Forest protection could earn tens of millions for Ghana
November 6, 2006

Ghana could earn tens of millions of dollars for reducing its deforestation rate under a carbon-trading initiative proposed by a coalition of developing countries and under discussion this week at U.N. climate talks in Nairobi, Kenya.

Deforestation -- most of which occurs in the tropics -- is responsible for about one-fifth of annual emissions of greenhouse gases. By reducing deforestation that would otherwise occur in developing countries, industrialized countries could effectively "offset" emissions limits set under international agreements like the Kyoto Protocol. Money would flow to Ghana via an "avoided deforestation" fund financed by contributions from wealthy countries. In theory the strategy could help fight climate change at a low cost while, at the same time improving living standards for some of the world's poorest people, safeguarding biodiversity, and preserving other ecosystem services. analysis of U.N. deforestation data suggests that an avoided deforestation initiative could be worth $30-346 million per year to Ghana, depending on how much deforestation it could "avoid" and the market price for carbon offsets.

Between 2000 and 2005 Ghana lost an average of 115,400 hectares of forest per year according to figures from the Food and Agriculture Organization of the United Nations (FAO). How much carbon does this represent? At the low end, FAO estimates that each hectare of Ghana's forest stores an average of 66 metric tons of carbon in above-ground biomass that would be otherwise released by deforestation and subsequent land conversion for agriculture or pasture. Other research suggests that net carbon released from deforestation of secondary and primary tropical forest, allowing for the carbon fixed by subsequent land use, is of the order of 100-200 metric tons per hectare. So deforestation in Ghana releases on the order of 63-150 metric tons of carbon for each hectare of cleared or converted for agriculture. As such, Ghana's annual deforestation may produce 7.6-17.3 million tons of carbon emissions per year.

Assuming a market rate of $4 per metric ton of carbon dioxide, Ghana's avoided deforestation could be worth at minimum $30.3-69.2 million per year, using a simplified model for calculating carbon values. At the higher end, using studies that show "carbon damage" is closer to $20 per ton, avoided deforestation could be valued from $151-346 million per year. Of course determining what constitutes "avoided deforestation" is a matter of definitions but nonetheless, for a poor and indebted country funds from avoided deforestation could make an important economic contribution.

What is the opportunity cost to Ghana of reducing its deforestation rate? Well, this is a bit more difficult to calculate but a recent World Bank study said that land worth $200-500 per hectare as pasture could be worth $1,500-$10,000 if left as intact forest and used to offset carbon emissions from industrialized countries. Using this figure, avoided deforestation could be a net economic benefit to Ghana in addition to the ecological payoffs afforded by leaving forest intact.

Background: Ghana has one of the stronger economies of sub-Sahara Africa due to its array of natural resources. However, the exploitation of these resources, coupled with the overall lack of environmental awareness, has devastated the country's forests. In less than 50 years, Ghana's primary rainforest has been reduced by 90 percent, while in the past 15 years (1990-2005), the country lost 1.9 million hectares or 26 percent of its forest cover.

Subsistence agriculture and cutting for fuelwood is common throughout Ghana and worsening due to a population growth rate approaching 3 percent. Logging and the pursuit of gold have also proved costly to the country's natural areas.

Forest loss in Ghana has exacerbated droughts and bushfires. In 1997 and 1998, widespread bushfires led the government to step up its anti-bushfire campaign, but the reform had little effect. Desert is encroaching on some deforested lands and soil erosion is rampant.

This paper is based on an earlier article: Avoided deforestation could help fight third world poverty under global warming pact

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CITATION: (November 06, 2006).

Forest protection could earn tens of millions for Ghana.