this data to a private, permissioned blockchain.
An EU forest database would substantially improve transparency, connectivity and accessibility for all member states. Countries would be able to measure the results of various experiments, innovations and policies.
They could learn and share knowledge across borders, without needing to request and wait for individual country reports. This would save the EU and individual countries time and money.
Through the use of blockchain, this data would be time-stamped and tamper-proof, ensuring EU privacy, data protection and competition rules are fully respected. And because blockchain is decentralised, this data would not sit on a central database in Brussels, “owned” by the EU. It would reside with the individual forest owners who would give permission for the EU and others to see their data.
2. It improves the traceability of wood in supply chains
Illegal logging and related trade are a major problem. Paperwork is being faked and people are being bribed; the authorities cannot have their eyes everywhere. Such practices cost governments billions in terms of lost revenue, cause environmental damage and delay sustainable development.
Europeans also increasingly want the guarantee that their shopping habits are not funding ecosystem destruction. They want to know where the goods they buy come from.
With its enhanced data security and traceability, blockchain can help tackle trust in wood and other natural-resource supply chains to guarantee specific attributes and other relevant identity information. Not to mention the fact it can facilitate real-time track-and-trace timber audits.
3. It incentivises forest owners to reverse deforestation
The European Green Deal and the European Biodiversity Strategy indicate that it is crucial for the EU to halt biodiversity loss by protecting and restoring forests. And yet to achieve this, there needs to be a financial incentive to encourage the preservation and reforestation of land. This is where blockchain becomes a really exciting catalyst:
Once all the information about a forest has been digitised, the data can be optimised to help forest owners unlock new capital. Currently in early development, there are specialist fintechs that are using blockchain to build a new financial mechanism for real-world assets – forests included – known as “digital twins”. These twins can be traded on the financial markets, similarly to a security or a share.
Through utilising blockchain to allow investors – including the general public – to invest in a forest, forest owners who may be considering deforesting land for commercial use to raise money, could potentially be persuaded to change their mind.
4. Increase investor access and stimulate cross-border investment
Digitised forests that have been optimised for direct investment would allow the EU’s 447 million citizens to invest in forests themselves, choosing which individual forest they want to support. Not to mention the many global investors seeking opportunities to support ESG initiatives too.
As well as reducing the barriers to entry by creating a new and affordable way to invest in forests, blockchain would bring in a new level of transparency and trust around forest data. It would, in turn, enable investors – large and small – to carry out sophisticated cross-border due diligence on a forest, and to do so in real-time. They would have all the records they needed accessible in one trusted portal via their desktop or mobile device.
This is game-changing for cross-border investment, and especially for smaller EU countries who might be struggling to access urgently needed international investment.
AUTHOR
Okereke Owo
