National Environmental Workshop Institute of Land Administration Bahir Dar University

1. Carbon trading from smallholder farms- towards environmentally friendly and eco-efficient watershed managementVeli PohjonenTana-Beles WME project National Environmental Workshop Institute of Land Administration Bahir Dar University 17 May 2011

2. CO2 in our air Despite climate conventions in Kyoto, Copenhagen and Cancun (Mexico): CO2 concentration of the air is rising 24 per cent between 1958 – 2011 No sign of drop after Kyoto (1997)

3. CO2 in the atmosphere 1958-2011

4. Two ways to combat • Through the sources: reduce CO2 emissions. Technological way. • Through the sinks: increase Carbon Offsets to trees and soils. Ecological way.

5. Carbon Offsets via trees • Conserve and manage the existing natural forests • Establish (large) block plantations • Agroforests , forest farms

6. Carbon Offsets in agroforests and forests farms • Plant trees • Count the trees in year 1 • Define carbon stock in year 1 (= A, tn C/farm) • Recount the trees in year 2 • Define carbon stock in year 2 (= B, tn C/farm) • Carbon Offset = B – A (tn C/farm/yr)

7. Ato Minale, Gelawdeos, Dera: 400 agroforesry trees; how much carbon offsetted in a year?

8. Ato Minale’s Carbon Offset • Year 2010: 438 trees, Carbon stock 5.47 tn • Year 2009 : 356 trees, Carbon stock 5.04 tn • Carbon Offset B – A = 0.421 tn C/yr • How much in Birr (or Euro) is B – A?

9. CER pricing principle • Certified Emissions Reduction, CER (http://www.pointcarbon.com ) • Price of CER = 12.73 Euro / tn CO2 • Price of C = 46.68 Euro / tn C (factor 44/12) • Price of C = 1114 Birr / tn C (exch. rate 23.87) Value of tree farmer’s Offsetted Carbon changes with daily CER-value at international market

10. Ato Minale: Birr value of Offsetted Carbon • Carbon Offset in one year B-A = 0.421 tn C/farm/yr • Price of Carbon 1114 Birr/tn C (47 €/tn C) • Value of Offsetted Carbon: 469 Birr/yr (20 €/yr)

11. Summary of 8 sample farmsall measured twice

12. Principle of Carbon Offset payment • Year A gives the baseline value (tn C/farm) • If B-A > 0, payment is done • B becomes new baseline value • If B-A < 0, payment is not done • The payment is done in the year when new carbon stock exceeds the baseline value

13. Expected Carbon payment to smallholder farmers & enterprises • Fair price would be CER = 1114 Birr / tn C • In real trade two middlemen are present • Would the price to farmer or enterprise drop to one third? That is 371 Birr / tn C • (or 156 Birr/yr/farm to Ato Minale) • Humbo project got payment (from World Bank) of 248 Birr / tn C (= 4 USD / tn CO2)

14. How Ato Minale’s 156 Birr/yr/farm compares to smallholder farm annual sales?

15. How to organize Carbon trade? • Smallholder farmers group into Forest Producers Organization (FPO) • FPO buys once a year the Carbon Offsets (CER-units) from member farmers • FPO sells the Carbon Offsets as CER-units to International Carbon Trade markets • Requires: (i) Export trade license, (ii) Trade Identication Number, (iii) Payment of royalty to District Revenue Office => CER-unit becomes a new export commodity

16. More tradable carbon into soils • Tree planting immediate way to increase carbon in smallholder farms (above ground) • How to increase and store carbon in smallholder farm soils (below ground)? • Biochar has huge potential

17. Poor soil (left) transformed into fertile Terra preta, using biochar(source Wikipedia : Biochar)

18. Biochar stores carbon • Biochar was invented by Amazonian indians 2000 years ago (Terra preta soils) • Biochar remains in the soil without decomposing, similarly to coal • Biochar makes permanent carbon sink • Via pyrolysis from crop and forest residues • Increment of biochar to smallholder farm soils can be added to Carbon trading • Biochar could be component in CER-units trading (export), organized by FPO’s.

19. Biochar – ultimate Watershed management agent? • Soil acidity decreases • Cation exchange capacity increases, leaching of nutrients decreases • Soil microbial activity increases, more nitrogen is retained in the soil • Fysical soil particle structure for crops improves • Soil water retention capacity improves => Crop yields raised in sustained manner

20. Environmental friendliness, eco-efficiency • Biological sinks becoming more important in combat against climate change • Carbon Offsets trade encourages farmers to plant more trees • Planting of trees on most eroded sites increases • Biochar sustains and improves agricultural soil fertility • Carbon sequestration and trading becoming essential component in Watershed management

21. Economic advantages • Farmers get immediate added value from planted trees, and later from biochar improved agriculture • The value of Ethiopian smallholder forestry increases annually by about 10 per cent • Carbon offsets (CER-units) are to be understood as a new export commodity from the farms, like exporting construction poles or sesame seeds from Ethiopia to Sudan =>A new export commodity is created

22. Building the Carbon Towers • Smallholder tree planting is on a good drive in Ethiopia • Farmers are motivated especially after successful steps in land tenure and certification • Ethiopia is already converting into Carbon Tower of African Horn. This accelerates with Carbon trading • Trees – Biochar - Carbon towers – Sinks are becoming more important in the coming UN climate conventions. They should be approved already in Durban, South Africa in December 2011

23. Carbon Tower gets greener

24. Thank you • veli.pohjonen@gmail.com • http://veli.pohjonen.org