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Carbon trading could protect forests, reduce rural poverty

Mongabay.com

Carbon trading could protect forests, reduce rural poverty

Carbon trading could protect forests, reduce rural poverty
mongabay.com
February 26, 2008 [corrected March 3]

Carbon trading from avoided deforestation (REDD) credits could yield billions of dollars for tropical countries, according to analysis by mongabay.com, a leading tropical forest web site.



Using conservative estimates for carbon storage in tropical forests for 63 countries, mongabay.com estimates that reducing deforestation by 10 percent would generate $767 million to $4.6 billion per year at carbon prices ranging from $5-30 per ton of CO2 [tCO2e]. For comparison, the EU’s ETS market for carbon credits is presently around $32/tCO2e. A 20 percent reduction would generate $1.5 to 9.2 billion, while a 50 percent reduction would yield $3.8 to 23 billion annually. The figures show the proceeds from REDD carbon credits would dwarf the $1.1 billion in international funding for forestry spent annually over the past decade and could offer developing countries a way to diversify earnings in their forestry sector while at the same time safeguarding important ecosystem services — like watershed protection and biodiversity conservation — and forest option values.



“Conservationists have long struggled to find a way to finance forest protection. Now REDD offers the potential to make forest conservation profitable,” said Rhett A. Butler, founder and editor of mongabay.com. “The key going forward will be ensuring that forest communities and rural populations see benefits from REDD. Without addressing the underlying drivers of deforestation — rural poverty and, increasingly, industrial actors — REDD will be dead in the forest.”



Still Butler says the potential financial gains from REDD are immense — likely well above the projections.



Chart for 63 tropical countries

“The figures used in these calculations are quite conservative, especially in terms of carbon stored in forest biomass. For example, the U.N. figures for Indonesia — 50 tons of carbon per hectare — are only a fraction of what is seen in peatlands and rainforests — upwards of 300 t/ha. Indonesia could potentially see several billion dollars per year from REDD.”



The calculations use average annual deforestation rates from 1990-2005 as a baseline and assume 50 percent of above-ground biomass is lost through deforestation. Forest carbon data comes from the U.N. Food and Agriculture Organization. Actual carbon savings from reducing deforestation are likely to be considerably higher, translating to increased carbon credit potential. The calculations exclude forest-rich countries for which FAO data is missing or incomplete, including Guyana, Suriname, and Belize. Adding these countries would further boost REDD earnings forecasts.

The updated projections come less month after the first REDD deal was signed in the Indonesian province of Aceh. The project — backed by the Government of Aceh, Fauna & Flora International (FFI) and Carbon Conservation — will protect the 1.9 million-acre Ulu Masen forest, a tract of rainforest home to the Sumatran elephant, the Clouded leopard , the Sumatran tiger, and the Sumatran orangutan. By preventing logging and conversion of Ulu Masen forest for oil palm plantations, planners expect to reduce carbon dioxide emissions by 100 million tons over 30 years. The proceeds — in the form of carbon credits — will help fund health and education projects in the local community.

Butler says that REDD may offer attractive economic returns relative to conventional logging and agricultural use of forest land, especially for rural communities which too often miss out on the benefits from industrial development of rainforests.

“Based on work by Dan Nepstad at the Woods Hole Research Institute, we’re talking break-even points of around $3 per ton of carbon for forgoing development of most of the Amazon. Cattle ranching — by far the leading driver of deforestation in the Brazilian Amazon — has offered far less than that on a historical basis,” said Butler. “In Indonesia, a study by the World Agroforestry Centre (ICRAF) and the Center for International Forestry Research (CIFOR) showed that Indonesia currently is seeing benefits of $0.34 per ton of CO2 — mostly from agriculture. For comparison EU carbon prices are presently over $32 per ton.”

“These studies show that in addition to making sense from a conservation standpoint, REDD could be an economically viable form of land use for some of the world’s most disadvantaged populations.”



Potential market value of REDD in 63 tropical countries [expanded chart]


Forest area Annual forest loss Carbon Annual CO2 Proceeds from a 10% reduction in deforestation rate Proceeds from a 20% reduction in deforestation rate Proceeds from a 50% reduction in deforestation rate
2005 1990-2005 Above ground biomass from forest loss $5 $10 $30 $5 $10 $30 $5 $10 $30
Country / Area 1000 ha 1000 ha t/ha M tons $US million $US million $US million
Brazil 477,698 2,822 81 417 208 417 1,250 417 833 2,500 1,042 2,084 6,251
Indonesia 88,495 1,871 50 172 86 172 516 172 344 1,031 430 860 2,579
DR Congo 133,610 461 140 118 59 118 355 118 237 710 296 592 1,775
Nigeria 11,089 410 102 77 38 77 230 77 153 459 191 383 1,148
Myanmar 32,222 466 79 68 34 68 203 68 136 407 170 339 1,017
Ecuador 10,853 198 150 54 27 54 163 54 109 326 136 272 815
Venezuela 47,713 288 100 53 26 53 158 53 105 316 132 264 791
Philippines 7,162 227 109 46 23 46 137 46 91 274 114 228 684
Papua New Guinea 29,437 139 170 43 22 43 130 43 87 260 108 217 650
Tanzania 35,257 412 52 39 19 39 117 39 78 234 97 195 585
Bolivia 58,740 270 67 33 17 33 99 33 66 199 83 166 497
Peru 68,742 94 170 29 15 29 88 29 59 176 73 147 441
Cambodia 10,447 167 91 28 14 28 83 28 56 167 70 139 417
Cameroon 21,245 220 63 25 13 25 76 25 51 153 64 127 381
Malaysia 20,890 99 136 25 12 25 74 25 49 148 62 123 369
Mexico 64,238 319 40 23 12 23 70 23 47 140 58 117 350
Madagascar 12,838 57 186 19 10 19 58 19 39 117 49 97 291
Nicaragua 5,189 90 111 18 9 18 55 18 37 110 46 92 275
Sudan 67,546 589 17 18 9 18 54 18 36 107 45 89 268
Zambia 42,452 445 21 17 9 17 52 17 35 105 44 87 262
Honduras 4,648 182 50 17 8 17 50 17 33 100 42 84 251
Paraguay 18,475 179 50 16 8 16 49 16 33 98 41 82 246
Ghana 5,517 129 66 16 8 16 47 16 31 93 39 78 233
Angola 59,104 125 64 15 7 15 44 15 29 88 37 74 221
Nepal 3,636 79 99 14 7 14 43 14 29 86 36 71 214
Zimbabwe 17,540 313 24 14 7 14 41 14 28 83 35 69 207
Liberia 3,154 60 116 13 6 13 38 13 26 77 32 64 192
Laos 16,142 78 73 10 5 10 31 10 21 62 26 52 156
Guatemala 3,938 54 96 9 5 9 28 9 19 57 24 47 142
Colombia 60,728 47 98 9 4 9 26 9 17 51 21 43 128
Solomon Islands 2,172 40 100 7 4 7 22 7 15 44 18 36 109
Benin 2,351 65 60 7 4 7 21 7 14 43 18 36 107
Thailand 14,520 96 39 7 3 7 21 7 14 41 17 34 103
Guinea 6,724 46 76 6 3 6 19 6 13 38 16 32 96
Somalia 7,131 77 44 6 3 6 18 6 12 37 15 31 92
Congo 22,471 17 186 6 3 6 17 6 12 35 14 29 87
Central African Republic 22,755 30 99 5 3 5 16 5 11 33 14 27 82
Uganda 3,627 86 30 5 2 5 14 5 10 29 12 24 71
Senegal 8,673 45 33 3 1 3 8 3 5 16 7 13 40
Gabon 21,775 10 137 3 1 3 8 3 5 15 6 13 38
Mozambique 19,262 50 25 2 1 2 7 2 5 14 6 12 35
Malawi 3,402 33 38 2 1 2 7 2 5 14 6 12 35
Chad 11,921 79 16 2 1 2 7 2 5 14 6 11 34
Togo 386 20 50 2 1 2 5 2 4 11 5 9 27
Kenya 3,522 12 76 2 1 2 5 2 3 10 4 9 26
Equatorial Guinea 1,632 15 57 2 1 2 5 2 3 10 4 8 24
Burkina Faso 6,794 24 35 2 1 2 5 2 3 9 4 8 23
Sierra Leone 2,754 19 40 1 1 1 4 1 3 9 4 7 21
Panama 4,294 5 114 1 1 1 3 1 2 7 3 6 17
Timor-Leste 798 11 50 1 1 1 3 1 2 6 3 5 15
Burundi 152 9 60 1 1 1 3 1 2 6 3 5 15
Costa Rica 2,391 12 47 1 0 1 3 1 2 6 2 5 15
French Guiana 8,063 2 250 1 0 1 3 1 2 5 2 4 13
Sri Lanka 1,933 28 17 1 0 1 3 1 2 5 2 4 13
Brunei Darussalam 278 2 115 0 0 0 1 0 1 3 1 2 7
El Salvador 298 5 50 0 0 0 1 0 1 3 1 2 7
Guinea-Bissau 2,072 10 24 0 0 0 1 0 1 2 1 2 6
Trinidad and Tobago 226 1 84 0 0 0 0 0 0 1 0 0 1
Haiti 105 1 57 0 0 0 0 0 0 0 0 0 1
Jamaica 339 0 80 0 0 0 0 0 0 0 0 0 1
Bangladesh 871 1 29 0 0 0 0 0 0 0 0 0 1
Guadeloupe 80 0 50 0 0 0 0 0 0 0 0 0 0
Dominica 46 0 50 0 0 0 0 0 0 0 0 0 0
TOTAL 767 1,533 4,600 1,533 3,067 9,200 3,833 7,667 23,000



NOTES


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