Once applicable activities and an accounting framework have been selected, it is necessary to determine which carbon related to these activities will be counted in determining Parties' compliance with their Kyoto commitments. This section introduces the concept of baselines-which can be used, if desired, to adjust carbon stock accounts to discriminate between the effects of LULUCF activities and other factors as well as to factor out the effects of business-as-usual and activity undertaken prior to 1990.
Baselines are the reference scenario against which a change in GHG emissions or removals is measured. There are many options for baselines, including the stock change that would have resulted from "business-as-usual" activities; the stock change that would have resulted from the continuation of current or 1990 activity levels; the stock change that would result in the absence of active management; performance benchmarks or standard management practices; or the rate of change of stocks in 1990.
Baselines could be set at a national, regional, or project level. National baselines presumably would be developed from analysis of regional trends and practices and could be based on a combination of measurements on control plots and models. Regional baselines could also be used as a constraint on the baselines for projects within the region. If national baselines were developed using a standardized methodology and agreed upon at the international level (e.g., by the COP), the design of incentives for individual landowners to enhance carbon sequestration could be purely a matter of domestic policy in each country.
Baselines need not necessarily be derived solely from observed trends and practices in a given country or region. Internationally agreed performance benchmarks have also been suggested as a means for establishing objective baselines (Lazarus et al., 1999). For example, certain practices could be considered "standard management practice," and baselines might be set to reflect the level of carbon sequestration that would occur if these practices were universally applied. Credit would then be available only to the extent that there was an improvement compared to the results of applying these standard practices. The applicability of this approach to the LULUCF sector is unclear, however, because there is no set of internationally agreed "standard management practices," and such practices may be difficult to define for the wide variety of situations that will be encountered in the field.
Baselines can be reflected in the adjustment terms of the accounting equations presented in Table 2-3, if the Parties so decide. In the land-based rule, the baseline stock change may be subtracted from the gross change in carbon stocks during the commitment period on land included in the system. Similarly, in the activity-based rule a baseline area subject to the activity under business-as-usual might be subtracted from the total area where the activity takes place during a commitment period. In addition, the impact of the activity per unit area may implicitly be calculated relative to a baseline representing the absence of that activity.
Key policy questions that could be addressed through the use of appropriate baselines are as follows:
These questions may be addressed differently for ARD activities, Article 3.4 activities, and projects. Decision 9/CP.4 requires accounting for ARD activities as changes in stock during the commitment period without making reference to a baseline stock change (suggesting that the baseline adjustment term may be zero for Article 3.3 accounting). Articles 6 and 12, on the other hand, require that credit be based on benefits that are "additional" to what otherwise would have occurred, implying the use of a "business-as-usual" baseline. Project developers therefore have had to develop methods to define "business-as-usual" baselines. A more detailed discussion of these methods appears in Chapter 5. Article 3.4 requires the COP to "decide upon modalities, rules, and guidelines as to how" additional activities will be included. Thus, the Parties must decide whether to require a baseline and, if one is required, how it should be calculated. If the Parties determine that such a baseline requirement is not relevant to Article 3.4, the baseline adjustment term can be set to zero in the accounting equation.
The following three sections provide additional information to guide decisions regarding each of the policy questions relevant to the use of baselines. Distinctions are made between ARD activities, Article 3.4 activities, and projects where appropriate. More details related to each of these types of activity appear in subsequent chapters.
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