Using carbon emission credits to promote environmentally sensitive agriculture

Location:

Several countries, Central America

Problem Overview:

Carbon dioxide emissions

Carbon dioxide emissions are the principal component of the "so-called" greenhouse gases.

Industrial processes account for over 75 percent of the carbon dioxide emissions, roughly 21.8 billion metric tons annually. Deforestation due to demands for agricultural lands is the other main culprit, responsible for 6.4 billion metric tons of emissions annually. Trees contain stored carbon. When they are cut down, carbon dioxide is released.

Forests and tree plantations are seen as part of the solution since they store carbon at a rate 20 to 100 times more per acre than pastures and croplands. The substitution of composting and other organic techniques for fertilizers and pesticides on tree plantations also allows for increased carbon storage.

Background:

Small-Scale Producers and Carbon Sequestration

In rural areas where agriculture and forests compete for land, the forests are at risk because farmers are unlikely to protect and preserve them unless they have an economic incentive to do so. For this reason, tree crops such as coffee or cocoa offer both significant economic and environmental benefits. These crops prevent the destruction of forested areas because they can be planted under tree canopies and provide farmers with continuous cash income from fruit harvesting. Capturing stored carbon (or carbon sequestration) through tree cultivation can become an additional source of income for farmers.

Trading Carbon Emissions

At the Kyoto conference, the United States put forth a strategy to curb the build-up of greenhouse gases through the creation of an international market in emissions credits. This concept of emissions trading originates from the U.S. domestic experience with other market-based approaches to environmental amelioration. In the United States, there is currently an acid rain allowance trading system for sulfur dioxide emissions.

The first step to trading carbon dioxide emissions would be to establish equitable nation by nation emissions limits based on population, potential economic growth and past emissions history. Within these limits each government would allocate emissions allowances to accommodate various business and community needs. Offsets would then be tradable across industrial and, eventually, national lines. Credits will be generated by companies which invest in renewable energy, energy efficiency, improved land use, forestry and agricultural practices and methane control programs.

Carbon credits that can be traded for or developed into a more formal financial instrument (i.e., bonds, guarantees, credit lines, funds) may enable small-scale farmers to expand their production, retain greater shade coverage and use more environmentally sensitive and organic production systems.

Status:

TechnoServe and Carbon Measurement

In order for carbon credit trading to be a useful mechanism, measurement of carbon reduction and storage will need to be standardized. The carbon inventory process involves determining a baseline of the amount of carbon that exists at a particular site, establishing permanent sample plots, and periodically surveying the vegetation at the site and in other areas.

TechnoServe is undertaking a pilot project, supported by The Ford Foundation and U. S. Agency for International Development, to investigate the use of carbon trading by small-scale coffee farmers in Central America. TechnoServe is compiling "carbon offset" data at a Guatemalan coffee cooperative, in partnership with Winrock International and Fundacion Solar, a Guatemalan environmental organization. TechnoServe will then use this data to propose a mechanism by which carbon credits can be traded for investment capital. Ideally, these funds will encourage small-scale coffee farmers to expand their environmentally sensitive production systems.

At the policy level, TechnoServe is building consensus for this type of program by establishing consultative groups in several countries of the region, including El Salvador, Nicaragua, Guatemala and Panama, as well as the United States. These working groups, comprised of business, government and non-governmental organizations, are examining the issues surrounding emissions trading.

Follow-up:

Pilot activities to measure the carbon absorption capacity of coffee are still ongoing. The results of this study will be used to develop a model to quantify the carbon offset potential of coffee. With this model, TechnoServe will propose a mechanism by which carbon credits can be traded for investment capital.

Documentation:

The results of the carbon offset study will be included in a technical proposal submitted to the U.S. Initiative on Joint Implementation - a partnership between the U.S. Environmental Protection Agency, the U.S. Department of Energy and the U.S. Agency for International Development.

Submitted by:

Carolyn Snyder
carolyn.snyder@tns.org
TechnoServe
49 Day St.
Norwalk, CT 06854
USA (203) 852-0377
http://www.technoserve.org/

Information Date: 1998-08-01
Information Source: TechnoServe, Inc.