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Economic Potential of Land-Use Change and Forestry for Carbon Sequestration and Poverty Reduction

Economic Potential of Land-Use Change and Forestry for Carbon Sequestration and Poverty Reduction. Presentation Outline. Output. Recommendation for Future research. Background. Objective. Farm Level. Policy Level. Transformation Costs. Transaction Costs. Background. the market.

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Economic Potential of Land-Use Change and Forestry for Carbon Sequestration and Poverty Reduction

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  1. Economic Potential of Land-Use Change and Forestry for Carbon Sequestration and Poverty Reduction

  2. Presentation Outline Output Recommendation for Future research Background Objective Farm Level Policy Level

  3. Transformation Costs Transaction Costs Background the market Problem 1 Global Warming Problem 2 (tropical countries) deforestation, land degradation, poverty smallholder agroforestry industrial plantations demand for CERs supply of CERs energy sector

  4. Objectives • Determine the most appropriate farm forestry systems for capturing carbon credit payments and assisting in poverty reduction • Estimate the transaction costs of actual projects and identify principles of project design to minimise these costs

  5. Output Objective 1 deals with farm-level analysis with tools and outcomes: • The MUTAN spreadsheets containing details (inputs, outputs, prices, costs and carbon) of 24 farm forestry systems • Relational plant-species information database, for both trees and shrubs, (currently called TreeSmart) contains over 100 species. • The SCUAF model (Soils Changes under Agroforestry) has been rewritten. The new version (SCUAF 5) is designed to work in conjunction with a spreadsheet. Examples include shifting cultivation, rotations and agroforestry systems. The software and examples are available for free download at:http://www.une.edu.au/carbon/scuaf.php • MUTAN stands for Model Usahatani Hutan (Farm Forestry Model)

  6. Output Figure 1. Mean annual increment (MAI) and current annual increment (CAI) of two tree species in different sites. Arrows represent the cycle length based On the traditional forester solution (maximisation of MAI)

  7. Figure 2. Net present Value (NPV) of two species of trees grown in different sites And under two accounting procedures: with no carbon credits (thin line) or with Carbon credits under the ideal accounting system (solid line). Arrow represent the optimal Cycle length

  8. Table 1. Financial Analysis

  9. Performance of the Systems: Small Scale CDM SOURCE: CESERF-ACIAR, 2003

  10. Output • Objective 2 deals with transaction costs and project design • Now that the Kyoto Protocol has been ratified, there has been some activity under the Clean Development Mechanism (CDM). However, the projects approved under the CDM so far do not include LUCF projects. So our analysis has been based on existing smallholder development projects from East Nusa Tenggara (IFSP and HKM), Muara Sungkai (Lampung) ICRAF Project and Lombok (JIFPRO).

  11. Project Design Document project developer host government (DNA) National approval operational entity Stakeholder comments Validation Registration CDM executive board project developer Implementation + Monitoring Verification and certification operational entity CDM executive board CER issuance CDM Cycle

  12. Stakeholder comments Validation Estimation of Transaction Costs for JIFPRO Pre-CDM Project Project Design Document Rp. 361.52 juta projects >8000 ha National approval Rp. 0 Incl in certification Registration 2% of CERs * projects < 15,000 t C/y Rp. 148.4 juta Implementation + Monitoring Verification and certification Rp. 400 juta Sumber: Prasetyo, 2005. CER issuance

  13. Reducing transaction costs enforcement and insurance project management search and negotiation monitoring approval Generate & disseminate information Bundle projects Teach landholders to measure C Encourage community self-regulation Promote secure land tenure

  14. Publications: Output Disemination • 16 working papers available in ACIAR manuscript • 4 published journals and 3 under review Computer Programs: • BRASS (Bioeconomic Rubber Agroforestry Support System) • SCUAF (Soil Change Under Agroforestry) • MUTAN (Model Usahatani Hutan / Farm Forestry Model) • TreeSmart (Relational Tree Database)

  15. • • • • Indonesian closed forest cover - 1995 • •

  16. Possibility for future research : • Potential of carbon trading for regional economic and community development • Research on designing simplified carbon trading • Research on how CDM community forestry have effect on combating global change

  17. Thank you

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