carbon trade finance & poverty reduction in nepal

8/7/2019 Carbon Trade Finance & Poverty Reduction in Nepal

http://slidepdf.com/reader/full/carbon-trade-finance-poverty-reduction-in-nepal 1/27

PROSPECTS OF CARBON TRADE IN POVERTY REDUCTION INPROSPECTS OF CARBON TRADE IN POVERTY REDUCTION INNEPALNEPAL

?



Prospects of Carbon Trade inProspects of Carbon Trade in

Poverty Reduction in NepalPoverty Reduction in Nepal

A Case Study of Kafley Community Forest onA Case Study of Kafley Community Forest on

Lamatar VDC, Lalitpur Lamatar VDC, Lalitpur

Presented by:

Sushil K. Bhandari



Operational definition of terminologies

used in the research paper

�Carbon trade:- Trading mechanism of carbon dioxide between the

net emitter and agent involved in carbon

sequestration intended to tackle global warming

�Carbon sequestration:- The process of absorption of atmospheric

carbon dioxide and stock in organic or

inorganic form

�Biomass:- The total mass of the vegetation existed at particular time



General BackgroundGeneral Background

��Anthropocentric developmentAnthropocentric development��Development for conservation andDevelopment for conservation and

conservation for developmentconservation for development��EnvironmentEnvironment--poverty reduction tiespoverty reduction ties

Economy Equity

Environment



Statement of Research ProblemsStatement of Research Problems

��Degrading natural resourcesDegrading natural resources

��Environment services of existing forest is yetEnvironment services of existing forest is yet

to be creditedto be credited

��CF outcome in poverty reduction is not uptoCF outcome in poverty reduction is not uptoexpectationexpectation

��High potentiality of bioHigh potentiality of bio--sequestrationsequestration



Research ObjectivesResearch Objectives

Overall objective

To explore out the potentiality of forestry as source of localdevelopment finance for the national overriding issue of povertyreduction.

Specific objectives

1. To find out the aggregate potentiality of forest existed and probableextendable area in the FUG at Lalitpur district.

2. To analyze national and international legal framework developed or in progress in relation to the issue.

3. To explore the consciousness level of people stakeholder withregard to carbon trade issue.



Scope of the workScope of the work

�Estimation of the carbon sequestration from the CF

�In-depth analysis of potentiality of carbon trade

finance in the poverty reduction

� Generalized estimation of carbon sequestrationfrom forest of Nepal



Limitation of the ResearchLimitation of the Research

�Focus on single CF

�Poverty analysis based on Cash Income

�Estimation of poverty reduction based on directtransfer payment in equitable basis



Research DesignResearch Design

Rational of the Selection of the study sideRational of the Selection of the study side�� Technical aspects requiresTechnical aspects requires�� ICIMOD had calculation biomass with carbon sequestrationICIMOD had calculation biomass with carbon sequestration�� Geographical proximity is easily accessibleGeographical proximity is easily accessible

�� Research designResearch design

�� Purposively categorization and then random samplingPurposively categorization and then random sampling�� Primary and secondary dataPrimary and secondary data

III. Date processing and analysisIII. Date processing and analysis

�� FGT modelFGT model�� CDM carbon sequestration modelCDM carbon sequestration model�� Lorenz CurveLorenz Curve�� GiniGini--CoefficientCoefficient



Mechanism of Carbon TradeMechanism of Carbon Trade

Retail providers

CDM market Voluntary market (CER) Avoided Deforestation

REED(Forest of Nepal recently

approved for CT)

VoluntaryCompliance

Following CDM

standarde.g. EU-ETS

Voluntary non compliance

e.g CCX

Fulfills KP commitment



3. Poverty Analysis3. Poverty AnalysisµµTheThe unfinished business of the 21unfinished business of the 21stst century is the eradication of poverty¶century is the eradication of poverty¶.. --JaunJaun SomaviaSomavia, UNWSSD,, UNWSSD,

19951995

I. Lorenz Curve

e Lorenz Curve o a In ome

i ri u ion among e ou e ol

0000

40506070809000

0 0 0 0 40 50 60 70 80 90 00

er en age o in ome re i ien

erena

ge o in

ome

Lorenz Curve

Line o equali y

�Lowest 40 % income

earning groups

earns 0% share of

total income

�Highest 0% earns

50% of the total

income



II.II. Coefficient of Variance (CV)Coefficient of Variance (CV)

III.III. Poverty GapPoverty GapMeasurement of Poverty Gap takin base ine of $ 1 a day

1 2 3 1

Percenta e of popu ation

.2

.

.

1

1.2

1.

1.

2

2.2

2.

2.

3Income

per

day

Poverty Gap

�Variation of the incomeamong the poor(<$1 aday) is . i.e. %

�The income among thepoor is more or less

equal with only %variation

� Income of the %people is below the

poverty line



Income and Income gap to break vicious circle of income poverty

0.32

0.710.6

0.97

0.3

0.61 0.55 0.53

0.91

0.24

0.660.8

0.35

0.53

0.98

0.68

0.29 0.4

0.03

0.7

0.390.45 0.47

0.09

0.76

0.34 0.2

0.650.47

0.0200.10.2

0.3

0.4

0.50.6

0.70.8

0.91

1 2 3 4 5 6 7 8 910

11

12

13

14

15

individual Cases

Inc

ome in U.S. dollor

Income Income gap

APG & NPG Line (0.396)

1 . Ave r age pove rty Gap (AGP):-0.395

2 . No r m a lized Pove rty Gap (NPG):-0.395



IV. FGT mode of Poverty Measurement

1. Poverty Incidence (head count ratio) or P

0.57 or 57 %

2. Normalized Poverty Gap or P1

0.22 i.e. on an avera e U.S.$ 0.22 is required as an addition income on the existinindividua income to up ift the peop e be ow poverty ine at east up the ine.

3. Poverty Severity (intensity of poverty) or P2

. i.e. %



4.Biomass4.BiomassBiomass increment status of the CF

. 4 6 9 3 . 9 6

11. 3 0 7 5 11. 6 3 12 5 12

0

2 0

4 0

6 0

8 0

100

120

2 0 0 4 / 0 5 2 0 0 5 / 0 6 2 0 0 6 / 0 7

Y e a r

A b o o o



5. Estimated revenue from carbon trade5. Estimated revenue from carbon trade

Estimated revenue of Carbon trade forthe two

consecuative years

.5 9418365 6.97

386987. 5 6

440776.728

0

5 0000

100000

15 0000

200000

25 0000

300000

35 0000

400000

45 0000

5 00000

2005 /06 2006/2007

Years

Amoun

t in

Re v e n u e a t 5 /t O2/ha /yr Re v e n u e a t 12/t O2/ha /yr



6. Comparative study of Income from CF and the6. Comparative study of Income from CF and theestimated from Carbon trade ( at U.S.$ 6tC/ha/yr)estimated from Carbon trade ( at U.S.$ 6tC/ha/yr)

Comparision of CF income and the estimated

income from Carbon trade

6 27521

40537 41854 3786 8 396 90

0 0 0 0

193493.5128

220388.36 4

0

50000

100000

150000

200000

250000

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07

Years

Amoun

Income from CF Carbon trade

Carbon is the currency of the new millennium.-- Anonymous



Need of Forest Carbon TradeNeed of Forest Carbon Trade

1.µ1.µ Investing on Trees¶ is better options than other mitigating optionsInvesting on Trees¶ is better options than other mitigating options

�� Climate change mitigationClimate change mitigation

�� Biodiversity conservationBiodiversity conservation

�� Strengthening environment and poverty reduction tiesStrengthening environment and poverty reduction ties

�� Local ownershipLocal ownership

�� Reduce vulnerability and increase resilienceReduce vulnerability and increase resilience

�� Reduce deforestation and depletionReduce deforestation and depletion



2.Present Access of CF in Carbon Trade

�Proposal of Nepal to permit the CF for the Carbon trade

Has been accepted by WB (Forest Carbon Partner Facility)�REED cell has been established�Expert committee formulated for climate change study�NAPA preparation is in progress

3. Potential impact of carbon trade in poverty

reduction

�Poverty reduction rate of Nepal was 3. % per annum (1 5/ 6-2 3/ 4)

�At research site level, it could increased to around 12% i.e. four-folds level

(WB estimation between poverty reduction rate and income increment)

� Incidence of poverty of the research site could decreasedto 1.6 from 5 by the year 2 33



4.Estimated Nationa income from Forest Carbontrade

1.131.41

3.1

2.25

00.5

1

1.5

2

2.5

3

3.5

Rate of

sequestration(tC/ha/yr

Manang Lamatar Ilam Terai

(Mean)

aces and ecoo ica bet

Mean carbon se estration rate at

different ecoo ica bets of Ne a

�Ave r a g e C -s e q u e s t r a t io n is

1 .94 tC /h a / y r

� e s ti m a te d f o r e s t a r e a in th e

y e a r 2 0 0 5 wa s a bo u t 4 0 ,0 0 0

�Es ti m a te d r e ve n u e if h a l f o f th e

a r e a is br o u g h t u n de r th e tr a des ch e m e

T ra n s a ct i o nT ra n s a ct i o n

ra te (U.S. )ra te (U.S. )

Am o u n t inAm o u n t in

NR s (bil li o n )NR s (bil li o n )

$ 5$ 5 4 .54 .5

$ 1 2$ 1 2 1 11 1

$ 2 0$ 2 0 1 8.41 8.4



5. Poverty, Growth & Emission

�Per capita nationa avera e is 0.03tCO2 /ha/yr �Permitted eve of emission 1.1 tCO2 /ha/yr i.e. Surp us of 0.07 tCO2 /ha/yr

�So, No need to be much worry about the industria rowth at east to near future ( on y in term of emission tradin )

6. Carbon Trade & MDGs� Goa 1- Eradicate extreme poverty and hun er �Goa 7- Ensure environment sustainabi ity

�Goa 8- Deve op a oba partnership for deve opment

Biodiversityconservation

Poverty alleviation

Social welfare anddevelopment

Renewable

projects

Mitigationactivities

Bio sequestration

GHGreduction

MDG

Inter ink amon GHG reduction, MDG and Carbon Trade

Carbon Trade

EnergyEfficiency



Prob em Foreseen

� Ownership of Carbon emission reduction

�Current CF uide ines has provision of the permission of on ynon-commercia use of forest products at oca eve .

�Carbon Trade is enou h to provide commercia ain

�On y 35% of forest income can be used for the communitydeve opment

�No provision of direct revenue transfer in the form of cash to the

househo ds( may emer es as a conf icts due to ar e resources)

� Low awareness eve of environment services of forest such ascarbon trade



IssuesIssues�North-South Debate

�Obligation to Pay

�Paying for Environment Services

�Polluters Pay principal

�Decarbonization

�Green Economy

�Monoculture



SuggestionsSuggestions�Technical knowledge to reduce transaction cost

�Appropriate national policy and strategy

�Distinct jurisdiction to concerned ministry ( Envt. Vs Forest)

�Reduce ownership dilemma

�Appropriate institutional framework

�Poverty reduction should be prime agenda naturalresource while utilizing local resources

� Maintenance of national inventory system

�Appropriate risk sharing mechanism

�Efforts towards keeping national emission at low level



Recommendation of issues/topics for Recommendation of issues/topics for future researchfuture research

�Potential of different distribution alternatives of carbon finance on povertyreduction

�Livelihood and ecological impacts of inclusion of CF under REDD

�Comparative study on the impacts of commercial and non-commercialuse rights of CFUG

�Strategic approach to include finance from Carbon trade innational budget for maximum outputs

� Analysis of the Emission reduction, Carbon trade, growth andpoverty reduction at national Level



Thank You for your kind attentionThank You for your kind attention



Poverty anywhere is the threat to prosperityeverywhere:--- Anonymous

carbon trade finance & poverty reduction in nepal

Documents