PRIORITIES FOR SELECTION OF A/R CDM PROJECTC ACTIVITIES IN CHILE

1. PRIORITIES FOR SELECTION OF A/R CDM PROJECTC ACTIVITIES IN CHILE SBSTA 18; Bonn 05 June 2003 Aquiles Neuenschwander Forest Adviser to Foundation for Agrarian Innovation; Ministry of Agriculture –Chile e-mail: aquilesn@fia.gob.cl

2. PRELIMINARY CRITERIA FOR THE A/R CDM PROJECT ACTIVITIES IN CHILE • Environmental Priorities: • Eroded and degraded soil recuperation with, in most of cases, lack or no cover vegetation • water supply sources protection, hydrographic basins, sloped lands and erosion risk • Forest species adapted to local ecosystems with no environmental uncertainties • Avoid in all cases natural forest replacement or sustitución

3. PRELIMINARY CRITERIA FOR THE A/R CDM PROJECT ACTIVITIES IN CHILE • Social Priorities: • Rural poorness alleviation through implementing economical activities in order to increase employment and training rural programs • life conditions improvement of the small and medium land owners in order to avoid rural emigration and provide sustainable incomes • Life conditions improvement of indigenous communities associated with land

4. PRELIMINARY CRITERIA FOR THE A/R CDM PROJECT ACTIVITIES IN CHILE • Economical Priorities: • Forest plantation establishment with high economic value to ensure incomes in short and long terms • Increment value of small and medium property by means of forest activities • Periodic additional incomes by tCER • Access to governmental incentive programs for plantations to improve forest rent and promote other small owners to get into the system • To use public and private current institutionally to capture good experiences to minimizing organizational costs and project administrations

5. WHY A/R PROJECT ACTIVITIES ARE NOT BUSINESS US USUAL FOR THE SMALL AND MEDIUM LAND OWNERS • Old people with low education level and strong agricultural tradition • Poor technological knowledge and little access to governmental programs for training. Normally no interest. • Rural isolation, lack access to forest products market. • Raft terrain with serious fertility deficiencies with strong restrictions for agricultural use • Extensive agricultural and livestock practices with low techniques • Average land less than 50 hectares, mainly in irregular legal tenure that imply not access fiscal credit or other instruments of foment. • Lack cash flow • No permanent or periodic incomes • Distrust to credit or other financial sources • Lack technological knowledge and commercial deficiencies

6. KIND OF A/R CDM PROJECT ACTIVITIES ENVISAGED IN CHILE • Afforestation in small owner lands or indigenous communities trough CONAF, NGO and/or others organizations • Associative afforestation by share-partnership agreements between forest enterprises and small land owners • Afforestation in eroded or degraded soils to recover productivity in any kind of land tenure and surfaces size

7. AFFORESTATION IN SMALL PROPERTIES • Reduce rural emigration to the cities from the country side and mitigate the urban poverty • Improve life conditions and incomes of rural communities • Increment de value of the small rural properties for agriculture through the eroded soils recovers • Provide accessibility to isolated areas through the road construction by forest activities • Diversify agricultural production through the new commercial channels developed by the forest activities • Crate new carbon sinks trough the projects

8. ASSOCIATIVE AFFORESTATION PROJECTS • ENTERPRISE: • Provide funding support to finance forest establishment, forest management, forest fire and disease protection Provide technical support in genetic improvement, management prescriptions and commercial assistance. • SMALL LAND OWNERS: • Provide land use, care of the forest and receive training in the different forest activity processes • At the end of the rotation the enterprise takes a % of the total harvest predefined in any contract and, the enterprise could offer a purchase option for the small owner portion in the wood, at least at the same market price.

9. PRELIMINARY ESTIMATION OF A/R PROJECT ACTIVITIES IN CHILE • Taking mainly into account aspects like: • Land tenure • Soil conditions • Weather • Other • It is estimated that, between year 2003 and 2012, about 200,000 hectares could be afforestated though A/R CDM project activities

10. CRUNCH ISSUES CONSIDERATIONS • NON-PERMANENCY • Transitory CER are considered the best possibility with or without insurance implications

11. CRUNCH ISSUES CONSIDERATIONS • ADDITIONALITY • Contribute to sustainable development in rural areas, improving small owners and peasants livelihood • Recover degraded and eroded lands with no profitable alternative uses • Protection of basins and infrastructure • Non-profitable activities in current investors expectative

12. CRUNCH ISSUES CONSIDERATIONS • BASE LINE • A/R CDM project activities must be carry out in bare lands or patch of land with scarce vegetation • A/R is supposed to increase dry material and carbon stock • Carbon stock in a non project present situation and its prospective can be estimated by current inventory systems • Sectoral circumstances can be assessed accordingly to available data

13. CRUNCH ISSUES CONSIDERATIONS • LEAKAGE • Current bare lands with little or no woody biomass existence that means very low human activity such as fuel wood collection, extensive livestock or agricultural traditional cultivation • Current carbon stock to be replaced by afforestation or reforestation are low and relatively easy to estimate • Lands use trends in areas susceptible to be afforestated could be estimated based on historical data • Under these circumstances, leakage could be estimated with survey of fuel wood uses and agriculture patterns

14. CRUNCH ISSUES CONSIDERATIONS • UNCERTAINTIES • Are mainly related to the carbon stock change and emissions measurement • Good practice guidance and uncertainties assessment, elaborated by IPCC are addressing these issues • It is assumed that IPCC recommendations should be considered in procedures and modalities for A/R CDM project activities

15. CRUNCH ISSUES CONSIDERATIONS • ENVIRONMENTAL IMPACTS • These are already considered in the Annex to decision 17/CP.7 and modifications should not be taking into account • Current dispositions for stakeholders consultation and its consideration, should be the same in A/R and energy CDM project activities

16. CRUNCH ISSUES CONSIDERATIONS • SOCIO-ECONOMIC IMPACTS • Socio-economics impacts are basic condition in establishing the additionality of an A/R CDM project activities so, they should be considered in the project design document, according to national data available • It is the host Party’s prerogative to confirm whether a CDM project activity assists it in achieving sustainable development • According to the precedent, it does not be recommendable to impose specific procedures and modalities on this matter in the current Convention or others

17. CRUNCH ISSUES CONSIDERATIONS • IMPACTS ON BIODIVERSITY AND NATURAL ECOSYSTEMS • As it was established in previous considerations, A/R CDM project activities are going to be carried out on eroded an degraded lands that contain scarce or none biodiversity and/or the natural ecosystem has been severely altered • Additionally, flora and wild life practically does not exist in this kind of lands are usually introduced, as rabbit, mice and other exotic species. • A/R CDM project activities would have any important impact on biodiversity and national ecosystems