climate change mitigation and sustainable development through carbon sequestration: experiences in...

Climate change mitigation and sustainabledevelopment through carbon sequestration:

experiences in Latin AmericaRob Bailis

Yale School of Forestry & Environmental Studies, 205 Prospect St., New Haven, CT 06511, USAE-mail: [email protected]

This article discusses the links between sustainable development and carbon sequestration as aclimate change mitigation (CCM) strategy with a focus on Latin America, which has hosted themajority of sequestration activities to date. The global potential for CCM through a combinationof sequestration and reduced deforestation is projected to be roughly 60-80 billion tonnes of carbon(GtC) by mid-century, with a large fraction of that potential lying in Latin America. Such activitiescan, in theory, contribute to sustainable development by contributing to rural livelihoods, providingfuel and timber, and enhancing biodiversity and other environmental services. However, due topolitical-economic constraints and the nature of the carbon market itself only a small fraction ofthis technical potential is likely to be reached. Moreover, the degree to which carbon sequestrationand forest conservation activities contribute to positive social and environmental outcomes is notclear. To date, carbon sequestration and forest conservation projects in Latin America have hadmixed results. Some of these experiences are reviewed and alternative policy options are discussed.

1. IntroductionLand-use change (LUC), largely in the form of tropicaldeforestation, is responsible for roughly one quarter ofanthropogenic CO2 emissions since the start of the indus-trial age [WRI, 2006; IPCC, 2000]. In contrast to carbonemissions from fossil fuel combustion, which releaselong-stored geological carbon into the atmosphere, emis-sions from LUC are potentially reversible. Biologicalsinks (stocks of terrestrial carbon in plant matter and soil)that are depleted through specific trajectories of land usemay be partially or wholly replaced by altering those land-use patterns in a way that promotes either new growth orregeneration of biomass. These processes, respectively re-ferred to as afforestation and reforestation (A/R), are oftengrouped together in climate change dialogues. In addition,slowing or halting forest loss, a process of “avoided de-forestation”, can also mitigate climate change. ThoughA/R and avoided deforestation both contribute to climatechange mitigation (CCM), the mechanisms through whichmitigation is accomplished are different. The growth ofnew biomass via A/R sequesters carbon. Avoided defores-tation, in contrast, results in emission reductions relative tobaseline emissions defined by historical patterns of LUC[1].

Latin America, which holds half the world’s tropicalforests [FAO, 2001], is a particularly important region forexploring CCM via biological sinks [Niles et al., 2002].Since 1990, the area has experienced the largest absoluteloss of forest cover of any region in the world [FAO,2005a]. Figure 1 shows the net change in area under bothnatural forest and plantations between 1990 and 2005. De-spite historically high rates of deforestation, the region

still has vast areas of tropical forest. Thus, in the absenceof policy changes, the region will remain a significant sourceof GHG emissions for decades to come [IPCC, 2001a].

The region’s potential for carbon sequestration and for-est conservation has received attention from governmentsand firms in industrialized countries seeking to gain afoothold in the sink-based carbon market as well as in-ternational environmental organizations who typically seesinks as complementary to goals of biodiversity conser-vation. Over half of the region’s remaining natural forestlies in Brazil, where the potential for decreasing emissionsfrom current LUC trajectories is truly immense [Fearn-side, 2005]. Not surprisingly, a large fraction of the carbonsequestration and forest conservation projects initiated todate, either through formal multilateral institutional pro-grams or through non-aligned efforts initiated by interna-tional conservation groups, are located in the region, aswill be discussed in more detail below[2].

In addition, there is potential for sink-based activitiesto contribute to improved livelihoods or other develop-ment goals [Leach and Leach, 2004]. Both forest conser-vation and carbon sequestration are closely linked to landmanagement practices in rural areas. Such areas are oftenpopulated by poor marginalized communities. Pressurefrom external forces, including expanding infrastructure,commercial agriculture, ranching, timber concessions, andhuman settlements all put strain on forest resources onwhich rural communities rely [Schmidt et al., 1999; Sun-derlin et al., 2005; Geist and Lambin, 2002]. Valuing landfor carbon sequestration makes A/R activities potentiallywell-suited to poverty alleviation and the promotion of

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sustainable livelihoods among rural communities, whichare unlikely to benefit from more conventional CCM ac-tivities[3]. Consequently, in addition to global CCM bene-fits, A/R activities can assist rural communities with cashtransfers, job creation, livelihood diversification and othersocio-economic benefits. They can also contribute solu-tions to local environmental problems like soil erosionand improved watershed management[4]. These reasons,inter alia, have been cited in support of A/R activities as“no regrets” strategies to mitigate climate change[Schneider, 2002]. However, if implemented poorly, A/Ractivities have the potential to exacerbate social and/orenvironmental problems in marginalized rural areas. Thereis some evidence that such negative outcomes have al-ready occurred [Lohmann, 2006; Brown et al., 2004].

In the following sections of this paper, I explore thepotential for carbon sequestration to mitigate climatechange and contribute to sustainable development in LatinAmerica. The next section provides some background forthe concept of A/R activities as a means of mitigatingclimate change and the institutions that have been craftedto support those activities including some of the specificmodalities and procedures of A/R activities under theCDM. Section 3 follows with an exploration of the linksbetween A/R activities and sustainable development. Sec-tion 4 then looks at the potential of biomass sinks in LatinAmerica. Section 5 explores some of the positive andnegative outcomes of existing projects in the region andSection 6 closes with a discussion of the policy implica-tions of these findings.

2. CCM via carbon sequestration and supportinginstitutionsThe concept of carbon sequestration through A/R isstraightforward. Photosynthesis fixes carbon dioxide, stor-ing it as carbon in plant matter, thereby transferring carb-on from the atmosphere to the biosphere [IPCC, 2000].A/R projects were initially thought to be relatively cheapoptions for carbon mitigation [GEF Council, 1999]. How-ever, the Intergovernmental Panel on climate Change(IPCC), in its Third Assessment Report (TAR), admittedthat early estimates of the costs of carbon mitigationthrough A/R activities may have been overly optimistic[IPCC, 2001a]. For example, the IPCC’s Second Assess-ment Report (SAR) cited the costs of land-based carbonsequestration estimated from “point source” analysesranging from 3 to 7 US$/tC [IPCC, 1996]. Similar analy-ses conducted in the same period projected costs of lessthan 1 US$/tC in several countries in Asia and LatinAmerica, while others found substantial carbon sequestra-tion could be obtained at negative costs [Sathaye and Rav-indranath, 1998; IPCC, 2001a; Sathaye et al., 2001;Schwarze, 2002].

The IPCC’s recent assessment admits that some of thesestudies may have underestimated the costs of carbon se-questration by omitting the costs of physical infrastruc-ture, data collection, monitoring, and verification, as wellas the opportunity cost of land dedicated to A/R [IPCC,2001a]. In addition, early studies generally did not con-sider the transaction costs involved in dealing with a largenumber of poor smallholder farmers rather than a single

Figure 1. Changes in natural forest and forest plantation areas between 1990 and 2005 with extent of remaining tropical forest shown [based on datafrom FAO, 2005a; and WRI, 2006].


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large-scale landowner, which is an important considera-tion if A/R activities are to contribute to sustainable de-velopment[5]. Further, early analyses did not typicallydiscount the value of future carbon sequestered, whichoverestimated the present value of future income streams.More recent analyses that incorporate opportunity costsof land and utilize discount rates for future incomestreams find costs ranging from 20 to 100 US$/tC [IPCC,2001a], which is considerably higher, though still com-petitive with the expected costs of climate change miti-gation in the long term[6].2.1. Institutions supporting biological sink activities indeveloping countriesA number of institutions have been created to promoteCCM in developing countries and economies in transition.These include the Clean Development Mechanism (CDM)and its precursor, Activities Implemented Jointly (AIJ).The Global Environment Facility (GEF) has also fundedsome A/R and avoided deforestation activities, thoughthey constitute a small fraction of the overall GEF projectportfolio [GEF, 2006]. In addition, voluntary carbon mar-kets have recently emerged as potentially significant fin-anciers of carbon sink activities. Of these institutions, theCDM is particularly relevant because of its prominencein defining standards and methodologies to be deployedin CCM projects worldwide [Leach and Leach, 2004].

In June 2006, a symbolic milestone was reached withthe pronouncement of the United Nations FrameworkConvention on Climate Change (UNFCCC) that cumula-tive carbon emissions expected to be offset by activitiesunder the CDM by the end of the first commitment periodof the Kyoto Protocol surpassed the equivalent of one bil-lion tonnes (Gt) of CO2 (∼273 MtC) [UNFCCC, 2006b].Though this represents a small fraction of the total an-thropogenic emissions among Annex I countries that areexpected during the first commitment period, it demon-strates the CDM is gaining traction as one of several“flexible mechanisms” for greenhouse gas (GHG) mitiga-tion. The CDM is the only mechanism that is specificallydirected at developing countries and, in addition to help-ing signatories to the protocol meet their greenhouse gasreduction commitments, it is specifically intended to “as-sist Parties not included in Annex I in achieving sustain-able development” [UNFCCC, 1997, Article 12][7].

In combining these two objectives, the UNFCCC and,by extension, the global community that supports it, ac-knowledges important links exist between climate changemitigation and sustainable development in those countriesthat are least responsible for GHG emissions. Indeed, inthe press release announcing the 1 Gt milestone, the act-ing head of the UNFCCC Secretariat made the connectionexplicit by stating, “We have crossed an important thresh-old with these emission reductions... It is now evident thatthe Kyoto Protocol is making a significant contributiontowards sustainable development in developing countries”[UNFCCC, 2006b].

However, this connection is not evident to everyone.The South-North sale of carbon credits has been criticizedon several counts, including the assumption that benefits

will flow to poor countries [Agarwal, 2002; Bachram,2004]. Critics hold that mechanisms like the CDM andvoluntary carbon markets enable industrialized countriesto take advantage of the cheapest GHG mitigation optionsavailable by encouraging non-Annex I countries[8] to “selloff their cheaper emissions control options... leaving fu-ture generations saddled with high-cost options” [Agar-wal, 2002, p. 385]. Further, critics hold that the sale ofcarbon in this way simply encourages business-as-usualbehavior in the countries that contribute most to climatechange [Lohmann, 2006]. Moreover, the design of CDMfunding effectively taxes the earnings of developing coun-tries by diverting a portion of revenue from projects toan “Adaptation Fund” [UNFCCC, 2002a]. This effectivelytaxes poor nations to fund their own adaptation to a prob-lem largely caused by rich nations[9]. Finally, it is likelythat CDM projects, which are market-oriented, will clusterin specific non-Annex I countries while other poorercountries will be bypassed[10].

Despite these criticisms, the CDM has gained substan-tial traction and is perceived by many as a means to fa-cilitate the transfer of technology, technical capacity, andfunds from Annex I to non-Annex I countries in order topromote a less GHG-intensive development path for thelatter. Experiences to date show that it has the potentialto meaningfully engage some, though certainly not all,non-Annex I countries and shift them to a more sustainabletrajectory than they would have otherwise followed[11].

The role of biological carbon sinks was a hotly debatedtopic as negotiations for the CDM were finalized. It wasat this stage of the discussion that “avoided deforestation”was blocked from inclusion in the CDM, leaving A/R asthe only eligible biological sink activity. Now, as theCDM project portfolio is expanding rapidly, the role ofsinks remains somewhat ambiguous. As of July 2006, A/Ractivities constituted less than 0.5 % of projects in theCDM “pipeline”[12] and contribute less than 0.1 % of thebillion certified emission reductions (CERs, 1 CER = 1 tof CO2 equivalent) expected by 2012[13]. Ironically,biomass energy, which potentially has strong links to A/Ractivities, accounts for 23 % of projects and 7 % of CERsexpected by 2012. The links between biomass energy andcarbon sequestration are discussed in Box 1.

Many non-Annex I countries have a comparative ad-vantage for A/R activities. Most are situated in tropicalregions where biomass productivity is higher than in tem-perate zones. Land costs, which are a major project cost,tend to be lower than in industrialized regions. Moreover,historical trends in land-use change across the developingworld show consistent loss of forest cover (as shown inFigure 1 above), indicating that the potential for A/R ac-tivities in non-Annex I countries is quite large[14].

However, in practice, A/R projects are more complexthan simply planting trees [Brown et al., 2004; Dutschkeet al., 2006; Gutiérrez et al., 2006; Smith and Scherr,2002; Grieg-Gran et al., 2005]. Complications arise in as-suring that both environmental and sustainable develop-ment benefits are realized. These difficulties are a resultof biophysical and socioeconomic attributes of land-based


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carbon sinks as well as the structure of markets for emis-sion reductions [Brown et al., 2004].2.2. “Modalities and procedures” for A/R in the CDMAll CDM projects must satisfy general criteria in orderto generate CERs. In addition, the biophysical nature ofcarbon sequestration through A/R activities creates spe-cific qualifications on CERs generated by A/R projects.Qualities that are specific to A/R projects are largely ques-tions of permanence. The general criteria fall typicallywithin the concepts of leakage and additionality. Each isexplained briefly below.2.2.1. PermanenceThis refers to the notion that CERs derived from A/R ac-tivities, which depend on carbon stored in trees and/orsoils, are not necessarily permanent because future humanor natural disturbance may release some or all of the carb-on back to the atmosphere [IPCC, 2000]. In order to re-flect this “non-permanence”, the UNFCCC created twotypes of CERs specifically for A/R projects: temporaryCERs (tCERs) and long-term CERs (lCERs), both ofwhich expire after a set period of time and must be re-placed before their expiry date [UNFCCC, 2004; Gutiér-

rez et al., 2006; Dutschke et al., 2006]. Both tCERs andlCERs allow parties with emission reduction requirementsto temporarily offset their emissions, thereby postponingthe need to buy permanent emission reductions [Pedroni,2005].2.2.2. LeakageThis refers to the idea that activities falling within theboundaries of a CDM project may cause GHG emissionsoutside the project boundary, which would not have oc-curred in the absence of project activities. The likelihoodof leakage was one of the reasons that “avoided defores-tation” was disallowed from eligibility in the Kyoto Pro-tocol [Skutsch et al., 2006][15]. If one particular sectionof tropical forest is conserved, the global nature of thetropical timber industry makes it difficult to guarantee thatanother forested area is not targeted to substitute for thelost production, either in the same country or in anotherpart of the world.2.2.3. AdditionalityThis refers to the requirement that emission reductions orcarbon sequestered in CDM projects must be additionalto other activities and projects that would have occurred

Box 1. Linking A/R to biomass energy for climate mitigation

From the scale of households to national utilities, numerous links exist between A/R activities and biomass energy.Coupling A/R projects to energy production creates two potential paths of GHG mitigation:1. through an increase in biological stocks of carbon and/or2. through a reduction of GHG emissions by fossil fuel substitution or improved combustion and reduced con-

sumption of solid biomass fuels.This is especially relevant for the least developed countries, where biomass constitutes the main source of energyand where there are few opportunities for fossil fuel substitution. In addition, a substantial portion of biomassmay be used unsustainably so that terrestrial carbon stocks are depleted in the long term. Also, most biomass isutilized in inefficient household devices [Bailis, 2004; Smith et al., 2000]. Moreover, in many urban areas ofdeveloping countries, particularly in sub-Saharan Africa, charcoal is a popular fuel. Conversion from wood tocharcoal is typically done in earthen kilns that are energy-inefficient and highly GHG-intensive [Bertschi et al.,2003; Brocard et al., 1996; Pennise et al., 2001]. The potential for emission reductions in this context is quitelarge [Bailis et al., 2005].Though the rules governing the CDM are favorable for large-scale utility and industrial applications of biomassenergy, as is apparent from the prevalence of biomass projects in the CDM pipeline shown in Figure 3, they donot permit the integration of A/R activities with biomass energy projects. Nor do they adequately address thequestion of baseline situations utilizing non-renewable biomass [Schlamadinger and Jürgens, 2004; 2005].Similarly, the rules governing small-scale projects, which were written with the objective of streamlining theregistration process in order to reduce transaction costs for projects below a certain size, are not favorable tosmall-scale biomass[1]. Several initial applications to the CDM-EB to revise the rules in order to facilitate CDMprojects for improved household cookstoves, which are associated with several additional benefits including im-proved public health, gender equity, and poverty alleviation, were rejected soon after the UNFCCC’s 11th Con-ference of Parties (COP-11). However, after several revisions to proposed methodologies, it appears as if progressis being made[2].Analysts have proposed that CDM modalities be changed in order to include non-renewable biomass as a projectbaseline, and to develop methodologies to consistently differentiate between renewable and non-renewable biomass[Schlamadinger and Jürgens, 2005; 2005]. In addition, steps should be taken to allow for the integration of biomassenergy with A/R activities in both regular and small-scale CDM projects [Dutschke et al., 2006].

Notes

1. Small-scale CDM projects must be: < 15 MWe for renewable energy projects; < 15 GWh per year for energy efficiency improvements; or generate < 15 ktCO2 inCERs annually for other projects.

2. See the report from the most recent meeting of the Small-scale Projects Working Group (SSWG) [UNFCCC, 2006c].


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in the absence of the CDM project. In other words, CERsare only valid if the project that generates them wouldnot have occurred without the added financing from sell-ing CERs. For this reason, large-scale commercial woodplantations have been criticized as A/R CDM projects be-cause the pace at which plantations have been created inmany developing regions raises doubts about the addition-ality of future plantations [Niles et al., 2002][16].

Non-permanent CERs differ in their lifetimes. tCERsexpire at the end of the commitment period following theone during which they were issued. lCERs expire at theend of the crediting period of the A/R project throughwhich they are generated. According to decisions made atCOP-9, crediting periods for A/R projects may be for 20years with up to two renewals or 30 years with no optionfor renewals, hence the lifetime of lCERs may extendfrom 20 to 60 years depending on the nature of the pro-ject, while the lifetime of tCERs will typically be lessthan 10 years depending on the length of time chosen forthe second commitment period [UNFCCC, 2004].2.2.4. Implications of non-permanenceNon-permanent CERs have several implications for A/Ractivities. Provisions made at COP-9 allow A/R projectsto earn income from timber or other forest products aswell as from the sale of CERs. Thus, managing A/R pro-jects can be complex. Maximizing revenue over a givenperiod requires the consideration of current and futureprices for CERs, timber and/or non-timber products. Ifnon-monetary benefits such as local capacity-building ortechnical training are also project goals, management isstill more complex, which makes it difficult for marginalcommunities to capture the benefits of A/R activities with-out significant assistance.

Researchers are starting to explore the full implicationsof the modalities for non-permanent CERs. Before theCOP-9 decisions, some analysts considered the CERs de-rived from A/R activities and their associated costs interms of “full carbon accounting”[17]. Benítez and Ober-steiner [2006] find that non-permanent CERs actually in-crease costs for carbon sequestration relative tofull-carbon accounting and will likely reduce the quantityof land devoted to carbon sequestration activities. Forthem, this implies “that latest agreements regarding CDM-sinks would result in efficiency losses in climate changemitigation. As tCER accounting is only valid for projectsin non-Annex-I countries, A/R-projects in industrializedcountries and economies in transition would have a com-parative advantage over projects in developing countries”(p. 11). Gutiérrez et al. [2006, p. 342] find that “optimalforest management is strongly influenced by carbon andtimber market scenarios,” and “tCERs will be more prof-itable [than lCERs] for forestry projects under the CDMbecause they give more flexibility to forest management.”However, they concede that tCERs may look less attrac-tive because of higher transaction costs.

3. Linking A/R activities and sustainabledevelopmentThe degree to which A/R activities may result in sustain-

able development is not at all clear. To start, the veryconcept of sustainable development has no clear defini-tion, nor is it measured or evaluated by any standardizedprocess or metric [Dutschke et al., 2006; Gundimeda,2004; Chambers and Conway, 1991][18]. Nevertheless, inthe broadest sense, a process of socioeconomic changecan be defined as sustainable development if it results inimprovements in standards of living for some segment ofthe population, while leaving the remaining population(including future generations) no worse off and whilemaintaining or improving environmental integrity[19].

However, there is no guarantee that A/R projects willsatisfy even this broad definition of sustainable develop-ment. Improved living standards and environmental integ-rity do not necessarily result from tree growth and carbonstorage. This is particularly true in communities that arealready marginalized in some way, where it may turn outthat “long-term requirement to keep carbon in storage mayconflict with the short-term needs of the poor” [Gundi-meda, 2004, p. 330]. As Brown et al. [2004, p. 4] write:

... there are clear trade-offs between carbon sequestra-tion, local social development, economic well-beingand access to resources, and other aspects of the en-vironment... A critical evaluation of the impacts ofthese projects and the priorities of different stakehold-ers involved in their development and implementationis therefore extremely timely.

In addition, carbon sequestration and emission reductionactivities that are specifically designed to yield socioeco-nomic benefits in addition to CERs will likely have highertransaction costs than projects that simply seek to maxi-mize profits through the production of CERs (and possiblyco-products like timber). Therefore, projects designed todeliver specific social benefits are likely to be less attrac-tive to investors purchasing CERs in competitive markets[Brown et al., 2004]. However, other markets exist suchas voluntary carbon markets, which may turn out to bemore amenable to projects that stress social benefits inaddition to GHG mitigation[20].

The actual extent of socioeconomic benefits derivedfrom carbon sequestration activities has been mixed. Pro-jects can yield direct benefits such as cash payments aswell as indirect benefits such as jobs, increases in socialcapital, technical and organizational skills, or environmentawareness within the community. The outcomes that haveresulted from actual projects depend on several factors:• Management of project activities. Currently some A/R

projects are run by corporations and others by NGOs.The two have distinct expectations from project activi-ties and participating communities therefore see differ-ent outcomes [Grieg-Gran et al., 2005].

• Land tenure security. Insecure tenure is a large disin-centive for investors seeking to invest in carbon se-questration through A/R.

• Project eligibility criteria. The rules governing whocan participate in particular projects affect the distri-bution of social benefits from A/R activities. For ex-ample, stipulating a minimum size of land perhousehold to devote to tree-planting may exclude


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poorer families who do not have access to sufficientland.

• Current land use. This affects the opportunity cost ofintroducing A/R activities which determines individu-als’ willingness to participate as well as their personalgain from doing so. Rules for project eligibility mayalso exclude particular land uses from the project,which will impact outcomes.

Environmental outcomes present another facet of sustain-able development that needs to be examined. Improve-ments in environmental conditions do not necessarilyresult from adding carbon to the landscape. Several ex-isting projects have established industrial tree plantationsthat can result in lowered water tables, reductions in bio-diversity, and loss of other ecosystem services [Lohmann,2006]. Plantations are of particular interest in Latin Amer-ica because, though the current area is smaller than inother regions of the world such as Asia and North Amer-ica, the area of tree plantations is rapidly expanding, withhalf of the ten countries with the fastest growing area oftree plantations located in the region [FAO, 2005b].

4. The potential of biomass sinks in Latin AmericaBetween 1980 and 2000 the atmospheric concentration ofCO2 increased 9 %, 339 to 369 ppm [NOAA, 2006]. An-thropogenic land use change contributed 10 to 30 % ofthis increase and the potential for land-based sinks to miti-gate future climate change falls roughly in the same range[IPCC, 2001b]. The IPCC’s most recent assessment esti-mates that by 2050, roughly 100 GtC (∼370 GtCO2) couldbe sequestered in land-based sinks, which is 10-20 % ofthe forecast range of global fossil fuel emissions expectedin the same period [IPCC, 2001a].

Latin America, which has sustained the largest losses

of natural forest area in recent years [FAO, 2001], has thelargest potential for GHG mitigation. Niles et al. [2002]estimate the potential for biological sinks by region, di-vided into avoided deforestation, agricultural sinks andA/R activities. Their results are shown in Figure 2. Theoverall potential for carbon offsets is moderated by po-litical and economic constraints, including country-spe-cific factors which have affected specific trajectories ofLUC, including the expansion of infrastructure, cattle-ranching, land tenure changes, national developmentplans, forestry experience, and political stability [Velarde,2004]. By taking these factors into consideration togetherwith biophysical data, Niles et al. estimate that Latin Amer-ica could sequester roughly 1.4 GtC (5 GtCO2) by 2012.

Figure 2 includes avoided deforestation and agriculturalsinks as well as A/R activities. Avoided deforestation hasthe largest potential for emission reduction across worldregions. However, neither avoided deforestation nor agri-culture projects are permissible in the CDM during thefirst commitment period[21]. Considering only A/R activi-ties analyzed by Niles and colleagues, roughly 1.7 millionha could be reforested in Latin America each year: a totalof 15 Mha by the end of the first commitment period,which would result in a cumulative sink of ∼178 MtC(653 MtCO2) [Niles et al., 2002].

This differs somewhat from data reported by the IPCC[IPCC, 2001a], which is taken from published analysesfrom Mexico, Brazil and Venezuela [Da Motta et al.,1999; Masera et al., 1997; Masera et al., 1995; Bondukiand Swisher, 1995]. These studies estimate that 12-19Mha are available strictly for A/R activities, includingcommercial plantations, rehabilitated land, energy planta-tions and agro-forestry, by 2030. This extent of landcould support the sequestration of between 1.9 and 2.3

Figure 2. Regional potential for carbon sinks from 2003 to 2012 [based on data in Niles et al., 2002]


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GtC (7.0-8.4 GtCO2), a factor of 4-5 times larger than thecarbon sink estimated by Niles et al. and extrapolated outover the same time period[22].

However, these estimates fail to consider the price ofCERs, timber, and other factors that affect land-use deci-sions. In an analysis of the entire region rather than justa few countries, accounting for numerous constraints onavailable land, Benítez and Obersteiner [2006] estimatethat an area of 237 Mha could be realistically availablefor A/R activities in Latin America[23]. This exceeds theanalyses mentioned above. However, within a range oflikely carbon prices (US$ 10-30/tC or US$ 2.7-8.2/tCO2),they find that only about 1 % of this area (2.2-3.3 Mha)will likely be used for carbon sequestration, storing 64-93MtC (235-340 MtCO2) by the end of the first commitmentperiod of the Kyoto Protocol[24]. This is a lower, but pos-sibly more realistic range of potential carbon sequestrationfor the region. For comparison, this level of sequestrationis close to one year of GHG emissions from fossil fuelsand other industrial sources in either Brazil or Mexico (92MtC and 105 MtC respectively in 2000 [WRI, 2006]).4.1. Biological sink projects in Latin America andinternational climate treatiesCarbon sequestration as a means of mitigating GHG emis-sions predates the drafting of the Kyoto Protocol[25]. In1995 the UNFCCC introduced Activities ImplementedJointly (AIJ), a pilot phase in which Annex I parties im-plemented projects in non-Annex I countries to reduce

GHG emissions or enhance GHG removals [UNFCCC,2006a]. Over 150 AIJ projects were developed, 20 ofwhich relied on biological sinks. Three-fourths of the sinkprojects were based in Latin America, covering over 1.4Mha of land and promising to offset over 40 MtC (∼147MtCO2): 37 % of the total carbon offsets from all AIJprojects [UNFCCC, 2006a]. However, these offsets areprimarily from avoided deforestation, as is shown in Table1, with nearly three-fourths of the total credits obtainedfrom two large forest conservation projects.

Only one-sixth of the carbon offsets expected from AIJprojects in Latin America are based on A/R activities. Thisproportion supports Niles et al.’s [2002] estimations, de-picted in Figure 2, that the CCM potential from forestconservation far outweighs the carbon sequestration po-tential from A/R. By taking avoided deforestation out ofthe CDM, a great deal of potential carbon offsets are un-available for CDM participants.4.2. A/R in the CDMThe experiences gained from the AIJ phase have provenvaluable in building experience and capacity for the CDM[UNFCCC, 2002b]. However, A/R activities represent avery small portion of CDM projects. All projects are basedon methodologies for establishing an appropriate baselineand for confirming that projects are creating verifiableCERs. Methodologies must be approved by the CDM’sExecutive Board (EB). By mid-2006, nearly three yearsafter the COP-9 decisions were made, only three A/R

Table 1. Overview of AIJ projects in Latin America

Project Host Investor Lifetime (yrs) Carbon (MtC)

Avoided deforestation

Bilsa Biological Reserve Ecuador USA 30 0.3

ECOLAND: Piedras Blancas National Park Costa Rica USA 16 0.4

Rio Bermejo Carbon Sequestration Pilot Project Argentina USA 30 0.4

Rio Bravo Carbon Sequestration Pilot Project Belize USA 42 1.6

Rio Condor Carbon Sequestration Project Chile USA 60 1.7

Noel Kempff Mercado Climate Action Project Bolivia USA 30 15.1

Consolidation of Costa Rican national parks and reserves Costa Rica USA 25 15.7

Total avoided deforestation 35.3

A/R activities

Project Salicornia: halophyte cultivation in Sonora Mexico USA 60 < 0.1

Commercial reforestation in the Chiriquí province Panama USA 25 < 0.1

Reforestation and forest conservation Costa Rica Norway 25 0.1

Scolel Té: carbon sequestration and sustainable forestry Mexico USA 30 0.3

Community silviculture in the Sierra Norte of Oaxaca Mexico USA 30 0.8

SIF Carbon Sequestration Project Chile USA 51 1.1

Klinki Forestry Project Costa Rica USA 46 2.0

PROFAFOR Ecuador Netherlands Not reported 2.6

Total A/R 6.9

Total from all A/R-AIJ projects in Latin America 42.1


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projects had been registered by the EB. These projects,one in China and two in India, utilize a single methodol-ogy, which is one of three methodologies approved outof 28 proposed thus far. In total, 182 non-A/R CDM meth-odologies have been proposed. 40 have been approvedand are being utilized in 550 projects [Fenhann, 2006][26].Figure 3 shows the number of CDM projects currently inthe pipeline and the expected CERs from them. The insetgraph shows the smallest seven contributors of CERs, in-cluding the three A/R projects.

22 additional A/R methodologies are currently underconsideration[27]. Assuming that the projects associatedwith these methodologies are approved, the net contribu-tion of A/R activities will be ∼0.5 % of the number ofprojects and ∼0.3 % of the total CERs expected by 2012from all CDM activity. Latin America is well representedin these activities, as it was in the AIJ phase. Over halfof the projects in the pipeline are in Latin America. Theseaccount for roughly two-thirds of the annual CERs ex-pected from all A/R CDM projects. Figure 4 shows thebreakdown of average annual CERs from A/R projects by

region. The 12 projects in Latin America currently await-ing approval of their methodologies are distributed amongnine countries. However, as the figure shows, the expectedCERs are heavily concentrated in Uruguay, where twoprojects account for 56 % of all A/R CERs from the region.

Most of the A/R CDM projects described here are toonew to assess social and environmental performance.However, the AIJ projects mentioned above have been go-ing on for up to a decade. In addition, a number of othercarbon sequestration projects exist outside of either AIJor CDM; they can provide insights into the impacts thatcarbon sequestration activities can have. Some experi-ences gained from these projects are discussed in the fol-lowing section.

5. Outcomes of current A/R projects in LatinAmericaAs was discussed above, the socioeconomic impacts ofcarbon sequestration projects have been mixed. It is clearthat positive outcomes do not accrue automatically; projectsmust be specifically designed and/or adapted to generate

Figure 3. CDM pipeline showing number of projects and CERs expected by 2012 [based on Fenhann, 2006]PFCs = perfluorocarbons; fugitive = fugitive emissions, which include leaks from the processing, transmission, and/or transportation of fuels, storage and transfer of refrigerants; HFCs =hydrofluorocarbons. 1 CER = 1 t of CO2 equivalent.


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social and ecological benefits. Moreover, while positiveimpacts accrue to some groups within the host country asa result of A/R activities, it is possible others may bemade less well off by the project.

Table 2 describes the social costs and benefits associ-ated with seven recent and/or ongoing carbon sequestra-tion projects in Latin America [based on Brown et al.,2004; Grieg-Gran et al., 2005; Lohmann, 2006; and Os-borne, 2006]. Just one of these projects is in the CDMpipeline. Three others are former AIJ projects, two ofwhich are currently selling credits in voluntary carbonmarkets. Benefits accruing to project participants differbetween projects that are developed by corporations andprojects that are developed by NGOs. Two projects runby corporations have led to net positive increases in em-ployment while most projects run by NGOs have not. Incontrast, NGO-based projects frequently (though not al-ways) offer cash payments to participants. These rangefrom one-time payments of ∼US$ 70/ha (PROFAFOR inEcuador), which is meant to cover the costs of estab-lishing a small plantation, to annual payments for incre-mental carbon storage of US$ 70-100/ha (Scolel Té inMexico and Huetar Norte in Costa Rica). In addition, pro-ject participants usually retain the right to harvest timber,but only after the project is complete (∼30 years). SomeNGO projects also focus on other aspects of communitywell-being such as land tenure security, capacity-buildingto organize and lobby for collective gain, and training inforest management.

Table 2 also describes some of the negative impactsincurred as a result of project activities. In the HuetarNorte project in Costa Rica, participants lost their eligi-bility for other social welfare programs. The Noel Kempffforest conservation project in Bolivia led to a loss of jobs

in the logging industry. The project compensated this byassisting families to obtain land title, micro-credit, andextension services, but it is unlikely that individuals weremade better off given the job losses that were incurred[Grieg-Gran et al., 2005]. A review of Scolel Té in Mexicofound that previously existing community tensions wereexacerbated by project activities. Similarly, the failure toengage women in critical decision-making in Scolel Témay have led to their further marginalization [Brown etal., 2004].

Several of the A/R projects described in Table 2 relyon large-scale tree plantations and deserve some addi-tional attention. PROFAFOR, in Ecuador, relies on plan-tations consisting primarily of exotic pine species plantedin previously unforested paramo grasslands, which aresensitive ecosystems that may respond poorly when sub-ject to intensive silvicultural management. A critical re-view of PROFAFOR notes that project designers may beoverestimating the project’s carbon sequestration poten-tial. Further, in some areas, the project may actually leadto a net loss of carbon [Lohmann, 2006, citing Vidal,1999]. The same study notes that project financing wasset up so that communities must absorb the costs of tech-nical assistance as well as replacing trees lost to mortality,which, among some communities, was estimated at 15-30 % in the first few years after planting. Moreover, atleast four communities received lower initial paymentsthan expected as a result of undisclosed charges. Thus,some communities may lose money by participating inthe project. However, early withdrawal is not an optionbecause the project agreements include withdrawal penal-ties that actually exceed the project incomes by as muchas a factor of three [Lohmann, 2006].

The Plantar project in Brazil also relies on large-scale

Figure 4. Average annual CERs from proposed A/R CDM projects by region and within Latin AmericaNote: The average annual CERs are calculated from total CERs expected during each project’s 20- or 30-year lifetime.


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Table 2. Social costs/benefits from select carbon sequestration projects in Latin America[Grieg-Gran et al., 2005; Brown et al., 2004; Osborne, 2006]

Project name(host country)

Projectorganizers

Cash payment

Indirectsocial benefits

Negativeoutcomes

Other comments

Huetar Norte(Costa Rica)

Costa Ricangovernment

US$516/hapaid over5 yrs

Project helps todiversify incomeamong participants.

Participants loseeligibility in othersocial programs.Must leave land idleduring applicationprocess.

Carbon sequestration is part of a broader PES[1]

scheme. Funding was initially through a gasolinetax. The cash payments cover 60 % of plantationestablishment costs. Additional benefit will resultfrom future timber sales and the sale of carboncredits, although the market for the carbon isunclear.

PROFAFOR(Ecuador)

Foundationestablishedby aconsortiumof Dutchpowercompanies

US$ 68-119/ha

Project helps todiversify incomeamongparticipants.Participants haveincreased landtenure security.

Trips to Quitorequired toparticipate. Long-term commitments toforestry reduceflexibility in landmanagement. Large-scale plantations thatimpact biodiversityin paramograsslands.

Originally an AIJ project. The payments arespread over two years and cover the costs ofplantation establishment provided that 80 % ofseedlings survive to the 2nd year. In some casesmortality rates exceeded 20 % so communities maylose money as a result [Lohmann, 2006].Participants transfer carbon credits to the Dutchcompanies but retain rights to harvest timber theyproduce, but must maintain the plantations for 30years. The average internal rate of return isexpected to be in the 12-27 % range in this period,but in instances of high tree mortality, this may beoverly optimistic.

Noel KempffClimate Ac-tion Project(Bolivia)

The NatureConservancy(TNC)

No directfinancialpayments

Communities wereassisted inobtaining landtitle, micro-creditschemes were setup, and extensionservices wereprovided.

Lost employment inlogging industry.

Originally an AIJ project on avoided deforestationproject in which TNC teamed with US powercompanies. Grieg-Gran et al. [2005] stress thatbenefits to communities are largely in compensationfor loss of employment in forest sector, so thatcommunities are not likely made better off by theproject.

Plantar carbonproject (Brazil)

Plantar (aBraziliansilviculturalcompany)


Employment inforestry andindustry activities

Project supports large-scale plantations thatcan impactbiodiversity andreduce livelihoodoptions. Plantar isaccused ofoutsourcing jobs,further reducingemploymentopportunities.

Project is in the CDM pipeline still awaiting adecision from the EB. The entity charged withvalidating the project recommended it for approval,but with serious reservations. The project iscertified by the Forest Stewardship Council, butmany civil society groups oppose it for bothenvironmental and social reasons [Pearson, 2002].There have been organized protests against theprojects by affected communities [Lohmann, 2006].

Peugeot Carb-on Sink Pro-ject (Brazil)

Peugeot No directfinancialpayments

Some employment,payment forcollection ofnative seeds.Environmentaleducation andseedlingdistribution.

None recorded Organizers are not seeking accreditation throughCDM. Grieg-Gran et al. [2005] hold that Peugeot isundertaking this project to improve its theircorporate image and to learn about emerging carbonmarkets. They also note that the benefits listed wereonly implemented after communities raisedcomplaints about lack of benefis from the project.

Ilha do Ba-nanal project(Brazil)

BrazilianNGOfinanced bya UK-basedcharitylinked to apowercompany


None recorded Limited impact onemployment

Project focuses on carbon sequestration via avoideddeforestation. It is not seeking to sell credits, butrather to demonstrate the potential of carbonsequestration for community development.

Scolel Té(Mexico)

Local NGOacademics,andconsultantswithfinancinginitiallyfrom UKgovernmentand laterfrom US AIJfunding

∼US$ 7/tCup to US$700/haover 10years

Project helps todiversify incomeamongparticipants.Participantsreceive assistancein establishingplantations andhave rights to allincome fromtimber production.

Project canexacerbate existingcommunity conflicts.Eligibilityrequirements canexclude smallholders,risking increasedsocial differentiation.

Originally an AIJ project. Carbon credits sold toUK-based Carbon Neutral for US$ 12/tC.Participants get 60 %. Total payments vary withtree growth: maximum revenues ∼US$ 700/ha over10 years. Early activities included agro-forestryoptions and live fences, but now the focus isprimarily on small plantations of exotic trees. Theproject spread to 33 communities and is growing.Participants have complained that payments forcarbon sequestration are too low, but are motivatedto participate by assistance with tree establishmentand expected income from timber.

Note

1. PES = payments for ecosystem services


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monoculture plantations linked to negative environmentaland social impacts. Environmental impacts include soildegradation and loss of biodiversity, as well as reductionsin water quality and supply [WRM, 2003]. Social impactsinclude loss of livelihood options and access to land.Moreover, critics have expressed doubts over the addition-ality of project activities [Pearson, 2002; Lohmann, 2006].A recent report by the Dag Hammarskjöld Foundationsums up the negative implications of Plantar’s activitiesin these terms:

The cerrado was cut down, fields were fenced and con-solidated, and agriculture, stock-raising and food prod-ucts factories, which depended on the biodiversity of thecerrado, collapsed, leaving many unemployed. Throughdispossession and impoverishment, residents have beenforced to accept low wages and dangerous working con-ditions, often as illegal out-sourced labor, or flee to fav-elas on the outskirts of cities, where they are also trappedin a cycle of poverty [Lohmann, 2006, p. 310].

Project eligibility is also an important factor in determin-ing social outcomes. Among more marginal segments ofthe population, lack of secure tenure can prevent partici-pation. The Noel Kempff Project in Bolivia actuallyhelped participants to obtain secure tenure. However,some projects have eligibility requirements that excludepoorer community members, which exposes them to therisk of further marginalization.

For example, both Huetar Norte and Scolel Té requireat least 1 ha be devoted to tree-planting. This limit, com-pounded with the length of time that land must be setaside for tree growth, precludes participation by poorerfamilies who may not own sufficient land or be willingto risk devoting 1 ha to a single non-food crop for severaldecades. One researcher investigating the Scolel Té pro-ject found that despite having a lower limit of 1 ha forparticipants, new participants were, on average, devoting5 ha to plantations, which implies that the project is pri-marily attracting middle- and upper-income landowners[Osborne, 2006].

Finally, Table 2 conveys no information about commu-nities not hosting carbon sequestration projects. Success-ful community forest management for carbonsequestration or other applications requires a high levelof community organization, communication, and special-ized knowledge [Chapela, 2005]. Lacking these, many ofthe poorest communities will not attract investment with-out outside assistance. Moreover, the market mechanismsthat have been created to link suppliers of carbon seques-tration to consumers of offsets are simply not designed tohelp the poorest meet market demands.

6. DiscussionIf carbon sequestration, either through A/R or forest con-servation, is to make a substantial contribution to climatemitigation and contribute to sustainable development asdefined above, an understanding of current experiences iscritical. Based on this brief overview, some patterns arediscernable. However, it is difficult to generalize for sev-eral reasons: the concept of payment for carbon seques-

tration or forest conservation is in its early stages and agreat deal of learning still needs to occur in order for thecosts and benefits of these activities to be fully under-stood. Moreover, the sample size of existing projects issmall and the methods used to ascertain information aboutthem are not uniform. Nevertheless, some lessons areemerging. For example, it is obvious that the exclusionof forest conservation as well as the complex proceduresrequired of A/R activities have created sufficient barriersso that biological sinks will not make a substantial con-tribution to the CDM in the first commitment period ofthe Kyoto Protocol. In addition, transaction costs createa barrier for the implementation of sink projects that in-clude a large number of small-scale producers.

Outside of the CDM, some notable projects have beendeveloped. Some of these are selling carbon credits togrowing voluntary markets. Buyers in voluntary marketsare more tolerant of higher costs, particularly if they arecommitted to promoting social benefits in addition toGHG mitigation. More research is needed to better under-stand the potential of sinks in the voluntary carbon mar-kets, their socioeconomic impacts, and the direction thatsuch markets may take as we move toward the secondcommitment period.

In addition, A/R activities are highly dependent on localland management and the social dynamics inherent in suchpractices. Thus, sustainable outcomes from A/R projectsare contingent on local context and particular LUC tra-jectories, particularly in Latin America where land tenureinstitutions in many countries are the combined productof centuries of colonial rule followed by a mix of post-colonial dictatorships, populist uprisings, and agrarian re-forms. As Brown et al. [2004, pp. 29-30] write concerningScolel Té:

The contrasting historical configuration and distribu-tion of land resources... together with the evolution oftheir institutions for resource collective management,have determined the way in which the carbon projecthas been set up and developed.

Importantly, recent analyses demonstrate that some pro-jects have had negative outcomes on both communitiesand environmental conditions. The possibility of negativeimpacts must be considered when designing and evaluat-ing biological sink projects. Monitoring must be suffi-ciently thorough so that, if negative impacts exist, theyare fully revealed; and project designs must be sufficientlyflexible so that changes can be introduced that both reducethe impacts and compensate individuals who have beenharmed. This is particularly true for projects based onlarge-scale silvicultural plantations. Nevertheless, nega-tive outcomes observed in some projects should not pre-vent biological sink activities from going forward whereappropriate. Rather, they should serve as reminders thatincreases in tree cover do not automatically yield socialbenefits or improvements in environmental conditions.

However, rather than abandoning carbon sequestrationas a CCM strategy as some have suggested [Lohmann,2006; Bachram, 2004], lessons must be drawn from badly-conceived projects in order to avoid such mistakes and


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ensure that projects meet both social and environmentstandards. As Leach and Leach [2004, p. 82] contend,“Many opportunities exist to develop carbon sinks thatalso benefit rural livelihoods, by building on and enhanc-ing the many interests and strategies that rural people al-ready have for living and working with land and trees.”This includes looking beyond trees purely as carbon stor-age facilities with an additional payoff in timber 30 yearsdown the road (an impossibly long-term investment for atypical poor rural household). Carbon sequestration pro-jects should explore multiple-use agro-forestry options sothat the multiple benefits of trees on farms can be ac-cessed [Montagnini and Nair, 2004].

Unfortunately, current financing mechanisms for pro-ject development do not favor A/R projects that enhancelivelihood options for poor communities. Some barriersto developing successful A/R and forest conservation pro-grams could be lowered by incorporating payments foradditional benefits that can accrue from successful pro-jects [Grieg-Gran et al., 2005]. This includes the provisionof environmental services like biodiversity conservationand watershed management, as well as other social goods,like improved energy security. If socially beneficial pro-jects cannot compete in carbon markets that seek thecheapest means of CCM, then other means could be de-veloped to take advantage of these multiple benefits.These include host-country co-financing justified on thebasis that A/R activities can generate positive externali-ties, bundling of PES projects together to lower overallcosts, or co-financing with other Kyoto funds such as theAdaptation, Least Developed Country, or Special ClimateChange Fund.

Acknowledgements

I am grateful for the support I received from the Climate and Global Change PostdoctoralProgram of the National Oceanographic and Atmospheric Administration (NOAA) during thecourse of this research. In addition, I am thankful for assistance and logistical support Ireceived from Omar Masera and his students in the Bioenergy Lab at the Centro de Inves-tigaciones en Ecosistemas (CIEco) of the Universidad Nacional Autónoma de México(UNAM) in Morelia, Mexico. In addition, Tracey Osbourne of University of CaliforniaBerkeley’s Energy and Resources Group provided valuable insight into Mexico’s Scolel Téproject and Georgia Basso provided assistance with editing and proof-reading. Of course,any errors or omissions are solely my responsibility.

Notes

1. This paper focuses primarily on A/R activities, but will make reference to avoided de-forestation because there are strong connections between them both conceptually andin policy discussions. However, A/R and avoided deforestation should be clearly distin-guished both for technical and political reasons. (See Note 15 below for a discussionof the political issues.) The distinction is complicated by research showing old-growthtropical forests can act as carbon sinks, collectively storing as much as 2 GtC/yr inrecent decades [Malhi and Grace, 2000]. Thus, forest conservation may result in addi-tional sequestration.

2. This is true of projects implemented under the UNFCCC’s Activities Implemented Jointly(AIJ) phase as well as for CDM projects in the pipeline. Many projects directed towardvoluntary carbon markets are also situated in the region. See Section 3 for more detail.One reason that early sink-based CCM activities focused on Latin America may be theresult of specific US policies during the Clinton administration, when the AIJ was es-tablished. Nearly one-third of the total carbon emission reductions and sequestrationexpected from AIJ projects are the result of projects between the US and Latin Americanpartners [UNFCCC, 2006a].

3. Conventional CCM activities include GHG emission reductions through renewable en-ergy, fuel-switching, or energy efficiency projects. This ignores the potential links be-tween A/R activities and biomass energy. See Box 1 for a discussion of this and recentattempts to integrate biomass energy with A/R activities in the CDM.

4. Paying poor communities for carbon sequestration fits within a broader strategy ofmarket mechanisms categorized as payments for ecosystem services (PES). PES

evolved as a tool of environmental and development policy in the 1990s [Grieg-Granet al., 2005; Landell-Mills and Porras, 2002; Pagiola et al., 2005]. In a PES scheme,a monetary value is assigned to benefits that society derives from environmental serv-ices derived from a given ecosystem like water catchment, biodiversity, aesthetic value,and/or carbon storage. This value is paid to communities or individuals in return fordeveloping and/or maintaining the ecosystem that delivers these services. In economicterms, the scheme internalizes some of the benefits of particular ecosystems so thatrural communities can make more efficient decisions about their land use. See [Grieg-Gran et al., 2005] for a critical review of experiences with PES schemes in Latin Amer-ica, including several carbon sequestration projects.

5. In the context of A/R projects, transaction costs include the cost of getting a projectregistered and approved, the costs of finding buyers for CERs, and the costs of moni-toring, verifying, and certifying CERs, which would all be higher for projects that targetmultiple dispersed landholders rather than a single landowner. An additional cost is themandatory 2 % levy paid to the Adaptation Fund as decided in the Marrakech Accordsreached at COP-7 [UNFCCC, 2001]. For a more detailed discussion of transaction costssee [Dutschke et al., 2006].

6. The IPCC TAR reports results from models that estimate the marginal abatement coststo meet Kyoto Protocol commitments with global emission trading. Results range from6 to 108 US$/tC (adjusted for inflation from 1990 to 2000 dollars based on OECDinflation rates) [IPCC, 2001a]. For comparison, one recent analysis developed a supplycurve for carbon sequestration via A/R activities in Latin America and showed that whenopportunity costs are included, the quantity of land that can economically be devotedto carbon sequestration remains fairly low until carbon prices exceed about US$ 15/tC[Benítez and Obersteiner, 2006].

7. In a later decision, the Conference of the Parties to the Kyoto Protocol agreed that itis the “prerogative” of the countries hosting CDM activity to define sustainable devel-opment and decide whether proposed CDM activities suit their definition [UNFCCC,2002a].

8. In the language of the UNFCCC, developing countries are categorized as non-AnnexI countries. The “Annex” is a reference to an appendix that was appended to the originalconvention document containing the list of industrialized countries agreeing to emissionlimits [United Nations, 1992].

9. The least developed countries are exempt from this tax; however, it still taxes incomefrom other developing countries in order to fund adaptation. No other flexible mecha-nisms are charged this type of levy.

10. This pattern is already apparent. As of August 2006, sub-Saharan Africa hosted only17 planned or approved CDM projects out of 996 in the pipeline [Fenhann, 2006]. 12are hosted by South Africa, effectively a middle-income country [UNDP, 2003]. Thus,the remaining 47 countries in the region host only 0.5 % of activities.

11. As Dutt mentions in the editorial of this issue, few CDM projects involve meaningfultechnology transfer or investment financing from Annex I countries. Funds reach non-Annex I countries solely in the form of cash for carbon offsets.

12. The “pipeline” refers to the process of registering and validating CDM project activity.UNEP-Risø produces a useful database dubbed the CDM Pipeline Overview, which isthe source of this information [Fenhann, 2006].

13. CERs are defined for accounting purposes by the UNFCCC as equal to 1 t of CO2

(∼0.273 tC) or its equivalent in other GHGs weighted by their global warming potentials[UNFCCC, 2002a].

14. The FAO’s Global Forest Resources Assessment [FAO, 2001] reports changes in forestcover at a national level from 99 non-Annex I countries. By their estimation, 78 non-Annex I countries experienced a decrease in forest area from 1990 to 2000. The largestlosses occurred in Brazil, Indonesia, Sudan, Zambia, Mexico, and the Democratic Re-public of Congo, which together account for 50 % of global forest loss [FAO, 2001].

15. Leakage was not the only concern voiced during debate over “avoided deforestation”.This question was decided in highly political debate in which Brazil and several promi-nent environmental groups were vocally opposed to its inclusion in the CDM. See [Niles,2002] for a full discussion. The issue reemerged at COP-11 in 2005 and is currentlyundergoing a technical and scientific assessment to explore ways that avoided defor-estation can be included in the second commitment period [Skutsch et al., 2006].

16. Figure 1 shows the expansion of plantations between 1990 and 2000. Regionally, non-Annex I countries have experienced annual growth rates of commercial tree plantationsranging from ∼3 % in sub-Saharan Africa to over 5 and 6 % in Asia and Latin Americarespectively [WRI, 2006].

17. The IPCC defines full carbon accounting as “a complete accounting for changes incarbon stocks across all carbon pools”, which would, “in principle, yield the net carbonexchange between terrestrial ecosystems and the atmosphere”. However, the IPCCalso mandated that only changes in stocks and flows of carbon induced by humanactivity could be counted toward or against mandated limits in GHG emissions [IPCC,2000, Section 2.3.2.5]. Under full carbon accounting it can be difficult to separate naturaland anthropogenic processes.

18. While no standardized metrics of sustainable development have been widely accepted,several have been developed. (For a quantitative metric of sustainability at the nationallevel, see [Esty and Porter, 2005]; for a qualitative framework that functions across


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scales, see [Carney, 1999] or [Chambers and Conway, 1991]; and for a quantitativeframework that is appropriate at the project level, see [Masera and López-Ridaura,2000].

19. Both the concepts of “standards of living” and “environmental integrity” are, at leastpartially, subjective, which makes measuring and quantifying them difficult. The aca-demic literature on either topic is too broad to do it justice here, but to scratch thesurface on “standards of living”, see the seminal work of Drèze and Sen [1989] and[Dasgupta, 1993]. For insight into the subjective nature of “environmental integrity”, seethe literature on political ecology: Blackie and Brookfield’s work [1987] is an early classic,while [Robbins, 2004] provides an excellent overview.

20. Voluntary carbon markets is somewhat analogous to the “fair trade” movement in whichconsumers are willing to pay a premium for a product that they consider to be moresocially and/or environmentally beneficial than an equivalent “normal” product [EqualExchange Inc., 2006]. The voluntary carbon market has grown from 3-5 MtCO2 (0.8-1.4MtC) traded in 2004 to a projected 20-50 MtCO2 (5.5-14 MtC) in 2006 [Gardner, 2006].However, the future viability of voluntary markets after stricter limits on GHG emissionsare in place and, perhaps, the US accepts mandatory emission reduction, is not at allclear.

21. The author thanks an anonymous reviewer for pointing out that emission reductionsthrough agriculture are permissible, but only for reductions in CH4 and N2O.

22. The range arises because a range of areas were given for Mexico from an upper boundof what is “technically feasible” to a more realistic level that is “economically feasible”.

23. The authors considered only land classified as non-forested and non-cultivated landclassified as grassland, savanna, or open shrubland by the International GeosphereBiosphere Program (IGBP). They also constrained their analysis to land that is poorlysuited for agriculture on the basis of an agricultural suitability index of 50 % or less[Ramankutty et al., 2002], land that is sparsely populated (< 100 people/km2), landwhose primary productivity is moderate ( 10 tC/ha-yr) and land situated below 3500 mabove sea level.

24. The range depends on the price of carbon, which is US$ 10-30/tC. The analysis alsoaccounts for the use of non-permanent CERs (discussed above). The authors foundthat non-permanent CERs shift the supply curve for A/R activities substantially, so thatthe number of CERs generated by 2012 can drop by nearly 60 % relative to a moreconventional carbon accounting mechanism when carbon is at US$ 30/tC [Benítez andObersteiner, 2006].

25. In fact, it was proposed as a possible CCM strategy by the physicist Freeman Dyson[1977].

26. In addition, there are 19 approved small-scale project methodologies in use in nearly550 small-scale projects, none of which are sink-based [Fenhann, 2006].

27. By August 2006, 29 methodologies had been proposed to the EB. Of these, three wereaccepted, one was withdrawn, and 21 were asked to make either minor changes orresubmit their project design documents (PDDs) – four had complied but have yet tobe approved. The balance still have decisions pending [Fenhann, 2006].

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