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The Kariba REDD project in Zimbabwe: From carbon credits to EARTH tokens

The Kariba REDD+ Project covers an area of 784,987 hectares in four districts of northwestern Zimbabwe. The project started in July 2011, and aims to generate almost 52 million carbon credits from reduced deforestation over its 30-year project life. The project is certified under the VCS and Climate Community and Biodiversity Standard systems.

The Kariba REDD+ project features as a chapter in the book “Carbon conflicts and forest landscapes in Africa”, edited by Melissa Leach and Ian Scoones.

Written by Vupenya Dzingirai, an Associate Professor at the University of Zimbabwe, and Lindiwe Mangwanya, a doctoral candidate at the University of Zimbabwe, the chapter gives a fascinating insight to the project, one that is not available in the reports produced by the project proponents.

For example, in a September 2016 Monitoring and Implementation Report, Abel Alan Marcarini and Florian Reimer of consulting firm South Pole write that,

During a survey carried out in April, May and June 2016, most interview partners reported to be satisfied or very satisfied with the project. Only 3.5% reported to be not satisfied. For employees and direct beneficiaries, the project has a positive impact on livelihoods, food security, children’s education and healthcare. No participant reported to be restricted in his use of the forest for basic livelihoods or cultural needs.

Dzingirai and Mangwanya describe a different situation. They write that,

[I]n practice, the project undermines livelihoods, forbidding access to foraging, agriculture and hunting across large areas that were traditionally used. All this makes the KCRP [Kariba Carbon REDD Project] strongly opposed by migrants – mainly Karanga – who need land for petty commodity production, and women and hunters who forage and hunt in the forests for household food security. The KCRP is also opposed by squatters wanting land and who wish to avoid intervention that would entangle them with the state and the private sector.

“Outcry” over Kariba REDD project

In 2014, Jeffrey Gogo, a journalist with the Zimbabwean newspaper, The Herald, reported on a Transparency International workshop in Harare about REDD governance, transparency and accountability. During the workshop, Elmon Mudenda, a councillor in Binga Ward 4, said there was an “outcry” in Binga District about the Kariba project and its developers, Carbon Green Africa (CGA):

“We have not seen anything really tangible, financially or otherwise (from CGA). We do not understand what REDD+ is all about. My officers told me ‘Carbon Green Africa is there to take pictures.’”

Mudenda said he had asked Carbon Green Africa to supply a fence to protect a vegetable garden from domestic and wild animals, but the company had not done so.

Mudenda said that it was not clear how many carbon credits had been sold, or how much money Binga district should receive:

“These guys are not clear on the amount that is due to Binga as a district. We do not know how many credits they have sold. Those issues need to be made clear to the rural council and to the community.”

In their research into the Kariba REDD project, Dzingirai and Mangwanya looked at Hurungwe district and found similar problems.

They write that although the four district councils are partners in the REDD project, “the local authority is more like a sleeping partner, with very little knowledge of what the project is all about and with no voice in its direction”.

An officer at Hurungwe Rural District told Dzingirai and Mangwanya that,

“I am telling you we are in the dark about what these guys are doing. These people are not straightforward at all… these guys keep us in the dark.”

Another officer said,

“These guys have the money, and what do we have? Nothing . . . and these guys have the lawyers. They even have experts who know what carbon credit is. Some of us do not know what it is, nor do we know the details.”

In 2016, Herald journalist Jeffrey Gogo reported that Binga councillor Mudenda was more positive about the project. He said that the change in livelihoods has been noticeable as a result of the REDD project, even though he complained once again that Carbon Green Africa had failed to supply the fence for the vegetable garden.

Unsold carbon credits. Enter EARTH tokens

Gogo reported that the Kariba REDD project was facing another problem: finding buyers for its carbon credits. The project had managed to raise US$2 million in the previous two years, by selling 1.5 million carbon credits. But Charles Ndondo, chief executive of Carbon Green Africa, told The Herald that the company was holding 3.5 million unsold credits due to poor prices.

In a 2016 article, Ndondo describes his company, Carbon Green Africa, as “a locally-based organization focused on conservation and reduction of climate change”.

Carbon Green Africa is actually a wholly-owned subsidiary of a company called Carbon Green Investments Guernsey Limited, which was registered in the tax haven of Guernsey in December 2010. In Kariba REDD project documents, Carbon Green Investments Guernsey is listed as the project proponent.

In November 2017, Carbon Green Investments made an announcement together with a company called impactChoice:

Natural assets provided by Kariba REDD+ will be the first supply side project to make natural assets available for sale on the EARTH token Natural Asset Exchange (NAE). The Kariba REDD+ project has a long-standing relationship with impactChoice and will be using EARTH token for the settlement of transactions on the platform.

Also in November 2017, impactChoice launched its EARTH Token cryptocurrency initial coin offering (ICO).

Environmental anthropologist Sian Sullivan of Bath Spa University explains what all this means on the Entitle Blog, under the headline, “Nature 3.0 – Will blockchain technology and cryptocurrencies save the planet?”. I’m guessing that’s a rhetorical question.

EARTH Tokens can be bought using two other cryptocurrencies: BitCoin or Ether. According to impactChoice’s website, 85,594,677 EARTH Tokens have been allocated. That means sold. On 18 January 2018, Sullivan calculated that the sold EARTH Tokens (then standing at 85,459,628) were worth about US$19 million.

That was three weeks ago. Back then one ether was worth about US$1,050. Today, an ether is worth about US$840.

ImpactChoice is registered in several tax havens

ImpactChoice was registered in the tax haven of Mauritius in April 2009.

But when we read the company’s EARTH Token Sales and Conditions document, we find that impactChoice was registered in the Isle of Man. And sure enough, a company called impactChoice was registered in the tax haven of the Isle of Man in April 2015.

There are several other related companies with impactChoice in their name:

  • ImpactChoice Energy was registered in South Africa in November 2007.
  • Another company, called impactChoice USA Inc, was registered in the tax haven of Delaware in December 2008.
  • Yet another company, called impactChoice Limited, was registered in the UK in June 2009.
  • And impactChoice Trading (Mauritius) Ltd, was registered in the tax haven of Mauritius in June 2008.

“People just like you can invest” in EARTH Tokens

A video explaining EARTH Tokens states that, “People just like you can invest in a sustainable future and share in the success of this enormous opportunity.” But, as Sullivan points out, people living in rural areas in the Global South, such as the Kariba REDD project area, are unlikely to be able to buy EARTH Tokens, because of the digital divide.

But even if a computer geek living in the Kariba project area fancied risking his money on EARTH Tokens, there’s another problem. The EARTH Tokens Sales and Conditions specifically exclude investors from High-Risk jurisdiction nations, as defined by the US Department of the Treasury’s Financial Action Task Force and Office of Foreign Assets Control.

Zimbabwe is one of the countries on that list.

Yet the EARTH Tokens video states that, “Instead of chopping down a forest to sell the wood, the community gets paid Earth Tokens to preserve and grow it.”

The video does not explain what the community might do with their EARTH Tokens.

Not for sale in the USA

ImpactChoice’s EARTH Tokens are also not for sale to citizens or residents of the USA. That’s because, as the EARTH tokens White Paper explains, the tokens have not been (and will not be) registered under the United States Securities Act of 1933.

Here’s what the US Securities and Exchange Commission website has to say about the Securities Act of 1933:

Often referred to as the “truth in securities” law, the Securities Act of 1933 has two basic objectives:

  • To require that investors receive financial and other significant information concerning securities being offered for public sale; and
  • To prohibit deceit, misrepresentations, and other fraud in the sale of securities.

The SEC accomplishes these goals primarily by requiring that companies disclose important financial information through the registration of securities.

It’s also worth taking a careful look at the EARTH Token Sales and Conditions. Here are just a few of the highlights:

“EARTH tokens may become useless and/or value- less due to technical, commercial, regulatory or any other reasons.”

“The transfer of funds to impactChoice and the creation of EARTH tokens by impactChoice carry significant financial, regulatory and/or reputational risks (including the complete loss of value of the created EARTH tokens, if any, and attributed features of the NAE [Natural Asset Exchange]).”

“By transferring funds to impactChoice and receiving EARTH tokens, the User represents and warrants that: . . .

“the User is not submitting funds to impactChoice in order to obtain EARTH tokens as a speculative investment; . . .

“the User waives the right to participate in a class action lawsuit or a class wide arbitration against any entity or individual involved with the creation of EARTH tokens; . . .

“the User understands that the transfer of funds to impactChoice, the creation of EARTH tokens and the development of the NAE carries significant financial, regulatory and reputational risks as further set forth herein; . . .

“the User understands that the User has no right against any other party to request any refund of the funds submitted to impactChoice for the creation of EARTH tokens under any circumstance; . . .

“the User understands that no market liquidity may be guaranteed and that the value of EARTH tokens over time may experience extreme volatility or depreciate in full; . . .”

“The User understands and accepts that for the development and execution of the NAE, impactChoice receives a flat fee of 50% of the total EARTH tokens created, and the full amount of funds transferred to impactChoice during the token sale.”

 

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