I find it amazing that investors might finance any type of REDD project in Panama at the moment. Panama is at the forefront of REDD and recently received $5MM from the UN-REDD program to further its national REDD program. However, we feel this is still a good five years away from being operational. As I mentioned in a previous post, the legal architecture of who actually owns the carbon in Panama does not exist. Currently the Panamanian government owns the trees, so the thinking with the Torrijos government was that it also owns the carbon in the trees. If I remember correctly, the government owns all minerals, water sources, etc. until they concession it, so this should be the same with carbon.

So when I read about people promoting REDD projects in Panama, it makes me shake my head. Yes, it is possible that you could make it rich. But to me at least, it is like investing in an oil discovery. It might deliver you some great returns for a while, but the landowner/government will soon realize that you are making a ridiculous profit and make a grab for your resource. Panama does a good job in my opinion of promoting foreign direct investment and protecting those investments. However, when a foreigner makes a huge profit because a private/national resource hadn't been adequately regulated by national legislation, he deserves to lose his shirt. We recommend waiting until Panama decides who owns the forest carbon and the rules of the game before making any type of investment. Rainforest communities forfeiting their opportunity to work the forest should receive the majority of the benefits of any REDD project. To me, this means 70-80% with 10-20% going to the government and a small slice to any private project promoter.