IMPACTS OF FOREST CARBON MARKETS

ON LOCAL LIVELIHOODS: CHINA,

MOZAMBIQUE AND AFGHANISTAN

Gary Q. Bull, Ravi Hegde, Yazhen Gong and Kijoo Han

University of British Columbia, Vancouver, Canada

October 16th, 2008

Forests, Rights and Climate Change

Oslo, Norway

ALTERNATIVE TITLE

RAD

REDD

ROGUE

What did we learn?

10/15/2008

2

OBJECTIVES

1. What are some key elements in contract design and

revenue distribution from forest carbon projects?

2. What is the influence of social capital on successful

project implementation?

3. Are property rights and governance systems

sufficiently in place that can adapt to payments for

ecosystems services such as carbon?

10/15/2008

3

MOZAMBIQUE

• Voluntary market

• Enviro-trade

• Stern report

• CIFOR - PEN project

• Part of our work connects to a long term World Bank project

• Household study

• Equity issues with carbon contracts

10/15/2008

4

VILLAGE PROFILE - MOZAMBIQUECharacteristics Nhambita Mbalawa PungueLocation Within buffer zone Outside park On the park boundary

Main forest

productsOwn use: wild food,

grass, fuel, poles &

limited use of clay for

pottery & timber

Own use & sale: wild

food, fuel, bamboo,

charcoal,poles,

timber & gold

panning

Own use & sale: wild

food, fuel, bamboo,

poles, fish & gold

panning

Farming Mainly subsistence; Mainly subsistence; Both subsistence &

commercial (tobacco;

vegetables)Major

environmental

resource

collected

Poles, wild food, clay

for pottery

Poles, wild food,

bamboo, charcoal,

gold panning

Fish, poles, wild food,

gold panning

Households

Sampled58 131 141

10/15/2008

5

RESULTS - MOZAMBIQUE

Age, income and education matters

Vulnerable households see fewer benefits

Larger land holders more likely to engage

Poorer tend to use miombo woodlands for

subsistence, while richer households use them

for cash.

Forests act as a crucial safety net against

income shocks

10/15/2008

6

Cash income composition (MTS)

Fish sale, 5.89

Wage, 44.51

Business, 5.65

crop sale, 6.56

Other environmental products

sale, 8.48

livestock sale, 7.62

Processed forest products

sale, 7.25

Unprocessed forest products

sale, 0.09Other sources, 10.22

PES income, 3.7

crop sale

livestock sale

Unprocessed forest products sale

Processed forest products sale

Fish sale

Other environmental products sale

Wage

Business

Other sources

PES income

Result – Carbon Income10/15/2008

7

DEFORESTATION IN NURISTAN, AFGHANISTAN

Source: UNOSAT http://www.unosat.org/freeproducts/afghanistan/Forest_zone3_1977_2002.jpg

10/15/2008

8

SURVEY TEAM AND NURISTAN

10/15/2008

9

PRELIMINARY RESULTS

The Bari caste rely on income from timber

products

The Atrojan caste rely on livestock production

10/15/2008

10

CHINA CDM FOREST PROJECT

10/15/2008

11

GUANGXI STATISTICS

County Land area

(ha)

Land tenure type Number of

villagesCommunal

lands

(ha)

Individual

lands

(ha)

Cangwu 2000 901.6 1098.4 15

Huanjiang 2000 2000 0 12

Total 4000 2901.6 1098.4 27

10/15/2008

12

GUANGXI SHAREHOLDING SYSTEM

Local forest companies

Local communities

Capital& techniques

Land

Shared income

Carbon

credits

Timber

Pine resins

Output

Shared income

Fig. 2 A share-holding system created by Guangxi carbon

project

Input

10/15/2008

13

POSITIVE RESULTS - GUANGXI

Villages were able to effectively organize

themselves

Unique share-holding system of 27 villages and

3 local forest companies was developed

Creative combination of native tree species,

(3000 ha) and exotic tree species (1000ha)

Internal rate of return is acceptable

10/15/2008

14

NEGATIVE RESULTS - GUANGXI

Up to September 2007, only 55% implemented.

Regenerating degenerated and remote lands is

difficult and costly.

Income-sharing ratios between the

communities and the local forest companies

not accepted

Unresolved property rights disputes

Low levels of trust in some of the villages which

resulted in poor participation rates.

10/15/2008

15

NEGATIVE RESULTS - GUANGXI

In 2008, it was determined that at least 14% of

the area slated for reforestation will not be

regenerated – infertility.

Farmers and reforestation companies have not

received any payment from the buyers.

10/15/2008

16

CONCLUSIONS

What are some key elements in contract design and revenue distribution from forest carbon projects?

Contract design

Adjust to unique community structures

Recognize biophysical limitation

Work with acceptable shareholder systems

Make payments at the appropriate time

Ensure that potential income is accessible to those with lower income,

lower education levels, older people and women.

Revenue distribution

Ensure local people understand the nature of the benefits

Sometimes indirect compensation, such as building a school, is more appropriate.

10/15/2008

17

CONCLUSIONS (CONT’D)

What is the influence of social capital on

successful project implementation?

Social capital

Analyze trust. Trust among households can greatly increase the

probability of success for a project. There are ways to measure trust and

the means to develop trust .

Create appropriate shareholder systems

10/15/2008

18

CONCLUSIONS (CONT’D)

Are property rights and governance structure in place that can adapt to payment for ecosystems services such as carbon?

Property right allocation

It has been largely sorted out, in surprising places (Nuristan)

It has impacts on the success of project implementation (China)

Governance structure

The distribution of carbon payments will have to recognize well functioning governance structure and adapt to them.

- In Nuristan it seems people are most comfortable with village level decisions being made by elders, not an elective process with one vote per household. The structure also seems to work for different castes in the villages.

- In China, the development of a shareholder system was critical to project establishment.

- In Mozambique the interplay between a shareholder system and traditional governance needs further analysis.

10/15/2008

19

SKILL TESTING QUESTION

Which country represented:

RAD

REDD

ROGUE

?

10/15/2008

20