Tropical forests lock up around 300 tonnes of carbon per hectare in above-ground biomass. Convert the forests to grassland or rice paddy, and this figure drops to 5 tonnes or less. The rest goes up in hot air and smoke or decomposes more slowly, adding to the amount of carbon dioxide in the atmosphere and thus contributing to global warming. At present, it makes economic sense to transform forests into cropland and tree crop plantations. Intact forests tend to generate little income for those who live there, while the land uses that generate the highest income are those that store low amounts of carbon.

However, a major study by a consortium of scientists led by the World Agroforestry Centre suggests that a carbon trade designed to tackle global warming could dramatically alter this. “If farmers were adequately rewarded for the carbon stored in trees and forests,” explains Brent Swallow, the global Coordinator of the ASB Partnership for the Tropical Forest Margins and lead author of Opportunities for Avoided Deforestation with Sustainable Benefits, “vast areas of forest could be saved and carbon emissions greatly reduced.” Compensating farmers for preserving carbon-rich landscapes could have the added benefit of alleviating poverty, although it is worth pointing out that where local people, governments and the private sector contest the rights to use forests, the prospects of payments could also increase conflicts.

Deforestation and degradation of woody vegetation and peatlands account for around 20 per cent of all carbon emissions – more than the entire global transport sector. Although climate-change negotiators have been aware of this for more than a decade, they have failed to agree on how to provide incentives that would reward farmers and landowners for preserving forests and peatlands. Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, companies in industrialized countries can offset some of their carbon emissions by funding afforestation and reforestation schemes in developing countries. But ‘avoided deforestation’, as it is known, has not been eligible for a number of reasons. While some of these reasons still apply, the urgent need to reduce emissions may encourage global negotiators to think again.

It is now almost certain that the United Nations Framework Convention on Climate Change (UNFCCC) will include measures to Reduce Emissions from Deforestation and Degradation (REDD) in the global climate-protection regime, which will replace the Kyoto Protocol in 2012. In the view of the influential Stern Report, published by the UK government, schemes that pay farmers to protect their forests could prove a cost-effective way of tackling global warming. However, others have disagreed, claiming that they are likely to be expensive, especially in Asia.

Until recently, the arguments on both sides have been largely based on desk studies. This is why the findings of Opportunities for Avoided Deforestation with Sustainable Benefits, reflecting over a decade of field research, are so significant. “We are not dealing with hypotheses or speculation,” explains Swallow. “The report provides mpirical results with clear implications for schemes whose purpose is to reduce emissions from deforestation and degradation.”

The study was carried out by the ASB Partnership for the Tropical Forest Margins, which brings together five CGIAR centres and over 80 national partners. Since 1994, ASB – it was then known as the Alternatives to Slash and Burn project – has been investigating the causes and consequences of deforestation, and exploring the trade offs between development and conservation, at a range of sites in the humid tropics. The five sites selected for the Opportunities study represent a wide range of biophysical and socio-economic conditions under which forests are converted to agriculture. In Cameroon, the conversion of primary forest to cocoa farms has been the major land-use change. In East Kalimantan, one of the three sites chosen in Indonesia, logging and slash-and-burn farming have led to considerable forest loss, while in the Peruvian Amazon livestock farming and industrial logging have been the main drivers of change.

The title of the study is deliberately ambiguous, with the word ‘opportunities’ being used to denote three related concepts. The first is opportunity cost: in other words, the costs of keeping land in carbon-rich forest compared to the costs of converting to lower carbon land uses. The word opportunity is also used in a broader sense. What are the prospects of avoided deforestation becoming an important approach to tackling global warming? And to what extent can schemes that reward those who leave the forests intact benefit poor smallholder farmers?

 The study found that deforestation invariably generated positive economic returns for land users in the five research sites. “It made sense for farmers to cut forests down and replace them with crops,” explains Swallow. “However, in over 80 per cent of the areas we investigated, the activities that prompted the loss of carbon stocks generated US$5 or less in profits for every tonne of carbon dioxide equivalent that was released into the atmosphere.”

The opportunity costs of carbon dioxide emissions varied from one site to another. In Peru, the majority of land-use changes generated less than US$5 per tonne of carbon dioxide equivalent (CO2-eq). In Jambi, Indonesia, conversion of logged-over forest to oil palm on peat soils was associated with a similar opportunity cost, and in areas where forests were cleared over peat – which is rich in carbon – the opportunity costs were at times as low as US$0.10 a tonne.

In simple terms, this means that conversion would be economically irrational if farmers could sell the carbon locked up in their forests and trees for US$5 a tonne – way below the US$35 a tonne that some European buyers were paying at the time the study was published. However, it is worth pointing out that until now high transaction costs have had the effect of reducing the benefits carbon sellers have received. Under certain conditions, however, deforestation still makes economic sense, especially when converted to high-value crops such as coffee, cocoa or oil palm on mineral soils. For example, in Cameroon, each tonne of carbon dioxide emitted generated around US$11 in value, with the opportunity costs rising to around US$28 per tonne using certain social (rather than private) discount rates.

The study concludes that there are cost-effective opportunities for large reductions in carbon dioxide emissions from avoided deforestation, provided the appropriate institutions and incentive systems are created.

 “Carbon-payment schemes that reward farmers and landowners could be very effective if – and it’s a big if – you can get the funds to the people who are actually making the choice to deforest,” says Swallow.

However, if payments are channelled through governments and organizations who fail to pass them on to the people who wield the axes and the chainsaws, the latter will continue to do what makes economic sense to them, even if it has a high cost for the planet. The authors suggest that schemes to reduce emissions from deforestation and forest degradation should pay special attention to the carbon-rich, and much threatened, peat lands of Southeast Asia. (See box: Indonesia’s burning problem.)

The research indicates that schemes to reduce emissions from deforestation and degradation could be used to encourage agroforestry. Research in Cameroon, to give just one example, revealed that cocoa plantations have aboveground carbon stocks of 141 tonnes per hectare. This compares with 250 tonnes for high forest, and just 4.5 tonnes for short fallow agriculture. Incentives that encourage farmers to establish multi-strata agroforests on degraded land could increase farmers’ incomes and sequester carbon. For this to happen, however, a more comprehensive form of carbon accounting is needed than the one proposed in some of the REDD schemes currently on the negotiation table.

Opportunities for Avoided Deforestation with Sustainable Benefits was launched at UNFCCC’s 13th session of the Conference of Parties – COP 13 – held in Bali, Indonesia, in December 2007. It received wide coverage in the international and local media and helped to inform discussions at ‘Forest Day’, an event organized by the Center for International Forestry Research and its partners in the Collaborative Partnership on Forests (which includes the World Agroforestry Centre). The Centre was a member of the Forest Day summary drafting team, which ensured that REDD remained high on the agenda throughout the conference.

A series of four research briefs – Avoided Deforestation with Sustainable Benefits in Indonesia – was also launched at the Bali conference. These explore the obstacles to creating an effective REDD mechanism, and look at the progress that has been made in Indonesia, the country with the highest land-use carbon dioxide emissions.

Further reading
Stern NH. 2007. The Economics of Climate Change: The Stern Review. Cambridge University Press. http://books.google.co.ke/books?id=U-VmIrGGZgAC&printsec=frontcover Swallow B, van Noordwijk M, Dewi S, Murdiyarso D, White D, Gockowski J, Hyman G, Budidarsono S, Robiglio V, Meadu V, Ekadinata A, Agus F, Hairiah K, Mbile PN, Sonwa DJ, Weise S. 2007. Opportunities for Avoided Deforestation with Sustainable Benefits. An Interim Report by the ASB Partnership for the Tropical Forest Margins. Nairobi, Kenya: ASB Partnership for the Tropical Forest Margins. http://worldagroforestry.org/Library/listdetails.asp?id=50386 Other related documents can be downloaded from: http://www.asb.cgiar.org/default.asp

For more information,
contact Brent Swallow,
b.swallow@cgiar.org