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Transaction and abatement costs of carbon-sink projects in developing countries
Abstract
Projects in the forestry sector, and land-use change and forestry projects more generally, have the potential to help mitigate global warming by acting as sinks for greenhouse gasses, particularly CO2. However, concerns have been expressed that participation in carbon-sink projects may be constrained by high costs. This problem may be particularly severe for projects involving smallholders in developing countries. Of particular concern are the transaction costs incurred in developing projects, measuring, certifying, and selling the carbon-sequestration services generated by such projects. This paper addresses these issues by reviewing the implications of transaction and abatement costs in carbon-sequestration projects. An approach to estimating abatement costs is demonstrated through four case studies of agroforestry systems located in Sumatra, Indonesia. A typology of transaction costs is presented and related to existing pilot projects. The paper concludes with recommendations to reduce the disadvantages that smallholders may face in capturing the opportunities offered by carbon markets.
... In order to participate in the carbon market, it is not enough for landholders to cover their opportunity costs; they must also incur transaction costs to certify the abatement services they provide [83]. Transaction costs can arise from the transfer of any property right [84]. ...
... In the case of carbon markets, transaction costs tend to be high because the property right to be exchanged is difficult to measure and its exact size is subject to uncertainty. Transaction costs can be thought of as the cost of converting carbon into a marketable commodity, and this requires monitoring, verification and certification to assure buyers that the commodity they are paying for actually exists [23,83]. ...
... A large portion of transaction costs tends to be fixed and occur long before any revenues are obtained [83,85]. This means that, except for large corporations, most landholders would only be able to participate in carbon markets as members of a project. ...
As carbon becomes a valuable commodity traded in markets for greenhouse-gas emissions, there will be incentives to adopt land uses that capture carbon payments as well as produce other marketable outputs, including biofuels. These production systems may be more sustainable than many of those in current use, but there is also the risk that the growing demand for biofuels will cause land degradation, deforestation and food scarcity. The land-use patterns that arise as a result of carbon markets will largely depend on the 'rules of the game', which will be determined by governments and international agencies. This paper addresses these issues by reviewing the literature on the potential for terrestrial carbon pools to contribute to mitigating climate change. The review covers studies from forestry, ecology, economics, agriculture and other disciplines, reflecting the complexity of the issues and the range of research priorities that will need to be addressed in the next few decades. There is strong evidence that the potential for land-use systems to contribute to climate mitigation efforts is significant, but for this to occur it will be necessary that landholders receive incentives to change their current land uses. These incentives are linked to scientific, institutional and economic factors. An essential component will be the development of markets that allow the trade of emission reductions from both the energy sector and the land-use change and forestry (LUCF) sector. Technical factors that will contribute to success include: creation and analysis of remote-sensing and socio-economic datasets to estimate credible baselines; development of simple and inexpensive techniques for measuring soil carbon; and development of agreed standards that relate land-use and biophysical characteristics of a site to carbon content. Much research is being done to address these factors, and monitoring and reporting systems for LUCF activities are operational under the Kyoto Protocol, but obstacles remain for widespread implementation. There is a window of opportunity for projects to be developed that restore degraded croplands, avoid deforestation and encourage reforestation. This opportunity has a limited life span that depends on the duration of the transition period to low-carbon energy technologies that will ultimately carry the burden of climate change mitigation.
... Additional uncertainty is attached to neglecting explicit costs for the design, implementation, monitoring, enforcement, verification and certification of AD projects and adding so-called transaction costs to forest carbon conservation or sequestration programmes (Kindermann et al., 2006Cacho et al., 2005;Grieg-Gran, 2006;Sathaye and Andrasko, 2007;Nepstad et al., 2007Nepstad et al., , 2009) on top of the implicit costs of AD. This underpins global climate change mitigation through AD to remain a relative low-cost option from a society's perspective , even though only the sectoral opportunity costs have been calculated in this study. ...
... Up to an assumed carbon price the total quantity of avoided CO 2 emissions would be decreased, i.e. the emission mitigation benefit to society would be less. Cacho et al. (2005) make a more thorough investigation, including carbon market effects of transaction and abatement costs of carbon sequestration projects in developing countries. ...
Die vermiedene tropische Entwaldung und zusätzliche Aufforstungen sind von zentraler Bedeutung für die Klimawandelvermeidung, üben aber zusätzlichen Druck auf die globalen Landressourcen zur Produktion von Nahrungsgütern, Futtermittel, Fasern, Bioenergie und Rundholz dar. Die Ziele der Studie beziehen sich auf die Analyse der Verzichtskosten in der Land- und Forstwirtschaft sowie das Potential zur Klimawandelvermeidung in globalen Wäldern durch normative und marktbasierte Klimaschutzprogramme. Das globale ökonomische Landnutzungsmodell ''Model of Agricultural Production and its Impact on the Environment'' (MAgPIE) wurde um eine konsistente Landnutzungsdatenbank und den Forstsektor erweitert. Es simuliert die räumlich-explizite Landnutzung und deren Änderungen während die Kosten land- und forstwirtschaftlicher Produktion unter gegebener Nachfrage nach Gütern geschätzt werden. Szenarien zu Klimaschutzmaßnahmen werden verglichen mit Referenzszenarien über Zeithorizonte bis zum Jahr 2100. Die Ergebnisse verweisen auf ein begrenztes Mitigationspotential normativen tropischen Waldschutzes zu geringen zusätzlichen Kosten in der Landwirtschaft. Lateinamerika profitiert von ausreichenden Landreserven und geringem Anstieg in der Güternachfrage und geringer Referenzentwaldung. Die Verlagerung von Emissionen durch regionalen Waldschutz hat Auswirkungen auf die sektoralen Produktionskosten und verringert das globale ökonomische Potential. Die Schlussfolgerungen betreffen 1) den Bedarf an substantieller Ertragssteigerung in Sub-Sahara Afrika als Voraussetzung für die erfolgreiche Umsetzung vermiedener Entwaldung, 2) die erhöhte Gefahr der Verlagerung von Emissionen aus Entwaldung durch die Umsetzung regionaler Klimaschutzprogramme und der Liberalisierung des Holzhandels, 3) das hohe ökonomische Potential integrierter Klimaschutzprogramme zu moderaten Verzichtskosten, sowie 4) die Notwendigkeit zusätzlicher Forschung bezüglich der Unsicherheiten in Parametern und Modellprozessen.
... Depending on the plant system, the abatement costs in Indonesia, for example, may vary between US$1.7 and US$7.8t CO 2 eq À1 (Cacho et al., 2005). Although these figures were not directly comparable with the present results due to their timeliness and derivation, they did at least show that SRC could probably be cultivated much more favorably in other regions of the world. ...
... These costs are related to the arrangements needed to link all the actors in the project, being the buyer, seller, donor, beneficiary and other actors such as evaluators and certifiers, throughout the project chain. This requires the identification and design of the project, investments negotiations, administrative costs for monitoring, reporting, verification and certification procedures to meet the goals agreed by the parties (Cacho et al. 2005). ...
... A wide body of literature reveals that AFS sequester more atmospheric CO 2 compared to conventional farming systems (Brakas and Aune, 2011;Nair 2012;De Stefano and Jacobson, 2017). Perennial trees in AFS sequester C through photosynthesis and store it in aboveground and belowground biomass (Cacho et al., 2005). A review by Lorenz and Lal (2014) shows that generally, AFS potentially sequesters 0.02e0.04 ...
As global carbon dioxide (CO2) concentration increases (277 ppm in 1750 to 415 ppm in 2021), many countries are battling to achieve a net zero emission target by 2050. Annually, consumption of fossil fuels and land use change release more CO2 into the atmosphere than natural sinks (vegetation, soils, and oceans) can sequester, causing atmospheric CO2 concentration to increase. Approximately 50% of global CO2 emissions remain in the atmosphere, while natural sinks absorb the other half. The most promising solution to the climate change problem is to protect carbon sinks and adopt novel strategies that enhance carbon (C) sequestration in human-modified ecosystems. Although natural vegetation is a crucial C sink, using trees in agricultural landscapes can sequester 0.02–0.04 PgC yr−1. Increasing tree cover in agroecosystems, which now occupy about 40% of the global land area, can contribute immensely to solving the climate crisis. In this chapter, we synthesize information on international C sources and sinks highlighting agroforestry's role in C sequestration, mitigation, and adaptation in a changing climate.
... The former is defined as the opportunity cost of changing the original operation and utilization mode to a new one, emphasizing the maintenance or increase in the carbon sequestration function of the forest (Lipper et al., 2010). The abatement cost is more of a technological and economically determined issue, whereas the transaction cost is more affected by institutional design (Cacho et al., 2005). Transaction costs include arranging a contract to exchange property rights ex ante and monitoring and enforcing the contract ex post (Matthews, 1986). ...
Purpose
As a typical nature-based solution to climate change, forestry carbon sinks are vital to achieving carbon neutrality in China. However, regulations in China are insufficient to promote the development of carbon offset projects in forestry. This study aims to identify the regulatory obstacles impeding the development of forestry offsets under China’s certified emission reduction (CCER) and explore ways to improve the regulatory system.
Design/methodology/approach
This study conducts a qualitative analysis using a normative legal research method. This study conducted a synthetic review of national and local regulatory documents to gain insights into the regulatory landscape of forestry offsets in China. The main contents and characteristics of these documents are illustrated. Furthermore, related secondary literature was reviewed to gain further insight into forestry offset regulations and to identify significant gaps in China’s CCER regulation.
Findings
Forestry offset regulations under the CCER are characterized by fragmentation and a relatively lower legally binding force. There is no systematic institutional arrangement for forestry offset development, impeding market expectations and increasing transaction costs. The main challenges in China’s regulation of forestry carbon sinks include entitlement ambiguity, complicated rules for registration and verification, a lack of mechanisms for incentives, risk prevention and biodiversity protection.
Originality/value
Forestry carbon sinks’ multiple environmental and social values necessitate their effective development and utilization. This study assessed forestry offset regulations in China and proposed corresponding institutional arrangements to improve forestry carbon sink regulations under the CCER.
... Nevertheless, challenges to certifying biochar production in remote regions and/or by individual farmers remain legion. Transaction costs will be large (Cacho et al., 2005). The fact that dry biomass is essential for a negative carbon balance is also an important complication in the humid tropics. ...
Flame curtain kilns have emerged as the preferred biochar technology for smallholders but reported methane emissions (30 g kg-1 biochar) have impeded carbon certification. Here, for flame curtain kilns we show almost no methane (0-3.6 g kg-1 biochar) emissions for dry (<15 % moisture) feedstock consisting of twigs and leaves. Wet feedstock (>40 % moisture) however generated significant methane (>500 g kg-1 biochar), underscoring that feedstock preparation is decisive for the carbon balance. Even for dry feedstock, both aerosol and CO emissions were significant (21-82 and 40-118 g kg-1 biochar, respectively). The data demonstrate that certification of low-tech biochar made from dry twigs and leaves should not be objected to on the grounds of methane. Careful selection of feedstock and potential after-combustion of the syn-gases are probably needed to avoid CO and aerosol emissions. More data are needed on methane emissions of other dry feedstocks.
... On the face of it, an orientation towards sustainability involves increased investment [Hopkins (2009);Nidumolu et al. (2009)] in capabilities which do not seem to directly enhance shareholders' wealth. Nowhere is such a preconception more evident than in the emerging economies [Cacho et al. (2005); Brem and Ivens (2013); Momaya (2018)] such as India. ...
India — the land of frugal innovation — is striving hard to catch up on its innovation capabilities. However, its inability to achieve balances on multiple fronts even 74 years after its independence indicates the presence of some underlying problems of competitiveness —both at the macro- as well as micro-levels. In this study, we build upon and extend the competitiveness Assets–Processes–Performance (APP) framework and try to diagnose such problems at the micro-level (i.e. firm level). We specifically try to understand the effect of environmentally sustainable practices (ESPs) on the relationship between innovation capabilities and export competitiveness (EC) of firms. Methodologically, we draw insights from both the theoretical (extant literature) as well as the observational (comprised of a purposive sample of select firms) realms. Our findings indicate that firms of Indian origin (FIOs) which are ahead of the rest in terms of their ESPs, fare better in terms of their EC. We propose a conceptual framework, wherein we posit that ESPs can moderate the relationship between innovation capabilities and EC. We also draw implications for theory and practice and discuss the avenues for future research.
... Although agroforestry practices in LMIC are more widespread than in developed countries (Ramachandran Nair et al., 2010), carbon market opportunities in LMIC associated with agroforestry are lower, hampered by insecure land tenure and high transaction costs that are prohibitive for smallholders in Africa and Indonesia for example (Cacho et al., 2005;Jindal et al., 2008). Widespread participation in carbon markets in the foreseeable future is unlikely without accompanying development of policy instruments to reward the rural poor for other environmental services such as watershed protection and biodiversity enhancement (Garrity, 2004;Lee et al., 2016). ...
Livestock have long been integral to food production systems, often not by choice but by need. While our knowledge of livestock greenhouse gas emissions (GHG) mitigation has evolved, the prevailing focus has been - somewhat myopically – on technology applications associated with mitigation.
Here, we (1) examine the global distribution of livestock GHG emissions, (2) explore social, economic and environmental co-benefits and trade-offs associated with mitigation interventions, and (3) critique approaches for quantifying GHG emissions.
This review uncovered many insights. First, while GHG emissions from ruminant livestock are greatest in low and middle-income countries (LMIC; globally, 66% of emissions are produced by Latin America and the Caribbean, East and southeast Asia, and south Asia), the majority of mitigation strategies are designed for developed countries. This serious concern is heightened by the fact that 80% of growth in global meat production over the next decade will occur in LMIC. Second, few studies concurrently assess social, economic and environmental aspects of mitigation. Of the 54 interventions reviewed, only 16 had triple-bottom line benefit with medium-high mitigation potential. Third, while efforts designed to stimulate adoption of strategies allowing both emissions reduction (ER) and carbon sequestration (CS) would achieve the greatest net emissions mitigation, CS measures have greater potential mitigation and co-benefits.
The scientific community must shift attention away from the prevailing, myopic lens on carbon, towards more holistic, systems-based, multi-metric approaches that carefully consider the raison d'être for livestock systems. Consequential life-cycle assessments and systems-aligned ‘socio-economic planetary boundaries’ offer useful starting points that may uncover sensitive leverage points and cross-scale emergent properties. Derivation of harmonised, globally-reconciled sustainability metrics requires iterative dialogue between stakeholders at all levels. Greater emphasis on the simultaneous characterisation of multiple sustainability dimensions would help avoid situations where progress made in one area causes maladaptive outcomes in other areas.
... Cacho et al. (2005, quoted in Kashwan 2008 analyzed various transaction costs involved in COM, which include search costs {incurred as investors, project developers, and hosts seek partners for mutually advantageous projects), negotiation costs {costs of reaching an agreement), approval costs {time delays incurred after submission of project design documents), administration costs {resources expended in administering the translation of a project design into practice), monitoring costs {costs of verifying compliance with the agreed terms of the transaction), enforcement costs {expenses of insisting on compliance if monitoring detects divergences from the agreed terms of the transaction), and insurance costs {the risk of project failure and its consequences for buyers and seller of CERs). Thus, transaction costs in developing countries for COM may be substantial. ...
The market driven payment for forest environmental services has become a new conservation discourse unfolding across the world since 1990. Of the wide variety of the environmental services that forests provide, carbon sequestration, watershed services, biodiversity conservation, and landscape beauty have drawn maximum attention of the scholars. Market is increasingly being seen as an alternative for ensuring sustainable usage, meeting fiscal deficit and also realising forest based welfare benefits. However, garnering larger social acceptance for freely available forest services as marketable commodity would require strong political support. To affix price, benefit from forest services need to be well defined, directly measurable, permanent and should be able to deliver the promised benefits. It is especially challenging in the context of decentralised forest governance emerged during the last two decades across the globe. Taking the example of carbon offset markets and the experiences of forest decentralisation in nine countries across Asia, Africa and Latin America, this paper establishes that claiming benefits from market for forest environmental services by poor and/or for the poor living in forests' fringes is far more complicated than simple trading. It would perhaps be the greatest challenge for the policy makers and practitioners to design an institution where the industrialists of the developed countries would enter into a market deal with the poorest living at the edge of forests in developing countries. By analysing the socioeconomic and institutional dimensions including status of property rights, nature of power and authority and regulatory system of decentralised governance in forests in developing countries, this paper will try to indicate the opportunities for convergence in institutional design which could dovetail ecological service benefits with welfare needs for the poor.
... No hay estimaciones de costos de transacción para el proyecto Plantar, pero Nagai (2005) estima que los costos de transacción representan aproximadamente el 1 por ciento del valor a obtener por la venta de créditos de carbono generados por el proyecto. Este costo estimado relativamente bajo no toma en cuenta los costos incurridos después de que el proyecto pase por el procedimiento de aprobación del MDL (aún pendiente), pero corrobora la idea de que los proyectos relacionados con pocos proveedores tienden a tener bajos costos de transacción (Cacho et al., 2005). Está claro que factores condicionantes, tales como ubicación y acceso, escala, tipo y grado de amenaza, incentivos preexistentes a la conservación, y las características de los proveedores y los servicios son elementos insuficientes para explicar las relaciones entre efectividad y costos a lo largo de los casos de PSA revisados. ...
Durante las dos últimas décadas, varios proyectos de carbono enfocados en la aforestación y reforestación (A/R) han sido implementados en América Latina, y en otros países en desarrollo, sobre todo a pequeña escala. Aunque siendo elegibles para ser financiados por el Mecanismo de Desarrollo Limpio (MDL) del Protocolo de Kyoto, reglas complicadas y altos costos de transacción han sido fuertes obstáculos para poder incrementar la escala de implementación de proyectos A/R. Este artículo contribuye al debate sobre el costo-efectividad de los PSA y su impacto en los medios de vida, basándose en una revisión de algunos esquemas de pago por carbono de A/R existentes en América Latina, y dos evaluaciones enfocadas en PSA bajo el contexto de REDD en la región amazónica.
... Similar to other PES schemes, REDD+ can impose prohibitive costs for small-scale initiatives, related to requirements for detailed management plans and data (Cacho et al. 2005). Additionally, if carbon storage becomes the predominant goal in a community forestry initiative, REDD+ can have negative impacts on local livelihoods and other social goals (Gilmour 2016). ...
Globally, forests cover approximately 30% of the world’s land surface and are vital for meeting human needs for food, fuelwood, timber, fodder and medicines. Forests are also critical in providing a wide range of environmental services, including biodiversity conservation, climate regulation, watershed protection and soil amelioration. Despite the enormous importance of forests in people’s lives and livelihoods, deforestation and forest degradation have increased globally, and at vastly higher rates than ever before. One of the major reasons for the failure of most forestry programmes in tropical developing countries is the exclusion of local people in forest management and poor recognition of local peoples’ customary rights and dependency on forests. Community-based forest management (CBFM), also known as community forestry, social forestry, joint forest management or participatory forestry, has emerged in response to the concern that centralised forest ownership in most developing countries has failed to promote sustainable forest management (SFM). Social, economic and environmental well-being are at the core of the SFM concept and principles. Despite the significant progress towards SFM over the past decades, its implementation is highly variable in the tropics where the capacity to utilise or enforce SFM policies, laws and regulations remains unequal. This chapter provides an overview of CBFM in the tropics. We first discuss the origins and evolution of CBFM, followed by governance issues relating to CBFM, the factors affecting the success (and failure) of CBFM, the design and implementation of CBFM, and CBFM in international forest policy and management.
... In addition, there is a problem of interests. Land used for carbon sink projects requires legal agreements that prevent land use for many years [30]. In this way land is used to generate emission rights so that the most polluting countries and industries continue to pollute while communities are unable to meet their needs [31,32]. ...
Today, climate change is assumed by many researchers and scholars as a certainty and is presented as the biggest challenge humanity has ever faced. It is commonly accepted that anthropogenic greenhouse gas emissions are the main cause that is accelerating the process. Therefore, it is urgent to find solutions to mitigate climate change, mainly because the intense effects have already been felt, in many cases in the form of the occurrence of extremely violent weather events. Forests are undoubtedly one of the most effective and easiest ways to provide the function of carbon sinks. However, it is essential and convenient to analyze the permanence time of this carbon in forests, because this permanence time depends directly on the forest management model used. This article aims to analyze forest management models from the perspective of carbon residence time in temperate forests, dividing the models into three types, namely carbon conservation models, carbon storage models, and carbon substitution models, according to their ability to contribute to functioning as carbon sinks, thereby contributing to the mitigation of climate change.
... Transaction costs: Transaction costs are the costs of putting in place and enforcing the offset agreement or contract [15]. It may include costs of searching for suitable offsets, negotiation between developers and the agency, obtaining approval, monitoring compliance, enforcement, insurance, design of the scheme and legal processes [16]. ...
In various countries, offset policies allow economic developments to proceed on condition that proponents undertake agreed actions that offset the resulting losses of environmental values. Although ecological and environmental benefits are the main concern of a conservation agency when assessing an offset proposal, it is also important to be aware of the full cost of implementing the offset. However, there is currently a lack of understanding of the costs of implementing offsets, including which costs are relevant and what their magnitudes are. To address this knowledge gap, we developed a typology of costs that are relevant to offset schemes. We searched the publicly available information on costs of offset activities for thirty-four threatened species and communities in Australia to apply our cost framework. The results indicate that cost information is lacking in many cases. Information about some of the cost categories is not available for any of the species (e.g., induced costs to other areas or sectors). It is not clear whether the unreported cost categories are not considered during negotiation or whether it is just a case of lack of reporting.
... Agroforestry systems in the Himalaya are backbone of hill agrarian community for livelihood security (Yadav et al. 2016). Various forms of agroforestry such as improved fallows beside maintenance of soil fertility also improve on farm environment quality (Kuntashula and Mungatana 2015), carbon sequestration (Cacho et al. 2005;Yadav et al. 2017) and economic sustainability (Kitti et al. 2009). Hence, there is enough scope in Himalayan agroforestry research for economic benefit to community and diverse ecosystem services in the context of global climate change. ...
Sustainable indigenous agroforestry systems are mainstay of rural agrarian economy coupled with
livestock rearing in mountains of Himalayas. A 2B4D6-watershed was selected in Central Himalayas to
investigate economic returns from agriculture based agroforestry systems. A detailed structured analysis
revealed four types of agriculture based agroforestry systems are prevalent in the 2B4D6-watershed of
Indian Central Himalaya. These agroforestry systems are profitable to farmers and can obtain more
than two-fold returns from agriculture based agroforestry systems. The net return from these systems
decreased in the order: Agrihorticulture > Agrihortisilviculture > Agrisilvihorticulture > Agrisilviculture.
The highest benefit cost ratio from agroforestry systems was obtained at higher elevation E5
and it
decreased with decrease in elevations in the order: E4
> E3
> E2
> E1
. Thus, we conclude that agroforestry
systems are not only sustainable but also are imperative for livelihood security of local inhabitants of
Indian Central Himalayas.
... This was using household survey and key informant data with latex price ranging from 3,000 Rupiah/kg to 7,000 Rupiah/kg, reflective of differences in latex quality and market access. Discount rates used to calculate the NPV of rubber net income over 5 years ranged from 10 per cent to 20 per cent, in line with values for the region(Cacho et al., 2005(Cacho et al., , 2013). terms of use, available at https://www.cambridge.org/core/terms. ...
This article investigates the use of payments for environmental services to support a wildlife corridor between two Priority Tiger Conservation Landscapes in central Sumatra, Indonesia. Several hundred smallholders operate within a Protection Forest linking the Tiger Conservation Landscapes. This study explores the willingness of these smallholders to accept a payment requiring them to forgo access to their land for five years. In addition to asking households directly what they would be willing to accept (WTA), we also ask them to infer what their neighbour would accept. The study finds evidence of hypothetical bias in the conventional WTA values, with a statistically significant difference between what people say they would be willing to accept when surveyed, compared to what they say would actually be willing to accept in a ‘real life’ situation. We show how inferred valuation techniques can mitigate against this.
... One mechanism that has received a great deal of attention is a carbon-sequestration based payment (Seeberg-Elverfeldt et al. 2009). However, such programs often fail because of the difficulty in monitoring and verifying compliance, and with making and enforcing contracts with, and delivering payments to, many smallholders (Lockie 2013;Alix-Garcia et al. 2012;Cacho et al. 2005). Research needs to shift towards generating better evidence on a wider range of specific institutional structures and mechanisms that link smallholders to financing opportunities, including expanding the innovative use of information and communication technologies (ICTs) and geo-spatial information. ...
Climate change, especially through greater frequency and intensity of climate extremes, is expected to negatively impact agriculture and food security, particularly in developing countries highly dependent on rain-fed agriculture. Promoting growth and food security must draw on the rich literature of the past 50–60 years while also addressing potential structural shifts in the factors that promote growth. This paper summarizes the economic considerations of Climate Smart Agriculture, a concept developed by the FAO to address the complex issue of how to achieve sustainable agricultural growth for food security under climate change. It addresses the lack of coherence on the CSA approach by building a formal basis of the CSA concept and methodology. We do this by posing a dynamic optimization problem wherein a social planner seeks to maximize expected discounted welfare associated with agriculture of the population they serve, both now and in the future. We analyze constraints, choices, and features of design of CSA to illustrate on the concept can be applied across a range of locations and conditions. This has implications for research, innovation, and policy design.
... The median flow estimate represents a more stable and long-term figure for the study site. This estimate is also in line with the opportunity costs (ranging between US$39 and US$509) reported for similar land-use types (Cacho et al. 2005, Chomitz et al. 2005, Börner and Wunder 2008, Bottcher et al. 2009). ...
Unsustainable land uses present many challenges for securing ecosystem service provision. It is also difficult to estimate the cost of a transition to more sustainable land management practices for individual landholders. The main cost to landholders are the opportunity costs, the income foregone when changing land use for continued or enhanced ecosystem service provision. Thus accurate estimation of opportunity costs and understanding their distribution are crucial starting points for determining the economic viability and design of any PES scheme. We compare two opportunity cost approaches and examine the distribution of these costs for improving drinking water quality in a complex farming system in a Honduran forest catchment. Data for both approaches was collected through a survey applied to upstream catchment landholders. Our results indicate that the direct flow approach and the proxy rent approach provide comparable and consistent opportunity cost estimates. The mean net flow return ha-1 was US 2 million per annum for water conservation but a revised estimate comes to US$ 257,057 per annum. Opportunity costs were found to vary according to differences in land use and landholder characteristics. High value cash crops upholding the local economy, such as coffee, entail much higher opportunity costs than for example cattle grazing. These results suggest that discriminate PES payments, that vary according to opportunity costs and thus discriminate between land uses and landholders, are essential. Water quality at our case study site could be managed sustainably by a scheme focusing on high-impact land uses with lower opportunity costs and closer to water sources.
... A growing body of literature analyzes the effects of alternative agricultural practices (Antle & Stoorvogel, 2008;Diagana, Antle, Stoorvogel, & Gray, 2007;Gilhespy et al., 2014;Schneider & Smith, 2008;Smith et al., 2013;Tenningkeit, Kahrl, Wolcke, & Newcombe, 2012;Tschakert, 2007). The livestock sector has also been the target of research on mitigation opportunities (Golub et al., 2013;Li et al., 2012;Schils, Olesen, del Prado, & Soussana, 2007), and the mitigation potential of forests, soil, and other biomass has been amply analyzed as well (Cacho, Marshall, & Milne, 2005;Lubowski & Rose, 2013;Makundi & Sathaye, 2004;Torres, Marchant, Lovett, Smart, & Tipper, 2010). However, from a policymaking perspective, the design of low emission development strategies is an example of multi-objective decision making in which policies target the reduction of GHG emissions while other goals such as increasing agricultural productivity and food security or attaining objectives such as export goals or economic growth are preserved. ...
As countries experience economic growth and choose among available development pathways, they are in a favorable position to adopt natural resource use technologies and production practices that favor efficient use of inputs, healthy soils, and ecosystems. Current emphasis on increasing resilience to climate change and reducing agricultural greenhouse gasses (GHG) emissions strengthens the support for sustainable agricultural production. In fact, reducing losses in soil fertility, reclaiming degraded lands, and promoting synergistic interaction between crop production and forests are generally seen as good climate change policies. In order for decision-makers to develop long-term policies that address these issues, they must have tools at their disposal that evaluate trade-offs, opportunities, and repercussions of the options considered. In this paper, the authors combine and reconcile the output of three models widely accessible to the public to analyze the impacts of policies that target emission reduction in the agricultural sector. We present an application to Colombia which reveals the importance of considering the full scope of interactions among the various land uses. Results indicate that investments in increasing the efficiency and productivity of the livestock sector and reducing land allocated to pasture are preferable to policies that target deforestation alone or target a reduction of emissions in crop production. Investments in livestock productivity and land-carrying capacity would reduce deforestation and provide sufficient gains in carbon stock to offset greater emissions from increased crop production while generating higher revenues.
... A growing body of literature analyzes the effects of alternative agricultural practices (Antle & Stoorvogel, 2008;Diagana, Antle, Stoorvogel, & Gray, 2007;Gilhespy et al., 2014;Schneider & Smith, 2008;Smith et al., 2013;Tenningkeit, Kahrl, Wolcke, & Newcombe, 2012;Tschakert, 2007). The livestock sector has also been the target of research on mitigation opportunities (Golub et al., 2013;Li et al., 2012;Schils, Olesen, del Prado, & Soussana, 2007), and the mitigation potential of forests, soil, and other biomass has been amply analyzed as well (Cacho, Marshall, & Milne, 2005;Lubowski & Rose, 2013;Makundi & Sathaye, 2004;Torres, Marchant, Lovett, Smart, & Tipper, 2010). However, from a policymaking perspective, the design of low emission development strategies is an example of multi-objective decision making in which policies target the reduction of GHG emissions while other goals such as increasing agricultural productivity and food security or attaining objectives such as export goals or economic growth are preserved. ...
As countries experience economic growth and choose among available development pathways, they are in a favorable position to adopt natural resource use technologies and production practices that favor efficient use of inputs, healthy soils, and ecosystems. Current emphasis on increasing resilience to climate change and reducing agricultural greenhouse gasses (GHG) emissions strengthens the support for sustainable agricultural production. In fact, reducing losses in soil fertility, reclaiming degraded lands, and promoting synergistic interaction between crop production and forests are generally seen as good climate change policies. In order for decision-makers to develop long-term policies that address these issues, they must have tools at their disposal that evaluate trade-offs, opportunities, and repercussions of the options considered. In this paper, the authors combine and reconcile the output of three models widely accessible to the public to analyze the impacts of policies that target emission reduction in the agricultural sector. We present an application to Colombia which reveals the importance of considering the full scope of interactions among the various land uses. Results indicate that investments in increasing the efficiency and productivity of the livestock sector and reducing land allocated to pasture are preferable to policies that target deforestation alone or target a reduction of emissions in crop production. Investments in livestock productivity and land-carrying capacity would reduce deforestation and provide sufficient gains in carbon stock to offset greater emissions from increased crop production while generating higher revenues.
... drawing on dudek and Wiener (1996) and Cacho et al. (2005), Cahco and lipper (2007) provide a topology of transaction costs for soil sequestration projects based on five categories: (i) search and negotiation; (ii) board approval; (iii) project management; (iv) monitoring; and (v) enforcement and insurance. using this framework, the authors draw on published project reports for smallholder reforestation and afforestation projects to calculate project transaction costs by category. ...
... Being this the case, since yearly mitigation potential of the SC Rural project would be equal to 0.6 MtCO 2 e, mitigation benefits 17 Hamilton et al. 2009. 18 For the purpose of this note, it is assumed that the transaction costs for public implementation are equal to 4 US$/t CO2e (per hectare and per year) which is an arbitrary but plausible value based on some literature available (Cacho et al. 2005;Mooney et al. 2004). The transaction costs for selling C credits on the market will be obviously higher, given the number and type of requirements, e.g. ...
... 18 Hamilton et al. 2009. 19 For the purpose of this note, it is assumed that the transaction costs for public implementation are equal to 4 US$/t CO2e (per hectare and per year) which is an arbitrary but plausible value based on some literature available (Cacho et al. 2005;Mooney et al. 2004). The transaction costs for selling C credits on the market will be obviously higher, given the number and type of requirements, e.g. ...
... Transaction cost was not a dominant factor in our selection of PES participants. The Plan Vivo system applied in the Nhambita PES program is generally believed to be cost-effective in working with a large number of small-scale farmers and rural communities (Cacho et al., 2005). The contract terms offered were quite flexible. ...
Quantitative research on household participation in the Payments for Environmental Services (PES) programme remains scarce. This paper aims to determine the key factors influencing household participation in a PES programme in Mozambique. Questionnaire-based quarterly surveys were conducted with 290 randomly selected households. We used the instrumental variables technique to identify the factors influencing household participation. The instrumental variables used for forest dependence were: household head born in the village, duration of residence of the household head in the village, ethnicity of the household head, business ownership of the household head and off-farm income of the household. The results show that education of household head and households' trust towards community members positively influenced household participation in PES, while forest dependence influenced it negatively. Future PES projects may thus need to focus more on developing social capital and the resource dependence of households.
... These costs (Table 1) were estimated as a weighted average of figures obtained from published sources (e.g. Cacho et al. 2005), by consulting directly with industry experts and by internet research of figures published on carbon marketing company websites. Where costs were not published as a cost per hectare, they were converted assuming average productivity of 5 tonnes CO2e per hectare per year and an average project area of 100 hectares. ...
The economic and technical viability of carbon forestry in Queensland was examined at a local government level. Three scenarios—hardwood monoculture plantations, mixed-species environmental plantings, and managed regrowth—were modelled with a range of carbon prices and other costing assumptions. Local government areas (LGAs) in the south and east of Queensland have the greatest economic potential for carbon forestry whilst LGAs in and adjoining the Brigalow Belt contained the greatest concentration of eligible area. The managed regrowth scenario showed the greatest economic promise although spatial analysis indicates that the area eligible under current trading rules and suitable for regrowth carbon forestry is much more limited than for other scenarios. At current or foreseeable prices carbon forestry is unlikely to result in widespread landscape change or contribute significant amounts of carbon sequestration in Queensland. A carbon price of around $A30 per tonne of CO2e is required for carbon forestry to yield positive economic returns across a significant proportion of Queensland. This is unlikely under Australia’s current and proposed regulatory environment for emission reduction through biosequestration. The insights from this paper can help inform policy aimed at encouraging carbon forestry irrespective of the funding model adopted. Other jurisdictions, particularly in developed countries, might likewise find that the availability of eligible land in their landscapes or the opportunity cost of participation outweighs current global carbon prices in determining the uptake of carbon forestry.
... Drawing on Dudek and Wiener (1996) and Cacho, Marshall and Milne (2005), Cahco and Lipper (2007) provide a topology of transaction costs for soil sequestration projects based on five categories: i) search and negotiation; ii) board approval; iii) project management; iv) monitoring and v) enforcement and insurance. Using this framework, the authors draw on published project reports for smallholder reforestation and afforestation projects to calculate project transaction costs by category. ...
... La mise en oeuvre du mécanisme REDD+ requiert notamment des plans d'aménagement forestiers à but de séquestration de carbone, mais plus largement des plans d'occupation des sols nationaux et régionaux, des données fiables pour le scénario de référence, des capacités importantes d'évaluation des émissions de GES à l'échelle nationale mais aussi de négociations pour aboutir à des accords entre acheteurs mondiaux et vendeurs locaux de crédits-carbone. Il s'agit là de tout un ensemble d'attributs qui imposeraient des coûts prohibitifs à des initiatives de taille réduite (Cacho et al., 2005), mais qui peut être envisageable pour un système centralisé pouvant faire des économies d'échelle et de la coordination à moindre coût. ...
Whith environmental global changes awareness, territorialization processes have changed at a local scale. The construction of discourses and regulation mechanisms by epistemic communities at a global scale can lead to the creation of territories of conservation and development. These territories creation is most often imposed to local population without a particular consideration for existing territorialities and action spaces. These territories lead to change in practices and strategies of resource management, that leads to concern about their environmental and social relevance.A research framework combining French ‘tropicalist’ geography and Anglophone political ecology is proposed to analyze the consequences of the creation of territories of conservation and development, according to 4 areas: (1) their impacts on the livelihoods of local populations that rely for all or part of these territories resources; (2) the unexpected territorialities emerging from the imposition of these territories in areas already territorialized and most often in many forms; (3) the gaps between these territories and the ecological processes in one hand and the spaces of activities in the other hand; (4) the contribution of these territories to Nature commodification and cutting in pieces placed on the market.
... For incentive-based and enablement measures we define implementation costs as all costs that are not incentive proper, i.e., payments or in-kind benefits to providers that are intended to compensate for opportunity costs or enable mitigation action are excluded. Implementation costs thus include all items covered under the term "transaction costs" in the literature on project-based mitigation initiatives, i.e., costs related to search and information, design, monitoring, and enforcement [70]. For disincentive-based measures, we understand implementation costs to cover all intervention-related costs, excluding potential fine revenues. ...
Reducing emissions from agriculture, forestry, and other land uses is considered an essential ingredient of an effective strategy to mitigate global warming. Required changes in land use and forestry, however, often imply foregoing returns from locally more attractive resource use strategies. We assess and compare the prospects of mitigating climate change through emission reductions from forestry and agriculture in the Brazilian Amazon. We use official statistics, literature, and case study material from both old and new colonization frontiers to identify the scope for emission reductions, in terms of potential additionality, opportunity costs, technological complexity, transaction costs, and risks of economic and environmental spillover effects. Our findings point to a comparative advantage in the Brazilian Amazon of forest conservation-based over land-use modifying mitigation options, especially in terms of higher potential additionality in emission reductions. Low-cost mitigation options do exist also in use-modifying agriculture and forestry, but tend to be technologically complex thus requiring more costly intervention schemes. Our review points to a series of regional development deficits that may come to hamper attempts to tap into the large-scale climate change mitigation potential often associated with the Amazon. Low-hanging fruits for mitigation do exist, but must be carefully identified based on the performance indicators we discuss.
... La mise en oeuvre du mécanisme REDD+ requiert notamment des plans d'aménagement forestiers à but de séquestration de carbone, mais plus largement des plans d'occupation des sols nationaux et régionaux, des données fiables pour le scénario de référence, des capacités importantes d'évaluation des émissions de GES à l'échelle nationale mais aussi de négociations pour aboutir à des accords entre acheteurs mondiaux et vendeurs locaux de crédits-carbone. Il s'agit là de tout un ensemble d'attributs qui imposeraient des coûts prohibitifs à des initiatives de taille réduite (Cacho et al., 2005), mais qui peut être envisageable pour un système centralisé pouvant faire des économies d'échelle et de la coordination à moindre coût. ...
With environmental global changes awareness, territorialization processes have changed at a local scale. The construction of discourses and regulation mechanisms by epistemic communities at a global scale can lead to the creation of territories of conservation and development. These territories creation is most often imposed to local population without a particular consideration for existing territorialities and action spaces. These territories lead to change in practices and strategies of resource management, that leads to concern about their environmental and social relevance.A research framework combining French ‘tropicalist’ geography and Anglophone political ecology is proposed to analyze the consequences of the creation of territories of conservation and development, according to 4 areas: (1) their impacts on the livelihoods of local populations that rely for all or part of these territories resources; (2) the unexpected territorialities emerging from the imposition of these territories in areas already territorialized and most often in many forms; (3) the gaps between these territories and the ecological processes in one hand and the spaces of activities in the other hand; (4) the contribution of these territories to Nature commodification and cutting in pieces placed on the market.
... The first conclusion is that, irrespective of the approach used to estimate it, our results confirm the potential of using forest for low-cost sequestration of CO 2 : substantial amounts of CO 2 can be sequestered at prices substantially below the reference price used in this discussion, even after accounting for the range of transaction costs presented in the literature. This conclusion mirrors the results of Cacho, Marshall, and Milne (2005) who, after accounting for an exhaustive list of different types of transaction costs (search, negotiation, verification and certification, implementation, monitoring, enforcement, and insurance), suggest that, taken together, and in the context of smallholder carbon forest, such costs would not threaten the feasibility of these programs. 14 The second conclusion is that although the two curves are quite similar at the reference price of 25 US$/tCO 2 , the supply curve estimated under the assumption that prices would need to equate profits from rubber is consistently to the right of the supply curve elicited through the auction: at 10 US$/tCO 2 , for example, the opportunity cost approach suggests an amount of sequestered Carbon that is approximately 15% higher than the amount supplied through auctions. ...
... Whichever compensation option is chosen, the interval of payment or provision of services needs to be regular in order to maintain trust in the process (Jindal, 2006). Essential steps and the evaluation of transaction costs of attaining and marketing carbon credits, not addressed in this study, include but are not limited to costs associated with: baseline development, monitoring the carbon sequestration, market integration, obtaining investor confidence, verification, and certification (Cacho et al., 2005;CCF, 2008). ...
There is increasing consensus over the inclusion of smallholder farmers in REDD + (Reduced Emissions through reduced Deforestation and Degradation) initiatives, expected to be one essential component within the new set of "Flexible Mechanisms" in the post-Kyoto Climate Change Agreement. However, with few long-term REDD + pilot projects implemented with smallholders, this paper attempts to anticipate potential synergies and constraints of such initiatives from smallholders' point of view by developing a framework to examine the capacities of two rural communities in Cameroon as a case study. Smallholder experiences with REDD + pilots and their predecessors such as integrated conservation and development projects (ICDPs), Payments for Environmental Services (PES) and the Clean Development Mechanism's Afforestation/Reforestation Projects (CDM AR), are outlined in order to highlight local-level REDD + project requirements. This paper assesses the capacity for smallholders in the South and Centre Provinces of Cameroon to respond to these requirements through data collected from individual and small-group key informant interviews. The two case study communities possess similar but different livelihood capitals regarding proximities to market, forest cover, livelihood strategies and access to extension services. For both villages smallholder capacity for future REDD + project adoption was found to require reinforcement to guarantee local feasibility of REDD + projects. Possibilities to encourage already in use agroforestry systems under a REDD + scheme are discussed. From these results, we outline recommendations, areas of concern and key targets for capacity building for future REDD + initiatives with smallholders in rural Africa.
... A growing body of literature analyzes the effects of alternative agricultural practices (Antle & Stoorvogel, 2008;Diagana, Antle, Stoorvogel, & Gray, 2007;Gilhespy et al., 2014;Schneider & Smith, 2008;Smith et al., 2013;Tenningkeit, Kahrl, Wolcke, & Newcombe, 2012;Tschakert, 2007). The livestock sector has also been the target of research on mitigation opportunities (Golub et al., 2013;Li et al., 2012;Schils, Olesen, del Prado, & Soussana, 2007), and the mitigation potential of forests, soil, and other biomass has been amply analyzed as well (Cacho, Marshall, & Milne, 2005;Lubowski & Rose, 2013;Makundi & Sathaye, 2004;Torres, Marchant, Lovett, Smart, & Tipper, 2010). However, from a policymaking perspective, the design of low emission development strategies is an example of multi-objective decision making in which policies target the reduction of GHG emissions while other goals such as increasing agricultural productivity and food security or attaining objectives such as export goals or economic growth are preserved. ...
and t is widely recognized that natural resource use in many de-veloping countries, from crop production to deforestation, is responsible for the bulk of GHG emissions. We also know that, in many countries, the agricultural and forestry sectors can provide low-cost climate change mitigation opportunities. As coun-tries experience economic growth and choose among the available development pathways, they are in a favorable position to adopt natural resource use technologies and production practices charac-terized by low GHG emissions. Rather than embedding high emis-sions practices in their development and intervene on emissions reduction at a later stage, they can utilize Low Emissions Develop-ment Strategies (LEDS). The U.S. Government launched an initia-tive, the Enhancing Capacity for Low Emission Development Strate-gies (EC-LEDS), to support developing countries' in their efforts to pursue long-term and transformative development. The initiative supports sustainable and climate-resilient economic growth com-patibly with a reduction in GHG emissions (USAID, 2011). Under the EC-LEDS initiative, the International Food Policy Re-search Institute (IFPRI) developed a modeling framework to help policymakers in their evaluation of trade-offs, opportunities, and repercussions of a set of policies that aim at reducing GHG emis-sions from the agricultural sector. The purpose of this study is to demonstrate that policymakers have tools at their disposal that can help in their evaluation of trade-offs, opportunities, and repercus-sions of the policies they are considering. Results provided in this study should be seen as an example of the potential applications of the framework developed. IMPORTANCE OF THE BASELINE In order to determine the potential of a portfolio of LED strate-gies it is essential to be able to determine with accuracy a refer-ence level of GHG emissions and carbon stocks. We must remem-ber that all countries are part of a global economic system and therefore agricultural commodity prices can reflect both domestic production and policies but also global trade flows. It is critical that policies are devised with full recognition of the role of the interna-tional economic environment. Our work combines and reconciles economic models and biophysical models to provide estimations of temporal shifts in GHG emissions, carbon stock, and economic ef-fects caused by land use change. This approach includes the use of the following models: 1) A spatially explicit model of land use choices to determine the possible effects of future changes in the drivers of land use choices; 2) The International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT; Rose-grant et al. 2012) model, a global partial equilibrium agriculture model that allows for policy and agricultural productivity invest-ment simulations; and 3) DeNitrification–DeComposition crop model (DNDC; Li 2007) that estimates spatially explicit profiles of GHG emissions from cropland with varying crop genetic productiv-ity shifters, management systems, and climate scenarios. This modeling methodology combines and reconciles the limited spatial resolution of macro-level economic models that operate through equilibrium-driven relationships at a subnational or na-tional level with detailed models of biophysical processes at high spatial resolution.
Accurately targeting poverty alleviation resources to poverty-stricken farmers is a focal issue in anti-poverty research (Gong & Zeng, Gong and Zeng Journal of Guangdong University of Finance and Economics 1:60–68, 2019), and avoiding the deviation of poverty alleviation targets due to elite capture is an urgent issue in FCS projects.
This chapter presents a literature review of PAFCS. First, core concepts are defined, including forest, FCS, FCS projects, poverty, poverty-stricken populations, community, poverty alleviation, poverty alleviation performances, and eco-compensation. Second, the literature is summarised within the following categories: development of FCS industry and poverty alleviation, PAFCS project design and implementation, poverty alleviation performances, and challenges in exploiting PAFCS potential. Finally, research suggestions and prospects are highlighted.
With the implementation of carbon neutrality strategies in China, both carbon emissions reduction and carbon sequestration should be considered. In order to exert the carbon neutrality potential of forest carbon sinks, it is necessary to calculate the cost of them in China. Based on the basic principles of land use opportunity cost and net present value from previous research, this paper constructs a forest carbon sink cost estimation model based on the afforestation cost method. Empirical analysis of the carbon sequestration cost is explored at the city level in China. According to the results, the regional distribution of carbon sink costs varies greatly. On the whole, Southwest China is suitable for afforestation to create carbon sinks since its cost is relatively low. It can obtain carbon benefits from forest carbon sinks projects, while there are higher carbon sink costs in the eastern coastal areas. Furthermore, it dynamically analyzes the impact of the rotation period, timber price, discount rate and afforestation cost on the cost of carbon sinks. The rotation period and afforestation cost have more sensitivity for the forest carbon sink cost. Therefore, it should implement different low-carbon policies in different regions, and encourage forest management to create carbon sinks in areas rich in forest resources. In addition, an inter-regional carbon sink trading mechanism can play the economic value of forest carbon sinks effectively and achieve win-win cooperation between regions.
The academia has paid much attention to the ecological protection and poverty alleviation functions of carbon sink afforestation project (CSAP), an important means to realize forestry carbon sink. However, whether CSAP can promote county industrial structural upgrading (ISU) and propel high-quality economic development remains unanswered. Based on the panel data of counties in Sichuan Province, China in 2000–2016, this paper estimates the impacts of CSAP on ISU through difference-in-differences with variation in treatment timing (VTT-DID) and synthetic control method. The results show that: CSAP can improve the advanced level of county industrial structure. This finding remains valid after a series of robustness tests. Government guidance dominates the impacts of CSAP on ISU, while market regulation plays a limited role in the impact mechanism due to the presence of elite capture. Government guidance and market regulation have a positive synergistic effect. The ISU impacts of CSAP are affected by resource endowment, level of economic development, and culture difference of ethnic monitories at the county level. Mechanism analysis shows that CSAP mainly acts on county ISU by increasing capital accumulation. The research results provide a reference path for China to transform its concept of economic development, and the key evidence for the fact that CSAP is an important way to realize high-quality economic development and environment protection at the county level.
La Guía recoge experiencias en Bolivia y otros países andinos sobre la sistematización del proceso que debería seguirse para identificar la disponibilidad de agua en una cuenca considerando el cambio climático, de tal manera a garantizar su aprovechamiento a través de la gestión integral de la cuenca. La metodología también proporciona elementos que permiten la mitigación de los efectos del cambio climático por medio del enfoque de “adaptación”.
A. Pendahuluan Upaya pemenuhan target pemenuhan komitmen pemerintah Indonesia untuk menurunkan emisi 26% (kemampuan sendiri) dan 41% (dengan bantuan internasional) pada tahun 2020 yang kemudian ditingkatkan menjadi 29% (kemam-puan sendiri) dan 41% (bantuan internasional) pada tahun 2030. Target ini meru-pakanbukti komitmen pemerintah Indonesia untuk menurunkan emisi gas rumah kaca setelah melakukan ratifikasi Kesepakatan Paris pada tahun 2016. Pasar karbon dipercaya mampu menyediakan insentif untuk menurunkan emisi yang paling efisien dan efektif (Busch et al., 2009). Negara-negara yang ter-libat dalam pasar karbon termotivasi untuk meningkatkan penurunan emisinya. Pembentukan pasar karbon untuk REDD+ dapat mencapai beberapa tujuan sekaligus, yaitu menciptakan insentif yang kuat untuk melindungi hutan tropis, mengendalikan dinamika hutan, mendorong pengurangan emisi, dan membantu tujuan global untuk mencegah pemanasan global lebih dari 2 derajat Celcius. Tid-aklah berlebihan jika pasar karbon diharapkan mampu berkontribusi terhadap per-tumbuhan dan pembangunan ekonomi negara-negara berkembang. Berbagai inisiatif pasar karbon wajib telah berkembang seperti Mekanisme Pembangunan Bersih dan Sistim Perdagangan Emisi Uni Eropa. Akan tetapi ini-siatif pasar karbon ini tidak dapat berjalan secara efektif untuk kegiatan mitigasi perubahan iklim berbasis lahan seperti kegiatan aforestasi dan reforestasi. Dalam rangka mempersiapkan pasar karbon berbasis lahan, kemudian berkembang berbagai inisiatif pendanaan internasional mitigasi perubahan iklim berbasis la-han. Meskipun demikian pendanaan internasional tersebut belum cukup mem-berikan kompensasi sebagai penyeimbang tekanan ekonomi yang mendorong ter-jadinya konversi hutan di banyak negara (Keohane, 2008). Selain itu berkembang juga pasar karbon sukarela, tetapi volume transaksi yang masih sangat kecil. Potensi kredit karbon melalui REDD+ telah menunjukkan kecenderungan yang meningkat di Indonesia. Dimulai dengan komitmen Indonesia dengan Norwe-gia dalam bentuk Letter of Intent untuk memberikan bantuan sebesar USD 1 milyar untuk mengurangi emisi gas rumah kaca di Indonesia. Di samping itu tawaran ker-jasama dari beberapa negara maju ke berbagai sektor pembangungan baik melalui pemerintah pusat maupun langsung ke pemerintah daerah bahkan dari pihak-pihak swasta maupun donor internasional semakin banyak. Kementerian Energi,
A. Pendahuluan Upaya pemenuhan target pemenuhan komitmen pemerintah Indonesia untuk menurunkan emisi 26% (kemampuan sendiri) dan 41% (dengan bantuan internasional) pada tahun 2020 yang kemudian ditingkatkan menjadi 29% (kemam-puan sendiri) dan 41% (bantuan internasional) pada tahun 2030. Target ini meru-pakanbukti komitmen pemerintah Indonesia untuk menurunkan emisi gas rumah kaca setelah melakukan ratifikasi Kesepakatan Paris pada tahun 2016. Pasar karbon dipercaya mampu menyediakan insentif untuk menurunkan emisi yang paling efisien dan efektif (Busch et al., 2009). Negara-negara yang ter-libat dalam pasar karbon termotivasi untuk meningkatkan penurunan emisinya. Pembentukan pasar karbon untuk REDD+ dapat mencapai beberapa tujuan sekaligus, yaitu menciptakan insentif yang kuat untuk melindungi hutan tropis, mengendalikan dinamika hutan, mendorong pengurangan emisi, dan membantu tujuan global untuk mencegah pemanasan global lebih dari 2 derajat Celcius. Tid-aklah berlebihan jika pasar karbon diharapkan mampu berkontribusi terhadap per-tumbuhan dan pembangunan ekonomi negara-negara berkembang. Berbagai inisiatif pasar karbon wajib telah berkembang seperti Mekanisme Pembangunan Bersih dan Sistim Perdagangan Emisi Uni Eropa. Akan tetapi ini-siatif pasar karbon ini tidak dapat berjalan secara efektif untuk kegiatan mitigasi perubahan iklim berbasis lahan seperti kegiatan aforestasi dan reforestasi. Dalam rangka mempersiapkan pasar karbon berbasis lahan, kemudian berkembang berbagai inisiatif pendanaan internasional mitigasi perubahan iklim berbasis la-han. Meskipun demikian pendanaan internasional tersebut belum cukup mem-berikan kompensasi sebagai penyeimbang tekanan ekonomi yang mendorong ter-jadinya konversi hutan di banyak negara (Keohane, 2008). Selain itu berkembang juga pasar karbon sukarela, tetapi volume transaksi yang masih sangat kecil. Potensi kredit karbon melalui REDD+ telah menunjukkan kecenderungan yang meningkat di Indonesia. Dimulai dengan komitmen Indonesia dengan Norwe-gia dalam bentuk Letter of Intent untuk memberikan bantuan sebesar USD 1 milyar untuk mengurangi emisi gas rumah kaca di Indonesia. Di samping itu tawaran ker-jasama dari beberapa negara maju ke berbagai sektor pembangungan baik melalui pemerintah pusat maupun langsung ke pemerintah daerah bahkan dari pihak-pihak swasta maupun donor internasional semakin banyak. Kementerian Energi,
A. Pendahuluan Upaya pemenuhan target pemenuhan komitmen pemerintah Indonesia untuk menurunkan emisi 26% (kemampuan sendiri) dan 41% (dengan bantuan internasional) pada tahun 2020 yang kemudian ditingkatkan menjadi 29% (kemam-puan sendiri) dan 41% (bantuan internasional) pada tahun 2030. Target ini meru-pakanbukti komitmen pemerintah Indonesia untuk menurunkan emisi gas rumah kaca setelah melakukan ratifikasi Kesepakatan Paris pada tahun 2016. Pasar karbon dipercaya mampu menyediakan insentif untuk menurunkan emisi yang paling efisien dan efektif (Busch et al., 2009). Negara-negara yang ter-libat dalam pasar karbon termotivasi untuk meningkatkan penurunan emisinya. Pembentukan pasar karbon untuk REDD+ dapat mencapai beberapa tujuan sekaligus, yaitu menciptakan insentif yang kuat untuk melindungi hutan tropis, mengendalikan dinamika hutan, mendorong pengurangan emisi, dan membantu tujuan global untuk mencegah pemanasan global lebih dari 2 derajat Celcius. Tid-aklah berlebihan jika pasar karbon diharapkan mampu berkontribusi terhadap per-tumbuhan dan pembangunan ekonomi negara-negara berkembang. Berbagai inisiatif pasar karbon wajib telah berkembang seperti Mekanisme Pembangunan Bersih dan Sistim Perdagangan Emisi Uni Eropa. Akan tetapi ini-siatif pasar karbon ini tidak dapat berjalan secara efektif untuk kegiatan mitigasi perubahan iklim berbasis lahan seperti kegiatan aforestasi dan reforestasi. Dalam rangka mempersiapkan pasar karbon berbasis lahan, kemudian berkembang berbagai inisiatif pendanaan internasional mitigasi perubahan iklim berbasis la-han. Meskipun demikian pendanaan internasional tersebut belum cukup mem-berikan kompensasi sebagai penyeimbang tekanan ekonomi yang mendorong ter-jadinya konversi hutan di banyak negara (Keohane, 2008). Selain itu berkembang juga pasar karbon sukarela, tetapi volume transaksi yang masih sangat kecil. Potensi kredit karbon melalui REDD+ telah menunjukkan kecenderungan yang meningkat di Indonesia. Dimulai dengan komitmen Indonesia dengan Norwe-gia dalam bentuk Letter of Intent untuk memberikan bantuan sebesar USD 1 milyar untuk mengurangi emisi gas rumah kaca di Indonesia. Di samping itu tawaran ker-jasama dari beberapa negara maju ke berbagai sektor pembangungan baik melalui pemerintah pusat maupun langsung ke pemerintah daerah bahkan dari pihak-pihak swasta maupun donor internasional semakin banyak. Kementerian Energi,
This study assessed the amount of carbon stored and the economic viability of the small-scale Clean Development
Mechanism (CDM) carbon offsets in Pinus caribaea and Eucalyptus grandis plantations under varying rotations.
Volume equations were used to estimate carbon stocks and merchantable wood volume in the plantations, while
net present value (NPV) and annual equivalent value (AEV) were used as measures of profitability at the optimum
economic rotation age as well as at the CDM-defined crediting period of 20 years. The findings show that over a
20-year rotation, E. grandis and P. caribaea plantations sequestered 638 and 418 t CO2-e ha−1, respectively. The
NPVs of E. grandis and P. caribaea with carbon credits over the CDM carbon-crediting period of 20 years were
US1 814 ha−1, respectively. This is higher than the NPVs without carbon credits of US1 390 ha−1 for E. grandis and P. caribaea, respectively. The AEV of E. grandis harvested at its optimal
economic rotation of 10 years was US298 ha−1, utilising
the CDM carbon-crediting period of 20 years. In contrast, the AEV of P. caribaea under the 20-year CDM carboncrediting
period was higher than harvesting at the optimal economic rotation of 16 years without carbon credits.
When the average CDM contract establishment costs exceed US1 000 ha−1 for P. caribaea and
E. grandis woodlots, respectively, it is not economically viable for one to participate in the CDM forest carbon
offsets programme. In conclusion, the study results indicate that whereas E. grandis has a higher biological
potential to sequester carbon than P. caribaea, it is currently not economically viable for participation in the CDM
forest carbon offset scheme. In contrast, it is economically viable for P. caribaea plantations to participate in the
CDM, if the CDM contract establishment costs are low.
Pasar karbon REDD+ dapat menjadi insentif bagi pelaku implementasi REDD+ di lapangan. Permasalahan yang dihadapi adalah ketidakpastian pasar yang tinggi yang diakibatkan oleh belum tersedianya mekanisme transaksi karbon. Komitmen pemerintah daerah baik propinsi maupun kabupaten relatif tinggi yang ditunjukan dengan disusunnya peraturan pendukung implementasi REDD+. Kegiatan REDD+ adalah dalam rangka menjaga hutan lestari dan seandainya terjadi perdagangan karbon maka hasil perdagangan merupakan manfaat tambahan.Stakeholder terutama pemda belum mengetahui secara pasti tentang tata cara atau mekanisme pasar karbon, termasuk standar karbon dan metodologi untuk menghasilkan kredit karbon. Insentif yang diharapkan atas capaian penurunan emisi yang dihasilkan lebih didasarkan pada perannya dalam pengelolaan hutan lestari/peningkatan kesejahteraan masyarakat bukan berdasarkan harga karbon. Terkait dengan pemenuhan target penurunan emisi 26% masih perlu kajian lebih jauh tentang proporsi yang dapat diklaim oleh pembeli. Besarnya proporsi perlu mempertimbangkan pangsa modal investasi antara pembeli dan pemerintah yang dikeluarkan, lain halnya jika pembiayaan awal ditanggung oleh pemerintah. Juga diperlukan lembaga registri yang mengelola kegiatan, capaian penurunan emisi, dan fasilitasi implementasi REDD+ di lapangan.Selain itu lembaga ini mengatur sistem insentif dan disinsentif dalam pengelolaan resiko kebocoran dan ketidakpermanenan.
As a policy tool to deal with environmental problem, the purpose of ecological compensation is to translate external,non-market value of ecosystem into real financial incentives for local actors to increase the ecosystem service. Therefore, it is the focus and hotspot of the ecological theoretical researchers and practitioner whether the ecological compensation program achieves the expected goals. Based on the recent theoretical and empirical developments of ecological compensation efficiency, we introduce the framework to analyze the efficiency of ecological compensation and analyze various types of inefficiency that the ecological compensation program might experience. Then,we summarize systematically the influencing factors of ecological compensation efficiency, find that the ecological compensation efficiency is not only determined by the extent to which incremental ecosystem services are provided, but also by the cost at which this was achieved. Whether the ecological compensation program succeeds in generating the desired ecosystem service depends on the potential service providers must enroll in the program, providers must comply with the terms of their contract, additionality, the relationship between land use and ecosystem services, permanence, leakage and perverse incentives. And the costs include the opportunity cost of the benefits foregone from alternative activities,the implementation cost of making and maintaining those changes and the transaction costs of the program. At last, we provide the measures of improving the ecological compensation efficiency, which include establishing the accuracy ecological compensation baseline, spatial targeting of ecological compensation, estimating the real opportunity cost and reducing the transaction cost. Some potential improvements in some further researches is put forward in the last section.
This study has been undertaken by a team of professionals from FAO and the Governments of the Santa Catarina and Rio de Janeiro States in Brazil: Giacomo Branca (FAO) and Katia Medeiros (FAO) coordinated the work, generated main results for the case studies using the Ex-Ante Carbon-balance Tool (EXACT) and prepared the report, with support from Aude Carro (FAO) who also conducted field work to collect relevant information for the EXACT application; Helga Hissa (EMBRAPA) and Marcelo Monteiro (EMATER-RIO) provided support, data collection and analysis for the realization of the case study on the Rio de Janeiro Sustainable Rural Development Project-The Rio Rural project; Mara Cristina Benez (EPAGRI), Elisângela Benedet da Silva (EPAGRI) and Vicente Sandrini Pereira (EPAGRI) provided support, data collection and analysis for the realization of the case study on the Santa Catarina Rural Competitiveness Project – The SC Rural project. The authors would like to thank: Cesar Falconi (FAO) for having granted support and overall supervision to the work; Martial Bernoux (IRD) for the guidance provided on the use of EXACT and the interpretation of the results; Leslie Lipper (FAO) for the helpful comments provided during the conduction of the study; Louis Bockel (FAO) as coordinator of the EXACT project; Alvaro Soler (World Bank Task Team Leader of the two projects used as case studies) and Ethel Sennhauser (Sector Manager Latin America and the Caribbean, World Bank) for having encouraged the choice of the projects as EXACT case studies and facilitated the conduction of the field work; the Governments of Santa Catarina and Rio de Janeiro States for their support to the field work; and Agnieszka Bakowska (FAO) for the assistance on the editorial and publishing process.
Forest recovery is occurring in Panama and several other tropical countries following decades of deforestation. Theory on such ‘forest transitions’ describes urbanization and agricultural modernization as underling factors. Tropical country governments may seek to harness these factors to promote a tropical forest transition within the REDD+ scheme. Yet tropical forest transitions remain poorly described due to limited data and inappropriate modeling. To determine the nature of a tropical forest transition I derive canonical correlations of (a) socio-agrarian transformation observed via respondent-level census records and (b) forest-cover change observed via satellite imagery, for 82% of Panamanian counties over 1980–1990–2000–2008. The Panamanian forest transition centered on multi-decadal in situ shifts in employment from agriculture to off-farm activity, particularly by women. Agricultural modernization and decline were coincident but of lesser importance. Urbanization entailed increasingly connected small urban centers in otherwise rural landscapes. Net forest gains per decade were ~ 1.5–2% of the area of influence of the socio-agrarian transformations, which concentrate in economically and agriculturally favored regions. Governments may conceivably nurture forest transitions already underway via economic policies, but they cannot coordinate them. Even so, inefficiencies may be prohibitively high, and challenges significant. A history of failure of similar ‘social engineering’ endeavors urges caution in this respect.
Payment for environmental service contracts commonly require actions beyond adoption of a practice, such as undergoing specified
enrollment procedures, granting consent to being monitored, and paying penalties for violations. These provisions are a bundle
of attributes a landholder must accept with contract enrollment, leading to transaction costs in the contracting process.
This article develops a principal–agent framework to study the links between these transaction costs and the well-known information
asymmetries between the landholders and the government agency offering contracts. Using stated choice data collected from
a sample of farmers, we estimate a mixed logit model to quantify the contribution of different contract attributes on contract
willingness-to-accept (WTA). More stringent provisions in contracts were found to raise individual WTA by widely differing
amounts across farmers, but the average effects imply that overall contract supply is sensitive to stringency. From a series
of microsimulations based on the estimated model, we find that transaction costs create a significant drain on the cost-effectiveness
of contracting from the agency’s point of view, similar in magnitude to the inefficiency created by hidden information. Although
stringent contractual terms raise program expenditures, they may be justified if they raise compliance rates enough to offset
the added cost. We also simulate an implicit frontier to trace out the change in compliance needed to justify a given increase
in stringency. For environmental benefits in the range of previous estimates, this analysis suggests that stringent terms
would need to substantially raise compliance rates to be cost effective.
The environmental integrity of a mechanism rewarding Reduced Emissions from Deforestation and Degradation (REDD) depends on appropriate accounting for emission reductions. Largely stemming from a lack of forest data in developing countries, emission reductions accounting contains substantial uncertainty as a result of forest carbon stock estimates, where the application of biome-averaged data over large forest areas is commonplace. Using a case study in the Bale Mountains in Ethiopia, we exemplify the implications of primary and secondary forest carbon stock estimates on predicted REDD project emission reductions and revenues. Primary data estimate area-weighted mean forest carbon stock of 195 tC/ha +/- 81, and biome-averaged data reported by the Intergovernmental Panel on Climate Change underestimate forest carbon stock in the Bale Mountains by as much as 63% in moist forest and 58% in dry forest. Combining forest carbon stock estimates and uncertainty in voluntary carbon market prices demonstrates the financial impact of uncertainty: potential revenues over the 20-year project ranged between US185 million. Estimated revenues will influence decisions to implement a project or not and may have profound implications for the level of benefit sharing that can be supported. Strong financial incentives exist to improve forest carbon stock estimates in tropical forests, as well as the environmental integrity of REDD projects.
ABSTRACT This paper presents an analysis of the performance of four agroforestry systems common,in the southern part of Sumatra (Jambi and Lampung). The systems analysed are rubber agroforestry, cinnamon multicropping, oil palm monoculture and damar agroforests.These systems span the range from monoculture,to complex agroforest and hence provide a useful overview of potential benefits and costs. Using a combination of modelling and data from various sources the paper shows that all four agroforestry systems can be financially and economically,attractive.The relative performance,of each system in terms of social and environmental benefitsis discussed at a general level, as well as their potential as tools for carbon sequestration. Keywords: Agroforestry, Carbon Sequestration, Sumatra, Indonesia, Economic Analysis
The proposed Clean Development Mechanism (CDM) of the Kyoto Protocol paves the way for financial and technological transfers to support forestry projects that sequester carbon or protect carbon stocks. From its inception, the concept has been highly controversial. It has been enthusiastically supported by those who believe that conservation of tropical forests will be difficult unless forest owners and managers are compensated for the environmental services of their forests. Others believe that financial transfers supporting ‘carbon farming’ would ignore social concerns and the full range of goods and services of forests. This paper examines the implications of CDM for forest conservation and sustainable use, by drawing on recent literature and the results of a policy dialogue with CDM stakeholders. We conclude that initial estimates of the contribution tropical forestry could make to both climate change mitigation and to forest conservation need to be scaled down. CDM payments for tropical forestry are likely to be received in a far more limited area than initially expected. The cost-effectiveness of forestry projects relative to projects in the energy sector may have been overestimated. In particular few estimates have adequately accounted for the likelihood that the duration of CDM forestry projects is unlikely to be as long as the residency time of carbon in the atmosphere. Also political realities and investor priorities may not have been sufficiently understood. CDM funding for forestry may also decline in future as economically viable clean technologies are increasingly developed in the energy sector. Tropical forests are likely to be an intermediate climate change mitigation strategy for buying time, until more permanent options become available. The most important justification for including forests in CDM may lie in the contribution CDM could potentially make to forest conservation and sustainable use. An analysis of the implications of CDM for forests reveals the importance of involving forest stakeholders more closely in the CDM debate. To prevent perverse outcomes and reduce the risk of ‘leakage’ of emission reduction to areas outside project boundaries, CDM projects may need to be limited to niches which meet certain political and institutional preconditions and where sufficient understanding of local decision-making and the broader context is available. CDM may be more effective if used to remove non-economic impediments to forestry activities that are economically viable and meet local needs. Lessons from the forestry sector in relation to plantations, natural forest management, forest conser-
vation and non-timber forest products are discussed
to illustrate the dangers of misusing CDM and also to give examples of how CDM could be harnessed for better use of forests. CDM should be seen as one more tool for enhancing the effectiveness of more conventional ways of promoting forest conservation and sustainable use.
Technically, forestry projects have thepotential to contribute significantly tothe mitigation of global warming, but manysuch projects may not be economicallyattractive at current estimates of carbon(C) prices. Forest C is, in a sense, a newcommodity that must be measured toacceptable standards for the commodity toexist. This will require that credible Cmeasuring and monitoring procedures be inplace. The amount of sequestered C that canbe claimed by a project is normallyestimated based on sampling a number ofsmall plots, and the precision of thisestimate depends on the number of plotssampled and on the spatial variability ofthe site. Measuring C can be expensive andhence it is important to select anefficient C-monitoring strategy to makeprojects competitive in the C market. Thispaper presents a method to determinewhether a forestry project will benefitfrom C trading, and to find the optimalmanagement strategy in terms of forestcycle length and C-monitoring strategyA model of an Acacia mangiumplantation in southern Sumatra, Indonesiais used to show that forestry projects canbe economically attractive under a range ofconditions, provided that the project islarge enough to absorb fixed costs.Modeling results indicate that between 15and 38 Mg of Certified Emission Reductions(CERs) per hectare can be captured by thesimulated plantation under optimalmanagement, with optimality defined asmaximizing the present value of profitsobtained from timber and C. The optimalcycle length ranged from 12 to 16 years andthe optimal number of sample plots rangedfrom 0 to 30. Costs of C monitoring (inpresent-value terms) were estimated to bebetween 0.45 (Mg C)-1 to 2.11 (MgC)-1 depending on the spatialvariability of biomass, the variable costsof C monitoring and the discount rate.
Implementation of the Kyoto Protocol will require theestablishment of procedures for monitoring,verification and certification of carbon offsetprojects. In this paper, the steps required forindependent certification of forestry-based carbonoffset projects are reviewed, based on the proceduresused by the international certification companySocit Gnrale de Surveillance.Firstly, a project must be evaluated for itssuitability in relation to eligibility criteria of theKyoto Protocol. These eligibility criteria areclassified under four headings: (a) acceptability tohost country parties and international agreements; (b)additionality, in terms of demonstrated positivegreenhouse gas effects additional to the`business-as-usual' case; (c) externalities orunwanted side effects; and, (d) capacity to implementproject's activities. Secondly, the scientificmethodology for calculating the carbon offsets and themethodology for data collection and statisticalanalysis must be evaluated. Additionally, the amountof carbon offsets quantified must be adjusted toreflect the uncertainty associated with themethodology and data used. Only when these steps havebeen completed can carbon offsets be certified.Finally, the paper discusses the importance ofstandardization of methods and procedures used forproject monitoring and verification, and the need foraccreditation to ensure that the activities ofcertifiers are regulated.
Estimates of forest biomass are needed for tracking changes in C stocks, as well as for other purposes. A common method for estimating forest biomass is through use of allometric equations which relate the biomass of individual trees to easily obtainable non-destructive measurements, such as diameter. A common form is B=aDb for biomass B, diameter D and parameters a and b. Field data collected in Sumatra and compared with previously published data show that the values of a and b vary between sites. This variation is likely to be the major source of uncertainty if biomass estimates are produced using equations that are not calibrated for individual sites. However, calibration by collection of B and D data for each site is unrealistic, requiring destructive measures. Methods of choosing values for a and b are, therefore, proposed that do not require destructive measurements. The parameter b can be estimated from the site-specific relationship between height (H) and diameter, H=kDc as b=2+c. The parameter a can be estimated from the average wood density (ρ) at the site as a=rρ, where r is expected to be relatively stable across sites. The allometric equation proposed is therefore B=rρD2+c.
Forestry has been proposed as a means to reduce net greenhouse gas emissions, by either reducing sources or enhancing sinks. This study assesses the potential of an incentive-based program to stimulate small farmers and communities to adopt biomass accumulating measures such as agroforestry or improved forest management. Current vegetation type, land use and stocks of carbon were assessed for an area of around 600 000 ha in southern Mexico, and the carbon (C) sequestration potential of a number of alternative techniques, based on farmers’ preferences, was estimated. Cost and benefit flows in US 0 and 15 MgC−1, of which 32×106 MgC through forest management. The choice of a baseline rate of biomass loss under a ‘business-as-usual’ scenario remains a critical issue for estimates of the cost-effectiveness of carbon sequestration by forestry.
"Projects implemented as part of the Clean Development Mechanism (CDM) of the Kyoto Protocol will have the dual mandate of mitigating greenhouse gas emissions and contributing to sustainable development. Basic agreement on core elements was reached in 2001, including the decision to allow afforestation and reforestation projects. However, it is not yet clear what rules will address social concerns. Many types of projects could potentially contribute to local livelihoods and ecosystem restoration, as well as to carbon emission offsets, including those using natural forest regeneration, agroforests, improved forest fallows, and agroforestry."
Environmental policies are significantly affected by political, administrative, and legal institutions. These institutions also have very substantial transaction costs associated with them. Benefit-Cost Analysis, as traditionally practiced, pays little attention to these transaction costs. This article presents a cost-effectiveness framework for carefully considering the institutional transaction costs of policies. This article then performs a comparison of two water quality policies: a non-tradeable effluent limit permit policy and an effluent charges policy. This comparison demonstrates that these institutional transaction costs indeed are significant. However, which it is important to consider these costs, they remain very difficult to estimate, and additional refinements are necessary.
The emission of greenhouse gases, particularly carbon dioxide, and the consequent potential for climate change are the focus of increasing international concern. Temporary land-use change and forestry projects (LUCF) can be implemented to offset permanent emissions of carbon dioxide from the energy sector. Several approaches to accounting for carbon sequestration in LUCF projects have been proposed. In the present paper, the economic implications of adopting four of these approaches are evaluated in a normative context. The analysis is based on simulation of Australian farm-forestry systems. Results are interpreted from the standpoint of both investors and landholders. The role of baselines and transaction costs are discussed.
As the international Joint Implementation (JI) program develops a system for trading carbon credits to offset greenhouse gas emissions, project managers need a reliable basis for measuring the carbon storage benefits of carbon offset projects. Monitoring and verifying carbon storage can be expensive, depending on the level of scientific validity needed. This guide describes a system of cost-effective methods for monitoring and verification on a commercial basis, for three types of land use; forest plantations, managed natural forests and agroforestry. Winrock International`s Forest Carbon Monitoring Program developed this system with its partners as a way to provide reliable results using accepted principles and practices of forest inventory, soil science and ecological surveys. Perhaps most important, the system brings field research methods to bear on commercial-scale inventories, at levels of precision specified by funding agencies.
The governance of natural resources used by many individuals in common is an issue of increasing concern to policy analysts. Both state control and privatization of resources have been advocated, but neither the state nor the market have been uniformly successful in solving common pool resource problems. After critiquing the foundations of policy analysis as applied to natural resources, Elinor Ostrom here provides a unique body of empirical data to explore conditions under which common pool resource problems have been satisfactorily or unsatisfactorily solved. Dr Ostrom uses institutional analysis to explore different ways - both successful and unsuccessful - of governing the commons. In contrast to the proposition of the 'tragedy of the commons' argument, common pool problems sometimes are solved by voluntary organizations rather than by a coercive state. Among the cases considered are communal tenure in meadows and forests, irrigation communities and other water rights, and fisheries.
Environmental policies are significantly affected by political, administrative, and legal institutions. These institutions also have very substantial transaction costs associated with them. Benefit-Cost Analysis, as traditionally practiced, pays little attention to these transaction costs. This article presents a cost-effectiveness framework for carefully considering the institutional transaction costs of policies. This article then performs a comparison of two water quality policies: a non-tradeable effluent limit permit policy and an effluent charges policy. This comparison demonstrated that these institutional transaction costs indeed are significant. However, while it is important to consider these costs, they remain very difficult to estimate, and additional refinements are necessary.
This study measured the magnitude of transaction costs associated with policies to reduce agricultural nonpoint source pollution. Interviews with staff from governmental agencies were conducted to estimate transaction costs associated with four policies to reduce agricultural phosphorous pollution in the Minnesota River. The tax on phosphate fertilizers had the lowest transaction costs (3.11 million), the requirement for conservation tillage on all cropped land (9.37 million). Taxes, thus, may have advantages with respect to transaction costs and abatement costs.
The use of food-crop intercropping, hedgerow intercropping and secondary or cover cropping to increase incomes of resource-poor farmers in South East Asia was investigated. Since all systems improve conservation of nutrients and most give extra marketable produce, they were expected to increase farm profitability. On upland farms in Lampung, South Sumatra, both inter- and secondary crops were found to improve yields compared with cassava monocropping and thus the income derived from growing cassava or rice with maize. These increases were equivalent to between 70 and 440 US dollars per hectare. An economic analysis of the lowland rice-producing systems in North East Thailand suggested that with the exception of growing cowpea, the use of pre-rice cover crops was not profitable despite a substantial increase in rice yield, because the additional labour cost more than the additional income was worth. A benefit of leguminous crops, however, can be the extra marketable product. Groundnut in Indonesia and cowpea in Thailand gave an attractive extra US 90. Although both hedgerow intercropping and secondary cropping represent a considerable investment of labour by farmers, this investment may be more feasible than paying for fertilizer on credit. On balance the most attractive option tested was the use of a leguminous secondary crop, e.g. groundnut or multipurpose cowpea, within the food crop cycle.
Growth records from three 1 ha plots of old-growth agroforest that have been monitored for 3–7 years in Sumatra are analysed. These plots of damar agroforest show typical multi-species composition. Tree species were grouped into five sets according to species ecology and average growth rate. Variables used in the multiple linear regression to predict average annual increment were crown form index, crown position (CP) index and initial girth. Crown form (CF) index is indicative both of photosynthetic capacity and of general vigour of the tree. Crown position index is indicative of the amount of light available to a tree. Results show that crown form is the most effective predictor of growth and that initial girth, and crown position only marginally increase the percentage of variance accounted for in most cases. About 40–50% of the variance is explained by using the above mentioned variables depending on the sites. The significance of these results is discussed and some methodological improvements to the monitoring techniques currently in use are suggested.
In its attempt to provide quantitative limits on greenhouse gas emissions, the Kyoto protocol accepts the principle that sequestration of carbon in the terrestrial biosphere can be used to offset emissions of carbon from fossil-fuel combustion. Whether or not the Kyoto protocol ever comes into force, it is worthwhile to understand how carbon sequestration might be treated in any mitigation plan that provides a tax or ration on carbon emissions. Emission credits, as proposed for the energy sector, are based on the idea that a prevented emission is prevented forever, and emission credits might be traded among parties. In the event that sequestered carbon is subsequently released to the atmosphere, it would be advantageous to agree what the liability is and who assumes that liability. We describe a system whereby emissions credits could be rented, rather than sold, when carbon is sequestered but permanence of sequestration is either not certain or not desired. Our proposal is similar to that offered by the government of Colombia except that it casts these temporary emissions credits into the traditional concepts of rental agreements and it clarifies the opportunities for secondary transactions. A rental contract for emissions credits would establish continuous responsibility for sequestered carbon; credit would be assigned when carbon is sequestered and debits would accrue when carbon is emitted.
This paper analyses the optimal design of collective credit agreements with joint responsibility. First, we demonstrate that these agreements can potentially induce peer monitoring, reduce the incidence of strategic default, and enhance the lender's ability to elicit debt repayments. The resulting benefits in terms of extended credit should, however, be weighted against the higher monitoring effort that such agreements impose upon participant borrowers. Second, we show that the relative benefits from peer monitoring are maximized when risks are positively correlated across borrowers, and also when the size of the group is neither too small (due to a “joint responsibility”, “cost sharing”, and “commitment” effects) nor too large (due to a “free riding” effect). Third, we compare among different monitoring structures.
"The present work is concerned with the topical issue of natural resource management. It does not deal, however, with broad-spectrum environmental concerns such as protection of wilderness areas (for example, the south pole), air or water pollution, etc., but focuses on local ecosystems. What distinguishes local-level resources from larger ecosystems is that (1) they are susceptible of appropriation by relatively small units (including individuals) and (2) they can lead to rivalry in consumption in so far as yields of these resources are clearly perceived as subtractable. This book thus addresses the question as to how these local or village-level natural resources (as contrasted with global commons) can be most efficiently and equitably managed. In other words, can we find guidelines or sound theoretical principles for an optimal long-term exploitation of local resources (forests, irrigation water, pastures, lakes and rivers, sea areas, etc.)? Disturbing evidence highlighting rapid processes of resource depletion, particularly so in developing countries, has stimulated a lot of theoretical and empirical works during the last decades. Moreover, relevant theoretical tools (such as game theory) have been developed independently of environmental concerns which have potential applications to this field. The present attempt aims essentially at making a pause in order to take stock of the achievements attained so far. We believe this step is necessary in view not only of the considerable body of literature which has accumulated on the subject under concern, but also of the multidisciplinary nature of the works involved. Due to these two characteristics, there are many gaps to be bridged between various strands of thinking or contributions to the field."
The "Clean Development Mechanism" (CDM) contained in the December 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change provides, for the first time, the capacity for industrialized countries to claim credits for greenhouse gas (GHG) emissions reductions or offsets undertaken in cooperation with host developing countries. However, the Protocol provides no guidance on how these cooperative activities for GHG reduction and sustainable development would be undertaken in practice, including the particularly important issue of the relationship of the private sector vis-à-vis government institutions in designing, financing, and securing approval for jointly implemented GHG abatement projects. The pilot program for "Activities Implemented Jointly" under the Framework Convention provides an opportunity to better understand the practical constraints and opportunities for successful private sector participation in the CDM. This paper highlights some of the lessons for establishing a successful CDM by examining a small number of cases from the United States Initiative on Joint Implementation (USIJI). The authors first review the objectives, proposal review and evaluation criteria of this program, and provide some overall information on project proposals by project type and stage of development. They then develop case studies of two energy-related USIJI projects from the earlier phase of the program. These cases illustrate several potential problems that can arise in establishing CDM transactions. Further investigation of more recent cases sheds some light on the extent to which these problems change over time. To be successful, the CDM must be based on a solid institutional footing, with clear incentives for all parties involved. The cases examined here illustrate how transactions can become entangled in the same kinds of problems that bedevil other transactions in developing and transitional economies. In both early cases, "transaction costs" were substantial. The latter projects indicated that while the nature of transactions costs changed over time, they still remained somewhat substantial. Project proponents regarded gaining USIJI acceptance as one of the principal impediments to JI project development. The cases also illustrate the need for clear and widely understood goals and procedures for investor country approval. In addition, the analysis underscores how attitudes of different project proponents regarding the value of GHG credits can affect their perspective on the transaction. Finally, the study underscores that financing remains the ultimate hurdle to project implementation, and that the expectation of a clear financial return on investment is a prerequisite to a successful project.
A major problem for institutional lenders is ensuring that borrowers exercise prudence in the use of the funds so that the likelihood of repayments is enhanced. One partial solution is peer monitoring: having neighbors who are in a good position to monitor the borrower be required to pay a penalty if the borrower goes bankrupt. Peer monitoring is largely responsible for the successful financial performance of the Grameen Bank of Bangladesh and of similar group lending programs elsewhere. But peer monitoring has a cost. It transfers risk from the bank, which is in a better position to bear risk, to the cosigner. In a simple model of peer monitoring in a competitive credit market, this article demonstrates that the transfer of risk to an improvement in borrowers' welfare. Copyright 1990 by Oxford University Press.
The social and environmental implications of plantations in the CDM are analysed under a hypothetical laissez faire approach and a proactive approach to Sustainable Development (SD), bounded by existing COP7 agreements and efficiency and equity considerations. Implications for timber rich, timber depleted and inherently timber poor regions are assessed. The social risks of industrial plantations cannot be fully addressed under COP7 rules and are likely to be highest in timber rich regions under repressive regimes or where politics dominate the forestry sector. Risks could, however, be reduced through minimum standards for stakeholder consultation and favourable legal institutions. Low cost opportunities with multiple benefits exist and require information dissemination, but some opportunities for biodiversity benefits will need financial support. Reduction of transaction costs would increase the participation of smallholder plantations but their role is likely to remain limited. Inclusion of assisted natural regeneration opens up opportunities for options with multiple benefits.
The emission of greenhouse gases, particularly carbon dioxide, and the consequent potential for climate change are the focus of increasing international concern. Temporary land-use change and forestry projects (LUCF) can be implemented to offset permanent emissions of carbon dioxide from the energy sector. Several approaches to accounting for carbon sequestration in LUCF projects have been proposed. In the present paper, the economic implications of adopting four of these approaches are evaluated in a normative context. The analysis is based on simulation of Australian farm-forestry systems. Results are interpreted from the standpoint of both investors and landholders. The role of baselines and transaction costs are discussed. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2003.
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