Indonesia's peat swamps worth $39B/year
July 11, 2007

Indonesia's peat swamps are worth $39 billion in carbon credits per year, according to rough calculations by Bloomberg.

Drainage and destruction of carbon-rich peat swamps releases up to 2 billion tons of carbon per year in Indonesia, according to estimates by Wetlands International, a Dutch NGO. The emissions make Indonesia the third largest producer of greenhouse gases despite having the world's twenty second largest economy.

Analysts say reducing these emissions could help slow global warming while paying significant dividends for Indonesia. At the going rate of 14.59 euros per ton of carbon offset, eliminating these emissions would be worth 29 billion euros ($39 billion), or more than the $30.1 billion value of the global emissions-credit trade in 2006.

While the tally is significant, there is presently no way for Indonesia to capitalize on this compensation. Environmentalists say that establishing such a mechanism could help reduce deforestation, cut greenhouse gas emissions, and improve rural livelihoods in some of world's poorest regions.

Tropical deforestation rates from 2000-2005, ranked in descending order by the highest amount of average annual forest loss for 25 countries based on data from the U.N. Food and Agriculture Organization (FAO). Image by Rhett A. Butler, click to enlarge

"This value highlights the potential of this market, however no international incentive system exists to encourage countries to sustain and restore these threatened carbon stocks. Cuts in carbon emissions made by avoiding peat soil degradation are not covered by the UN-controlled Clean Development Mechanism (CDM), for example. In fact, no official carbon trade agreements include the emissions that are avoided when the carbon locked in soils is kept intact," said Wetlands International in a statement calling for "a global finance mechanism to trigger large-scale restoration and management of wetlands".

"The benefits would be carbon storage, poverty reduction and biodiversity conservation," Wetlands continued. "A dedicated wetlands carbon fund could allow investing companies to compensate for their emissions and could result in trade. The funds generated would be used to sustain the carbon stocks in tropical peatswamps and would also help sustain local livelihoods and conserve a massive biodiversity treasure."

Wetlands estimates that peatlands in Southeast Asia store at least 42 billion metric tons of soil carbon or peat carbon, which if exposed to oxygen in air or burned, would potentially create 155 billion tons of carbon dioxide emissions, according to Bloomberg. Total global carbon dioxide emissions from fuel combustion were 26.6 billion tons in 2004, according to the International Energy Agency. Emissions from deforestation are thought to account for about a fifth of total carbon dioxide emissions.

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CITATION: (July 11, 2007).

Indonesia's peat swamps worth $39B/year.