OPPORTUNITIES AND CHALLENGES

The technical potential for mitigating climate change through biological carbon management, both through storage and sequestration is large. How well that potential can be realised depends on having a suitable policy framework to enable it. This section considers how ecosystem carbon is treated within existing climate policy and some of the opportunities and challenges for increasing the role it can play.

ECOSYSTEM CARBON MANAGEMENT IN INTERNATIONAL CLIMATE POLICY

International climate policy only partly addresses emissions from land use change and does little to support biosequestration activities. The development of a comprehensive policy framework under UNFCCC for addressing ecosystem carbon management would be a very significant advance.

The potential of ecosystem carbon management is recognised in the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol through the LULUCF (Land Use, Land Use Change and Forestry) sector. Under the LULUCF, developed (Annex I) countries must report on carbon stock changes from afforestation, reforestation and deforestation (since 1990), and can also elect to report on the additional activities of forest management, cropland management, grazing land management, and revegetation (Robledo and Blaser 2008). Developing countries have no requirement or opportunity to account for emissions and sequestration activities in the land use sector. Although developed countries can gain credit for forestry projects in developing countries through the Clean Development Mechanism (CDM), the rules are restrictive (Dutschke 2007; Schlamadinger et al. 2007) and at the time of writing only three CDM forestry projects had been accepted.

The current policy framework for the land use sector has several shortcomings (Cowie et al. 2007; Schlamadinger et al. 2007; Hohne et al. 2007). One of these is the lack of involvement of developing countries, as described above. Another concern is the incomplete coverage of carbon sources and sinks as Parties are only required to account for forestry activities. All other activities are voluntary and there is no option for wetland accounting (Schlamadinger et al. 2007; Henschel et al. 2008). Other issues include the complex monitoring and reporting requirements, the requirement to account for managed lands only, and the difficulties in factoring out anthropogenic from natural disturbances (Benndorf et al. 2007). Perhaps the biggest criticism is that emissions reductions from the land use sector were not taken into account in the formulation of targets for developed countries, but can still be used to meet them. This has led many to see LULUCF as an offset mechanism, rather than one that achieves overall emissions reductions (Cowie et al. 2007; Schlamadinger et al. 2007). 

These shortcomings mean that ecosystem carbon management is not currently supported by international policy. This could change in the future, as the next climate agreement is currently under discussion. Whether or not a more effective policy framework is created will depend on issues such as whether ‘all lands’ are included, and whether the perception of LULUCF can be changed from an offset mechanism to a sector capable of bringing about real reductions in emissions (Cowie et al. 2007; Schlamadinger et al. 2007; Benndorf et al. 2007; Hohne et al. 2007). The development of new policy is not likely to be simple. LULUCF was developed from a complex political process under considerable scientific uncertainty, and there are a number of factors that make accounting for emissions from land use difficult, such as the issues of permanence, leakage and additionality (see glossary) that will need to be addressed. 

Much of the discussion on future land-use based commitments to date has been focussed on forest. The Bali Action Plan, adopted by the UNFCCC at the thirteenth session of its Conference of the Parties (COP-13) held in Bali in December 2007, mandates Parties to negotiate a post-2012 instrument for reduced emissions from deforestation and forest degradation in developing countries (REDD) (Decision 1/CP.13). The Parties specified that the development of such an instrument should take into consideration ‘the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.’ The inclusion of REDD in the next climate agreement would partly address emissions from the land use sector in developing countries. The scope of REDD is still to be determined, but could significantly increase the potential for carbon management if it includes carbon stock enhancement (Eliasch 2008).

Although reducing emissions from the forest sector is clearly important, this report has also emphasised the need to reduce emissions through activities in non-forest ecosystems, particularly peatlands and agriculture. This will require the mobilisation of investment in appropriate land use activities (Hohne et al. 2007), and there have been some suggestions that non-forest carbon should be included in any successor to the Kyoto Protocol. The Terrestrial Carbon Group advocates the inclusion of all biomass and soil carbon (TCG 2008), the FAO has proposed that agriculture be included on the grounds that its mitigation potential is high relative to the sector’s emissions (FAO 2009), and a number of authors have emphasised the importance of complete carbon accounting in the land use sector (Cowie et al. 2007; Schlamadinger et al. 2007; Benndorf et al. 2007; Hohne et al. 2007). 

Although it is generally agreed that any future climate change agreement should aim to reduce all anthropogenic emissions from the land use sector (through a combination of LULUCF and REDD activities), it is not yet clear if this will be achieved. Improvements in the coverage of land use activities under the LULUCF are under discussion for the next climate agreement, to the extent that there is the option to include reporting on peatlands and wetlands (FCCC/KP/AWG/2009/L.3), and the carbon accounting framework is likely to be made more rigorous. However, most of the additional activities are likely to remain voluntary, as mandatory accounting across all ecosystems appears neither politically or technically feasible. In addition, the relationship between LULUCF and REDD is still to be determined. It does not currently look likely that developing countries will be required to account for emissions from any ecosystem other than forest. 

Since any land-based carbon management policy must consider land tenure and enforcement issues, several international human rights instruments become relevant, such as the International Covenant on Economic, Social, and Cultural Rights and the United Nations Declaration on the Rights of Indigenous People (Brown et al. 2008). In the context of multilateral environmental agreements, the need to explore synergies between the UNFCCC and the CBD alongside links with national development plans has been recognised (Reid and Huq 2005; Blakers 2008), as well as necessary overlaps with the UNCCD, as desertification, biodiversity and climate change are also closely linked (Lal 2007). However, differences between the conventions in constituencies and administrative arrangements continue to present challenges. 

The extent to which climate policy adequately covers land based emissions and removals and achieves real emissions reductions is likely to influence the extent to which countries adopt ecosystem carbon management in practice. Current land use based mitigation policies do not provide the kind of framework that is required to deliver the incentive mechanisms recommended in this report. The development of a comprehensive policy framework under UNFCCC for addressing ecosystem carbon management would be a very significant advance.

WHAT WILL IT COST? HOW CAN WE PAY?

Ecosystem carbon management can be a low cost mitigation activity, but its global potential is likely to be strongly influenced by the financial incentives made available to key stakeholders. These incentives may be derived from a non-market instrument such as an international fund, or from the carbon market or through a combination of both. There are limited opportunities for ecosystem carbon mitigation in the existing compliance markets, although this could change if REDD is linked to the carbon market. The voluntary market is smaller but offers models for including non-forest carbon and rewarding biodiversity conservation. Barriers to including ecosystem carbon include high transaction costs and issues with accounting and permanence. Factors such as governance and subsidies also influence land use decisions and hence affect what happens to ecosystem carbon.

Nations considering how best to mitigate climate change need to consider the cost-effectiveness of the options available to them. Is ecosystem carbon management a good deal?

Costs of carbon mitigation via avoided deforestation, especially of tropical peatland, can be very low in contrast with ‘clean energy’ options (Spracklen et al. 2008). In agriculture, the costs of carbon mitigation vary, but many are low: managing grazing, fertilizers and fire on grasslands costs as little as US$ 5 per tonne of carbon dioxide equivalent per year. Restoration of soils and degraded land cost about US$ 10 per tonne of carbon dioxide equivalent per year (Smith et al. 2008). To set these costs in context, the IPCC puts costs of carbon capture and storage (CCS) at US$ 20–270 per tonne of carbon dioxide equivalent (IPCC 2005). 

Although ecosystem carbon management is not necessarily very costly, other land uses may offer a better return, at least locally and in the short term. One factor that can shift the balance is the level of incentives made available to landholders. Higher incentives will make carbon management more competitive with other land uses. For example, the economic mitigation potential of forestry would double if carbon prices increased from 20 US$/t CO2e to 100 US$/t CO2e (IPCC 2007a). These levels of carbon sequestration could offset 2 to 4% of the 20 Gt C per year of projected emissions by 2030 on the basis of current growth rates (Canadell et al. 2007; Raupach et al. 2007).

For agriculture, the same increase in the price of carbon (from $20 to $ 100 per tonne CO2e) more than doubles the economic carbon mitigation potential (from 1.5Gt CO2e per year to 4 Gt CO2e per year (Smith et al. 2007a). 

As discussed above, only afforestation and reforestation activities have access to the global carbon market through the Kyoto Protocol’s Clean Development Mechanism (CDM) and there are very few forestry projects under way. Voluntary carbon markets are much smaller than the regulatory market, but forestry projects are better represented, making up about a fifth of all transactions (Ebeling and Fehse 2009). Some voluntary markets allow non-forest carbon projects: the Chicago Climate Exchange (CCX) allows offsets through rangeland and agricultural soil management in the United States of America (Chicago Climate Exchange 2008).

Providing direct financial incentives for ecosystem carbon is only one of many policy options and incentives to change land use decisions. For forests, avoided deforestation strategies can include eliminating perverse incentives by changing input subsidies, land titling systems, forest governance arrangements and taxation regimes. Positive incentives can also be implemented to directly or indirectly change drivers of deforestation, including strengthening property rights. For agriculture, some interventions may need no financial incentive as they are beneficial in themselves, but instead require investment in sharing best practice (see below). Even within a financial incentive approach, a broader system of payments for ecosystem services may be more appropriate for some ecosystems and types of agriculture. Selecting the right mix of incentives will depend on what policies and processes are driving land use change.

LAND COMPETITION AND LIVELIHOOD 

There are competing demands for land use. Any policy that aims to promote ecosystem carbon management must resolve conflicts between different land uses and take care not to disadvantage the poor.

Policies that are to have a positive effect on carbon storage and sequestration in terrestrial ecosystems (both natural and human-dominated) may aim to ensure that existing land-use continues – for example through enhanced protection of set-aside areas that hold significant carbon stores, such as peat-swamp forests – or they may aim to bring about large-scale land use change, for example through changing agricultural practices. Any such policies and their impacts will need to be considered in the context of other, possibly competing needs for and uses of land: for food production, as living space, for maintenance of biodiversity, for recreation and to fulfil aesthetic and spiritual demands (Millennium Ecosystem Assessment 2005).

How, then, can people optimise land use and land management for a variety of needs? One approach is to maximise the efficiency of land-use for one overriding purpose – such as food production or human habitation – in any one place, thereby leaving more land available for other uses (such as recreation, species conservation or carbon sequestration); another is to seek multiple uses or benefits from any one piece of land (Green et al., 2005). 

Whichever approach is chosen, trade-offs will almost certainly be necessary and in any individual case, particular people or groups of people will attach different priorities to different kinds of land use. Where there are competing possible land-uses, conflicts are likely to arise, with a strong likelihood that there will be different ‘winners’ and ‘losers’, at least in the short and medium term. Without careful planning it is likely often to be the poor and disadvantaged who lose out, for a variety of reasons: they are often highly dependent on local resources, and are not in a position to buy in substitutes; they generally have less of a voice in decision-making at all levels, but particularly national and international; and they may have less knowledge of and ability to make use of laws, regulations and policies to support their needs and aspirations. 

Of particular potential concern is the use of various kinds of financial incentive, for example to encourage the cultivation of biofuel crops, or to promote large-scale afforestation for carbon sequestration. Such incentives will in many cases have the effect of increasing the economic value of land hitherto considered of little commercial interest. Sometimes such lands may indeed be marginal; in such cases, there may be little conflict in appropriating the land for such schemes. Sometimes, however, this may not be the case. The land may be of great importance for local people – as rangeland or pasture for livestock, or as a source of wild food or other resources – or it may be important for biodiversity, or both. Appropriation of such land may result in biodiversity losses and in local people finding themselves deprived of traditional benefits with little or no compensation. If this is not to happen, the full spectrum of values of the land should be taken into account in any incentive schemes, and recognition given to customary land tenure and traditional access rights. Local people should be enabled and encouraged to play a full role in decision making (Rights and Resources Initiative 2008). 

In any event, incentive-driven measures that do involve local people are likely to have higher transaction costs and are likely to attract less investment. There is also a danger that the poor may agree to activities (such as tree planting) that cost them more to implement than the payments to which they have agreed (Campbell et al. 2008; Coad et al. 2008). There may in addition be local inequalities, including gender imbalances, whereby benefits do reach the local community, but are unevenly divided within it and the costs fall disproportionately on the very poor (Parasai 2006).

However, with careful planning, there is no intrinsic reason why policies that favour carbon storage and sequestration in ecosystems should not be beneficial locally. This is particularly true for agriculture, where there is great scope for increasing carbon storage in ways that may also enhance long-term productivity. There are, though, often considerable barriers to changing agricultural practice, particularly where farmers have little access to information and resources. Surmounting such barriers is likely to require external input, at the very least in the form of capacity-building and the introduction of appropriate technologies. As discussed in the agriculture section, different ways of increasing soil carbon content will be appropriate in different circumstances. Carbon management policies that are too prescriptive about the choice of technology could lead to pressure on farmers and land managers to adopt methods that are inappropriate for them, with negative consequences for their livelihoods. Experience suggests that farmers prefer a basket of technologies to try out and, very often, adapt. Indeed, some would see this as part of a process by which farmers actually develop the technology (Sumberg and Okali 1997). Many of the agricultural practices that store more carbon can be implemented at little or no cost (Smith 2004) and if farmers decide measures are worthwhile they will keep them when external funding is no longer there, providing a greater mitigation effect than has been paid for.

LIKELY FUTURE TRENDS

Understanding the likely future trends in land use and the influences on those trends is a crucial part of any attempt to manage carbon in ecosystems. The IPCC’s fourth assessment report discussed the drivers of land use change in terms of demand for land-based products and services such as food demand, on one hand, and production possibilities and opportunity costs such as technological change, on the other (IPCC 2007a). Population growth and economic development can be seen as the ultimate drivers. 

A few global studies have conducted long term land use projections using scenarios of these and other factors, e.g the IPCC’s own SRES scenarios, UNEP’s Global Environment Outlook and the Millennium Ecosystem Assessment. In the short term, almost all scenarios suggest an increase in cropland (IPCC 2007a).

Longer term scenarios are mixed. Those that assume higher population rates and higher food demands with lower rates of technological improvement and thus lower increases in crop yields suggest a large expansion (up to 40%) of agricultural land between 1995 and 2100. Those that assume smaller populations and a high degree of technological change indicate there could be a reduction in agricultural land by as much as 20% less by the end of the century.

BENEFITS FOR BIODIVERSITY AND ECOSYSTEM SERVICES

Implementing policies that protect and restore ecosystem carbon can bring biodiversity and ecosystem service benefits too but are likely to do so only if they are designed with these aims in mind.

Discussions about ecosystem carbon management recognise that it must offer multiple benefits to be politically acceptable. But it cannot be relied on to deliver those benefits in the absence of other policies: priorities will have to be co-ordinated, and cross-cutting international and national policies as well as input from interdisciplinary research are needed (Lal 2007; Miles and Kapos 2008). Carbon management measures have great potential for offering multiple benefits, such as the maintenance of biodiverse areas, and enhancement of ecosystem services such as soil fertility (UNEP-WCMC 2008; Eliasch 2008; Reid and Swiderska 2008). 

REDD mechanisms are very likely to benefit biodiversity and can be designed to benefit local resource users at the same time. The challenge is to design regulations that do both, thereby avoiding biodiversity or livelihood trade-offs. In general mechanisms that include reduction in forest degradation are likely to have a greater positive impact on biodiversity than those confined to reducing deforestation. Reforestation activities may also have positive biodiversity impacts (Strassburg 2007; Strassburg et al. 2008; TCG 2008). However, afforestation may often have negative impacts on biodiversity. 

Various mapping tools are being developed to support site-selection for REDD projects by identifying areas that are rich in both carbon and biodiversity (UNEP-WCMC 2008). 

The Climate, Community and Biodiversity (CCB) Standards developed by the CCB Alliance are the most widely used and respected international standards for multiple benefits of land-based carbon projects (CCBA 2008). They aim to encourage the development of LULUCF projects under the Kyoto Protocol with net positive impacts on biodiversity as well as social and economic well-being (Taiyab 2006). Six projects have been approved already, 10 others are currently being reviewed and more than 100 projects intend to also apply the standards (CCBA 2008). Lessons learned from applying these standards could therefore serve as an important input into further policy negotiations on ecosystem carbon management measures.

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