Carbon Finance Schemes - Incentives for Forest and Agroforestry Systems

Deforestation contributes a quarter of all anthropogenic greenhouse gas emissions. On the island of Sulawesi in the vicinity of the Lore Lindu National Park, smallholders contribute to deforestation processes with their agricultural practices, specifically with cocoa plantations. This study assesses the impact of carbon sequestration payments for forest management systems on the prevailing land use systems. Additionally, the level of incentives which induces farmers to adopt sustainable agroforestry practices is determined. We show that low carbon credit prices have a small impact on household income. However, with rising prices, the poorest households can realise an increase of 18 percent. The majority of the households have an incentive to adopt the more sustainable shade intensive agroforestry system and stop deforestation activities with prices observed on markets. The cost-efficiency of avoided deforestation, compared to biofuels, is demonstrated. The study shows that forestry activities provide an important opportunity as climate mitigation strategies

Could carbon payments be a solution to deforestation? Empirical evidence from Indonesia

Up to 25 percent of all anthropogenic greenhouse gas emissions are caused by deforestation, and Indonesia is the third largest emitter worldwide due to land use change and deforestation. On the island of Sulawesi in the vicinity of the Lore Lindu National Park, smallholders contribute to conversion processes at the forest margin as a result of their agricultural practices. Specifically the area dedicated to cocoa plantations has increased from zero in 1979 to nearly 18,000 hectares in 2001. Some of these plots have been established inside the 220,000 hectares of the National Park. An intensification process is observed with a consequent reduction of the shade tree density. This study focuses on the impact of carbon sequestration payments for forest management systems on smallholder households. The level of incentives is determined which motivates farmers to desist from further deforestation and land use intensification activities. Household behaviour and resource allocation is analysed with a comparative static linear programming model. As these models prove to be a reliable tool for policy analysis, the output can indicate the adjustments in resource allocation and land use shifts when introducing compensation payments. The data was collected in a household survey in six villages around the Lore Lindu National Park. Four household categories were identified according to their dominant agroforestry systems. With carbon credit prices up to €32 tCO2e-1 an incentive can be provided for the majority of the households to adopt the more sustainable shade intensive agroforestry systems. The results show that with current carbon prices the deforestation activities of the majority of households could be stopped. A win-win situation seems to appear, whereby, when targeting only the shade intensive agroforestry systems with carbon payments, the poorest households economically benefit the most, the vicious circle of deforestation can be interrupted and land use systems with high environmental benefits are promoted.Payments for Environmental Services, Avoided Deforestation, Linear Programming, Resource /Energy Economics and Policy,

Payments for environmental services : incentives through carbon sequestration compensation for cocoa-based agroforestry systems in Central Sulawesi, Indonesia

Up to 25 percent of all anthropogenic greenhouse gas emissions are caused by deforestation, and Indonesia is the third largest greenhouse gas emitter worldwide due to land use change and deforestation. On the island of Sulawesi in the vicinity of the Lore Lindu National Park (LLNP), many smallholders contribute to conversion processes at the forest margin as a result of their agricultural practices. Specifically the area dedicated to cocoa plantations has increased from zero (1979) to nearly 18,000 hectares (2001). Some of these plots have been established inside the 220,000 hectares of the LLNP. An intensification process is observed with a consequent reduction of the shade tree density. This study assesses which impact carbon sequestration payments for forest management systems have on the prevailing land use systems. Additionally, the level of incentives is determined which motivates farmers to desist from further deforestation and land use intensification activities. Household behaviour and resource allocation is analysed with a comparative static linear programming model. As these models prove to be a reliable tool for policy analysis, the output can indicate the adjustments in resource allocation and land use shifts when introducing compensation payments. The data was collected in a household survey in six villages around the LLNP. Four household categories are identified according to their dominant agroforestry systems. These range from low intensity management with a high degree of shading to highly intensified shade free systems. At the plot level, the payments from carbon sequestration are the highest for the full shade cocoa agroforestry system, but with low carbon prices of € 5 tCO2e-1 these constitute 5 percent of the cocoa gross margin. Focusing on the household level, however, an increase of up to 18 percent of the total gross margin can be realised. Furthermore, for differentiated carbon prices up to € 32 tCO2e-1 the majority of the households have an incentive to adopt the more sustainable shade intensive agroforestry system. A win-win situation seems to appear, whereby, when targeting only the shade intensive agroforestry systems with carbon payments, the poorest households economically benefit the most and land use systems with high environmental benefits are promoted.payments for environmental services, carbon sequestration, agroforestry systems, cocoa, linear programming, economic incentives, poverty, Environmental Economics and Policy, Land Economics/Use,