Carbon finance could net Guyana and Suriname tens of millions of dollars
Carbon finance could net Guyana and Suriname tens of millions of dollars
mongabay.com
November 5, 2006
Guyana and Suriname — two of South America’s least known countries — could earn tens of millions of dollars through a global warming deal that may be proposed this week at U.N. climate talks between 189 countries in Nairobi, Kenya.
The initiative, put forth a year ago by a coalition that now includes 15 developing countries, calls for compensation from industrialized nations in exchange for tropical forest conservation. The plan relies on the concept of “avoided deforestation” whereby developing countries are paid to prevent deforestation that would otherwise occur. The principal is based on the carbon storage capabilities of tropical forests: when trees are cut and burned, carbon is released into the atmosphere contributing to global warming. Worldwide about 20 percent of greenhouse gas emissions are produced by deforestation. By “avoiding” or preventing deforestation, developing countries can effectively cut global emissions of heat-trapping gases. These “carbon credits” can be sold to industrialized countries that fail to meet emissions limits imposed under international agreements like the Kyoto Protocol.
With the caveat that there are still lots of unknowns under carbon finance initiatives, Mongabay.com analysis of U.N. deforestation data suggests that an avoided deforestation initiative could generate more than $100 million annually in Guyana and Suriname, where deforestation rates of primary forest are estimated to top 15,000 hectares per year.
Combined, the annual loss of 30,000 hectares of forest in Guyana and Suriname releases more than 6 megatons of carbon into the atmosphere. Using a market rate of $4 per metric ton of carbon dioxide — the current trading price of CCX Carbon Financial Instrument contracts on the Chicago Climate Exchange, but higher in Europe — the countries’ avoided deforestation could be worth at $120 million per year, using a simplified model for calculating carbon values. Using that peg “carbon damage” at $20 per ton, avoided deforestation could be valued at $120 million per year, a significant economic boost in Guyana and Suriname where GDP (as measured in official exchange rates) is $1.02 billion and 2.96 billion respectively.
This paper is based on an earlier mongabay.com article: Avoided deforestation could help fight third world poverty under global warming pact