Averted Slash-and-Burn-caused Deforestation under the Clean - DOC
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Averted Deforestation under the Clean Development Mechanism – A Case of Slash-and-Burn in Palawan A Bachelor Project in Forestry by Jacob Lindhardt Palm (S2014) Subject Supervisor: Niels Strange Unit of Forestry Method Supervisor: Sri N. Sriskandarajah Unit of Learning and Bioethics Assisting Supervisor: Jette Bredahl Jacobsen Unit of Forestry Department of Forest & Landscape and Danish Research Institute of Food Economics The Royal Veterinary and Agricultural University, Denmark June 2004 Abstract Tropical deforestation is causing a significant amount of greenhouse gas (GHG) emissions into the atmosphere. Small-scale farmers contribute to such deforestation with low-value and unsustainable slash-and-burn agriculture. The Clean Development Mechanism (CDM) of the Kyoto Protocol is offering an opportunity for developed countries to approach parts of their GHG emission reduction obligations from the Kyoto Protocol by investing in reducing greenhouse gas emissions in developing countries. Land use, land use change and forestry are among the ways where CDM can be used, but averted deforestation is presently not an accepted method within the Kyoto Protocol. This paper utilizes calculations from existing literature to explore the possibilities of implementing averted deforestation to the CDM, using the Philippine island of Palawan as a case study, with Denmark as the proposed investing country. Taking into account some of the various advantages that averted deforestation offers, this paper recommends that the potential possibilities of the latter should be implemented in the Clean Development Mechanism of the Kyoto Protocol, while also recognising the need for further research in measuring carbon reductions to ensure the credibility of such a project. The front page image is kindly contributed by the webmaster of Palawan Council of Sustainable Development. II Resumé (Danish Version of Abstract) Tropiske skovrydninger er kilde til et signifikant udslip af drivhusgasser ud i atmosfæren. Med svedjebrug, som hverken er særligt økonomisk eller bæredygtigt, medvirker bønder til nogen af disse skovrydninger. Kyotoprotokollens Clean Development Mechanism (den rene udviklingsmekanisme) eller CDM tilbyder muligheden for at udviklede lande kan opnå dele af deres påkrævede reduktioner i udslip af drivhusgas, ved at investere i at reducere udslippene i udviklingslandene. Jordbrug og skovbrug er blandt de områder, hvor CDM kan bruges, men at forhindre skovrydninger er p.t. ikke under de accepterede muligheder. Med den filippinske ø, Palawan som studieområde, og Danmark foreslået som det investerende land, undersøger dette projekt, via beregninger fra litteraturen, mulighederne for at implementere forhindring af skovrydninger til CDM‟s muligheder. Med syn på nogen af fordelene ved begrænsning af skovrydninger, anbefaler dette projekt at muligheden for at forhindre skovrydninger bliver implementeret som en mulighed under CDM. Desuden indses et behov for øgede studier i at måle udledningsreduktioner, til det formål at sikre troværdigheden af et sådant projekt. III Acknowledgements A number of people have contributed in improving the quality of this paper. Special thanks to the following, without whom this paper would have never reached its final form: My main supervisor, Dr. Niels Strange, for his patience and guidance, My method supervisor, Dr. Sri N. Sriskandarajah, for always being ready to take the time to clear up my doubts, Dr. Jette Bredahl Jacobsen, for always being enthusiastic in discussing Kyoto and forestry, The staff of the library of the Royal Veterinary and Agricultural University, Denmark, for being so helpful, consistently sending materials and answering my requests, Dr. Leon O. Namuco, Dept. of Horticulture, UP Los Banos, the Philippines, for providing me economic details of the horticulture of mango in the uplands of the Philippines, Ms. Hivy Ortiz Chour, Forestry Officer, Global Forest Resources Assessment, FAO, for sending me statistical forest materials from FAO, Ms. Ellen Hawes, Research Coordinator, Climate Change Initiative, The Nature Conservancy, for helping me finding relevant UNFCCC decisions, My friend and colleague in the studies of forestry, Ms. Matilde Råhede for her comments and opposing to improve the quality of my work, My fiancée, Ms. Tracy Tan Suqin of Singapore, for her encouragement, help in research and proof- reading. IV Table of Contents ABSTRACT ....................................................................................................................................... II RESUMÉ (DANISH VERSION OF ABSTRACT) ...................................................................... III ACKNOWLEDGEMENTS............................................................................................................ IV TABLE OF CONTENTS.................................................................................................................. V ABBREVIATIONS AND ACRONYMS ....................................................................................... VI GLOSSARY .................................................................................................................................... VII 1 INTRODUCTION ...................................................................................................................... 1 1.1 Presentation of the Problem ..................................................................................................... 1 1.2 Problem Formulation ............................................................................................................... 2 1.3 Methodology ............................................................................................................................ 3 1.4 Limitations ............................................................................................................................... 5 2 THE CLEAN DEVELOPMENT MECHANISM OF THE KYOTO PROTOCOL ........... 6 2.1 The Kyoto Protocol .................................................................................................................. 6 2.1.1 Introduction to the Protocol ..................................................................................................... 6 2.1.2 Article 25 of the Kyoto Protocol .............................................................................................. 7 2.2 Principles and Eligibility of CDM ........................................................................................... 7 2.3 Permanence of Carbon Credits ................................................................................................ 9 2.4 Averted Deforestation under CDM .......................................................................................... 9 2.5 Price Estimating Carbon Credits ............................................................................................ 12 2.6 Summary ................................................................................................................................ 16 3 PALAWAN – THE PROJECT AREA OF THE HOST COUNTRY ................................. 17 3.1 Introduction to the Philippines and Palawan.......................................................................... 17 3.2 Deforestation History of Palawan – and the Expected Continuation..................................... 20 3.2.1 History of Deforestation Until 1993 ...................................................................................... 20 3.2.2 Estimates 1993-1998 .............................................................................................................. 20 3.3 Future CO2 Emission without AD Projects – The Baseline of Palawan ................................ 22 3.4 Summary ................................................................................................................................ 26 4 PROJECT PALAWAN 2005 .................................................................................................. 26 4.1 Initialisation to the Averted Deforestation Project ................................................................ 26 4.2 Estimated Costs for Stop of Slash-and-Burn ......................................................................... 26 4.3 Summary ................................................................................................................................ 28 5 DISCUSSION AND RECOMMENDATIONS ...................................................................... 28 6 CONCLUSION......................................................................................................................... 31 7 PERSPECTIVES ..................................................................................................................... 31 8 REFERENCES ......................................................................................................................... 32 8.1 References to Websites .......................................................................................................... 36 8.1.1 Governmental and Intergovernmental Organisations ............................................................ 36 8.1.2 Non-Governmental Organisations ......................................................................................... 36 APPENDICES V Abbreviations and Acronyms AAU: Assigned Amount Unit AD: Averted Deforestation (Also used in literature: Avoided Deforestation) C: 1 ton of emitted / sequestered C equals 3.667 tons emitted CO2 CDM: Clean Development Mechanism CER: Certified Emission Reduction, the CDM currency, expressed in tons of CO2 CO2: 1 ton of emitted / sequestered CO2 equals 0.27 tons C CO2e: CO2 equivalent, GHG standard, calculated from various greenhouse trace gases1 CoP: Conference of the Parties (to the Protocol) DKK: Danish kronor, the currency of Denmark, ranging between US$ 0.11-0.19 in the past 10 years, with a mean around US$ 0.152 ER: Emission Reductions (measured in tons CO2), can be achieved in the industry as more efficient energy use, or by various mechanisms ERU: Emission Reduction Unit GHG: Greenhouse Gas IPCC: Intergovernmental Panel of Climate Change JI: Joint Implementation LCER: Long-term Certified Emission Reduction LULUCF: Land Use, Land Use Change and Forestry OD: Other Deforestation (beyond deforestation caused by slash-and-burn) PgC: One petagram carbon (PgC) is 1015 grams or 1 gigaton carbon PHP: Philippine peso, the currency of the Philippines, ranging between DKK 0.105-0.165 in the past 2 years3 PP2005: Project Palawan 2005; the proposed case project in this study TCER: Temporary Certified Emission Reduction UNFCCC: United Nations Framework Convention on Climate Change WTA: Willingness To Accept (project) WTP: Willingness To Pay (for project) 1 This study writes CO2, referring to all GHGs. 2 Source: http://finance.yahoo.com/m5?s=DKK&t=USD&a=1&c=3 (Was available on April 29, 2004, but by May 18, the 10-year history of the US$-DKK was not available. Therefore, as per May 18, this paper is referring to http://finance.yahoo.com/currency/convert?from=DKK&to=USD&amt=1&t=2y for the 2-year history). 3 Source: http://finance.yahoo.com/currency/convert?from=PHP&to=DKK&amt=1&t=2y (May 18, 2004). VI Glossary Annex I Parties: 41 countries (UNFCCC website)4 developed countries plus EU, listed in Annex I of the Kyoto Protocol. The number of members is growing Baseline: Expected CO2 emission in a “business as usual” scenario Kaingin: Tagalog (Philippine language) for slash-and-burn Kaingineros: Tagalog for the farmers who depend on slash-and-burn Non-Annex I Parties: Developing countries, which are parties to Kyoto and eligible of hosting CDM The Protocol: Referring to the Kyoto Protocol 4 As per April 2, 2004. A list of Annex B countries is almost identical to Annex I, and the obligations and commitments of these are almost the same. This study will use Annex I interchangeably with Annex B, not differentiating the two lists. VII 1 Introduction 1.1 Presentation of the Problem Throughout the eighties and nineties, the annual rate of tropical deforestation was approximately 14 million hectares (FAO, 1993). Besides the ecological loss, landslides and decline of sustainable livelihood, tropical deforestation is causing considerable CO2 emissions. Fearnside (2000) concludes that the net emission in the eighties (considering future land uses of converted forests, etc.) reached 12 billion tons of CO2 (3.3 PgC) per year5. The Intergovernmental Panel of Climate Change (IPCC) however, estimates the worldwide land-use change emission considerably more conservatively with only 1.1 PgC emitted in 1990 (Nakicenovic et al., 2000). This is partly due to a net sequestration in temperate regions, where the forest cover is increasing, causing the global net forest reduction in 1980-1990 to no more than 9.9 million ha per year (FAO, 1993). As tropical forests, e.g. rainforests, are converted (i.e. degraded) it causes significant CO2 emission from burning and decomposition. The next uses of the land will effect in some carbon re- sequestration, but for each harvest, the subsequent sequestration will be less. The re-sequestration will not be efficient in the long term, because the soil will not be suitable for e.g. long-term agriculture. Most of the biomass lost by slash-and-burn will never be regenerated, and consequently the CO2 emitted in the process will not become re-sequestered (Fearnside, 2000). The emission of CO2, an important greenhouse gas (GHG), into the atmosphere is a source of global concern for the future, as it constitutes a serious global climate change threat (refer to Appendix A). According to Smith et al. (2002) the tropical land-use is at least amounting 20% of the total annual CO2 emissions. Using IPCC‟s official estimates, the worldwide land-use changes are responsible for 1.1 PgC out of a total anthropogenic CO2 emission of 7.1 PgC, faulting 15.5% of the total net emissions from land-use changes (Nakicenovic et al., 2000). The international society is attempting to fight the climate change threat with the Kyoto Protocol. This is a set of rules, which provide guidelines to most of the developed countries to decrease their GHG emissions. Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, developed countries can meet part of their GHG emission reduction with carbon projects in developing countries. One of the important rules for such projects to comply with CDM are that 5 Fearnside‟s conclusion is that a net flow of 3.3 billion tons C is emitted in form of CO2 from tropical deforestation and forest degradation. CO2 is 3.67 times heavier than C. This equals 3.3 PgC 3.667 =12.1 billion tons of CO2. 1 investing countries must provide local (sustainable) livelihood not worse than without the project (Smith et al., 2002). Further details of CDM and the Kyoto Protocol follow in chapter 2. Averted deforestation (AD) is nevertheless not presently eligible under CDM (UNFCCC, 2002 and Smith et al., 2002), as there are divided political as well as scientific views on the possibility (Chomitz, 2000 and Dutschke, 2001), but it can be reconsidered in the future (UNFCCC, 2002). Slash-and-burn agriculture is a major contributor to tropical deforestation. Poor farmers are cutting down and burning trees, exhausting the ash-enriched soil, and then moving to a new area. Traditionally, degraded forests could lay fallow for a reasonable period, but as population density is growing even in rural areas, the fallow periods in Palawan are at some places down to only 1-2 years from previously 10-15 years (Shively, 1997). Compared to e.g. logging-caused deforestation, slash-and-burn is a rather low-income and primitive industry, which does have possible alternative projects that can be more sustainable – for example oil palm production, which has shown to be valuable in Sumatra (Tomich et al., 1998). The reason why the focus of this study is slash-and-burn agriculture is that it is a low-income industry with a high level of environmental impact. Palawan – the case site of this study - is often referred to as “the last frontier” of the Philippines6, as the island has the highest remaining forest cover of the larger Philippine islands, but the ecosystems are under threat, especially from deforestation (see chapter 3 below). Therefore, Palawan is also a place where immediate action to avert deforestation has the potential to reap immense benefits. 1.2 Problem Formulation To investigate the model of developed countries purchasing carbon credits by averting slash-and- burn-caused deforestation, the Philippine island province of Palawan will used as a case study for a possible AD project under the CDM of the Kyoto Protocol. This study is handling the following main question: Should averting deforestation in non-Annex I countries be a way for Annex I countries to purchase carbon credits under the Clean Development Mechanism? Included in the question is the request for arguments for and against the possibility of implementing AD under CDM. The Annex I Party – the investing country - of this case study is Denmark. 6 See for example http://www.unesco.org/csi/act/ulugan/ulugan1e.htm (Mar 25, 2004). 2 This work is a case study of a hypothetical carbon project in Palawan, hereafter named Project Palawan 2005 (PP2005). The purpose of PP2005 shall be to achieve Emission Reductions (ERs) by averting slash-and-burn-caused deforestation within the rules of CDM (see chapter 2.2). To answer the main question of this study, the following sub questions have to be investigated: - What are the current rules and regulations for CDM projects under the Kyoto Protocol? - How much potential is there for CO2 emission from slash-and-burn farming in Palawan in a “business as usual” scenario?7 - How much emission reductions are possible to achieve in a CDM project? - What will be the costs of implementing such a project in Palawan, which supplies a stop (or reduction) of slash-and-burn, while still remaining within the rules of CDM, so that the investing country can purchase the established carbon credits? - What are the cost-benefits for the stakeholders8 of implementing an AD project in Palawan? The purpose of this study is to investigate the future possibilities of using AD as a CDM tool to reduce the immediate global climate change threat within reasonable 9 costs from the developed world. As “extra” benefits, such AD project will – if shown possible - improve sustainable development and livelihood in the developing world, and protect and secure the unique biodiversity in various tropical terrestrial ecosystems. 1.3 Methodology This work is a literature study, which utilizes calculations from existing literature, implementing a case (AD in Palawan) to a system (CDM). It is investigating the possibilities and limitations of CDM for the purpose of AD, including the willingness to pay for CDM credits (Chapter 2). Thereafter it identifies Palawan as an object for a CDM project (Chapter 3). To analyse the possibility of a project in Palawan, financed by Denmark and accepted by the Philippines, a budget is laid out for the AD project (Chapter 4). To implement an averted slash-and-burn CDM project for Palawan, the baseline10 for Palawan has to be mapped. This is the hypothetical – or potential - future CO2 emission from slash-and-burn in 7 This is the baseline of Palawan – see chapter 2. 8 The stakeholders in this study are the small-scale farmers (kaingineros), the host country, the investing country, and when it comes to carbon benefits, the international society. 9 Here it is given that a developed country (or firm) will only implement an AD project, if its opportunity cost of carbon emission reduction is higher than the costs of carbon credits under an AD project. 10 See chapter 2.2 for details of baseline. 3 Palawan, provided no CDM project is implemented. Furthermore, carbon leakage 11 has to be estimated for the situation that a total stop of slash-and-burn agriculture might cause increased emission from other sources, e.g. fertiliser trace gases and increased deforestation from illegal logging, increased slash-and-burn agriculture outside the project area, etc. This is for the purpose of computing total net ER in PP2005. Socioeconomic factors in Palawan and the Philippines have to be investigated. This is to allow the computing of cost-benefits for the host country to accept the project, and also for estimating the possibility of success in PP2005. Here it is given that the host country will only accept PP2005 if the project, including all externalities, is profitable after consideration of the opportunity costs of the second best alternative. It is also given that the project is kept within the livelihood rules of CDM, meaning that the farmers‟ socio-economic state should not be worsened. Similarly, cost-benefits of a project will be computed for the investing country to accept the project. This is to establish the willingness to pay (WTP) of Denmark, for the Certified Emission Reduction (CER) gained throughout PP2005. To implement a CDM carbon project to the Palawan case, a number of variables have to be known: - Expected Emission Reductions (ER) throughout PP2005 - Willingness To Pay (WTP) for PP2005. This is the investing country‟s cost-benefit analysis, including non-monetary value of the project, if any - Willingness To Accept (WTA) PP2005. This is the host country‟s cost-benefit analysis, including non-monetary value of the project - Cost of PP2005. This shall be an estimate of the price for finding alternatives to the slash-and- burn agriculture, which comply with the rules of the CDM, including additionality12 and sustainability (Smith et al., 2002)13. A project is only possible if the costs of PP2005 does not exceed WTP and if the local‟s livelihood is not negatively affected To calculate the total baseline of Palawan, the following data is necessary: - Present and historical slash-and-burn deforestation rates. This includes knowledge on what in general happens to the deforested areas after being abandoned by the farmers 11 Carbon leakage is the endogenous increase in carbon emissions as a result of emission reductions elsewhere. 12 Additionality is when there is a difference between the emissions that occur in the baseline scenario, and the emissions associated with a proposed project. Additional carbon emission reductions will become achieved carbon credits for the investor. 13 To comply with CDM, the alternatives must provide sustainable livelihood for the locals. 4 - Number of kaingineros (farmers depending on kaingin) - Which kind of forests are cleared, and at which combustion efficiency - Among kaingineros, how much is each household contributing to CO2 emission per year - How is the expected population growth in the area, including migration, especially into kaingin (slash-and-burn farming) - Rates of deforestation caused by urbanisation and logging In order to reach a strong conclusion, this study will seek to establish conservative estimates for all arguments. For estimating the baseline as well as the WTP for CER, this study is using the lowest estimates available. Similarly, high estimates will be found for establishing the price for averting deforestation in PP2005. This is giving an overall conservative result, which is necessary for having a strong argument for bringing averted deforestation into the methods of the Clean Development Mechanism for the second commitment period14. For this project the author expects to achieve experience in conducting research, as well as gaining knowledge in climatic consequences from forest fires, forest conversions in the tropics, and the use of CDM projects. 1.4 Limitations To address the problem analysis within the practical limits, given the workload considerations of this project, the project is limited by: - Only briefly suggesting solutions of technical and political methods in the reductions of slash- and-burn deforestation – other (similar) projects will be examples - Using other projects together with CoP decisions when proposing solutions for the administrative problems with countries buying emission rights by reducing the deforestation in selected areas, and measuring how much these countries earn rights to release CO2 in their own industries - Refraining from discussing future environmental, social and economic effects on unrestrained CO2 emissions – here is simply referred to the joint statement of the Royal Society (2001A) The variables under chapter 1.3 above to implement a CDM project into the Palawan case go beyond what can be within the workload of this project. Those will be estimates from projects in other regions, and estimated calculations from the sources available considering this case. 14 See chapter 2. 5 The data needed to calculate total ER are either too complex to include in this study, considering the project size, or they are even impossible to predict for the future, as too many factors can influence the variables. Therefore, the Palawan case will only be subject to estimates, which again will be used in arguing for the solutions of this study. Tropical deforestation has many aspects, which will not be considered in this project, as the size of the thesis does not permit it. Problems like the impact of how much the biological diversity is threatened, the extent of poverty increase and the issue of the vicious cycle of global warming and deforestation will not be discussed. With limitations specified, this work will establish estimates of - Palawan‟s baseline CO2 emission scenario and the potential ER achievable - Denmark‟s willingness to pay for achieving the carbon credits from an AD project in Palawan - Costs of an AD project in Palawan These estimates will be converted into operation under a CDM project, concluding whether or not AD should be applicable as a mean for Annex I countries to reduce emissions, while non-Annex I countries get to conserve their forests, without sacrificing the livelihoods of the farmers. 2 The Clean Development Mechanism of the Kyoto Protocol 2.1 The Kyoto Protocol 2.1.1 Introduction to the Protocol In 1997 the Kyoto Protocol was adopted to the United Nations Framework Convention on Climate Change. It aims at reducing GHG emissions from developed countries (Annex I) by at least 5% below 1990 level in the first commitment period of 2008-2012 (UNFCCC, 1997). The level of reduction obligations among the countries vary considerably, with 8% to the EU countries, 0% to New Zealand, Russia and Ukraine15, while Iceland can increase emission to 10% beyond the base- year of 1990. Japan and USA are obligated to reduce with 6% and 7% respectively (UNFCCC, 1997, Annex B). The total carbon dioxide emissions from the Annex I parties, in the base-year of 13,7 1990 are 13.7 billion tons (UNFCCC website)16, or = 2.05 PgC. For USA it was 4,957 Mt 6,67 15 Russia and Ukraine are, despite the 0%, expected to emit less carbon in the first commitment period, and the excess carbon might be traded with other Parties of the Protocol, but it can also be used for developing each country (Paltsev, 2000). 16 UNFCCC provides the base-year emissions of the Annex I Parties on: http://unfccc.int/resource/kpco2.pdf. 6 (UNFCCC website), obligating the U.S. to reduce with 0.07 4,957 Mt CO2 = 347 Mt CO2 from 1990, but this deficient is likely to increase every year, as USA‟s GHG emission tends to increase consistently (see Appendix B). Subsequent Conferences of the Parties (CoPs) since 1997 have been, and will be deciding upon modalities, rules and guidelines on how to incorporate human-induced land use activities into a country‟s emission target (UNFCCC, 1997). For the full Kyoto Protocol, see UNFCCC (1997). 2.1.2 Article 25 of the Kyoto Protocol The legal standing of the Protocol is that when 55 Parties of the convention, accounting for at least 55% of the total GHG emission from all Annex I countries in the base-year of 1990, have ratified the Protocol, then the commitments will go into force 90 days later. Currently, Annex I Parties covering 44.2% of the base-year emission have given their consent (UNFCCC website). Ratification now from either Russia or USA alone can bring the Protocol into force, as these two countries contributed 17.4% and 36.1% respectively of the total 1990 GHG emissions (UNFCCC website). On the other hand, the Kyoto Protocol, as it is now, will not become legally binding if neither Russia nor USA ratifies the Protocol, as the two countries combined cover more than 45% of the 1990 GHG emission. 2.2 Principles and Eligibility of CDM Forests have a special role in the Kyoto Protocol. They are both part of the problem and the part of the solution to mitigating climate changes, as they are massive sources of GHG emissions, as well as being major sinks of carbon, and having the ability to sequester large amounts of carbon from the atmosphere. As stated in the Kyoto Protocol (UNFCCC, 1997), Article 12, the Clean Development Mechanism is opening for a market, where Annex I Parties can generate Certified Emission Reductions (CERs) by engaging in climate change mitigation projects in non-Annex I Parties. The Annex I Party is the investing country, and the non-Annex I Party is the host country. Under the terms of the Kyoto Protocol, every ton of carbon absorbed from the atmosphere by forests or other carbon “sinks”, which is verified, i.e. allowed to be counted, effectively permits a country to emit an additional ton of carbon from burning fossil fuels. 7 CDM projects have to be based on voluntary agreements by both parties, and have to improve the standard of living, as one purpose (beyond ERs) is to provide sustainable development in the host country. A project must ensure that all carbon benefits achieved within the project boundaries are not negated by actions on or off site caused by the project. A sound strategy must be in place for monitoring and mitigating any carbon leakage that could be attributed to the project. The carbon benefits have to be additional to what would have occurred without the project; including outside the boundaries of the project. The following regulations were decided on CDM at CoP7 in Marrakesh, 2001 (UNFCCC, 2002): - The eligibility of land use, land-use change and forestry project activities under CDM is limited to afforestation and reforestation. This excludes AD as a possibility in the first commitment period, 2008-2012 - For the first commitment period, the total of additions to a Party‟s assigned CER resulting from CDM shall not exceed 5% of base-year emissions of that Party - The treatment of land use, land-use change and forestry (LULUCF) project activities under CDM in future commitment periods shall be decided as part of the negotiations in the second commitment period (this is opening for negotiations for AD in future commitment periods) Furthermore, criteria for baselines of the Protocol‟s article 6 were lined out. Basically, up to an ER project, e.g. under CDM, there must be warranted a level of carbon emission, i.e. the baseline, provided there is “business as usual”. Throughout the project, an executive board 17 shall monitor the purchased ERs. In the long term, the idea is that the society must make technological innovations towards industrial GHG emission reductions. The overall purpose of the LULUCF carbon projects is that we “buy time” in order to avoid global warming and its consequences, until the technology has improved energy efficiency to the extent of neutralizing the global warming threat (Royal Society, 2001B). Despite the fact that the possibility of implementing AD under CDM will at the earliest arise by the end of the first commitment period (2008-2012), this case study is basing its calculations on the carbon project, PP2005 starting by 2005. 17 An executive board responsible to the Conference of the Parties to the UNFCCC will supervise CDM projects (UNFCCC website). 8 The amount of CO2 that can be sequestered by CDM projects and other land-use projects is small in comparison to the globally increasing emissions of GHG. It is clear that the ultimate solutions to the global warming threat are found in various technological innovations (Royal Society, 2001B). While CDM projects are having a developed country as investing country, and a developing country as host country, there is also a Joint Implementation (JI), a mechanism in which both parties are Annex I countries. 2.3 Permanence of Carbon Credits At CoP9 in Milan, December 2003, some uncertainties concerning the permanence of achieved carbon credits were resolved. Two kinds of credits are allowed: Long-term and Temporary Certified Emission Reductions, referred to as LCER and TCER respectively. TCERs expire at the end of the subsequent commitment period following the one for which the CER was issued, but can be renewed if the carbon sink is preserved. LCERs are similar, but these expire after 20 or 30 years, also to renewal up to 60 years. After 60 years of successful verification and certification, both LCERs and TCERs will be replaced with permanent CERs. CDM credits are subjected to verification and certification of continued storage of carbon every 5 years (UNFCCC, 2004). The reason for the flexibility in permanence is that sequestered carbon (e.g. biomass in an afforestation project) or protected carbon (e.g. from an AD project) is not necessarily secured by the end of a project or a commitment period, and this way there is incentive from the investing country to ensure long term sustainability (Dutschke, 2001). The economic reason for a country to invest in TCER – which the country then have to buy again, or purchase elsewhere – is that the general beliefs are that industrial carbon emission reductions will decrease in price, as technological innovations improve (Royal Society, 2001B). On the other hand, the price of traded CER and other carbon credits is expected to rise in the first commitment period, as a result of increased demand (Kristoffersen, 2002). Furthermore, it seems morally obvious that a country immediately after a short project cannot be certain that a carbon sink is secured. Until then, the investing country shall not claim that credit on a permanent basis. 2.4 Averted Deforestation under CDM The inclusion of project-based mechanisms in climate change policy has spawned a host of technical, political, social, moral/ethical and economic issues on the validity of avoided deforestation in the Kyoto Protocol‟s CDM, taking into consideration that these issues do overlap. The positions of the various state actors and non-state actors on the issue lie on a wide spectrum. 9 This section seeks to discuss the various takes on the issue as well as the different positions that the various nations and NGOs hold. Within the land-use, land-use change and forestry sector, there is widespread criticism relating to the environmental integrity of carbon dioxide sequestration or avoided GHG emissions through averted deforestation activities, which has led to the exclusion of such activities from the CDM of the Kyoto Protocol for the first commitment period. Among the most challenging technical issues are the “methodologies for baseline establishment and identification and monitoring of leakage” (Aukland et al., 2003, p. 124). Chomitz (2000) provides a comprehensive list of arguments and counter-arguments on the technical issues on this topic, which helps provide starting points on the issue: can baselines be set for forest carbon projects and can leakage be quantified or neutralized for forest carbon projects? From the opposition‟s viewpoint, emission reductions from forest carbon are likely not „real and additional‟ and crediting these offsets will lead to increased world GHG emissions because, firstly, countries will claim credit for standing forests, and therefore emit the equivalent amount of GHG in their industries etc. Secondly, there is no way of measuring emission reductions, so projects will make unverifiable claims for offsets. Thirdly, forests are not really protected because deforestation is merely diverted. These „leakage‟ effects are pervasive and hard to measure. The problem with uncertainty in measuring baselines and verifying additionality is an issue, which is frequently emphasised on (e.g. Houghton et al., 1996 and Royal Society, 2001A). Indeed, the European Community‟s position is that “avoided deforestation is presented as an activity that is very positive from a biodiversity perspective” but “from a climate perspective, however, the impact is highly uncertain due to large difficulties to ensure additionality and to avoid leakage” (UNFCCC, 2001, p. 11). However, the counter-arguments are that if additional tests are properly applied, countries would not be able to claim credit for the protection of unthreatened standing forests, as well as the existence of well-established statistical methods for measuring actual carbon stocks in standing forests18, and that effective averted deforestation projects would not merely fence off forests but actually include actions that address the root causes of deforestation, neutralizing leakage. This section explores the differing postures within and across these groups, particularly the stance of the EU, Brazil and NGOs. Although this issue has been debated on the bases of science and 18 Chomitz notes that techniques exist for identifying areas in high risk of deforestation over the short to medium run, allowing the calculation of ERs over this period whereas techniques for predicting year-by-year emissions for deforestation prevention projects are less well developed. 10 morals/ethics, it is better understood by the “hidden agendas”19 that these groups hold. On the surface, the European Union‟s opposition is grounded upon the ecological validation that “carbon in forests is inherently at risk of emission to the atmosphere, and that the only acceptable form of mitigation should, therefore, be reduction of fossil-fuel emissions „at source‟” (Fearnside, 2001, p.171). This is contentious as there seems, according to Fearnside, to be an underlying economic motive from the point of view of European governments which do not want to be disadvantaged in the competitive international market and who have an incentive in forcing the U.S. in increasing its energy prices when the latter cannot buy carbon credits from abroad in huge amounts (Fearnside, 2001). While the Brazilian opposition is another mystery because of the program‟s potential gains to the country, its posture is best explained by the reason that it wants to protect its territorial sovereignty because a potential “internationalization” of the Amazon with the pretext of environmental protection will impede its autonomy in decision-making (Fearnside, 2001)20. This, however, should no longer be an issue, as with the CoP9 decisions from December 2003, host countries can decide on short-term contracts with the investing countries (see chapter 2.3 above). Peru as well as the Association of Small Island States (AOSIS) represented by the Island of Tuvulu, have also opposed the inclusion of forests (Fearnside, 2001). The various NGOs vary in their attitudes towards the inclusion of AD in the CDM, which can be quite puzzling assuming that they prioritize environmental protection over other factors. Major environmental NGOs headquartered in the U.S., such as Conservation International (CI), Environmental Defense Fund (EDF), the Natural Resources Defense Fund (EDF), the Natural Resources Defense Council (NRDC) and The Nature Conservancy (TNC) favour the inclusion. On the other hand, the climate sectors on the European head offices of four major environmental NGOs such as Greenpeace International, Worldwide Fund for Nature (WWF) International, Birdlife International and Friends of the Earth (FOE) International sits on the opposition, alongside with their U.S. branches or affiliates, and even the Indigenous Peoples‟ Forum on Climate Change, led by groups from Southeast Asia. To Fearnside, it seems that these groups target to use the Kyoto 19 Fearnside seems to be drawing upon a stakeholder analysis in finding out why AD under CDM has been supported or opposed by various actors. 20 Fearnside also seeks to point out, that “the opposition of the Ministry of Foreign Relations to including forests in the CDM is not shared by the governors of the Amazonian states, nor by most of Brazil‟s scientific community. It is also not shared by the Minister of the Environment, who, in Cochabamba, Bolivia in June 1999 signed a joint statement of ministers of the environment in Latin American countries supporting inclusion of forests in the CDM” (Fearnside, 2001, p.174). 11 Protocol to “force the U.S. to drastically reduce its consumption” and therein condemning its consumption lifestyle and associated cultural domination (Fearnside, 2001, p.177). The NGOs themselves, however, do not quite express their stand in such a dramatic way. Greenpeace for instance, emphasizes on the same uncertainty in the measurement of ER, as does the European Community. But Greenpeace also refers to CDM as a loophole to actually increase homebound GHG emission for the developed countries21. Furthermore, Greenpeace states that the CERs that give the right to increase the industrial GHG emissions are never secured, and the carbon sinks can be lost the very moment that the credit has been verified (Greenpeace, 2000). The umbrella group of the Annex I Parties Australia, New Zealand and particularly the U.S., Canada and Japan have supported the inclusion of forests, because they stand to “gain financially by buying credit to satisfy Kyoto commitments” (Fearnside, 2001, p.174). IPCC supports this financial argument in Appendix B, by showing a clear connection between the development of Gross Domestic Product and GHG emissions respectively, where especially the USA and Russia show fluctuations that follow for them both22. Among the non-Annex I Parties, Bolivia, Costa Rica, Columbia and Mexico all favour the inclusion of AD under CDM (Fearnside, 2001). For a table of the various stakeholders‟ position on the issue, see Appendix C. 2.5 Price Estimating Carbon Credits Denmark‟s use of CDM projects to reach its Kyoto target is restricted to 5% of the 1990 emission, which was 52.1 Mt CO2 (UNFCCC website)23. This puts a limit for Denmark of annually 2.6 Mt CO2 as the maximum amount of credits that Denmark can achieve from CDM projects. Globally the emissions from the Annex I Parties were 13.73 Gt CO2, but only 8.77 Gt without the U.S. This makes a maximum demand for CDM credits on 439 Mt CER if USA remains reluctant to ratify the Protocol, or 687 Mt if it ratifies. It is estimated that Denmark will have an annual CO2 emission, which is 15 Mt too large in the first commitment period (Kristoffersen, 2002). This means that Denmark must annually purchase its deficiency of 15 Mt ER in one form or another, and maximum 2.6 Mt in the form of CER. As the principles of CDM are to reach Kyoto targets in a way that improves the conditions in the Third 21 Greenpeace‟s stand on the loophole is not a strong argument, as CDM is precisely meant for the Annex I countries to escape the homebound GHG emission reductions. 22 Appendix B shows also that the oil crisis triggered some technological improvements on more efficient use of energy for USA and Japan, while U.S.S.R./Russia did not improve its energy technology, as it did not suffer in the oil crisis. 23 1990 emissions are scheduled at http://unfccc.int/resource/kpco2.pdf. 12 World, i.e. promotes and improves the sustainable livelihood, one could believe that Denmark has a non-monetary value in using CDM projects. However, Denmark‟s Willingness To Pay (WTP) for CER is no higher than for any other ER credits, as Denmark will seek to purchase the most cost efficient ERs (Jensen, 2004 and Clausen, 2004). In the following there is referred to different ways of achieving the right to pollute CO 2 into the atmosphere. Generally, whichever method is used, the idea is that a country (or a company) purchases a right to emit CO2 by avoiding an emission, or sequestering carbon into a sink. Trading emission quotas amongst developed countries is a way of avoiding an emission in the buying country, which gets the right to pollute the quota it buys, deducting the same amount from the selling country. These quotas are called Assigned Amount Unit (AAU). The credits achieved from JI and CDM projects are called Emission Reduction Unit (ERU) and Certified Emission Reduction (CER) respectively (UNFCCC website). Together they are referred to as ER credits. AAU, ERU and CER are all purchased for the same purpose – to mitigate GHG emissions – and this way achieving the right to pollute further in the homebound industries. ER in the industry, however, are not achieved rights to pollute, but are direct improvements in order to reach the Kyoto obligations. There are considerable differences in the estimates of future price developments for the various ways of reaching the Kyoto obligations. ERs achieved by direct national reduction with windmills would cost an estimated DKK 204-243 per ton ER, while quotas for electricity production (i.e. a stop of export) would cost around DKK 28 per ton ER. These estimates are for the first commitment period, and at a discount rate of 6% (Kristoffersen, 2002). However, Kristoffersen suggests that Denmark focuses a large part of its efforts to reach its Kyoto target in projects in developing countries. The main objective for this is the amount of global environmental benefits achievable for the investments.24 Estimating the future price development for trading CO2 quotas (AAUs), as well as for purchasing CER and ERU has turned out to be connected to a high level of uncertainty. Copenhagen Economics expect the equilibrium price on the international market to be DKK 20-80 per ton CO2 during the first commitment period (Jensen et al., 2003). 24 The Environmental Assessment Institute (Institut for Miljøvurdering, EAI) is an independent institution under the Danish Ministry of Environment. It refers to Kristoffersen‟s report (2002) without any reservations. Therefore this study will accept Kristoffersen‟s estimates for Denmark‟s WTP for ERs. 13 Amongst the important factors on the future price is Russia‟s path on the Kyoto Protocol. If Russia ratifies the Kyoto Protocol, and decides to trade a large part of its excess “hot air” 25, then the quota supply of available ER credits on the market will be high, and the price will lie on approximately DKK 20 per ton. If Russia decides to spend the excess “hot air” on its own industrial development, and at the same time the potential CDM/JI market turns out to be rather low, then the price can go up to the DKK 80 per ton ER credit. Copenhagen Economics estimate that with a market price of above DKK 15 per ton ER, there will open a market for CDM projects with more possible projects as the price of ER credits rises (Jensen et al., 2003). With a price less than 15 kronor per ER credit, there will be rather limited CDM projects available, and Russia will have almost monopoly on “hot air” trading, as the other countries with “hot air” available do at all not have the potential to satisfy the demand. When Russia raises the price of its AAU, more CDM/JI projects become available, and the supply will therefore go up. With this in mind, Russia can modify the price upwards until it gets competition from the CDM/JI market. Along the same line, if USA decides to get back on former U.S. president Clinton‟s track, and ratifies the Kyoto Protocol, then the higher demand for ER credits will cause a substantial price increment to DKK 120-180 per ton ER credit (Jensen et al., 2003). The World Bank‟s Prototype Carbon Fund (PCF) is a fund under the World Bank, with the overall purpose of reducing the global warming threat. PCF emphasises on establishing a “market for project-based greenhouse gas emission reductions within the framework of the Kyoto Protocol and to contribute to sustainable development” (PCF website). PCF has run ER projects in different developing countries. The costs per ton ER varied from US$ 3-6, but because of expenses from administration, research, etc., the price of the CER, which are sold to Annex I countries, vary between US$ 4-8 (DKK 21-73) (Rosenzweig et al., 2002). It is given that with an increasing supply of available CDM projects, price equilibrium will establish where demand and supply meet. As the price of ER credits rises, another limiting factor gets increased influence: Increasing costs of the credits motivates countries to invest in technological innovations to create industrial ERs. This will again put a limit on the price increment. Natsource (2002) has made a large stakeholder analysis covering most of the Annex I Parties. Here, the conclusion is that it‟s most likely that the price per ER credit will be around US$5 in 2005, increasing to around US$11 in 2010, the middle of the first commitment period. 25 General term for traded CO2 quotas. 14 Estimates for carbon projects and trade with “hot air” in developing countries, Eastern Europe and Russia have been done by Copenhagen Economics. With a median on 41 DKK/ton, the price estimate per ton AAU ranges from 16 DKK/ton to 78 DKK/ton (Jensen et al., 2003). However, as Kristoffersen (2002) claims, quota on the electricity production can decrease the GHG provide ERs to the price of 28 DKK/ton CO2 at a discount rate of 6%; therefore it is unlikely that Denmark will accept any prices higher than this. These quotas have a potential to create ERs of 13 Mt CO2/year. The last 2 Mt of the Danish Kyoto deficient can be reached via CDM/JI projects, or credit trading as examples26. Figure 1 shows an outline of the CDM market with the cheapest expected prices. Notice that the demand cannot go beyond the 687 and 439 Mt, which is the maximum worldwide demand with and without the U.S. to ratify the Protocol. Notice also how the CDM market opens as the price go above DKK 10 per ton CER. Worldwide Yearly Demand and Supply of CDM Credits Conservative Draft 45 40 Price per ton CER (DKK) 35 30 25 20 15 10 5 0 0 200 400 600 800 CER (Mt CO2) Demand with USA Demand w/o USA Supply Figure 1: Conservative demand and supply curve for the global CDM market, with and without ratification of the U.S. to the Kyoto Protocol. Drafted from the information in the current section. The experiences above make it reasonable that the international market of emission reductions is rather dynamic, relative to national policies, especially in larger countries. However, it is rational to 26 There are a few methods, which are cost effective to the society and actually create ERs. One example is financial support to afforestation in Denmark, which gives the Danish society an income of 42 DKK/ton ER (including non- monetary, recreational value). The reason why these cannot solve the GHG problem is that there is only a little potential for these projects. E.g., afforestation in Denmark has the potential of only 0.025 Mt CO2/year (Kristoffersen, 2002). 15 also believe that the price will not slip under 2003DKK 16 per ER credit, except for CDM projects which turn out to be extraordinary efficient. In fact, Denmark has started a JI project with Rumania in May 2004, where Denmark purchases carbon credits to a price between 36 and 40 Danish kronor per ER credit (Ministry of Environment webpage)27. 2.6 Summary The Clean Development Mechanism (CDM) was established under the 1997 Kyoto Protocol as a way of promoting sustainable development while minimizing the costs of limiting greenhouse gas emissions. Industrialised countries can under CDM of the Protocol meet part of their GHG emission reduction with carbon projects in developing countries. Important rules for such projects to comply with CDM are among others that investing countries must provide local (sustainable) livelihood not worse than without the project (Smith et al., 2002). Such projects will provide the investing partner with the carbon credits that are additional to the baseline of the project area. Subject to the CoP7 decisions, AD is currently not eligible under the CDM, but the possibility is subject to negotiations in future CoPs. Various NGOs and the European Community opposed to the inclusion of avoided deforestation, using uncertainty in verifying the actual additionality (the gained credits), and insecurity with established or protected sinks. Developed countries outside EU favoured the inclusion, as it gives a cheaper opportunity to reach the Kyoto obligations. The international market for ER credits is sensitive to various factors, making predictions rather uncertain. Denmark‟s WTP for carbon credits is at least 2003-DKK 16 per ton of CO2 mitigation. This means that if a CDM project can create credits under this price, Denmark will definitely invest. However, it is likely that Denmark also will accept higher prices, as the 16-kronor price is set very modest. This study finds it relevant to investigate the possibility of AD, because the eligible CDM methods (afforestation and reforestation) are as a trigger to this work expected to be more expensive per achieved CER than the preventative AD, which obviously is also a stronger ecological method. 27 Press release on http://www.mim.dk/nyheder/presse/Dep/030504_Joint_Implementation-projekt.htm. 16 3 Palawan – The Project Area of the Host Country 3.1 Introduction to the Philippines and Palawan The Philippines signed the Kyoto Protocol as a non-Annex I Party back in 1998, and ratified by November 20, 2003 (UNFCCC website)28. In the period 1890-1990 the Philippine population has roughly grown with a factor ten. In that same period the forest cover has dropped from 70% to 20.5%, with an accelerated loss in the last part of that period (WWF, 1998). In 1997 the population was 73.4 million people, and the growth rate was 2.3%. Projected estimates are that by 2025 the population will be 113.5 millions29. There is a strong connection between population density and deforestation rate (Eder, 1990 and WWF, 1998), which is pictured in Figure 2. Figure 2: Connection between deforestation and population, Philippines 1935-1989 (Elauria et al., 2003, p. 533). With 180,000 hectares lost every year, the Philippines is the country with the highest rate of deforestation (WWF, 1998)30. The Philippines‟ total land area is 299,404 km 2 (29.9 million ha). Palawan Province consists of a 425 km (NE to SW) long island and 1767 minor islands, with a total area of 14,896 km 2 (~1.5 million ha)31, situated in the South China Sea, as a Western frontier of the 28 That the Philippines has ratified, means that the parliament (or senate) has accepted and confirmed the Protocol to become law, after the states leader earlier signed it on behalf of the Philippines. 29 Population and Development Database, at: http://www.alsagerschool.co.uk/subjects/sub_content/geography/Gpop/HTMLENH/country/ph.htm (April 29, 2004). 30 Other estimates range from 100,000-300,000 ha (Eder, 1990). 31 Online atlas at http://home.online.no/~erfalch/country.htm (April 29, 2004). 17 Philippines. Palawan is with 1.2 million km 2 (PCSD website)32 the fifth largest of the Philippine islands. Figure 3 shows a map of the study site. Figure 3: Map of the Palawan Province of the Philippines (PCSD website). In the years 1948-1960 the population of Palawan Province went from 106,000 to 163,000 inhabitants, reaching 372,000 in 1980 (Eder, 1990) to more than twice that size with 750,000 people in 151,000 households in 2004 (McNally et al., 2004 and McNally, 2004)33. Palawan had an annual population growth rate of 3.67% in 1990-1995 and 3.60% per 200034. From 1970-80, migration caused 46.3% of the population change, and for 1980-90 the number was 47% (WWF, 1998). The population of 750,000 and the growth rate development has been put into Appendix D, where it is also seen that the growth curve started declining around 1988. Palawan‟s population growth is considerably higher than the average of the Philippines. Lots of migrants in search of livelihood come from the rest of the Philippines, where the natural resources are now exhausted, and they will 32 Overview paper at http://www.co-management.org/download/research/rr4/part1.pdf (April 29, 2004). 33 McNally‟s paper (McNally et al., 2004) says 600.000 people per 2004, but he will change this number to 750.000 in the final paper. 34 Press release: http://www.census.gov.ph/data/pressrelease/2002/pr0290tx.html. 18 live on substance farming in the uplands, and fishing (WWF, 1998). In 1998 there were more than 36.000 small-scale farmers in Palawan (WWF, 1998).Upland rice is one of the most important upland crops in Palawan. Already in 1960 there were more than 16,000 hectares of upland rice in Palawan (IRRI, 1975). Slash-and-burn cultivation is prohibited in Philippines according to the Forest Act no. 1148 of 1904, and the Revised Forestry Code (Presidential Decree no. 705 of 1975), including indigenous swidden practices (e.g. the Puerto Princesa municipal government's ban). In section 38 of Presidential Decree no. 705, revised forestry code35, swidden farming (kaingin) is defined as a threat to the forest, along with “illegal entry, unlawful occupation, kaingin, fire, insect infestation, theft, and other forms of forest destruction” while in Section 79, „Unlawful Occupation or Destruction of Forest Lands and Grazing Lands‟, anybody who „makes kaingin for his own private use or for others‟ will be fined and/or jailed.36 For long time, indigenous swidden cultivators have been classified as squatters on public land regardless of their length of occupancy over their territory (Novellino, 1998). One of the recognitions of indigenous rights came with Republic Act no. 8371, also known as the Indigenous People's Rights Act (IPRA), which was signed in 1997, and incorporated into the Social Reform Agenda proposed by former President Fidel Ramos. The IPRA was enacted with the primary objective of recognizing, protecting and promoting the rights of indigenous cultural communities. Chapter 3 of the IPRA states the rights to ancestral domains, including the right to develop lands and natural resources37, while chapter 4 provides indigenous peoples with the rights to self-governance and empowerment. Therefore it seems that the ban on shifting cultivation contravenes these, and above all, chapter 4, section 17 of Republic Act no. 8371 stating that the indigenous people of the forests shall have the rights to determine and decide their own priorities for development affecting their lives, beliefs, institutions, spiritual well-being, and the lands they own, occupy or use. 35 Revising Presidential Decree No. 389, otherwise known as the Forestry Reform Code of the Philippines. Sourced from Chan Robles Virtual Law Library, Philippine Environmental Laws Online, found on http://www.chanrobles.com/pd705.htm (May 12, 2004). 36 Ibid. 37 „Subject to Section 56 hereof, right to develop, control and use lands and territories traditionally occupied, owned, or used; to manage and conserve natural resources within the territories and uphold the responsibilities for future generations; to benefit and share the profits from allocation and utilization of the natural resources found therein; the right to negotiate the terms and conditions for the exploration of natural resources in the areas for the purpose of ensuring ecological, environmental protection and the conservation measures, pursuant to national and customary laws; the right to an informed and intelligent participation in the formulation and implementation of any project, government or private, that will affect or impact upon the ancestral domains and to receive just and fair compensation for any damages which they sustain as a result of the project; and the right to effective measures by the government to prevent any interfere with, alienation and encroachment upon these rights‟. Emphasis in italics is author‟s own. Sourced from http://www.chanrobles.com/republicactno8371.htm. 19 3.2 Deforestation History of Palawan – and the Expected Continuation 3.2.1 History of Deforestation Until 1993 While the rest of the Philippines was deforested at a very rapid rate since colonization started, Palawan got to keep most of its forest cover until recently. A major factor contributing to the delay of big-scale commercial logging is the topography of Palawan Island; 75% of the land area has slopes over 18%, which discouraged logging until the rest of the Philippines had exhausted their resources to a more severe level (WWF, 1998). Mainland Palawan‟s forest cover has decreased from 92% in 1964 to 68% in 1979, and again to 54% in 1988 (Eder, 1990 and WWF, 1998). This gives some estimates of deforestation rates: 24% 1964-79: 92% - 68% = 24% deforestation. The average yearly rate is = 1.60% of total land 15 years area. The average yearly deforestation rate in the period 1964-79 was 1.60% of 1.2 million ha = 19,200 ha/year. Same method gives a deforestation of 1.56% of the total land cover, equalling 18,700 ha/year for 1979-88. This decrease in deforestation is possibly a description of how the commercial logging companies‟ access to forests declines with the loss of forest cover. The population growth curve (see Appendix D) changed character around 1988, but the population is still increasing - just less drastically. Therefore it is likely that the slash-and-burn-caused deforestation is still increasing. Republic Act No. 7611, known as the “Strategic Environmental Plan for Palawan Act” or just SEP, which was implemented in 1992, constituted a total ban on commercial logging in Palawan (SEP, 1992). No data on the total forest cover after 1988 is available. Therefore, for a short period of time, the best way of estimating the development would be continuing the trend from 1964-88. With 1.5% deforestation (18,000 ha/year) in the years 1988-1993, the total forest cover in 1992 would be 48%, which has been put into Appendix E as part of the baseline estimates, which are described later. 3.2.2 Estimates 1993-1998 Kaingin is happening at the upland farms, whose owners are also struggling the most to make their living (Shively, 1997, WWF, 1998 and Shively et al., 1999). The average clearing for all upland farms combined was roughly 0.16 ha/year in Shively‟s studies, which cover 98 lowland farms and 104 upland farms in 1996. Shively presents his work in Palawan as representative of the Philippines as a whole (Shively et al., 2004) indicating that his study area is also reasonable for the Palawan 20 upland situation. This shows – with 36,000 agriculturalists in Palawan (See chapter 3.1) – that there were approximately 18,535 upland farms in Palawan in 199838. Sources (WWF, 1998 and Shively et al., 1999) indicate that most migrants put pressure on the upland forests as new-coming kaingineros. So a conservative estimate of the growth rate of upland kaingineros would be 3.67% p.a. by 1992, and decreasing to 3.60 in 2000 (see chapter 3.1). This trend for the growth rate of kainginero households has been inserterted in the table in Appendix E. Calculating backwards from 18,535 upland farmers in 1998 with the growth rate of approximately 3.64% p.a. estimates the level of kaingineros by 1992 to be 18,535 1.0364 6 = 14,956 households. In Appendix E the growth rate factor shows to be declining with 0.0000875 each year, as the trend was in 1992-200039. For a longer period, however, the growth factor is expected to be declining more rapidly, as when the forest cover is under a certain state, Palawan can simply not sustain the high amount of kaingineros. The trend in Appendix E shows that the amount of kaingin farms in 1995 was 16,655, increasing with 606 farms to 17,261 households in 1996. Average upland farm size in Palawan is estimated 2.9 hectares for the year 1996, while the average clearing for fallow was 0.16 ha per farm (Shively et al., 1999)40. These estimates calculate a slash- and-burn caused deforestation in the uplands in 1996 of 17,261 farms 0.16 ha/farm + 606 new farms 2.9 ha/new farm = 4,519 ha41. Following the trend (see Appendix E) it is estimated that 4,363 ha were cleared for upland agriculture in 1995. According to Asian Development Bank (2001), the rate of deforestation from 1992-98 was 14,300 ha/year in Palawan. This is spread out among slash-and-burn farming, urbanisation, illegal logging, and mangroves being illegally converted into fish ponds (WWF, 1998). This study will calculate with the average of 14,300 in the year 1995, saying the excess 1995 deforestation beyond slash-and- burn constitutes 14,300 ha – 4,363 ha = 9,937 ha. In Appendix E, the 9,937 hectares of Other Deforestation (OD) is measured up with the population of Palawan, which in 1995 was approximately 545,112 people. The reason for this is that there seems to be a clear connection between population density and deforestation (Eder, 1990 and WWF, 1998). 38 36000 *104 Expanding the number of upland farmers, using the same proportion s give 18535 farmers. 104 98 39 3.67% 3.60% 0.0000875 2000 1992 40 Shively suggests the results from his study to be the Palawan trend. 41 The number is 4,517 in Appendix E, as the numbers there are exact. 21 9,937 ha For Palawan the OD was = 0.0182 ha/citizen in 1995. This is set as the trend for 545,112 citizens OD in Appendix E. As the loss of forest cover becomes more severe, the population growth of kaingineros will decrease, and at some stage reach a turning point where there is so little forest cover that the amount of farmers will start decreasing every year (the growth rate turns negative), as they will search for other means of livelihood. Likewise, it is obvious that the massive rate of OD per citizen will decrease as the available forests decline – but for small periods of time, it makes sense to use the trend above. 3.3 Future CO2 Emission without AD Projects – The Baseline of Palawan This study will take the lower values when estimating baselines, as arguments towards AD should be valid even when approached to sceptics of AD under CDM. Not all area cleared by farmers constitutes destruction of primary forest. Shively et al. (1999) suggests that for a study site of Palawan with adjacent lowland and upland, about 30% of area cleared in 1996 was virgin forest, 46% was degraded forest and scrubland, and 24% was grassland. Those estimates give an indication of how much nutrition is needed in cleared land, in order to grow the average amount of crops for the upland small-scale farmers of Palawan. Shively points out that his study site is covering an area showing the general trend of Palawan. These proportions of annual clearings cannot stay the same year after year, as the virgin forest cover will decline, while the fallow and grassland cover increases. As the land the farmer clears is less nutritious year by year, the farmer will have to increase the area he has to clear in order to sustain his household. Figure 4 provides a similar example from slash-and-burn in Africa, showing the increasing fallow area and decreasing virgin forest (or forest which has been abandoned very long ago). The virgin forests in Palawan are tropical and subtropical moist broadleaf forests with dipterocarp species to be predominant (WWF website)42. In Sabah (a Malaysian state of Borneo, the closest larger area to Palawan) the carbon density of primary dipterocarp forests is 213 t C/ha, including belowground (Pinard et al., 2000). Other sources (Nakicenovic et al., 2000 and Lasco, 2002) give estimates of carbon density in this type of forest, ranging from 175 – 351 t C/ha43. 42 The link http://www.worldwildlife.org/wildworld/profiles/terrestrial/im/im0143_full.html gives a detailed description of Palawan‟s ecosystem. 43 With 17% root biomass, which is recommended by Pinard et al. (1996) 22 Nonetheless, IPCC recommends that for projects in this kind of forest the baseline of 138 t C/ha should be used (Houghton et al., 1996), when searching for the more conservative estimates. The lower values of scrubland and grassland are 15 and 5 t C/ha respectively (Lasco, 2002). Figure 4: Simulated forest age-class structures by the impact of shifting cultivation incorporating with historic and projected rural population growth in the central African moist forest region (Zhang et al., 2002, p. 207). Fearnside‟s (2000) estimates of combustion efficiency (a time-averaged measure, including future use)44 in Brazil are 38.8% for virgin forest and long-fallow, 53.8% for slash-and-burn, and 93.4% for grassland. Using Brazil combustion efficiency and the lower carbon estimates for the Palawan biomass, a conservative estimate for the 1996 net carbon emission would be: 0.388 138 t C/ha + 0.538 15 t C/ha + 0.934 5 t C/ha = 66.28 t C/ha. 44 Fearnside has included future growth of crops and fallow in his calculations. To increase certainty in a given project, here for Palawan, individual combustion efficiency should be calculated. 23 To calculate the combustion efficiency for Palawan however, would require a comprehensive analysis of the crops grown in the kainginero farms of Palawan, their respective carbon densities, and the lengths of cropping and fallow periods. This study estimates the combustion efficiency from upland rice, emphasising that the crop is not the most important factor of combustion efficiency, instead the length of fallow and cropping periods are. This is demonstrated in Figure 5, where the values of carbon density during cropping is close to 5 t C/ha both before and after harvest, and the density in the fallow is increasing with the annual mean of 5.3 t C/ha. It is clear that the exact carbon densities of the various pastures before and after harvest are less important than the rotation and especially fallow periods. These values are combined from IRRI (1975), Fischer et al. (2001) and Lasco (2002). In Appendix F the net carbon emission for Palawan is calculated to 73.03 t C/ha for the year 1996. The GHG equivalent is 3.667 73.03 t CO2/ha = 267.80 t CO2/ha. The reason to choose upland rice for these calculations is that together with corn it comprises 45% of the grown crops in the uplands of Palawan (Coxhead et al., 2001). Time-averaged carbon density of upland rice, including fallow (rotation with 3 year crop, 6 year fallow) Average: 13.1 t C/ha 40 35 Carbon density 30 25 (t C/ha) 20 15 10 5 0 0 5 10 15 20 Years from clearing Figure 5: Simplified model of carbon density in a kaingin system of Palawan (Calculated from IRRI, 1975, Fischer et al., 2001 and Lasco, 2002). For the year 1996, the net emission from land clearing for fallow was for each household: 0.16 ha 267.80 t CO2 = 42.85 t CO2. The new-coming farmers cleared each the size of an average 1996 farm, namely 2.9 ha. Measured in carbon, each farmer would by entering the market emit 2.9 ha 267.80 t CO2/ha = 776.62 t CO2. 24 As stated in section 3.2.2, the average clearing from kaingineros will increase as the land is more exhausted before clearing, but we hereby have the average annual clearing in t CO2 instead of ha. Even though the level of CO2 from land clearing does not equal the nutrition level in the cleared land exactly, those estimates are the best available for how much farmers have to clear in order to sustain their households. This study will equal the emissions per farm from 1996 with the trend for Palawan‟s baseline from kaingin. The 1996 overall, kaingin-caused CO2 emission in Palawan is hereby calculated: From clearing from the new kaingineros in Palawan: 606 new farms 776.62 t CO2/new farm = 470,633 t CO2 From new clearing for fallow: 17,267 farms 42.85 t CO2/farm = 739,891 t CO2 In all from kaingin, 1996: 1,210,524 t CO2 Appendix E provides the estimates for emissions from 1992-2004, and the expected baseline for 2005-2019. For example, slash-and-burn in Palawan will cause emissions of 1.648 Mt CO2 in 2005, and 2.631 Mt CO2 in 2019. For the average emission from OD, the estimate is found using the 38.8% combustion efficiency from general deforestation in the Brazil Amazon (Fearnside, 2000) and the carbon density of 138 t C/ha, giving 0.388 138 t C/ha = 39.75 t C/ha, equalling 145.75 t CO2/ha. This is inserted in the spreadsheet of Appendix E. It is important to emphasize the inaccuracy of the relative hectare amounts of clearing and forest cover in Appendix E, as these are only symbols of the 1996-rate. Only the shown CO2 emissions are considered having acceptable estimates of the baseline. Appendix G provides the baseline of Palawan to be 2.77 Mt CO2 per year on average for the next 30 years. Fearnside (2000) states that the loss of soil carbon is small by comparison with aboveground biomass, but not unimportant. However, in the moist forest zone of Cameroon the soil matter contents were not significantly affected by land use (Kotto-Same et al., 1997). Therefore, as this study aims for a conservative estimate, the possible losses from soil carbon are not included. The measuring of carbon emissions from deforestation is extremely sensitive to the method used, and for the purpose of CDM, the methods have to be approved by IPCC (Watson et al., 2000). 25 3.4 Summary It is clear that this chapter is not significantly correct in its conclusions. It experiences lack of updated information on recent deforestation rates. More recent sources than 1998 are short of scientific credibility, as e.g. correspondence have been mails with postulates, unsupported by surveys, etc. A strong contender to the lack of certainty in estimating the baseline is that the different sources have different or even undefined definitions of forest cover, as not all sources are meant for Kyoto connections. The baseline of Palawan‟s kaingin is at least 1.6 Mt in 2005, but averaging 2.77 Mt CO2 per year in the coming 30 years. 4 Project Palawan 2005 4.1 Initialisation to the Averted Deforestation Project The purpose of PP2005 is to halt the upland land clearing, which is done in order to switch the exhausted soils to more nutritious soils for new periods of crops. Agroforestry is a sustainable possibility, as fruit trees can produce a harvest every year without new plantings needed. As a bonus, the carbon density is higher than that of the usually grown, short-term crops (specified under chapter 3.3 above). Another carbon bonus will be that the land that is now fallow will become sinks as they regenerate forest. This study will estimate benefits from farmers changing their traditional crops to sustainable fruit trees on the land that they currently have in use. 4.2 Estimated Costs for Stop of Slash-and-Burn Shively (1999) showed that the income of upland farmers growing mango (Mangifera indica) is significantly higher than those who do not. This is despite the fact that they only have an average of about 10 trees per household. The reasons behind not all small-scale farmers grow mango as a main crop are among others that they cannot afford the long term investments, and that there is insecurity in their rights to keep small orchards, as mentioned in chapter 3.1 above. However, the Philippines have a monetary value in farmers converting from the unsustainable, agricultural crops into for example mango production, especially when the conversion happens in the uplands. Table 1 shows how the global production of mango has recently been increasing. Furthermore, there are indications that the Philippines‟ agricultural sector expects an increasing importance of mango production in the future (PCARRD webpage). 26 Table 1: Global production of mango in the years 1996-2002. Production of Mango Year 1996-98 1999 2000 2001 2002* (Average) 1000 tons Mango 21946 22997 23979 24457 24639 Source: FAO webpage45 *Provisional Appendix H tables out statistics about mango production and prices in the Philippines and Palawan in general. This is comprised in Appendix I as a spread sheet on how an investment in mango will pay back. There it is clear that with an interest rate of 1-10%, the investment is paying back in 15- 22 years. The net present value (NPV) of 1 ha of mango is ranging from DKK 25,000 with the interest rate of 10% and 1 peso equalling 0.105 Danish kronor, to DKK 1.8 million at the interest rate of 1% and 1 peso equalling 0.165 Danish kronor. In 1995, average upland households‟ income was 9,850 peso (DKK 1,034-1,625). For comparison between traditional kaingin and mango, Table 2 gives a simple overview of the value with low and high conversion to Danish kronor. Table 2: Net Present Value (NPV) of establishment of 1 ha mango, compared with NPV of an average upland household of Palawan. Interest rate, r = 1% 2% 3% 5% 7% 10% Mango plantation NPV (PHP) 10,873,692 4,667,695 2,667,748 1,168,713 601,139 245,258 NPV (DKK), low 1 PHP=0.105 DKK 1,141,738 490,108 280,114 12,2715 63,120 25,752 NPV (DKK), high 1 PHP=0.165 DKK 1,794,159 770,170 440,178 192,838 99,188 40,468 Traditional upland farm NPV Income=9,850 (PHP) P/year 985,000 492,500 328,333 197,000 140,714 98,500 NPV (DKK), low 1 PHP=0.105 DKK 103,425 51,713 34,475 20,685 14,775 10,343 NPV (DKK), high 1 PHP=0.165 DKK 162,525 81,263 54,175 32,505 23,218 16,253 Sources: Shively (1999) and Appendix I of the current paper. An investing country, which can pay the investment, can accept an internal rate of return (IRR) of 0% given that it can purchase the carbon credits gained in the operation this way. The farmer can accept the conversion if he has security on his right to remain on the converted land in the future. Referring to Republic Act no. 8371 (see chapter 3.1 above), the government would have advantage in entitling the small-scale farmers to planting 1 ha of mango orchard (or another sustainable crop) and to keep that land as long as he stays within that area and refrains from kaingin. With an IRR of 0%, the investing country‟s gain from the investment will be an emission reduction (ER) as each farm converting kaingin to agroforestry will stop clearing the land, which according to section 3.3 and Appendix E constitutes 42.85 tons of CO2 per household per year. In these calculations, the cost per CER will be zero, and the indigenous people as well as the Philippine government will have economic advantage of the conversions. 45 Statistics from FAO, available at http://www.fao.org/es/ESC/en/20953/21038/highlight_26407en.html (May 14, 2004). 27 In quantity of the CER, the limiting factors for the potentials of the AD investment are the 5% of the 1990 GHG emission of the investing country and the baseline of the targeted area (minus leakage). For the cases of this paper (Denmark and Palawan), those values are 2.6 Mt and 2.77 Mt (not including possible leakage) respectively, according to chapters 2 and 3. As a note to this, the 2.6 Mt ER that Denmark has the right to purchase from CDM will be reduced, as other CDM projects are already in its starting phase, but the ERs from these are not yet known (Clausen, 2004). An exact way to measure the environmental gain is to start with the 42.85 tons ER for each household which is helped to stop kaingin, then add the additional sink from the higher carbon density in the alternative crops, and deduct the leakage if the former kaingineros increase their use of fuel and fertilisers, containing trace gases. Having estimated the value for conversion into mango as a proposed alternative crop, PP2005 should be designed to include a number of alternatives, as the project ought not to influence the market price of the various selected crops. 4.3 Summary With an investment in mango production there is potential for an investing country to purchase carbon emission reductions for a very low cost, or even make a profit next to the certified emission reduction (CER). For large scale emission reduction in the PP2005, more alternatives to slash-and- burn need to be investigated. 5 Discussion and Recommendations This paper is arguing that averted deforestation could be a reasonable path in facing parts of the immediate demands of the Kyoto Protocol. It does not investigate the ecological advantages of AD, as compared to the present eligible methods under CDM which are afforestation and reforestation, but it seems only obvious that AD is conserving biodiversity, like it contributes to abating poverty when conducted under the rules of CDM. The arguments in this paper are instead focused on the feasibility of emission reductions from AD and its economic viability. The wide area of this study requires a large amount of research in many different topics. Lack of scientific papers has made it necessary to accept that not all sources are published papers. Governmental and inter-governmental websites have been used widely, partly to find certain data, partly to understand views on certain problems. Some scientists have conducted comprehensive research, but have not published all their findings in scientific papers. These unpublished findings are then sometimes made available on the Internet. An example of this is Dr. Shively, who has been 28 collecting data from Palawan in four different periods. Some of his findings are published in scientific journals (1997, 1999 and Shively et al., 2004), while some have been presented at a conference (Shively et al., 1999). WWF has produced an academic paper (1998), and placed it on the Internet, without having it published in any journal. The latter two works and a few similar sources have been accepted by the author, for the purpose of this paper. The author also accepts papers presented by IPCC as credible, as IPCC is recognised as the most reliable source on global warming. Chapter 1.3 covers the background of using conservative estimates in the price of ER credits and Palawan baseline in chapters 2 and 3 respectively, as to give strong arguments to the thesis that averted deforestation is a possibility under CDM. Chapter 3 is meant as a case for responding the problem formulation of this study. For an actual project between an Annex I country and a non- Annex I country, it is necessary to conduct scientific on-ground analysis to calculate the more exact potential for GHG emission, as well as to make multiple comparisons to estimate leakage. In the calculations of the baseline in chapter 3, only the land clearings are accounted for. To justify this, it is expected that these clearings are a far more substantial impact to the environment than the use of fuel and other CO2 emitting procedures in the work of the kaingineros. The sources for the costs of establishing one hectare of mango are combined from an organisation under the Philippine government, which is promoting mango production. Dr. Namuco is an expert in Philippine mango production, who provided a cash-flow chart on production of mango, including the initialising years until the gross income stabilises. This has been combined with the statistics on production efficiency in Palawan, which is significantly lower in Palawan than the average of the Philippines. However, the accuracy of chapter 4 would be enhanced by a comprehensive research. The question on the ownership of the land and the rights of indigenous people to use the land needs further research as well. Only does it seem clear that the Philippines as well as the small-scale farmers will have advantage in conversions from slash-and-burn to agroforestry. In order to sustain each household during the first years of mango production, the farmers will need to borrow an amount similar to the average gross income (9,850 peso/year). The calculations are not included in Appendix I, but such a loan will only delay the paying back of the mango investment with a maximum of 1 year, as the income is increasing rapidly in the years 9-14 of the investment. It is obvious that the entire population of Palawan‟s kaingineros cannot convert to mango production without the market price dropping considerably. Therefore other agroforestry crops are 29 needed. Rubber and palm oil are among the crops, which are investigated as possible substitutes for slash-and-burn, but this study recommends further research in other possible crops, conventional as well as innovative for the uplands of the tropics. As the locals export agroforestry crops, e.g. mango, they will need an amount of rice into the system. Critics might argue that the leakage from this is neutralising the carbon gain in Palawan. The counter-argument is that rice produced in lowlands is sustainable, and irrigated lowlands will enhance production (Shively et al., 2004). A weakness of the findings of chapter 4.2 is indeed that the probable need for investments in irrigating lowland rice fields for substituting upland rice is not explored. Considering the date of various data, as they differ from 1995-2003, the inflation-caused differences of values have not been adjusted for. Therefore, it is recognised that the differences in NPV in Table 2 (chapter 4.2) are somehow smaller. Still, the author finds it likely that the price of a conversion to sustainable agroforestry can remain a cost-effective path to creating certified emission reductions compared to other ways to reach the Kyoto targets. As it is today, all large-scale methods towards emission reductions, which are eligible under CDM, are more costly than the DKK 16 per ton of greenhouse gas emission. Averted deforestation is a tool, which, for the benefit of future generations should be eligible under CDM as soon as possible. As the environment has to be secured for the coming generations, it is important that all credits are monitored and verified with the most conservative methods: - Baselines and additionalities have to be measured with the lowest estimates, positive leakages with the highest estimates, always giving the benefit of the doubt to the environment - Durability of any CER should only persist as long as the verified sinks are intact. Should the sinks disappear, i.e. from burning or logging, then the investing country should lose its credits as leakage in its national carbon accounting. The investing country is responsible for encouraging the host country to keep the sinks protected. The background for this argument is that the investing country must create sustainable emission reductions In order to reap maximum benefits from AD under CDM, research is needed in a number of areas. The areas of immediate concern are in the measurement of additionality (baseline emission minus the emission from a given project), and in the identification (or genetically manipulating) of future crops to convert to, for the slash-and-burn farmers, whom, with the help from the developing 30 countries can change their role of being part of the problem, to being part of the solution to the global warming threat. A problem which is likely to arise is an increased migration into the project area of a CDM project, caused by the improved living standards and greater possibilities as more uncleared land will be available. Without any steps taken, this might become the limiting factor for the success of a possible CDM project. It is difficult to measure the impact on the socio-economy and environment, and it is difficult to measure if the latter is caused indirectly by the project or not. This is not only a possible problem for averted deforestation, but also a problem for the current eligible CDM methods. However, a viewpoint can be that the environmental impact caused by migration is not actual leakage, but will just appear elsewhere, if the CDM project does not taken place. Yet, clear rules on this are recommended for the future of CDM. 6 Conclusion Research in literature, focusing on the Palawan case, shows that there is potential for major GHG emission reductions in averting deforestation in Non-Annex I countries of the developing world. This potential can be approached by Annex I countries investing in improving the agricultural methods used by small-scale farmers, towards sustainable methods, e.g. by converting slash-and- burn into agroforestry. To motivate investors, future Conferences of the Parties to the Kyoto Protocol need to agree on adding Averted Deforestation into the eligible LULUCF projects under CDM. With today‟s technology, AD will be cost-efficient, compared to other methods with large potential of reducing emission. 7 Perspectives As a follow up on this paper, research on the political will to tolerate Palawanese kaingineros converting into agroforestry would be an aid for the future CoP to decide on AD under CDM. There are ongoing debates relating to the global economy about climate change and the Kyoto Protocol, poverty in the Third World, and other major issues confronting the world today, with differing perspectives regarding the priority of these problems. 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(http://unfccc.int/resource/docs/cop9/06a02.pdf as of May 27, 2004). 35 Watson, R.T.; Noble, I.R.; Bolin, B.; Ravindranath, N.H.; Verardo, D.J.; David, J. and Dokken, D.J. (2000): IPCC Special Report on Land Use, Land-Use Change and Forestry. Intergovernmental Panel of Climate Change. (http://www.grida.no/climate/ipcc/land_use/index.htm as of May 27, 2004). WWF (World Wildlife Fund) (1998): Socioeconomic Root Causes of Biodiversity Loss in the Philippines. Unpublished. (http://www.panda.org/downloads/policy/phil.pdf as of May 27, 2004). Zhang, Q.; Justice, C.O. and Desanker, V.P. (2002): Impacts of simulated shifting cultivation on deforestation and the carbon stocks of the forests of central Africa. Agriculture, Ecosystems and Environment, vol. 90, no. 2, pp. 203–209. 8.1 References to Websites 8.1.1 Governmental and Intergovernmental Organisations FAO (Food and Agriculture Organization of the United Nations): http://www.fao.org/ MIN (Mango Information Network, the Philippines): http://www.min.pcarrd.dost.gov.ph/ Ministry of Environment, Denmark (Miljøministeriet): http://www.mim.dk/ PCARRD (Philippines Council for Agriculture, Forestry and Natural Resources Research and Development): http://www.pcarrd.dost.gov.ph/ PCSD (Palawan Council for Sustainable Development): http://www.pcsd.ph/ PCF (Prototype Carbon Fund): http://carbonfinance.org/pcf/router.cfm?Page=Home UNFCCC (United Nations Framework Convention on Climate Change): http://unfccc.int/ 8.1.2 Non-Governmental Organisations WWF (World Wildlife Fund): http://www.worldwildlife.org/ 36 Appendix A Joint statement from a group of sixteen national academies of science from all parts of the world, endorsing IPCC as the most reliable source of information on climate change and its causes. Emphasising on global warming consequences from GHG emission, it recognises the Kyoto Protocol as being a first important step towards stabilising atmospheric concentrations of GHG. Furthermore, it calls for immediate action from the society in order to reduce global GHG emission. (Royal Society, 2001A). Appendix B Source: Intergovernmental Panel of Climate Change (IPCC). (http://www.ipcc.ch/present/graphics/2001syr/large/03.17.jpg as of May 27, 2004). Appendix C Various stakeholders‟ position on the use of different LULUCF projects under CDM (Fearnside, 2001). Appendix D Palawan‟s population trend in the past 100 years (McNally et al., 2004). Appendix E Baseline of slash-and-burn in Palawan, in a “business as usual” scenario, 1992-2014 Area of Palawan (ha): 1489600 Average uphill farm size (ha): 2.9 Average uphill annual clearing (ha): 0.16 Average OD net emission Emission, per new-coming Annual emission per kainginero household (t CO2): 42.85 Other Deforestation (OD) (t CO2/ha): 145.75 farmer (t CO2): 776.62 Cleared Cleared OD per capita (ha): 0.0182 (Urbanisation and illegal Kaingin OD Overall Farm by Cleared for slash- Palawan's virgin Total deforestation beyond caused forest use forest use Kaingineros growth new-comers for fallow and-burn forest cover deforestation kaingin) Population emission emission emission Year (households) factor (ha) (ha) (ha) (%) (ha) (ha) (ha) Palawan (Mt CO2) (Mt CO2) (Mt CO2) 1992 14956 1.03670 1535 2393 3928 48.0% 715008 12849 8921 489378 1.052 1.300 2.352 1993 15504 1.03661 1588 2481 4069 47.1% 701691 13317 9248 507338 1.090 1.348 2.438 1994 16070 1.03653 1642 2571 4213 46.2% 687891 13800 9587 525913 1.128 1.397 2.526 1995 16655 1.03644 1698 2665 4363 45.2% 673591 14300 9937 545122 1.168 1.448 2.617 1996 17261 1.03635 1756 2762 4517 44.2% 658774 14817 10299 564985 1.210 1.501 2.711 1997 17887 1.03626 1815 2862 4677 43.2% 643424 15351 10674 585522 1.253 1.556 2.808 1998 18534 1.03618 1876 2965 4842 42.1% 627521 15902 11061 606754 1.297 1.612 2.909 1999 19203 1.03609 1940 3072 5012 41.0% 611049 16473 11461 628704 1.342 1.670 3.013 2000 19894 1.03600 2005 3183 5188 39.9% 593987 17062 11874 651392 1.389 1.731 3.120 2001 20608 1.03591 2072 3297 5369 38.7% 576316 17671 12302 674842 1.438 1.793 3.231 2002 21347 1.03583 2141 3415 5557 37.5% 558016 18300 12744 699077 1.488 1.857 3.345 2003 22110 1.03574 2212 3538 5750 36.2% 539066 18950 13200 724122 1.540 1.924 3.464 2004 22898 1.03565 2286 3664 5949 34.9% 519444 19621 13672 750000 1.593 1.993 3.586 2005 23712 1.03556 2361 3794 6155 33.5% 499130 20315 14159 776738 1.648 2.064 3.712 2006 24553 1.03548 2439 3929 6368 32.1% 478099 21031 14663 804360 1.705 2.137 3.842 2007 25422 1.03539 2520 4068 6587 30.6% 456329 21770 15183 832895 1.764 2.213 3.977 2008 26319 1.03530 2602 4211 6814 29.1% 433795 22534 15720 862369 1.825 2.291 4.116 2009 27246 1.03521 2688 4359 7047 27.6% 410473 23322 16275 892811 1.887 2.372 4.259 2010 28203 1.03513 2775 4513 7288 25.9% 386337 24136 16848 924249 1.952 2.456 4.407 2011 29191 1.03504 2866 4671 7536 24.3% 361361 24976 17440 956713 2.018 2.542 4.560 2012 30212 1.03495 2959 4834 7793 22.5% 335517 25844 18051 990234 2.087 2.631 4.718 2013 31265 1.03486 3054 5002 8057 20.7% 308778 26739 18682 1024842 2.158 2.723 4.881 2014 32352 1.03478 3153 5176 8329 18.9% 281116 27663 19333 1060571 2.231 2.818 5.048 2015 33474 1.03469 3254 5356 8610 17.0% 252500 28616 20006 1097452 2.306 2.916 5.222 2016 34633 1.03460 3359 5541 8900 15.0% 222900 29600 20699 1135520 2.384 3.017 5.400 2017 35828 1.03451 3466 5732 9199 12.9% 192286 30614 21416 1174809 2.463 3.121 5.585 2018 37061 1.03443 3577 5930 9507 10.8% 160625 31661 22155 1215355 2.546 3.229 5.775 2019 38334 1.03434 3691 6133 9824 8.6% 127883 32741 22917 1257193 2.631 3.340 5.971 Sourced from chapter 3. Appendix F Estimating the carbon loss from kaingin in Palawan Year Carbon after density clearing (t C/ha) 0 4.3 1 5.3 1.01 4.3 2 5.3 2.01 4.3 3 5.3 3.01 4.3 4 9.6 5 14.9 6 20.2 7 25.5 8 30.8 9 36.1 9.01 4.3 10 5.3 10.01 4.3 Potential carbon sinks if land is not cleared for cultivation (t C/ha): 11 5.3 Year Virgin forest 6-year old fallow 1-year old grassland 11.01 4.3 1 138 36.1 6 12 5.3 2 138 41.4 11.3 12.01 4.3 3 138 46.7 16.6 13 9.6 4 138 52.0 21.9 14 14.9 5 138 57.3 27.2 15 20.2 6 138 62.6 32.5 16 25.5 7 138 67.9 37.8 17 30.8 8 138 73.2 43.1 18 36.1 9 138 78.5 48.4 18.01 4.3 19 5.3 19.01 4.3 19.5 4.65 Average: 13.09 Loss (primary): 124.91 (=138-13.09) Loss (fallow): 65.41 (=78.5-13.09) Loss (grass): 35.31 (=48.4-13.09) Total weighed loss: 76.03 (=124.91*30%+65.41*46%+35.31*24%) (IRRI, 1975, Shively et al., 1999, Fischer et al., 2001 and Lasco, 2002). Appendix G Trend for kaingin-caused emission: Emission (Mt CO2) = 2 1029 e0.0333year 2 10 29 e 0.0333t 2005 2034 83.219 Mt Average annual emission, 2005-2034: = = 2.774 Mt CO2/year 30 years 30 years 12 Baseline, Palawan 10 0,0333x Kaingin trend: y = 2E-29e Annual emission 8 (Mt CO2) 6 4 2 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Year Kaingin-caused emission Overall emission from deforestation Emission from Other Deforestation Expon. (Kaingin-caused emission) Accumulated CO2 emission from kaingin in Palawan, 2005-2034 90 80 70 60 Mt CO2 50 40 30 20 10 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 Year Kaingin OD In all Emission 2005-2034 (Mt CO2): 83,219 105,974 189,193 Average per year (Mt CO2): 2,774 3,532 6,306 Drafted from information in chapter 3. Appendix H Statistics on mango production in the Philippines. The currency is Philippine peso (PHP) Source: Namuco, 2004 Source: MIN webpage Price of mango: PHP20/kg Palawan Price Harvest Gross Operating Yearly net Year (2001-P/kg) (kg/ha) Year return (P) cost (P) Return (P) 1990 18.69 - 1 0 16315 -16315 1991 13.06 - 2 0 9110 -9110 1992 10.54 6753 3 0 9110 -9110 1993 13.77 5564 4 2500 16630 -14130 1994 17.85 5828 5 5000 21743 -16743 1995 13.94 4096 6 10000 33645 -23645 1996 14.32 4575 7 20000 33645 -13645 1997 13.15 4283 8 30000 33645 -3645 1998 17.69 3337 9 40000 38280 1720 1999 22.89 2999 10 50000 38280 11720 2000 - 3060 11 100000 38280 61720 2001 12.34 3152 12 150000 47585 102415 Average 15.29 4365 13 200000 47585 152415 14 300000 64200 235800 Average, Philippines 7000 15 400000 64200 335800 Palawan yield factor, Total 1307500 512253 795247 compared with Namuco: 0.623529 Calculated from Namuco and MIN Yield/ha (kg) Year Namuco Palawan 4 125 78 5 250 156 6 500 312 7 1000 624 8 1500 935 9 2000 1247 10 2500 1559 11 5000 3118 12 7500 4676 13 10000 6235 14 15000 9353 15 20000 12471 Appendix I Cash flow chart for planting 1 ha of mango in Palawan at different interest rates. The currency is Philippine peso (PHP) Harvest Gross Operating Yearly net Balance (PHP) Year (kg/ha) return (PHP) cost (PHP) return (PHP) r= 1% r= 2% r= 3% r= 5% r= 7% r= 10% 0 0 0 16315 -16315 -16315 -16315 -16315 -16315 -16315 -16315 1 0 0 9110 -9110 -32793 -32956 -33119 -33446 -33772 -34262 2 0 0 9110 -9110 -42231 -42725 -43223 -44228 -45246 -46798 3 78 1192 16630 -15438 -51763 -52690 -53630 -55549 -57523 -60587 4 156 2384 21743 -19359 -67719 -69182 -70677 -73765 -76988 -82084 5 312 4768 33645 -28877 -87755 -89924 -92156 -96812 -101736 -109651 6 624 9537 33645 -24108 -117509 -120599 -123797 -130529 -137734 -149493 7 935 14305 33645 -19340 -142793 -147120 -151619 -161164 -171484 -188551 8 1247 19073 38280 -19207 -163561 -169402 -175508 -188562 -202828 -226746 9 1559 23841 38280 -14439 -184403 -191997 -199980 -217197 -236233 -268628 10 3118 47683 38280 9403 -200686 -210276 -220418 -242496 -267208 -309929 11 4676 71524 47585 23939 -193290 -205078 -217628 -245218 -276509 -331519 12 6235 95366 47585 47781 -171283 -185240 -200217 -233539 -271925 -340731 13 9353 143049 64200 78849 -125215 -141164 -158443 -197435 -243179 -327024 14 12471 190732 64200 126532 -47619 -65139 -84347 -128458 -181353 -280877 15 12471 190732 64200 126532 78437 60090 39654 -8349 -67516 -182433 16 12471 190732 64200 126532 205753 187824 167375 117765 54290 -74145 17 12471 190732 64200 126532 334342 318112 298928 250185 184622 44973 18 12471 190732 64200 126532 464217 451006 434428 389226 324077 176001 19 12471 190732 64200 126532 595391 586558 573992 535219 473294 320133 20 12471 190732 64200 126532 727877 724821 717744 688511 632956 478678 21 12471 190732 64200 126532 861687 865849 865808 849469 803795 653078 22 12471 190732 64200 126532 996836 1009697 1018314 1018474 986592 844918 23 12471 190732 64200 126532 1133336 1156423 1175395 1195929 1182185 1055941 24 12471 190732 64200 126532 1271201 1306083 1337189 1382258 1391470 1288067 25 12471 190732 64200 126532 1410445 1458737 1503836 1577902 1615405 1543405 26 12471 190732 64200 126532 1551081 1614443 1675483 1783329 1855015 1824277 27 12471 190732 64200 126532 1693124 1773264 1852279 1999027 2111398 2133237 28 12471 190732 64200 126532 1836587 1935261 2034379 2225510 2385727 2473092 29 12471 190732 64200 126532 1981484 2100498 2221942 2463317 2679260 2846933 NPV (Year 0) (PHP) 10,873,692 4,667,695 2,667,748 1,168,713 601,139 245,258 Low NPV (Year 0) (DKK) 1 PHP=0.105 DKK 1,141,738 490,108 280,114 122,715 63,120 25,752 High NPV (Year 0) (DKK) 1 PHP=0.165 DKK 1,794,159 770,170 440,178 192,838 99,188 40,468 14 Yearly Net Return 126532 Net Present Value is calculated by the following formula: NPV = (1 r ) 15 , as the yearly net return, p, is i 1 (1 r ) i r th stabilising at 126,532 peso at the 15 year. Calculated from the data in Appendix H (Palawan average yield and price).