The Economic potential of land-use change and forestry for carbon sequestration and poverty reduction
 |
| Project ASEM 2002/066 | ||
|
This research project is funded by the Australian Centre for International Agricultural Research (ACIAR), under the Agricultural Systems Economics and Management Program.A brief overview of the project is presented below. To download papers and computer programs, or to learn more about the project, use the menu above.
| ||||
 CESERF | ||||
|
| ||||
 | ||||
Background
Concerns over global warming have led to proposals for the establishment of markets for greenhouse gas emissions. Through the process of photosynthesis, trees absorb cabon dioxide which remains fixed in wood and other organic matter in forests for long time periods, and hence trees are a convenient way of sequestering carbon from the atmosphere to reduce net emissions.
The Kyoto Protocol (KP) has provided the context within which much of the policy debate on global warming occurs. But other mechanisms to help control global warming and preserve biodiversity exist at international and national levels. This research project focuses on land-use change and forestry (LUCF) activities, with emphasis on smallholder agroforestry. So the relevant Kyoto policy is the Clean Development Mechanism (CDM), which allows Kyoto signatories to implement projects that reduce emissions in developing countries, with these emission reductions credited to the country making the investment.
The project contains a farm-level component and a policy-analysis component. The focus in Indonesia is on smallholders and poverty alleviation. The project also has an Australian component that focuses on farm forestry and environmental services.
This project is a follow up of ACIAR Project ASEM 1999/093. The information contained in these pages includes outputs from the previous project as well as the current project.
Objectives
- Determine the most appropriate land-use change and forestry systems for capturing carbon-credit payments and assisting in poverty alleviation
- Estimate the transaction costs of actual projects and identify principles of project design to minimise these costs.
Expected Outputs
- An integrated system of parameter values and bioeconomic models to analyse the performance of different LUCF systems.
- Estimates of transaction costs associated with different project designs.
- Identification of constraints caused by political and social factors.
- Enhanced capacity of government research agencies both in Indonesia and Australia.
Research Method
Subproject 1: Farm-level analysis
The conceptual framework for Subproject 1 is illustrated in Figure 1. Inputs required are: (1) the characteristics of the relevant site, including soils and climate; (2) information on LUCF systems available for a given site, including growth and carbon sequestration rates of trees and crops; (3) economic data on prices, costs and production inputs required for a given LUCF system. These inputs are integrated through economic analysis to provide a selection of feasible LUCF systems and a ranking of those systems.
Subproject 1 will produce a dataset of representative LUCF systems and measures of their economic performance in various environments. These outputs are on a per-hectare basis and will allow the selection of desirable systems for a given environment (i.e. dry v wet, degraded v good land). The performance measures will be based on profitability, but also accounting for risks and social and environmental benefits.
Subproject 2: Transaction costs and project design
Alternative designs for carbon sequestration projects will affect the profits, costs and risks faced by landholders, investors, local governments and host countries. Therefore project design will influence the likelihood that alternative LUCF systems will be adopted and promoted at different levels. Alternative project designs may include: (i) contracts with smallholder groups, (ii) projects involving community land, (iii) contracts with individual landholders, and (iv) projects involving large plantations.
It may also be important to account for spatial differences within a project area, particularly when a constraint on the amount of land that can be reforested is included in the form of minimum food-production needs in the locality, this is especially important in smallholder projects. Outputs from Subproject 1 will be used to simulate groups of farmers operating in heterogeneous landscapes incorporated into a carbon-sequestration project. This will provide some important information in terms of project design and carbon-monitoring costs.
In Indonesia, this subproject will focus on the Citanduy watershed, Java, the ICRAF research site in Lampung, South Sumatra, and the FORDA research site in Nussa Tenggara. In Australia, the focus will be on lower rainfall areas (450 to 800 mm) in general, and northern NSW in particular. There exist some marginal systems (in an economic sense) that may have high environmental benefits in addition to carbon sequestration. In Australia, the establishment of farm-forestry operations for salinity control is particularly relevant. Northern NSW has been selected in this project as it faces salinity emergence in the Namoi catchment, and is one of the priority catchments for the NSW Government’s Environmental Services Scheme.
The following transaction costs will be estimated for selected combinations of project size, design and site:
- search costs,
- negotiation costs,
- approval costs,
- administration costs,
- monitoring costs,
- enforcement costs,
- insurance costs.