CLIMATE, BIODIVERSITY, AND FORESTS · in tropical forests; some are restricted to a single patch of...

CLIMATE, BIODIVERSITY,AND FORESTS

ISSUES AND OPPORTUNITIES EMERGING FROM THE KYOTO PROTOCOL

PAIGE BROWN

WORLD RESOURCES INSTITUTEFOREST FRONTIERS INITIAnVE

iNCOLLABORAnONWITH

IUCNTie Wodil C.semton U.imi

CLIMATE, BIODIVERSITY,AND FORESTS

I S S U E S A N D O P P O R T U N I T I E S E M E R G I N G F R O M T H E K Y O T O P R O T O C O L

BY PAIGE BROWN

A Contribution to theForest Frontiers Initiative

and theIUCN Climate Change Initiative

WORLD RESOURCES INSTITUTEFOREST FRONTIERS INITIATIVE

IN COLLABORATION WITH

IUCNThe World Conservation Uni<

CAROL ROSENPublications Director

Hyacinth BillingsProduction Manager

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Each World Resources Institute report represents a timely, scholarly treatment of a subject of public concern.

WRI takes responsibility for choosing the study topics and guaranteeing its authors and researchers freedom of inquiry.

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Unless otherwise stated, however, all the interpretation and findings set forth in WRI publications are those of the authors.

Copyright © 1998 World Resources Institute and IL'CN - The World Conservation Union. All rights reserved.

ISBN 1-56973-285-x

Library of Congress Catalog Card No. 98-88915

Printed in the United States of America on Recvcled Paper.

CONTENTS

Acknowledgments

Foreword 1Introduction 2Getting to Kyoto 2Kyoto Protocol Overview 5Synergies Between Climate Mitigation and Biodiversity Conservation 6Unresolved Issues That Impede Capturing Climate and Biodiversity Benefits 7

Generic Issues Associated with Forests and Land-Use Changein the Kyoto Protocol 9

Forests as a Distraction from Reducing Energy-Related Emissions 9Forest Options Could Become a Loophole 10The Possibility of Negative Environmental Impacts 10The Question of Property Rights 11Threats to National Sovereignty 11

The Treatment of Forests and Land-Use Changein Industrialized Countries 12

Current Protocol Rules for Domestic Inventories of Greenhouse Gas Emissionsfrom Forests and Land-Use Change 12

The 1990 Base Year 12The 2008-2012 Commitment Period 13The 1990-2008 Interim Period 13

Intergovernmental Panel on Climate Change Guidelines for DomesticInventories of Greenhouse Gas Emissions from Forests and Land-Use Change 13

Defining and Tracking Deforestation 13What Is Left Uncounted in National Inventories? 14

Forest Harvest and Management 14Forest Degradation 14Storage in Wood Products 15Forest Fires 16Soil Carbon 16

Methods for Including Additional Activities Under Domestic Inventories 16The Treatment of Forests and Land-Use Change Under the Market Mechanisms for

Reductions Between Developed Countries 17Project-Based Credit Trading 17Emissions Trading 18

The Role of Forests and Land-Use Change in Developing Countries 19The Clean Development Mechanism 20Project Eligibility 21

Forest Harvest and Management 21Carbon Stored in Wood Products 22Forest Conservation 22Improving Agricultural Productivity 22Fire Suppression 23

Contributing Elements for a Successful CDM 23

Technical Concerns Associated with Measuring and Verifying Forestand Land-Use Change Emissions and Reductions 24

Establishing a Reference Case 24Leakage 24Permanence of Reductions 25Measurement Accuracy 25

Recommendations 26

Glossary 30

Notes 31

W O R L D R E S O U R C E S I N S T I T U T E I I I FOREST F R O N T I E RS I N IT! ATI VE

ACKNOWLEDGMENTS

T his report is the result of a collaboration between WRI and IUCN-TheWorld Conservation Union. The author would first and foremost like tothank Brett Orlando of IUCN-The World Conservation Union, who

made this collaboration possible. Brett provided invaluable editorial input toensure balance and clarity within the report. Additionally, he drafted the boxon Potential Impacts of Climate Change. At WRI, the author is extremelygrateful to Nancy Kete and Nigel Sizer for invaluable input and guidance thathelped bridge the issues of climate and biodiversity. The report benefitedgreatly from the comments and suggestions of reviewers, both from withinWRI, including Bruce Cabarle, Laura Lee Dooley, Paul Faeth, Nels Johnson,Tony La Vina, Gwen Parker, Walt Reid, and Frances Seymour, and fromIUCN-The World Conservation Union, Andrew M. Deutz, Patrick Dugan, ScottA. Hajost, Bill Jackson, Rachel Kyte, Jeffrey A. McNeely, Simon Rietbergen, andRichard Tarasofsky. I would particularly like to thank Liz Cook for her contri-butions throughout the project. The comments of external reviewers SandraBrown, Kenneth Chomitz, Darren Goetze, David Pearce, and Youba Sokonawere exceedingly valuable.

The author is grateful to Hyacinth Billings and Carol Rosen for managingthe publication process. The report also benefited from the editorial talents ofPatricia Ardila and Robert Livernash. This author alone is, of course, responsiblefor the document's accuracy and recommendations.

W O R L D R E S O U R C E S I N S T I T U T E I V F O R E S T F R O N T I E R S I N I T I A T I V E

FOREWORD

O ver the past severaldecades, two profoundglobal environmental

issues-biodiversity loss and climatechange-have often moved in whol-ly unconnected domains. After all,what possible connection couldthere be between the fate of unknownspecies in the Amazon rainforestand emissions of carbon dioxidefrom coal-burning power plants inindustrialized countries?

A great deal, as we now know.At the first level, climate change is amajor threat to efforts to conservebiodiversity. Some species already onthe verge of extinction could bepushed over the edge as their habitatsdisappear because of climaticchanges. More drought and floodsthat may be influenced by climatechange will also make communitiesstruggling to improve their livelihoodseven more vulnerable. Another areawhere these two issues stronglyintersect is in the carbon stored inthe world's forests and other naturalecosystems. When forests are burnedor otherwise destroyed, carbon isreleased into the atmosphere. Foreven' forest or other ecosystem that isspared this fate, carbon is stored andkept out of the atmosphere. Whileenergy sector emissions are thepredominant contributor, forestconversion is also a significant partof the climate change problem,contributing some 20 percent ofannual carbon dioxide emissions and,over the past 150 years, an estimated30 percent of the atmospheric buildupof carbon dioxide.

In much of the world, far moreforests are being lost than protected.This is bad news for climate change,and worse news for the world'sbiological resources. As a very roughguess, there are perhaps 14 millionspecies in the world. At least 50percent of these species may residein tropical forests; some are restrictedto a single patch of trees. Once thetrees are gone, these species are goneforever. The rapid loss of forests thusis doubly damaging, adding to theglobal burden of atmospheric carbondioxide and undermining the world'sbiological resources, which in turnreduces the resilience of ecosystemsfaced with a changing climate.

Can the world communityrespond to these dire threats to theglobal environment? The 1997Kyoto Protocol to the FrameworkConvention on Climate Change is akey step towards the mitigation ofclimate change-it was the firstinternational agreement to placelegally binding limits on greenhousegas emissions from developedcountries. Although the Protocolsignificantly advanced the cause ofclimate protection, it left manyquestions unanswered, including therole of forests and land-use changein meeting obligations to slow globalwarming. Just as the negative effectson biological diversity of globalwarming and deforestation reinforceeach other, there are considerablepositive synergies between reducinggreenhouse gas emissions and step-ping up efforts to conserve forests. Asthe Conference of the Parties preparesto tackle these questions, this reportoffers timely insight into the potentialof forests to advance both climateand biodiversity goals throughoutthe world.

Climate, Biodiversity, andForests: Issues and OpportunitiesEmerging from the Kyoto Protocolexamines why the role of forests andland-use change under the KyotoProtocol remains controversial andattempts to clarify and separate theissues. For example, some perceiveforests and land-use change as adistraction from reducing energy-related emissions, while others fearthat greenhouse gas fluxes fromforests and land-use change cannotbe credibly quantified. It will requirefurther research and careful con-struction of mechanisms created bythe Protocol to resolve these issuesand ensure that the treatment offorests and land-use change isconsistent with credible greenhousereductions and biodiversity andsocial benefits.

Without a much strongercommitment to solving climatechange and biodiversity loss, we willbequeath to our children andgrandchildren an irretrievablyimpoverished world. Such a fate canbe avoided, but it requires a stronginternational commitment andconcerted action. We hope this reporthelps to encourage such action.

We would like to express ourgratitude to the AVINA Foundation,the John D. and Catherine T.MacArthur Foundation, and theUnited States Agency for InternationalDevelopment, whose support hasmade this work possible.

Jonathan LashPresidentWorld Resources Institute

David McDowellDirector GeneralIUCN-The World Conservation Union

W O R L D R E S O U R C E S I N S T I T U T E F O R E S T F R O N T I E R S I N I T I A T I V E

INTRODUCTION

F or more than a decade, thecommunity of nations hasengaged in a difficult and

crucial debate that has set theframework for international effortsto reduce the risk of climate changeinto the next century. That debatetook a significant new turn inDecember 1997, when nations metin Kyoto, Japan, to forge a follow-onProtocol to the original 1992Framework Convention on ClimateChange. The Kyoto Protocol marksthe first international agreement toplace legally binding limits ongreenhouse gas emissions fromdeveloped countries but leavesmany issues to be resolved in futurenegotiations.

One of the most important areasyet to be resolved concerns howmuch of a role forests and land-usechange will play under the KyotoProtocol. They are both a part ofthe problem and of the solution ofclimate change. Saving or increasingforest cover, particularly of old-growthforests, stores carbon, thus keepingit out of the atmosphere and slowingglobal warming. Conversely, theglobal loss of forests plays asignificant role in increasing the risksof climate change. Forest conversionhas contributed an estimated 30percent of the atmospheric buildupin carbon dioxide.'

This report focuses on the waysin which forests and land-usechange can both exacerbate andmitigate climate change. It identi-fies the opportunities the Protocolpresents regarding the conservation,improved management, andrestoration of forests and considerssome of the reasons the issue has

proven controversial. Finally, thepaper highlights key future deci-sions that will determine whetherthese opportunities are seized andexamines how these decisions canbe made to work for climate, forests,and biodiversity.

GETTING TO KYOTO

In order to better appreciate theissues and opportunities associatedwith land-use change and forestspresented by the Kyoto Protocol, it isuseful to understand the eventsleading up to it.

Climate change was initiallyrecognized as a serious problemmeriting international attention atthe First World Climate Conferencein 1979- At that time, a declarationwas issued calling on the world'sgovernments to prevent potentialhuman-caused changes in climatethat would adversely impact people'swell-being.

Propelled by increasing under-standing of global weather and evi-dence of growing concentrations ofatmospheric carbon dioxide, in1988 the UN EnvironmentProgramme (UNEP) and the WorldMeteorological Organization estab-lished the Intergovernmental Panelon Climate Change (IPCC). TheIPCC is charged with assessing cur-rent information on climate changeand its potential impacts and withframing strategies to mitigate oradapt to such change.2 The IPCCcontains three working groups: thefirst concentrates on the climatesystem, the second on impacts andresponse options, and the third oneconomic and social dimensions.Box 1 provides a chronology of keyevents.

1 9 7 9 . World MeteorologicalOrganization (WMO) and UnitedNations Environment Programme(UNEP) convene First WorldClimate Conference and establishWorld Climate Program.1 9 8 8 . WMO and UNEP establishthe Intergovernmental Panel onClimate Change to assess threat ofclimate change.1 9 8 9 . Noordwijk Declarationsigned by 68 environmental minis-ters from around the world; it pro-poses increasing global forest coverto help slow climate change. (1)

CHRONOLOGY

1 9 9 0 . IPCC's First AssessmentReport affirms scientific basis forclimate change.1 9 9 0 . The Second WorldClimate Conference calls for atreaty on climate change.1 9 9 0 . United Nations establish-es Intergovernmental NegotiatingCommittee that ultimately draftsthe Framework Convention onClimate Change (FCCC).1 9 9 2 . FCCC opened for signa-ture at the Rio Earth Summit.Developed countries commit toreturn greenhouse gas emissions

OF KEY EVENTS

to 1990 levels by the year 2000and to help developing countriesrespond to climate change throughtechnology transfer and funding.1 9 9 5 . First Conference of theParties establishes that initial FCCCcommitments are inadequate. Itissues the "Berlin Mandate" thatleads to the Protocol by the thirdConference of the Parties.1 9 9 6 . Second Conference of theParties. The ministers endorse theSecond Assessment Report of theIntergovernmental Panel onClimate Change, which states that

the balance of evidence "suggestsa discernible human influence onglobal climate."1 9 9 7 . Third Conference of theParties produces the Kyoto Protocolto the FCCC that includes legallybinding limits on greenhouse gasemissions.

N o f e ; l. Ministerial Conference on

Atmospheric Pollution and Climatic Change.

1990. The Noordwijk Declaration on

Atmospheric Pollution and Climate Change.

W O R t D R E S O U R C E S I N S T I T U T E F O R E S T F R O N T I E R S I N I T I A T I V E

hi- ••

The IPCC published its FirstAssessment Report on ClimateChange in 1990. The reportaffirmed the underlying scientificbasis of climate change. It notedfossil fuel combustion from vehiclesand industrial activities as one ofthe main contributors to human-induced carbon dioxide emissions.It also explicitly recognized the his-toric, current, and future contribu-tions of forests to climate change,focusing on emissions from defor-estation and potential uptake fromreforestation.3

At the close of 1990, the UnitedNations General Assembly acceptedthe first IPCC Report and establishedthe Intergovernmental NegotiatingCommittee to begin discussing theterms of a Framework Conventionon Climate Change. The UnitedNations Conference on Environmentand Development, or Earth Summit,held in Rio de Janeiro in 1992, wasset as the target for completing thenegotiations. At the Earth Summit,154 governments signed the UnitedNations Framework Convention onClimate Change (FCCC). The statedobjective of the FCCC is to stabilizegreenhouse gas concentrations inthe atmosphere at a level that wouldprevent dangerous, human-causedclimate change.4

Although this paper does notprovide full coverage of the FCCC, itdoes contain a general outline thatfocuses on its treatment of forestsand land-use change.

All FCCC parties-developingand developed countries-agreed tosubmit "national communications"that would include inventories ofhuman-caused emissions of green-house gases from sources such asvehicles, industries, deforestation,and removals such as reforestation.The national communications werealso to describe programs that con-tained measures to mitigate climatechange, with developed countriesbeing required to describe specificpolicies and measures to implementtheir commitments.

The Climate Convention explic-itly includes the role of forests andland-use change under commit-ments, stating that Parties shallpromote and cooperate in the sus-tainable management, conserva-tion, and enhancement of sinks ofgreenhouse gases, including forestsand other terrestrial, coastal, andmarine ecosvstems.5

To aid Parties in preparing theirnational communications, in 1995the IPCC issued a workbook con-taining guidelines for undertakinginventories with the aim of develop-ing internationally agreed report-ing, data gathering, and documentingmethods for greenhouse gases.6 Inaddition to industrial emissions, theIPCC workbook instructs nations todo a comprehensive inventory of thetotal emissions and removals fromforest and land-use change activi-ties. The workbook asks for theinventory' to include three categoriesof emissions and removals: a)increases or decreases in biomasswithin a standing forest, such asfrom logging, fuelwood collection,or regrowth; b) conversion of forestsor grasslands to other land uses;and c) sequestration from regrowthof abandoned land, such as pasture.

Parties using the IPCC report-ing and accounting guidelines fornational inventories identified sev-eral issues where further method-ological work would be needed. Inparticular, Parties have identifiedthe need to improve methods totrack emissions from forests andland-use change. Several Partiesrequested further scientific work inmeasuring emissions and sequestra-tion in order to reduce uncertaintyin estimates.

Beyond overseas developmentassistance, industrialized countriesalso agreed to provide new andadditional financial resources andto promote the transfer of environ-mentally sound technologies toassist developing countries in meet-ing their obligations.

The FCCC designated theGlobal Environment Facility (GEF)as an interim financing mechanism.The GEF, conceived in 1989, isintended to serve as a mechanismfor providing financial resources tohelp developing countries addressglobal environmental issues,including climate change andbiodiversity loss.7

The FCCC also recognized theconcept of Joint Implementation,that is, agreements between at leasttwo parties (be it individuals, non-governmental organizations, gov-ernmental bodies, academicinstitutions, or the private sector intwo or more countries) to offsetgreenhouse gas emissions by reduc-ing, avoiding, or sequesteringgreenhouse gas emissions. Forexample, one project in Mexico dis-tributed energy-efficient light bulbs,while a second project in the CzechRepublic, funded by three Americanutilities, switched an electrical plantfrom high-emission coal to lower-emission natural gas. The conceptis not limited to energy projects butalso includes forest and land-usechange sector offsets. Some forestand land-use sector carbon seques-tration projects that illustrate thisconcept are described in Box 2.


FOREST AND LAND-USE CHANGE CARBON SEQUESTRATION PROJECTS

Early carbon sequestration pro-jects such as the Reduced ImpactLogging Project in Malaysia andCARE/Guatemala were primarilybilateral agreements between a sin-gle investor seeking to offset itsgreenhouse gas emissions and animplementing agency. Perhaps inresponse to concerns about risk offailure, more recent projects havemoved away from bilateral agree-ments to either investor pools, suchas Rio Bravo, or project portfoliossuch as those offered by Costa Rica.• REDUCED IMPACT LOGGING IN

S A B A H , MALAYSIA

In August 1992, New EnglandElectric Systems of Massachusetts,a coal-burning utility, decided toprovide funds to Innoprise Corp.,of Sabah, Malaysia, a timber con-cession holder, to implement reduced-impact logging guidelines for 1,400hectares of Innoprise's 1 millionhectare concession (1). The projectemphasized staff training to useexisting technology and machineryin an environmentally sensitiveway and to increase supervision ofharvesting operations.

The harvesting guidelinesinclude specifications for creatingbuffer zones for streams and roads,developing a formal harvestingplan, cutting climber vines beforeharvesting, planning and markingskid trails, marking trees for futureharvests, and undertaking direc-tional felling of marked trees to

reduce residual damage to sur-rounding forest.

The project's potential benefitsinclude reduced damage to theresidual forest; decreased erosion,carbon emissions, and landdegradation; increased capacityfor future timber production;increased biodiversity protection;decreased incidence of fire;reduced weed infestations; andincreased long-term ecologicaland economic productivity.• THE RIO BRAVO CARBON

SEQUESTRATION PROJECT, BELIZE

Multiple utilities are investing inBelize's Rio Bravo CarbonSequestration Project, implement-ed by the Programme for Belizeand The Nature Conservancy, tostop forests from being converted toagricultural land. The projectpurchased approximately 6,014hectares of endangered forest thatwould have been converted tomechanized agriculture and isdeveloping a sustainable forestmanagement component that willprovide income to local people andincrease the amount of carbonsequestered (2).

If the protected forest areahad been converted to agriculturalland, it would have separated cur-rently protected forest areas, thuscompromising their ecologicalintegrity (2). The project areacontains nine endangered mam-mals, among them the jaguar,

ocelot, and Baird's tapir. Over itslifetime, the project is estimated tosequester slightly over 1 milliontons of carbon.• FORESTS ABSORBING CARBON

EMISSIONS (FACE)/KRKONOSE

NATIONAL PARK, CZECH REPUBLIC

FACE was founded by theElectricity Generating Board (SEP)of the Netherlands to sequesterpart of the CO2 it emitted fromthe use of fossil fuel for electricitygeneration in that country. Theproject area, in the Czech Republic,contains the only Norway spruceforest in Europe adapted to amontane climate. Because of thisunusual flora, 38,500 hectares ofthis forest was designated a NationalPark in 1963. The park and itsforests have become heavilydegraded by air pollution. In 1984,the IUCN-the World ConservationUnion listed Krkonose as one ofthe ten most threatened nationalparks in the world. FACE is financ-ing the reforestation of 15,000hectares of damaged and dead forestin Krkonose National Park (3).• CARE/GUATEMALA

AGROFORESTRY PROJECT

A project proposed and implement-ed by CARE in Guatemala fea-tured several components,including creating communitywoodlots, implementing agro-forestry practices, terracing vul-nerable slopes (thus improvingagricultural productivity), and

providing training for communityforest fire brigades (4). WRI cal-culated that the project wouldsequester an estimated 11.2 mil-lion tons of carbon over 40 \earsthrough net addition to the standinginventory of biomass carbon,retention of standing forests as aresult of demand displacement viawoodlots and agroforestry projects,protection of some carbon in soils,and retention of some standingforests because of community firebrigades.

Notes: 1. Michelle A Pinard and

Francis E. Putz. "Retaining Forest Biomass

by Reducing Logging Damage." Biotropiai

28, no 3 (1996V \

2. Programme for Belize. The Nature

Conservancy, and \\ isconsin Electric Power

Company. "The Rio Bravo Conservation

and Management Area, Belize. Carbon

Sequestration Pilot Project Proposal.'

Submitted for consideration under the

I'nited States Initiative on Joint

implementations (November, 1994).

3. "Forests Absorbing Carbon Emissions,

Annual Report" (Arnhem, "Die

Netherlands, 1993). FACE Website-

httpVAww facefoundation.nl.

4. Paul Faeth, Cheryl Cort, and Robert

l.neraash. "Evaluating the Carbon

Sequestration Benefits ot Forestn Projects

in Developing Countries" (Washington DC:

World Resources Institute, 199-U.

To gain experience and test theefficacy of Joint Implementation,the United States, Costa Rica, theNetherlands, and several othercountries established experimentalnational programs to evaluate,approve, and, in some cases, fundprojects.

Some environmental groupsand various developing countrieshave been critical of JointImplementation, arguing that itwould allow developed countries toavoid making difficult changesdomestically by buying cheap car-bon offsets in developing countries.8

As a result of the opposition to Joint

Implementation, in 1995 the firstConference of the Parties estab-lished a pilot phase, termedActivities Implemented Jointly (AIJ).AIJ is similar to Joint Implementationin that both are based on greenhousegas reduction projects among severalcountries. Any country may partici-pate in AIJ, but no actual reduction

credits can accrue during the pilotphase, which lasts until the end of1999, when a review is scheduled.There are currently over 15 forestand land-use-based mitigationprojects underway, and many morehave been proposed.


Finally, in recognition of theirhistorical responsibility for thebuildup of greenhouse gases in theatmosphere, under the FCCC devel-oped nations voluntarily committedto reduce emissions to f 990 levelsby the year 2000. The FCCCinstructed the first Conference of theParties to determine whether devel-oped countiy commitments wereadequate.

At this first meeting the Partiesconcluded that the voluntary com-mitments under the FCCC wereindeed inadequate, as it becameclear that most developed countrieswould not meet them. Negotiatorsagreed to the Berlin Mandate thatestablished the need for quantifiedlimits on greenhouse gas emissionsbeyond the year 2000. The BerlinMandate talks were given a signifi-cant push in 1995 when the IPCCissued its Second Assessment Report,concluding that "the balance of evi-dence suggests a discernible humaninfluence on global climate."9 Aseparate subsidiary body, the Ad HocGroup on the Berlin Mandate, wascreated to draft a protocol for adop-tion at the third Conference of theParties in 1997.

KYOTO PROTOCOLOVERVIEWOn December 10,1997, delegatesfrom 160 nations completednegotiations on the Kyoto Protocolat the third Conference of theParties. By providing that industri-alized nations should adopt legallybinding emission limits on green-house gases, the Kyoto Protocol tookthe significant step of moving fromvoluntary to binding commitments.While individual countiy commit-ments vary; the Protocol calls forreductions of aggregate industrial-ized countiy emissions by roughly 5percent below 1990 levels.10

Following the FCCC, the Protocoldivides the world into twogroups-industrialized, or "Annex I,"countries which committed to

greenhouse gas emission limits,and developing or "non-Annex I,"countries with no binding limits.The Annex I group consists of 39industrialized nations andeconomies in transition, includingthe United States, the EuropeanUnion, Canada, Japan, the CzechRepublic, and Russia."

Q POTENTIAL IMPACTS

By Brett Orlando.

lUCN-Workl Conservation I num.

Washington o/fice

There is a growing scientific con-sensus that climate change couldpresent a major threat to biodiver-sity at both the species and theecosystem levels. The IPCC statedthat human-induced climatechange could bring about losses inbiological diversity and in the goodsand services that ecosystems providesociety(l). Many ecosystems arealready threatened b\ humanactivities such as pollution,increasing resource demands, andnonsustainable managementpractices. Human-induced climatechange represents an importantadditional stress.

Species will be more vulner-able, and even where they are ableto tolerate climate change, they couldface new competitors, predators,diseases, and alien species for whichthey have no natural defense.Existing forested areas might under-go major changes: some may entirelydisappear, while others mightexperience changes in species com-position. Half of coastal wetlandsof international conservationimportance could be lost. Coralreefs and mangroves would bethreatened by sea level rise, increas-ing temperatures, and changes instorm patterns. Small islands areparticularly vulnerable to sea levelrise, as much of the land mass couldbe lost, potentially displacing largenumbers of people (2). Also, seven

OF CLIMATE CHANGE

of ten areas with the highest per-centage of threatened plants are onsmall islands, and climate changewill onh exacerbate these threats (3).Finallv, carbon stored in forestscould be lost as forests transitionfrom one type to another underchanged climate conditions, thusenhancing the greenhouse effect.

Human society is also miner-able to climate change. For exam-ple, increased incidence of drought,triggered by climate change, couldlead to threats to food security,particularly in arid and semi-aridregioas. Communities that are cur-renth struggling to improve theirlivelihoods are the most vulnerableto the potential impacts of climatechange as they will have fewerresources for adaptation measures.

Notes: i. Intergovernmental Panel

on Climate Change. "Summary for

Policymakers," in Climate Change

1995- Impacts. Adaptations, and

Mitigation of Climate Change:

Scientific-Technical Analyses of

Impacts. Adaptations, and Mitigation

qj (lunate Change Contribution of

Working Group II to the Second

Assessment Report of the Tntergo\emmental

Panel on Climate Change.

2. "Summary for Policymakers," jb.

3. The IUCX Species Survival

Commission. 1997IUCX Red List of

Threatened Plants. Kern S. Walter and

Harriet J. Gillett. eds Compiled by The

World Conservation Monitoring Centre

(Gland, Switzerland' IUCN-The World

Conservation Union, 1998). xxxiv


Forest and Land-Use Change Under the Kyoto Protocol

ARTICLE

Article 3.3

Article 3.4

Article 6andArticle 17

Article 12

RELEVANCE TO LAND USE CHANGE AND FORESTS

Domestic Greenhouse Emissions by Industrialized Countries. Defines which domestic emissions should be inventoried by industrializedcountries during the 2008-2012 commitment period. The Protocol currently requires tracking greenhouse gas removals and emissions fromhuman-induced afforestation, reforestation, and deforestation that have occurred since 1990.

Inventorying Additional Activities. While Article 3-3 defines three activities to be inventoried, Article 3.4 states that later Conferences ofthe Parties may include additional activities such as forest harvest and management, or remove activities that must be inventoried.

Project-based Credit and Emissions Trading Between Industrialized Countries.• Define two market mechanisms that allow industrialized countries to trade emission allowances with other industrialized countries.• Article 6 specifies project-based credit trading and explicitly refers to enhancing carbon storage and reducing emissions but does not

specify which kinds of projects, such as those aimed at slowing forest degradation and tree planting, are allowed.

Clean Development Mechanism (COM). Allows industrialized countries to meet their reductions via activities in developing countries.There is no explicit mention of land-use change and forest projects, making it unclear what kind of endeavors will be allowed.

Under the Protocol, each Annex

I country agreed to a specific green-

house gas reduction target using its

1990 levels as a baseline. Parties

negotiated these non-uniform targets

in order to address varying national

circumstances. For example, Japan

and the United States committed to

a 6 percent and 7 percent reduction

from their 1990 emission levels,

respectively, while Australia set its cap

to an 8 percent increase. Japan

received a lower target than the

United States, as it is a relatively

more energy efficient nation and

therefore claimed that greater reduc-

tions would be more difficult than

for the United States. Australia argued

that its dependence on coal would

make reductions, or even a stabi-

lization at 1990 levels, too difficult.

The Protocol requires inventories

of the six major greenhouse gases.12

Carbon dioxide, the most prevalent

of them, is emitted from energy pro-

duction, transport, industry, and

land-use conversion such as defor-

estation. Land-use changes primarily

emit carbon dioxide, though methane

and nitrous oxide are also emitted

in trace quantities.

These reductions must be accom-

plished within the "commitment

period," 2008-2012, which provides

increased timing flexibility. For

example, Japan's average yearly

greenhouse gas emissions for 2008-

2012 must be 6 percent below what

they were in 1990. F.missions may

be above the 6 percent reduction in

any given year during the commit-

ment period, but the average must

be compensated in later years.

Annex I countries have four

means by which to meet their

Protocol commitments and to cal-

culate their net emission inventory.

(See Table 1.) They may a) take

any domestic action to reduce emis-

sions from their industrial sectors,

such as replacing fossil fuel use with

renewable energy sources; b) take

domestic action through a limited

set of forest-sector activities-afforesta-

tion and reforestation that count as

reductions, and deforestation that

counts as an emission; c) use two

market-based mechanisms (emis-

sions trading and project-based credit

trading) that allow them to buy, sell,

or trade greenhouse gas reductions

and emission allowances from other

Annex I countries; and d) use a third

market mechanism that allows buy-

ing or trading of project-based credits

from non-Annex I countries-e.g.,

the Clean Development Mechanism.

SYNERGIES BETWEEN

CLIMATE MITIGATION

AND BIODIVERSITY

CONSERVATION

The FCCC explicitly recognizes the

links between climate change and

biodiversity conservation in both its

objective and its commitments. The

objective states the importance of

preventing dangerous changes to

the climate system within a time

frame that would not allow ecosys-

tems to adapt naturally. Box 3

describes some of the potential

impacts of climate change on biodi-

versity and human society. The

FCCC also commits nations to pro-

moting sustainable management

and conservation of forests and

other terrestrial ecosystems. If rati-

fied by the Parties, the Kyoto

Protocol could offer incentives for

the restoration, protection, and con-

servation of forests and other

ecosystems within developed and

developing countries, thus present-

ing clear synergies between climate

mitigation and biodiversity conser-

vation. Emissions from the conver-

sion and degradation of forest and

grassland ecosystems is not only a

contributor to climate change but is

also a significant driving force

behind species extinctions and the

loss of critical ecosystem functions

and sendees such as regenerating

watersheds, purifying water, slowing

soil erosion, and providing food,

fiber, and medicines.13


! * • : - / •

Temperate forests, most of which

have already been converted and

degraded, still offer important

opportunities to protect biodiversity

and slow climate change. For

example, in the United States, where

overall only 1-2 percent of native

forest remains, the Pacific Northwest

retains 13 percent of its old-growth

forest, which provides critical

breeding and feeding habitat to a

range of species, such as the spotted

owl and northern goshawk.14 Old-

growth Douglas fir forests in the

Pacific Northwest are also one of the

most efficient storehouses of carbon.

Even after that length of time, natural

forests store greater amounts of carbon

than tree plantations and provide

greater biodiversity benefits.

Boreal forests remain largely

intact, with Russia containing nearly

one fifth of the world's forest and

Canada housing the second largest

forest expanse, making these two

nations critical carbon storehouses.

The Russian Federation contains

about 20 percent of the world's carbon

stored in forest vegetation, meaning

that further deforestation or degra-

dation of Russian forests could

potentially be a significant source of

emissions.15 An estimated 19 percent

of Russian forests are currently under

threat from logging and mining.16

These same forests also harbor

endangered animal species such as

the Amur tiger and are the traditional

homeland of indigenous peoples.

Carbon sequestration potential,

endangered forest regions, and bio-

diversity "hot spots" often overlap,

particularly in developing countries.

This offers opportunities for synergies

among the various concerns, as

illustrated by Table 2, which lists

the top ten countries in order of

plant biodiversity in their frontier

forests.17 These countries exhibit

an important link to a similar

ranking of developing country car-

bon sequestration potential, shown

in the far right column of the table.18

Because Annex I countries

must limit their greenhouse gas

emissions, the Protocol could create a

disincentive for forest conversion and

degradation. The three market

mechanisms could potentially provide

funds for carbon offset projects that

provide alternatives to conversion or

intensive use of forests, as Annex I

countries seek to meet their emission

limits. Box 2 describes forest and

land-use projects funded and designed

to reduce or sequester carbon. These

carbon offset projects provide examples

of actual Activities Implemented

Jointly (AIJ) pilot projects and as

such offer possible examples of the

kinds of activities that might be

allowed under the Clean Development

Mechanism (CDM).

If the Protocol creates incentives

to conserve and better manage forests

in both developed and developing

countries, tremendous climate and

biodiversity benefits could be realized.

However, a great deal of work remains

to ensure that including forests and

land-use change more fully within

the Protocol results in credible

greenhouse gas reductions.

UNRESOLVED ISSUES THAT

IMPEDE CAPTURING

CLIMATE AND BIODIVERSITY

BENEFITS

By not fully counting emissions and

removals from forest management

and by not defining deforestation,

the Protocol has not yet seized the

opportunity to provide incentives to

improve forest management and

possibly slow forest loss in developed

countries. These omissions could lead

to large uncounted emissions from

Annex I nations that continue to

deforest, or from countries with poor

forest management policies. The

Parties to the Convention will also

decide whether forest and land-use

change projects are eligible under the

Clean Development Mechanism

(CDM). In particular, decisions on

project eligibility and guidelines will

determine whether the CDM can

provide assistance to slow deforesta-

tion, contribute to sustainable devel-

opment, and reduce greenhouse gas

emissions and biodiversity loss in

developing countries. As the Parties

decide how to incorporate forests and

land-use change into the Protocol,

they should seek greater collaboration

with other international agreements,

particularly the two that emerged from

the Rio Faith Summit-the Convention on

Biological Diversity and the Convention

to Combat Desertification—with the

purpose of ensuring that they neither

contradict each other nor miss key

overlaps." (See Box 4.) If the

opportunities to link actions to slow

climate change with halting biodi-

versity loss and desertification are to

be realized, the issues associated with

fully accounting for emissions and

reductions from forests and land-use

change must be understood and

addressed.

Plant Biodiversity and Carbon Sequestration

PLANT BIODIVERSITY RANK

1

2

3

4

5

6

7

8

9

10

COUNTRY

Brazil

Colombia

Indonesia

Venezuela

Peru

Ecuador

Bolivia

Mexico

Malaysia

Papua New Guinea

CARBON RANK

1

8

2

16

15

19

Unranked

6

5

10


• • • •<?

This paper examines the reasonswhy the above-described issues existand how they may be overcome.The concerns relating to land-usechange, forests, and global warmingaddressed in this paper fall into twobroad categories: a) Annex I national-level inventories and actions toreduce greenhouse gas emissions,which relate only to countries thathave accepted greenhouse gas limits,thus far limited to industrializedcountries; and b) project-level esti-mates of net greenhouse gas reduc-tions (the Clean DevelopmentMechanism and project-based credittrading), which may relate to eitherindustrialized or developing countries.

The next four sections willaddress each of the main issues, asfollows:• Generic Issues Associated withForests and Land-Use Change inthe Kyoto Protocol. These encom-pass national inventories and pro-ject-level accounting and arerelevant to both Annex I and non-Annex I countries.

• TIK Treatment of Forests andLand-Use Change in IndustrializedCountries. This examines issuesrelated to national inventories ofemissions and sequestration fromland-use change and forests andbriefly covers project-based creditand emissions trading.• UK Role of Forests and Land-UseChange in Developing Countries.This focuses on the Clean DevelopmentMechanism as the primary meansto influence emissions from devel-oping countries under the Protocol.

• Technical Concents Associatedwith Measuring and VerifyingForest and Land-Use ChangeEmissions and Reductions. Theserelate primarily to project-level emis-sions and reductions under project-based credit trading and the CleanDevelopment Mechanism, asidefrom measurement accuracy, whichalso applies to national inventories.

MAXIMIZING SYNERGIES BETWEEN INTERNATIONAL AGREEMENTS

The four agreements emergingfrom the Rio Earth Summit-theConvention on Biological Diversity,the Framework Convention onClimate Change, the Conventionto Combat Desertification, and theForest Principles-call for policies,strategies, and solutions to mitigatethe effects of climate change, bio-diversity loss, desertification, andforest degradation and conversion,respectively. In particular, eachdocument calls on countries tointegrate these four objectives intonational and regional developmentplans, policies, programs, andstrategies. Coordinating policies andstrategies between the Conventionsand other international forest agree-ments will both enhance their

impact and avoid actions on thepart of one that contradict theobjectives of another.

A number of internationalinitiatives relating to forests havebeen launched, including theIntergovernmental Forum on Forests.The Forest Principles suggestprinciples and actions but do notprovide guidance on issues. TheIntergovernmental Forum onForests is a continuation of theIntergovernmental Panel onForests, established by theCommission on SustainableDevelopment to provide guidanceon improving national forest poli-cies, international coordination, cri-teria and indicators for sustainableforest management, and assessing

the environmental implications offorest product harvest.

Synergies among the agree-ments clearly exist and should befully exploited. For example, findingavenues to slow the loss of forestsin areas that are high in biodiver-sity and are large carbon storehouses(in the Congo Basin and theAmazon) should be explored.Rehabilitating degraded range-lands and planting windbreaksboth increases carbon storage andreverses desertification. Arid landsin developing countries may presenta significant opportunity for carbonsequestration, since there are largeareas requiring restoration. Eventhough arid areas sequester lesscarbon than some other land types.

such as moist forests, such projectsare still often more cost-effectivethan similar efforts in Europe orthe United States, where hind andlabor are relatively more expensive.Similarly, replacing fuel sourcesin economies in transition canreduce the acid precipitation thatdamages and kills forests in Centraland Eastern Europe, among otherregions, while reducing greenhousegas emissions (1).

Note: 1. World Resources Institute, in

collaboration with the United Nations

Environment Programme, the (nited

Nations Itaelopment Programme, and the

World Bank. World Resources. A Guide to

thedhibtdEnvironment 1996-97 (New

York: Oxford Umversih Press, 1996).


GENERIC ISSUES ASSOCIATED WITH FORESTS AND LAND-USE CHANGEIN THE KYOTO PROTOCOL

T his section describes theways in which forest andland-use change climate

mitigation efforts may have unin-tended negative consequences,including failure to sequester theestimated amount of greenhousegases, thus diluting the Protocol'seffectiveness in slowing globalwarming, or misuse that results innegative social or environmentalimpacts.

FORESTS AS A

DISTRACTION FROM

REDUCING ENERGY-

RELATED EMISSIONS

For many national governmentsand environmental organizations,climate change is solely an energyissue, so they do not want the focusof the negotiations to shift from fos-sil fuel emissions to forest-sectoremissions. They fear that if Annex Icountries have broad latitude to uti-lize forests and land-use activities tomeet their commitments, eitherdomestically or through marketmechanisms, then these nationscan avoid making difficult changesin their fossil fuel consumption pat-terns by investing in relativelycheap projects to maintain rain-forests in tropical countries, or byundertaking massive tree plantingschemes domestically. If this provesto be the case, the Protocol's abilityto induce the development of newclimate-friendly technology in theindustrial sector would be diminished.

How much of a difference canland-use change and forest projectsmake? A significant amount, buthardly enough to allow nations tocompletely bypass the industrialsector. By 2050, land-use and forestoptions from all regions, includingtemperate and boreal, could reduceor sequester about 12-15 percent ofcumulative fossil fuel emissionsover the same period.20 In theUnited States, domestic forestoptions could remove or conserveabout 16 percent of the neededreductions over the commitmentperiod.21 Thus, the United Statescannot rely solely on its domesticforest and land-use sector. Given thephysical limits, the concern thatforest and land-use projects will dis-tract developed nations from thegoal of reducing industrial fossilfuel use seems overstated.

While land-use change andforests may play a relatively smallpart in the solution to global warm-ing, they are a part of the problem.During the initial period of eco-nomic development in Europe andNorth America, land-use changeresulted in large releases of carbondioxide.22 Deforestation in tropical

countries has contributed an esti-mated 23 percent of average annualglobal emissions of carbon dioxide.23

Further, the buildup of carbon diox-ide emissions in the atmosphereduring the 1980's from land-usechange and deforestation accountsfor nearly 20 percent of the human-caused "radiative forcing" of green-house gases, an amount greater thanthat for nitrous oxide at 6 percentand about equal to methane at 19percent.24 (See Figure 1.) Radiativeforcing describes a change in theenergy balance of the Earth'satmospheric system in response toalterations, such as a change in theconcentration of greenhouse gases.This energy balance controls theEarth's climate system.

The buildup of greenhousegases in the atmosphere that causesclimate change is primarily due tofossil fuel use; therefore, climatechange can be avoided only byseeking changes in the world's useof fossil fuels. However, in tandemwith, and in some cases prior to,these changes, emission reductionsfrom other sectors, such as agricul-ture and manufacturing, thatrelease the other greenhouse gasesare also necessary, in order to avoidor slow climate change. Amongother sources of greenhouse gases,forest and land-use change is mostin danger of exclusion, despite thefact that it bears such a large his-torical, current, and future respon-sibility for emissions, and one thatoffers such important additionalbenefits to climate.

Greenhouse Gas Share of Radiative Forcing

1 0 %HalogenatedCompounds 2 0 %

C02 Deforestation& Land-Use Change

4 5 %CO, Industrial Processes


FOREST OPTIONS COULD

BECOME A LOOPHOLE

Forest options could become a loop-hole if, under the two project-basedmechanisms, governments or otherentities try to claim "credit" foractivities they would have doneanyway, regardless of the Protocol.Moreover, this issue is not confined toforest and land-use change projectsbut can also afflict energy-sectorprojects under the market mecha-nisms, where a recipient governmentor other agency claims an incorrect"reference" scenario (that is, thelikely course of future developmentin an area if projects were notimplemented).

For example, a country mayclaim that an area of forest wouldhave been converted to agriculturaluse, although it is in fact not indanger of being converted. Climatemitigation funds would be used toprotect the area, and an investorwould gain unearned greenhousegas reduction credits. Similarly, inthe energy sector, a recipient coun-try may gain funds to switch anelectrical power station from high-emission coal to low-emission nat-ural gas, but the municipality mayhave already been planning such afuel switch. In both sectors, theCDM and project-based credit trad-ing must establish guidelinesrequiring proof of prevailing man-agement practices, trends, and legalrequirements, all of which must besurpassed if the project is to claimcredit.

THE POSSIBILITY OF NEGATIVE

ENVIRONMENTAL IMPACTS

Some environmental groups areconcerned that including forestsand land-use change more fully inthe Protocol will lead to someinterpretations of its terms thatresult in negative environmentalimpacts for both market mechanismsand domestic reduction efforts.25

One prominent concern is thatgovernments and forest productscompanies will attempt to claim

reduction credits from the conversionof natural forests to fast-growingplantations. This concern stems fromthe common misconception that arapid harvest and tree planting regimemaximizes carbon removal.26

Mature forests have often beenaccumulating carbon for centuriesand store tremendous amountsrelative to young, growing forests.27

Further, new evidence is emerging thatmature tropical forests continue tosequester small amounts of carbon,

rather than becoming "overmature"and releasing carbon, as waspreviously thought28 Compared withforest conservation, tree planting isa less efficient carbon storagemethod, in terms both of cost perton and tons per hectare.29 (SeeFigure 2.) The carbon stored in thefour plantation and afforestationsites includes both carbon stored inliving biomass and wood productsafter 300 years10

Comparison of Potential Biomass

Industrial Poplar Plantation

EUROPE

Afforestation of Tropical Wasteland

BORNEO

Industrial Slash Pine Plantation

BRAZIL

Industrial Black Locust Plantation

EUROPE

Mature Primary Moist Forest

CAMEROON

Mature Closed Forest

SABAH. MALAYSIA

Mature Douglas Fir

NORTHWESTERN UNITED STATES

137

611

200 300 400 500

TONS OF CARBON PER HECTARE

Sources: Mark K. Harmon. William K. Ferrell, and Jen)' F. Franklin. "Kffects on Carbon Storage of Conversion of Old-Growth Forests to YoungForests." Science 247 (1990): 699. Francis E. Putz and Michelle Pinard. "Reduced Impact Logging as a Carbon Offset Method." ConservationBiology 7, no. 4 (December 1993): 755-57. Sandra Brown. Andrew J. R. Gillespie, and Mel E. Lugo. "Biomass Estimation Methods for TropicalForests with Applications to Forest Inventor;' Data." Forest Science 35, no. 4 (December 1989): 895.

WORLD RESOURCES INSTITUTE 10 FOREST FRONTIERS INITIATIVE

The market-based mechanismsand Annex I countries must incor-porate guidelines that preventgreenhouse gas reduction creditsfrom accruing at the expense ofnegative overall environmentalimpacts, even if the net result ispositive for climate change. Forexample, converting open woodlandor grassland to tree plantations may,in some cases, increase net carbonsequestered, but such a strategywould destroy a natural ecosystem.

Social and environmentalcriteria could serve as screens forprojects under the mechanisms.Many public institutions involvinginternational trade and investmentregimes employ such environmentalscreens, with varying degrees ofsuccess. The Protocol also explicitlystates that the Clean DevelopmentMechanism must contribute tosustainable development, which, ifdefined appropriately, would requirethe screening of projects for negativesocial and environmental impacts,including biodiversity.

THE QUESTION OF

PROPERTY RIGHTS

If the market mechanisms introducenew financing for forest and land-useprojects, competition for control overforest resources may intensify asvarious users try to gain access to thenew financial flows. These factorsmake it especially important thatprojects be screened and designedwith potential social impacts inmind, so that their design andnegotiation involve not only stategovernments or private entities butalso local users. In many cases itwill not be sufficient to contractwith the host government entitiesfor projects; it may also be necessaryor preferable to negotiate and/orcontract directly with local andindigenous users of the project area.From the Dayaks in Sarawak,Malaysia, to the Kyuquot People inVancouver Island, Canada,31

property and usage rights for forestresources are unclear or contestedbetween the state and local or forestdwelling communities; this makessocial screens an important part ofboth the CDM and the project-basedcredit trading regime.32 Also, insome regions the state lacks the

ability to enforce its ownershiprights, leading to an "open access"situation in which many differentusers rely on forest resources with-out legally recognized rights.Projects should be screened toensure that property and usagerights and the needs of local usersare taken into account.

THREATS TO NATIONAL

SOVEREIGNTY

In part because the Protocol is aninternational legal agreement, bothAnnex I and non-Annex I countrieshave expressed concerns about thepotential threat to national sover-eignty. If Annex I countries ratifythe Protocol, they will have toinventory and report emissions and belegally bound to meet their greenhousegas limits; thus, some internationaloversight will be required. Whilethe FCCC commits all Parties toimplement programs that mitigateclimate change, such as those thatpromote the sustainable manage-ment and conservation of forests.Annex I countries have resistedlisting specific policies, such as car-bon taxes, due to sovereignty andother concerns.

Similarly, some developingcountries note that forest and land-use projects under the CDM maythreaten national sovereignty. Thisconcern stems from the perceptionthat forest and land-use projectsunder the CDM, such as forestconservation activities, could precludeusing that forest for other purposes,thus slowing development. However,this problem can be avoided ifprojects contain a strong social andcommunity component that furthersnational development priorities.Moreover, Article 12 specifies thatparticipation in the CDM is voluntaryand must be approved by each Parryinvolved, including both investorand host countries.

W O R L D R E S O U R C E S I N S T I T U T E 11 F O R E S T F R O N T I E R S I N I T I A T I V E

THE TREATMENT OF FORESTS AND LAND-USE CHANGE ININDUSTRIALIZED COUNTRIES

T his section focuses on thecurrent Protocol provisionsregarding which forest and

land-use change activities must beinventoried by industrialized countries,the methods that may be used toquantify them, and the potential roleof such activities under emissions andproject-based credit trading. Becausemany rules and guidelines are not setbut will be finalized in laterConferences, this section can onlydescribe the current status, optionsavailable to delegates, and possibleimplications of the decisions.

To assist delegates in finalizingthe rules related to land-use changeand forests, the Subsidiary Body forScientific and Technical Advice to theFCCC asked the IPCC to prepare aSpecial Report on key forest andland-use change issues, to be complet-ed by mid-2000. The Special Reportwill investigate defining terms inArticle 3-3, which, if any, emissionsfrom additional land-use activitiesshould be inventoried by Annex Icountries, and issues related to project-level accounting under the marketmechanisms. If forest, biodiversity, anddevelopment experts participate in theIPCC Special Report process and otherfora, they may contribute to the decision-making process relating to land-usechange and forest trends by suggestinghow, where, and whether they can beinfluenced for the betterment of bothclimate and biodiversity.

CURRENT PROTOCOL

RULES FOR DOMESTIC

INVENTORIES OF

GREENHOUSE GAS

EMISSIONS FROM FORESTS

AND LAND-USE CHANGE

A clear interpretation of the KyotoProtocol rules is difficult becausemany decisions remain to be finalizedby later Conferences of the Parties.Three time periods are relevant tothe role of forests and land-usechange in estimating the domesticinventories of Annex I countries: the1990 base year, the complianceperiod (2008-2012), and the inter-im period (1990- 2008).

THE 1990 BASE YEAR

Annex I countries adopted greenhousegas limits during the 2008-2012commitment period based on a per-centage of their emissions in 1990.Therefore, a higher amount ofemissions during the base yearmakes it easier to meet their com-mitments. For example, Japanagreed to a 6 percent reduction andthus its emissions during 2008-2012must be 94 percent of 1990 emis-sions; therefore, the larger the 1990emissions, the more that may beemitted during the commitmentperiod.

In their national communica-tions to the FCCC, most Annex Icountries reported land-use changeand forest sector as being a net sinkfor greenhouse gases (removalswere greater than emissions).Therefore, it benefited most nationsto exclude the land-use change andforest sector from their 1990 base-lines because, if included, net 1990emissions would be lower. As aresult, forest and land-use changenet emissions are only counted inthe 1990 base year if they were a netsource (emissions were greater thanremovals) in that year. If the land-use and forest sector was a net sink,countries may exclude it from theirbase year calculations. This con-struct allows Annex I countries toinclude net land-use change andforest-sector emissions only if itincreases their base year emissions,but not if it decreases them.Australia and Estonia were the onlytwo countries for whom the forestand land-use sector constituted anet source. Australia particularlybenefited from including forest andland-use change emissions, as itsignificantly raised its 1990 emissionlevel. (SeeBox5.)

Interestingly, the Protocol con-tains an asymmetry between what isinventoried in 1990 and in thecommitment period. The Protocoldoes not specify any restrictions onthe forest and land-use activitiesinventoried in 1990. Countriesincluded a wide variety of activitiesin their national communications,such as forest conversion, managedforests, and sequestration inpeatland.

While most Annex I countriesdo not include emissions or seques-tration from the land-use changeand forest sector in 1990 becausethey were a net source, the base yearinventories will be important for thecommitment period. During thecommitment period, Annex I coun-tries must inventory emissions andsequestrations from afforestation,reforestation, and deforestation dueto direct human activity since 1990.Therefore, to determine whetherafforestation, deforestation, or refor-estation has taken place since 1990,Annex I countries must determinewhat forests were present in 1990.Annex I countries will require asnapshot of the landscape in 1990 toestablish what has changed during2008-2012. Many countries havenot yet reported adequate 1990 data.Canada, for example, has not yetreported emissions or sequestrationfrom its forest and land-use sector.

During the Kyoto negotiations,Australia was granted two conces-sions that provide an example ofhow the Protocol may fail to inducechanges in resource use. First,Australia may increase emissionsby 8 percent. Second, includingland-use change and forest-sectoremissions in the base year primarilybenefits Australia, only one of twocountries that reported net emissions

THE CASEfrom their forests and land-useconversion in the 1990 base year.Forest and land-use-sector emissionsincrease Australia's 1990 base yearreleases by about 24 percent (1).Such a large base year increase willlighten Australia's burden duringthe commitment period, thusdecreasing incentives to slow orhalt deforestation and industrialemissions.

OF AUSTRALIAThe Protocol provides little, if

any, incentive for Australia to beginvaluing its natural resources formore than the agricultural landbeneath them. A more restrictivecommitment might have promptedAustralia to rethink land clearingpolicies or coal use. Further, theProtocol's emphasis on tree plantingdoes little to encourage morebenign, integrated land-use policies.

The current approach encouragesless-efficient carbon gains fromtree planting rather than nativeforest protection.

N o t e : 1. Global Environmental ChangeReport. "A Brief Analysis of the KyotoProtocol," mGbbal Environmental ChangeReport IX, no. 24 (December 24,1997).


THE 2008-2012COMMITMENT PERIODArticle 33 of the Protocol requiresAnnex I countries to inventoryafforestation, reforestation, anddeforestation that have occurredsince 1990, but the emissions andremovals from these activities areonly measured during the 5-yearcommitment period between 2008-2012. Article 3.4 then instructs theConference of the Parties, withguidance from the advisory bodies,33

to decide how and whether Annex Icountries must inventory emissionsand sequestration from additionalactivities, such as forest manage-ment or agricultural practices.

A significant barrier to bring-ing in additional forest and land-use change activities-even if provento be quantifiable and a significantgreenhouse gas source-is theuncertain impact on Annex I tar-gets. Each Annex I country negoti-ated its limitation target based on arough understanding of how thetarget would be reached. As certaingases or flexibility mechanismswere or were not included in theProtocol during negotiations. AnnexI nations would adjust the acceptedlimitation target accordingly. Eachnegotiated item impacted these tar-gets either higher or lower. Forexample, the United States wouldprobably not have agreed to a 7 per-cent reduction target if "flexibilitymechanisms" such as the CDM andemissions trading had not beenincorporated into the Protocol.

As previously mentioned, nationalcommunications were not compre-hensive regarding forest and land-use emissions, nor were they submittedby all Annex I countries. As a result,it was difficult for negotiators toincorporate into targets the positive ornegative impact of including emis-sions or sequestration from forestsand land-use change, and how theymight change through time.

Incorporating additional activitiesin the first commitment period willbe even more difficult than theoriginal negotiations, since Annex Icountries are now unable to adjusttheir agreed-upon targets.

THE T 990-2008 INTERIMPERIODAs negotiators decide what activitiesshould be counted during the com-mitment period, they will need to becognizant of the potential impact ofthese decisions on actions takenduring the interim period. Forexample, the Protocol may create anincentive to clear land during theinterim 1990-2008 period, whenemissions are not inventoried, laterallowing them to gain carbon creditfor replanting trees and inventoryingtheir carbon uptake during the com-mitment period. This could occurbecause emissions from deforesta-tion may be counted only duringthe 2008-2012 commitment period,but not during the period from1990 to 2008. One way to avoidcreating this incentive would be fornegotiators to agree that creditshould be given for reforestation orafforestation only if the area con-tained no forest in 1990.34 If land wasforested in 1990 and is not in 2012,then greenhouse gas emissionsfrom deforestation should be report-ed and counted as a liability againstcompliance, unless a natural distur-bance caused the conversion.

INTERGOVERNMENTAL

PANEL ON CLIMATE

CHANGE GUIDELINES FOR

DOMESTIC INVENTORIES

OF GREENHOUSE GAS

EMISSIONS FROM FORESTS

AND LAND-USE CHANGE

The Protocol and the IPCCGuidelines for national greenhousegas emissions inventories are incon-sistent in some respects. The IPCCrecommends inventorying emis-sions and sequestration under threebroad categories of land-use changeand forest management. These cat-egories contain activities, such aslogging and sequestration from nat-ural regeneration, that are not listedunder the Kyoto Protocol, whichonly requires inventorying afforesta-tion, reforestation, and deforesta-tion. The IPCC's Guidelines forNational Greenhouse GasInventories35 recommends track-ing emissions and sequestrationfrom the following categories:

Changes in forest and otherwoody biomass stock: These arecarbon fluxes within a forest due tologging or fuelwood gathering,among other possible managementpractices.

Forest and grassland conversion:This involves emissions resultingfrom converting forest or grasslandto other land uses, such as croplandor pasture.

Abandonment of managed lands:This is sequestration due to theabandonment of previously managedlands, so that they are "regrowingtowards a natural state."

Part of the reason why negotia-tors of the Protocol delineated sucha limited set of activities may bethat while the IPCC workbook pro-vided guidelines for inventoryingemissions and sequestration from abroad range of activities, manycountries did not provide their data.This lack of data hampered thenegotiators in assessing how andwhether to include a wide spectrumof forests and land-use changeactivities. Further, Parties reportingnational communications notedproblems with data generation andmethodological issues. SeveralAnnex I countries requested furtherscientific work to determine theappropriate methods for estimatingemissions and sequestration fromforests and land-use change36 Tocorrect this lack of data and deter-mine the importance of emissionsand sequestration from forest andland-use change, Annex I countriesshould begin to systematically col-lect information on changes inthese activities.

DEFINING AND TRACKING

DEFORESTATION

Each activity required to be invento-ried will need to be precisely andcarefully defined, as Annex I coun-tries will use these legal definitionsto estimate their greenhouse gasemissions. Afforestation is definedas tree planting on lands that his-torically have not contained forests;reforestation is tree planting onlands that have historically con-tained forests, but have been con-verted to some other use.Deforestation is thus far undefined,leaving this to a later Conference ofthe Parties or IPCC research.37


Individual countries have beenproposing definitions that may havelittle scientific basis. For example,one government proposed thatdeforestation has occurred only if astructure, such as a building or aroad, replaces the forest, arguingthat any other conversion, such asto agriculture, does not preclude theforest from growing back. Thisexample illustrates the importanceof constructing a careful definition;if defined too narrowly. Annex Icountries will not be required toreport emissions, thus creating aloophole.

A number of widely accepteddefinitions of deforestation exist.For example, the Food andAgriculture Organization (FAO)defines deforestation as a reductionof forest stand density to less than20 percent of its original cover.38

Yet another definition is the conver-sion of forest to "nonforest uses''and as such may be even more easi-ly monitored than the FAO defini-tion.39 Even though greenhousegas emissions from forest harvestingare not currently counted underProtocol rules, if human activitiesresult in deforestation or severedegradation and the area is notreplanted, then the activity shouldbe labeled as deforestation and theemissions inventoried. For exam-ple, logging in some areas such asslopes, high altitudes, and borealzones compromises a forest's abilityto regenerate. Harvest in these areasamounts to deforestation. TheConference of the Parties shouldseek advice from forest and biodi-versity experts in deciding whichdefinition to adopt.

WHAT IS LEFT

UNCOUNTED IN NATIONAL

INVENTORIES?

The Conference of the Parties willdecide what, if any; additional activ-ities should be inventoried, based onthe work of the advisor)' bodies.Clearly, some of these omitted activ-ities have a large impact on globalgreenhouse gas emissions. This sec-tion discusses activities not current-ly included under the Protocol andexamines possible missed opportu-nities and risks of each.

FOREST HARVEST ANDMANAGEMENT

The Protocol does not requireinventories of emissions and seques-tration in forests managed for woodharvest. Harvested forests may becarbon-neutral, if biomass regrowthbalances biomass removal, butsome harvest regimes may result innet emissions. Studies to date haveshown mixed results. One studyestimated that uptake of carbonfrom regrowth and storage in woodproducts (this is discussed below)was greater than emissions fromharvest and product decay inCanada and New Zealand.40

However, studies using nationalinventories mask important differ-ences in forest types and manage-ment regimes. While the forestsector as a whole in the UnitedStates may be a net sink, one analy-sis shows that converting old-growth forests to younger forestsresults in net emissions of carbon.4'If the Parties decide to requireinventories of emissions and reduc-tions from managed forests, agreater understanding of net green-house gas flows due to various har-vest and management systems willbe needed.

Because of the size of the forestproducts industry in Canada, theUnited States, and Scandinaviancountries in particular, changes inforest management, (e.g. longerrotation times) may offer signifi-cant reductions in greenhouse gasemissions. Instituting sustainableforest management or reducedimpact logging improves carbonstorage, reduces the risk of fire, andoffers environmental benefits suchas diminished erosion and improvedwildlife habitat42

Many, though not all, non-governmental organizations opposerequiring inventories of emissionsand sequestration from forestmanagement activities. They fearthat the carbon fluxes are toodifficult to estimate because theyinvolve periodic losses and uptakeof carbon. Some also worry that ifforest management is inventoried,then large reductions will beclaimed from replanted harvestsites, thus reducing the Protocol'sability to change developed countries'fossil fuel consumption.

However, at least an equal dangeris that excluding forest harvest andmanagement from Annex Iinventories will result in uncountedgreenhouse gas emissions and missan opportunity to create incentivesfor improved forest management. Ifforest harvest and management areincluded, the Kyoto Protocol couldcreate an incentive to manage formore mature, potentially morebiologically diverse forests thatgenerally store more carbon thanyounger forests.43 Also, not countingemissions from forest harvest andmanagement may create a loopholefor Annex I countries, depending onhow deforestation is defined.

Measuring and trackingchanges within a forest stand arealso technically feasible. Inventorymethods for stand density andbiomass have been developed.44

Furthermore, new applications ofglobal positioning systems, surveydata, and remote sensing will aid inperforming the required inventories,as they may more accuratelymeasure forest biomass, rather thansimply forest cover.

FOREST DEGRADATION

Because some forest managementsystems are neutral with respect to netgreenhouse gas fluxes, the Partiesmay instead choose to requireinventories of degradation, ratherthan all management systems.Degradation could be defined as theloss of biomass within a forest. Causesof degradation may include conver-sion of primary forests to secondary,or unsustainable harvesting ofmanaged forests, pollution, or grazing.As previously discussed in this paperand elsewhere, and illustrated inFigure 2, converting primary foreststo secondary forests can be a signifi-cant source of carbon emissionsand biodiversity loss. **

Air pollution is a major causeof degradation in Annex I countries;it is estimated to have contributed tothe loss of at least 100,000 hectares offorests in Central and Eastern Europeover the last 20 years. *" However, thequestion is whether degradation frompollutants would be inventoriedbecause the Protocol stipulatesmeasuring emissions and removalsfrom direct human activities. Whatconstitutes a direct human activityhas yet to be defined. While thegreenhouse gas implications ofdegradation from pollution may notbe inventoried, it does offer an exam-ple of further connections betweenglobal warming and biodiversity loss.


Sulfur dioxide emissions from coal-fired power plants are killing forestsin Eastern Europe and acidifyingsoil so that regeneration is difficultor impossible. Acid-rain-damagedforests bum or die and decay, exac-erbating these countries' green-house gas emissions and resultingin biodiversity loss. Convertingpower plants from coal to gas elimi-nates these sulfur dioxide emissions,thus decreasing acid precipitationand benefiting forests, in addition tooffering human health benefits.

Incorporating forest degradationinto the inventoried activities couldpotentially be accomplished by asufficiently broad definition ofdeforestation.

STORAGE IN WOOD

PRODUCTS

The IPCC workbook recommendsthe default assumption that all car-bon in harvested biomass is releasedin the harvest year rather thanstored or released over time. Thisassumption is clearly inaccurate,and studies have begun to exploreinventory methods. These samestudies suggest that the carbonstored in wood products is signifi-cant enough to warrant inclusionin national inventories.47 However,important questions remain to beresolved such as how to account fordecay over time and who is liablefor emissions from products that aretraded internationally

There is also demonstratedinterest in storing carbon in woodproducts as a greenhouse gas mitiga-tion strategy.48 {SeeBox 6.) Becausewood products are the result of agreenhouse gas emittingactivity-logging-more research isneeded to differentiate between typesof forests and management strategiesto determine those that are a net sink,net source, or in balance over thelong term. A review of studies showsa mixed result. For example in Russia,it is estimated that 33 teragrams (Tg)of carbon per year are stored in woodproducts, while 115 Tg are releasedfrom logging49

As methods are improved andstandardized, it may be prudent toinventor}1 carbon in wood products,but, as was stated previously, the netcarbon flux of the entire managementsystem, from harvest to product,should be taken into account whendevising emission reduction strategies.

Box 6 describes a U.S. proposalto increase logging intensity as acarbon sequestration strategy, despitethe negative climatic and ecologicalconsequences. Storage in woodproducts can be a useful climatemitigation strategy, particularly ifefforts are undertaken to increasemilling or logging efficiency byreducing wood waste, or undercertain management regimes.

A U.S. PROPOSAL — CUTTING DOWN TREES TO SAVE CARBON

The U.S. House of Representativesrecently passed a nonbindingmeasure to manage nationalforests to reduce greenhouse gases(1). The measure notes that CChmay be kept out of the atmosphere"by harvesting the forest before itbegins to decompose or burn, thusstoring the carbon in wood products.''But this strategy is inconsistentwith climate mitigation and otherenvironmental goals. As noted inthe text, a rapid harvest and treeplanting regime is not a cost-effective carbon storage method,nor will it result in large amountsof sequestered carbon. Preventing

harvest of primary forests or estab-lishing a management regime thatmaintains older forests is more cost-effective, even when carbon inwood products from the increasedharvests is included (2).

Ecologically, it is unwise toencourage converting older foreststo young, even-aged stands, as themeasure implies. Even-agedmonoculture forests are less bio-logically diverse than older, uneven-aged, multispecies stands, so thismeasure would negatively impactbiodiversity. Increased logging andtree planting for harvests onnational forests is a losing

strategy for both climate andbiodiversity.

Unlike the IPCC InventoryGuidelines, the Kyoto Protocoldoes not require inventoryingemissions and reductions fromforest management; thus the strate-gies outlined in the House measurewould not impact emissions mea-sured under the current rules. Itdoes, however, illustrate the dan-gers of inventorying a wider groupof land-use change and forestactivities but not fully accountingfor their emissions, only theirsequestration.

Notes: l. House of Representatives

1997. House Resolution 151 Regarding

Management of National Forests to Reduce

Greenhouse Gases. October 21

2. Mark E Harmon, \\ llliam k Ferrell.

and Jem E Franklin "Effects on Carbon

Storage of Comersion of O'd-Grovrth

Forest to \oung Forests." Science 2-C

Robert N Stauns "Hie Costs of

Carbon Sequestration. A Re\ealed

Preference Approach" CSIA Discussion

Paper 95-06 I Kenneth School of

Government, Harvard I mversin, 19951


FOREST FIRESForest fires are a massive source ofuncounted greenhouse gas emissions,yet even those caused by humanactivities are not inventoried undercurrent Protocol rules. In fact, ifhuman-caused fires were invento-ried, some countries' forest sectors,such as Russia's, might move frombeing a net sink to a net source.One study estimated that forest firesin Russia emit an estimated f 37million tons of carbon annually butdid not distinguish between anthro-pogenic and non-anthropogenicfires.50 It does note that forestsstressed by pollutants, pests, anddiseases are more fire-prone.

Despite the importance ofemissions from forest fires, it maybe difficult to determine whether afire was the direct result of humanactivities. However, excluding firesfrom national inventories may opena loophole for Annex I countries, asthe fire would not register as anemission, but reforesting the areawould result in a credit for green-house gas removals.

Including wildfire may also beecologically unwise, since much recentresearch suggests that fire is often partof a healthy disturbance regime.Carbon sequestration should notoverride natural ecosystem patterns.

SOIL CARBONThe Protocol does not require thatcarbon fluxes from soil due to land-use change be inventoried. This isproblematic, as it is estimated thatat least 75 percent of terrestrial car-bon is stored in the soil and itsorganic layer as opposed to the veg-etation, much of it being stored innonforest ecosystems such as peat-lands.51 The percentage is higher inboreal forest soils, which hold about84 percent of the total carbon. Somequestion whether soil carbon can beaccurately measured and thus resistincluding carbon fluxes in nationalinventories. However, given themagnitude of carbon stored in soil, ifstandardized measurement tech-niques can be developed, as somesuggest, then soil carbon could bean important piece of the puzzle.52

METHODS FOR INCLUDINGADDITIONAL ACTIVITIESUNDER DOMESTICINVENTORIESIt appears that the Protocol negotiatorsattempted to resolve technical issuesassociated with forest and land-usechange by allowing only threeactivities-afforestation, reforesta-tion, and deforestation—rather thanattempting to address them. As theadvisory bodies weigh whether toinclude additional activities, theyshould consider the magnitude ofthe potential impact on greenhousegas emissions or removals and thedegree of scientific uncertainty inquantifying emissions. For exam-ple, given the potential greenhousegas emissions from forest harvestand management and the availabletools for inventories, the advisorybodies should consider requiringinventories of emissions from theseand other activities.

One option that would enableParties to explore the efficacy ofinventorying additional activitieswould be to use z project-basedgreenhouse gas accounting systemin the first commitment period.This would allow the Parties todetermine what methods can beused to inventory emissions andwhat management practices andpolicies can reduce them. If theactivities are found to be significant,they could be phased in during thefirst commitment period withoutdistorting agreed-upon targets.

A project-based approach forcurrently excluded activities wouldresemble project-based credit trad-ing, but function domestically.Emission reductions beyond a busi-ness as usual, or reference, case(such as from improving harvestpractices) would count towards thelimitation targets. The referencecases should be established bydeveloping a minimum set of per-formance standards whereby onlyimprovements over this minimumwould be credited. For example,existing regulations for forest har-vest in a given region could berequired to be surpassed for crediting.One area may require 100-meterbuffer zones along riparian areas,but the landowner creates a 200-meter buffer. Only the carbon storedon the additional 100-meter buffercould be registered as an emissionreduction.

Under a project-based approach,sequestration under the referencescenario is subtracted; this meansthat only the incremental increasein sequestration or reduction inemissions is counted. Subtractingthe carbon stored under the refer-ence scenario ensures that the activ-ity increases net carbon sequestered,since an activity that results in anannual uptake of carbon may notrepresent the optimal option comparedwith alternate activities. Figure 3illustrates a proposed carbon miti-gation project involving improvedforest management. The referencescenario shows a positive annualuptake of carbon. However, bettermanagement brings an improve-ment from the reference case.


Using a project-based approachin conjunction with minimum per-formance standards would accom-plish the following:• Allow time to develop standard-ized methods for inventories andidentify best management practices aslater Conferences of the Partiesdecide whether to include additionalactivities.• Limit the amount of greenhousegas reductions claimed to only netimprovements from a minimumreference case, based on minimumperformance standards, thus reducingthe danger that forests and land-usestrategies would dominate reductionefforts.• Ensure reporting rigor in esti-mating greenhouse gas reductionsfrom project-level forest and land-use change activities, thus decreas-ing uncertainly in greenhouse gasreduction estimates. Such an approachwould also require that reductionpolicies and strategies result in netclimate benefits, thus possibly avoidingincentives to move to short rotationperiods with young stands, which isnot an efficient means to sequestercarbon and does not yield the highestbiodiversity benefits. {See Box 6.)

If "credit" were given only forincremental improvement, thenincentives for increased environ-mental performance on public andprivate lands could be put in place.These new activities-such as manag-ing for older forests and sustainabletimber-generate increasedbiodiversity, climate, and watershedbenefits, among others.

THE TREATMENT OFFORESTS AND LAND-USECHANGE UNDER THEMARKET MECHANISMSFOR REDUCTIONSBETWEEN DEVELOPEDCOUNTRIES

The Protocol describes three distinctmarket mechanisms, two of which arereserved for Annex I parties-project-based credit trading and emissionstrading. It is unclear what types offorest and land-use change projectswill be eligible under any of thesemechanisms.

If Annex I countries sell green-house gas reductions through emis-sions or project-based credittrading, the seller nation mustexceed its emission reduction targetby at least the amount sold. Oneproject from the ActivitiesImplemented Jointly (AIJ) pilotphase illustrates how these twomechanisms may operate. TheUnited States and Russia are under-taking a reforestation project inRussia, RUSAFOR, and dividing theemission reductions evenly.

The project is estimated to sequesterapproximately 29,000 tons of car-bon over its lifetime, half of which,14,500 tons of carbon, will be trans-ferred to the United States fromRussia.53 In order to do so, Russia'semissions reductions must exceedits commitment by the amounttraded to the United States. Becauserules and guidelines are not yet inplace, it is unclear when Russiamust show that it has met its com-mitments, or what sanctions will bein place if the seller country fails tomeet its commitments.

PROJECT-BASED CREDITTRADINGAnnex I countries may transfer toother Annex I countries greenhousegas reductions resulting from projectsthat diminish, avoid, or sequestergreenhouse gas emissions (Article6). The FACE project in the CzechRepublic, described in Box 2, offersan example of a likely mitigationproject between Annex I countries.As with all of the market mecha-nisms, the rules have not beenfinalized, so it is not possible toknow what types of projects will beeligible. If forest and land-useactivities are eligible, they may bebound by decisions relating toArticle 3-3 limiting them toafforestation, reforestation, anddeforestation projects.

If the cost per ton of reductionsis high relative to emissions trading,the Clean Development Mechanism,or domestic reductions, then pro-ject-based credit trading may berarely used. But it could provide anew tool for slowing deforestationand encouraging restoration inAnnex I countries such as Russiaand Canada. The relative costs willbe determined largely by transac-tion costs and varying costs of landand labor in different countries.Because this mechanism is project-based, it should not necessarily bebound by the restrictions of Article3.3.

As described earlier, in order tosell reduction credits, the Annex Iseller must have exceeded its totalreduction commitments or kept itsemissions below the amount trans-ferred. A compliance mechanismwill be required to create an incen-tive for the "seller" Annex I countryto exceed its target by at least theamount of reductions it has sold. Ifat the end of the commitment peri-od the country has failed to exceedits target, then it may be subject tosanctions.


• • _ • • *

C2 i (i i\.,r

z2 48.52 M

„_ 43.89 M0(AZ 39-26 M

0h-

34.63 M

y

***

Improved Management

1 13 19 25 31 37

TIME (YEAR)

ReferenceActivities

With OffsetActivities

EMISSIONS TRADINGMany aspects of emissions trading(Article 17) remain to be defined,including structure, rules, andguidelines. An emissions tradingsystem is a complicated mechanismto create and monitor. There is verylimited experience with pollutiontrading on a global scale, thoughframeworks and issues have beenexplored. There are variations oftrading systems, but all start withbinding commitments within anoverall emission limit.

A target level of cumulativeemissions for a prescribed period oftime is developed and a definedgroup of trading members is estab-lished. Parties to the trading systemcan emit up to their limit or reduceemissions below their budget or capand bank the reductions for futureuse or sell them, Conversely, Partiesthat exceed their budget or limitsmay purchase emissionallowances.54

Depending on the system, groupmembers could be nations or privateentities from a greenhouse gas emit-ting sector, such as power producers.

As with project-based credittrading, another key element of anemissions trading system will be acompliance or liability mechanism;if a member of the trading groupsells or exceeds its emission limits, itmight be subject to some type ofsanctions and trading privilegescould be suspended.

The sulfur dioxide trading sys-tem in the United States is onefunctioning example of a tradingsystem, but it covers only one pollutantwithin a single regulator)7 system.However, the emissions trading systemthat emerges from the Kyoto Protocolmay build upon the monitoring,reporting, and verification successesof the sulfur dioxide trading system.

It is also likely that the green-house gas trading system under theProtocol would be developed incre-mentally, thus simplifying its imple-mentation. Some have suggestedcreating "umbrella groups'' ofcountries that comprise a tradinggroup. For example, New Zealand,Canada, and the Czech Republiccould form one group that estab-lishes a trading system for a limitednumber of gases, such as C02,under the expectation that as aneconomy in transition, the CzechRepublic may offer low-cost emis-sion reductions.

The role of forests and land-usechange under emissions trading willdepend upon the type of system andthe forest-related activity allowed bythe Conference of the Parties. Forexample, a member may generateadditional emission credits viareforestation and afforestation,which they may use or trade.

Forest harvest, which undersome management systems is a netsource, provides a second example.The timber industry could receiveemission allowances. If they alteredmanagement practices in ways thatreduced emissions below their allottedamounts, they could trade or savethem for later use. Credits could alsobe accrued for regrowth followingharvest, which could be used inlater harvests or traded.

Other schemes may also providea model for trading forest and land-use change reductions, especially inthe early phases of the system.Non-point-source water pollutiontrading systems, for example, dis-count for uncertainty and establisharea-specific management normsand minimum standards that mustbe surpassed to trade reductions.55

The incremental improvement andresulting pollution reductions maythen be traded.


& • • •

THE ROLE OF FORESTS AND LAND-USE CHANGE IN DEVELOPING COUNTRIES

T he FCCC commits allParties, both Annex I andnon-Annex I, to imple-

ment programs that mitigate cli-mate change. However, developingcountries are not bound by limitson greenhouse gas emissions underthe Kyoto Protocol. The FCCCdescribes these varying levels ofcommitments as "differentiatedresponsibilities."56 In general,non-Annex I countries have resistedadopting any limits until Annex Icountries demonstrate real emis-sions reductions themselves.

The CDM provides a significantopportunity in the Protocol to iden-tify and finance lower-emissiondevelopment paths in developingcountries. It is also the first mecha-nism to become operational underthe Protocol, possibly as early as2000; thus work on the institutionaland technical aspects of implementing,monitoring, and verifying projectsis a priority.

As with many other parts of theProtocol, the decisions relating tothe treatment of forests and land-usechange within the CDM have yet to befinalized. The current text of Article12 provides a skeletal outline of howthe CDM should operate, thus itsentire institutional structure remainsto be constructed. (See Box 7)

There is disagreement over theextent to which forest and land-usechange projects are allowed under theClean Development Mechanism, ifat all. Several countries claim that,because forests and land-use changeare not explicitly mentioned in theProtocol text on the CDM, they aretherefore not included. Others claimthat since there are no explicit limitsplaced on the CDM, any and allforest and land-use projects areeligible. The matter will have to bedecided by negotiators.

OUTSTANDING ISSUES FACING THE CLEAN DEVELOPMENT MECHANISM

Most aspects of the CDM remainto be decided; however, the Protocolcalls for a supervisory executiveboard to oversee it and for "oper-ating entities" that will certifyproject activities. Unlike thecurrent pilot phase, a share of theinvestments will cover administra-tive expenses for the executiveboard and operating entities, aswell as assist developing countriesparticularly vulnerable to theimpacts of climate change inmeeting the costs of adaptation(such as the small island states).Because actions under the CDMmay begin crediting in 2000, beforeany other mechanism, the urgencyof setting up a workable system isgreater than with emissions tradingor project-based credit trading.Some critical unanswered questionsare discussed here.

INSTITUTIONAL

• Who should serve on thesupervisory executive board, andwhat should be its main functions?Should the board include technicalexperts only, or should key stake-

holder representatives from non-governmental organizations,governments, and the private sectoralso be included? Some also haveproposed that the executive boardbe sited in an existing body, suchas the World Bank, while othersargue for an independent andnew institution.• Who may serve as a certifyingagency? The certification processwill be an important determinantof project credibility, as it will bearresponsibility for monitoring andverification of greenhouse gasreductions. Public agencies or amix of private and public entitiesmay be allowed to certify reductions.For example, SG8-Forestry, a for-profit firm, is monitoring CostaRica's Certifiable Tradable Offsets.• What should be the amountof the adaptation fee and admin-istrative expenses? The adminis-trative expenses will cover the costof running the institution, such ashousing and staffing the executiveboard. The adaptation fee was animportant piece of the CDM, ascountries strongly opposed to Joint

Implementation felt that theirneeds were being addressed.However, a trade-off clearly existsbetween creating a fund thatprovides needed adaptation fundsand increasing the costs of CDMprojects such that they are nolonger attractive options.

PROJECTS

• By what criteria and stan-dards will proposed projects beevaluated (social, environmental,economic) ? The evaluation maybe based on a project-by-projectreview by the executive board oran operating entity; on a basic setof underlying standards, allowingfor individual projects to bereviewed by different entities; oraccording to country-by-countrycriteria, with the reference casedetermined by standard practicewithin that country.• What type of projects will beeligible? As this paper has discussedat length, there is a range ofoptions within the forest sector withrespect to what types of projects willbe eligible for credits. The energy

sector faces similar choices. Forexample, using clean rather thanconventional coal results in green-house gas reductions, but coal powerplants may not be made eligible. Thetypes of eligible projects will in turndetermine which of the current AIJprojects will be brought into the CDM.

ARRANGEMENT BETWEEN

BUYERS AND SELLERS

• Should the CDM consist of aportfolio of projects waiting forsupport, or a series of bilateralagreements? A portfolio approachmay consist of one or multipleclearinghouses that offer emissionreduction certificates from a poolof projects, such as the case of CostaRican Certifiable Tradable Offsets,perhaps offered by a non-Annex Icountry, the World Bank, or a privateentity. A bilateral approach wouldinvolve individual agreementsbetween private entities and/orcountries, as is the case of the RioBravo and CARE/Guatemala projectsdescribed in Box 2. However, it ispossible that both approachesmav be allowed under the CDM.


The current AIJ pilot phaseextends to the end of 1999, andadditional greenhouse gas offsetprojects continue to be funded. TheConference of the Parties has yet toevaluate the pilot phase for lessonsabout issues and opportunities andwhat may be lost or gained due todecisions relating to project eligibil-ity and institutional structure. AsParties make these decisions, anevaluation of the current AIJ pilotphase might provide valuablelessons, if undertaken in advance ofthe establishment of the CDM.

THE CLEAN DEVELOPMENTMECHANISMThe Clean Development Mechanismallows project-based trading betweendeveloped and developing nations.The stated purpose of the CleanDevelopment Mechanism is to assistnon-Annex I countries in achievingsustainable development, tocontribute to the ultimate objectiveof the Convention (stabilizingatmospheric greenhouse gasconcentrations), and to assist AnnexI countries in attaining compliancewith their binding emissions targets.These purposes are to be achievedthrough three key elements outlinedin the Protocol: certified emissionsreductions from project activities indeveloping countries, a financialmechanism that funnels investmentstowards these emission reduction andsequestration activities, and the appli-cation or use of some or all of thesecertified reductions in meeting AnnexI emissions limits. The difficultylies in constructing an institutionthat achieves the stated purposes.

Because developing countrieshave no legally binding emissionlimits, the CDM offers a means tomove investments in a more climate-friendly direction. If not carefullyset up, however, the absence ofemission limits or caps in the CDMcould provide Annex I countrieswith a potentially limitless pool ofreduction opportunities, renderingtheir limits virtually meaningless.

The CDM has the potential tomeet the needs of both developingand industrialized countries. Itresponds to the needs of Annex Inations by offering lower-cost, moreflexible options in meeting emis-sions constraints, while providing asource of capital for the financingof clean, energy-efficient economicdevelopment and for projects withthe potential to reduce deforestationand forest degradation in non-AnnexI countries.

While developing countriesresist any actions they believe wouldstifle economic development, socialand environmental benefits may begained from strong commitmentsand pro-active policy reforms on thepart of both industrialized andindustrializing economies. Theoptimistic scenario is one wheredeveloping countries take a differentpath and minimize or in somecases avoid the choking smog andaccompanying human deaths,massive deforestation, and speciesloss that developed countriesexperienced. Developing countriesmay find ways of sustainably usingtheir biological resources so thatlivelihoods can be realized whilemaintaining resource productivityin terms of local and global climate,biological diversity, water purification,and myriad other services justbeginning to be recognized.

WORLD RESOURCES INSTITUTE 2 0 FOREST FRONTIERS INITIATIVE

Similarly, the CDM has thepotential to fund "technologicalleapfrogging" that would enabledeveloping countries to bypass theinefficient choices made byindustrialized countries. Whilemost examples of leapfroggingcenter on the energy sector, such asimproving building efficiency, theforest and land-use sector also offerstechnology transfer opportunities.Some examples include: improvingagricultural productivity throughtransfer of irrigation, managementpractices, or techniques to restoredegraded agricultural land; increas-ing milling efficiency; and improv-ing silvicultural practices orsustainable forest managementtechniques. Through carbonsequestration activities, the CDMmay help slow the loss of biologicaldiversity, protect critical watersheds,and accelerate the reforestation ofdegraded forests and the restorationof degraded agricultural land.

PROJECT ELIGIBILITY

The Parties are beginning to makedecisions about how to operational-ize the CDM. One of the mostimportant choices is whether forestand land-use change projects willhave a place under the CDM.

Because such a large percentageof greenhouse gas emissions fromnon-Annex I countries comes fromdeforestation, excluding or narrowlydefining the options to addressdeforestation will weaken the abilityof non-Annex I countries to limitcurrent and future emissions.Future trends show continuing forestdegradation and loss, along withhigh carbon emissions, unlessaction is taken quickly.57 The CleanDevelopment Mechanism offers anopportunity to slow both greenhousegas emissions and forest loss.

The types of activities allowedwill impact future and current forestand land-use sector investments.Subsequent Conferences of theParties, under guidance from theadvisory bodies, may choose toexclude certain project activities,thus preventing some current projectsfrom transferring to the CleanDevelopment Mechanism. Conservationand forest management projectsappear to be in question, as Article3.3, which lists the forest and land-use activities that must be invento-ried, may also apply to the CleanDevelopment Mechanism.

FOREST HARVEST AND

MANAGEMENT

Projects involving sustainable forestmanagement or reduced-impactlogging in place of an intensiveharvest regime have been shown toresult in quantifiable carbonemission reductions.58

Some of these projects havebeen carefully monitored for theircarbon gains and losses. It isrelatively easy to estimate the netcarbon sequestered due to suchprojects because of past research onlogging practices and the ability ofsuch activities to utilize control plotsfor reference cases. Six AIJ pilot-phasecarbon projects involve sustainableforest management or reduced-impact logging. A current exampleof a reduced-impact logging project,described in Box 2, is underway inMalaysia and is estimated to havesequestered about 42 megagrams(Mg) of carbon per hectare.59 At aminimum, before deciding projecteligibility, the Conference of theParties should investigate theirefficacy and overall environmentalimpacts under the current AIJ pilotphase. Emerging institutions andefforts, such as the Forest StewardshipCouncil, may also offer lessons formonitoring and verifying improvedforest management.60

To avoid rewarding poorlogging practices by paying forimprovements over a low referencecase, minimum performance stan-dards and practices for the referencecase should be established.Minimum practices should consistof basic standards for harvesting;only avoided emissions due toimprovement over these standardswould be creditable. Without theseminimum standards, the mostdestructive harvest operations wouldyield greater carbon credits thanless destructive operations, due to alower baseline. The minimumreference case should at least beequal to, or above, the existing lawsof the host country.

If such efforts were allowedunder the Clean DevelopmentMechanism, sustainable forestmanagement could become moreprofitable in developing countriesthan clearing forest for low-productivity agriculture.61


CARBON STORED IN WOOD

PRODUCTS

As noted in the section on Annex Icountries, the impact of harvestregimes "with" and "without" pro-ject intervention must be carefullyconsidered. Increasing harvest inpursuit of storing carbon in woodproducts is not a prudent strategyfor either climate or biodiversitybecause a relatively small percentageof the tree removed becomes woodproduct. WRI evaluated the netcarbon sequestration potential offive forestry and land-use projects,some of which included storingcarbon in wood products as part oftheir strategy.62 Of the projectsexamined, the average amount ofcarbon in wood products as a per-centage of total carbon sequesteredwas 1.5 percent, the maximumbeing 2 percent, while strategiesfocusing on storing carbon in livingbiomass yielded greater greenhousegas reductions. These projectsinvolved community forestry, notcommercial timber operations, sothe former may be less efficient.However, one study of tropical timberharvests found that a maximum of31 percent of individual tree biomassbecame sawn timber, with the averagebeing 25 percent, meaning that theremaining carbon previously stored inthe tree returns to the atmosphere.63

Additionally, harvesting typicallydamages the surrounding forest,resulting in carbon emissions. Mosttimber products are not long-lived,as only a small percentage ofharvested wood goes into furnitureor buildings; the majority becomesshort-lived products such as shippingpallets that are used several times,then burned.

These factors indicate thatincreasing area or harvest intensitywill not result in carbon gains, butthey point to other opportunities forgreenhouse gas reductions throughprojects that increase the use of millresidue for fuel or wood products,improved logging techniques thatreduce damage to surrounding forest,increased milling effideriCT to reducewood waste through improved tech-nology, and training of foresters.64

FOREST CONSERVATION

Conservation, or avoided deforesta-tion, offers the greatest confluenceof climate and biodiversity benefitsand presents significant emissionreduction opportunities.65 However,some environmental organizationsand developing countries seek tospecifically exclude conservationprojects. Their opposition is basedon two concerns: a) it is too difficultto determine whether deforestationwould have occurred in the absenceof carbon offset activities; and b)the CDM may create an incentive toexaggerate threats to a forest.

However, under appropriateCDM guidelines, conservation pro-jects can potentially result in reli-able greenhouse gas reductions.First, the "without mitigation" or"reference" case must be con-firmed, using local deforestationtrends. Second, the underlyingcauses of these trends must beestablished.

Defining a reference scenariowill require evidence of an immi-nent threat to the standing forest inthe absence of action. The projectactivities should seek to address andcounter the threats leading to land-use change by providing alternateincome sources such as land pur-chase or payments, or substitutes forthe alternate use of the forest land.For example, if fuelwood gatheringis resulting in deforestation, theproject should seek to provide alter-nate fuelwood sources in addition toprotection.

Under these conditions, theproject could combine enforcementof protected areas with alternativesto forest conversion. The Rio Bravoproject in Belize combined forestprotection with income fromsustainable forest management toreplace farming. In other cases,though not all, the value of carbonsequestration may be able toprovide an income stream thatcompetes with the value of forestconversion, such as the CARFIXproject in Costa Rica.

Some fear that allowingconservation projects will give non-Annex I countries an incentive toexaggerate the threat to forests. Ifavoided deforestation projects areallowed under the CDM, it will beimportant to avoid constructingguidelines that inadvertently dis-courage governments from under-taking conservation efforts. Forexample, if conservation projectsare allowed only in countries withalmost no protected areas, it wouldpenalize countries with significantprotected areas. One option would beto allow conservation offsets only incountries that had designated a cer-tain percentage, such as 10 percent,of their forests as protected areas.

Conservation projects could alsobe required to consist of multiplefunding sources, of which carbonsequestration can be only a fixedpercentage, and solely that percentageof greenhouse gas reductions couldbe credited. Or, conservation projectsmay only be allowed in certain areas,such as buffer zones of existing pro-tected areas proven to be under threat.

IMPROVING AGRICULTURAL

PRODUCTIVITY

Increasing agricultural productivityin developing countries can stabi-lize the agricultural frontier, thusslowing deforestation. Early carbonsequestration offset projects includedincreasing agricultural productivityas a component.66 The connectionbetween deforestation and agriculturalland demand makes improvingagricultural productivity animportant strategy for reducinggreenhouse gas emissions fromnon-Annex I countries.

The difficulty is that theconnection between maintainingforest cover and increasing agricultur-al productivity is indirect, even if itis well understood.67 If possible, theClean Development Mechanismguidelines should be designed toallow projects that seek to increaseagricultural productivity in con-junction with forest protection. Anexample of such a project,CARE/Guatemala, is described inBox 2.


FIRE SUPPRESSION

Huge swaths of Brazilian forest andIndonesian peat bogs have burnedin human-caused conflagrationsleading to massive carbon emissions.

In moist forests, human activitiessuch as selective logging, shiftingcultivation, and fuelwood gatheringdry out the forest floor, increasing therisk of wildfires.6S Several jointlyimplemented projects includedecreased incidence of fire as anobjective and benefit of the project.The CARE/Guatemala Agroforestryproject includes a fire protectioncomponent, from funding firebrigades and moving from slashand burn agriculture to agroforestry.Not allowing projects that decreasethe incidence of fire under theClean Development Mechanismcould remove an incentive for animportant carbon reduction strategy.In many cases, however, fires appearto be the secondary impact of otheractivities, such as logging, pollu-tant-stress, or clearing for cattlepasture; therefore, if CDM projectsand national policies discouragedthese activities, then human-causedfires would decrease as well.

CONTRIBUTING ELEMENTS

FOR A SUCCESSFUL CDM

The chances of realizing the poten-tial benefits of the CDM would beenhanced, though not guaranteed,by consideration of several addition-al elements that go beyond institu-tional structure and projecteligibility. First is the danger thatthe CDM will reward environmen-tally harmful policies and practices;second is the role of local benefits;and third is the need for data,improved methods, and monitoringsystems for the quantification ofgreenhouse gas benefits.

If countries participating inthe CDM have policies that exacer-bate deforestation through subsi-dies, tax breaks, or below-cost sales,then carbon sequestration projectsmay only be mitigating the impactof poor policies. The same dangerexists for energy' offset projects aswell, if countries offer subsidies forhigh-emission fuel sources. As wassuggested previously for developedcountries, minimum performancestandards could help to avoidrewarding countries or private sec-tor entities with extremely poorpractices or policies by paying formanagement improvements over anexceedingly low baseline.

Social benefits are an impor-tant part of the CDM for two rea-sons. First, sustainable developmentis one of the purposes of the CDM.Its success will be measured both byachieving emission reductions andby sustainable development, asthese represent the respective priori-ties of Annex I and non-Annex Icountries69 Thus, land-use changeand forest-related projects will beundertaken to the extent that theycontribute to sustainable develop-ment, which will probably bedefined by host countries' develop-ment priorities.

Secondly, the goals of emissionreductions and sustainable develop-ment need not be in conflict.Providing economic benefits to peoplein the project region gives them agreater stake in the project'ssuccess.70 Carbon alone will not bea sufficient motivator to ensure aproject's longevity? in the absence ofstrict oversight.

Although significant progresshas been made, more research isneeded to fully understand the cal-culation of greenhouse gas benefits.Concerns about accurately quantify-ing greenhouse gas reductions andemissions can in large part besolved by sharpening the IPCCmethodology guidelines, establish-ing national-level inventory meth-ods, instituting procedures forindependent verification requiredunder Article 12, and utilizing exist-ing technology and data on forestcover and land-use change.

If the Convention Parties allowa broad range of projects and activi-ties under the CDM, that will neces-sitate putting new systems andtechnologies in place that accurate-ly monitor and verify? regional forestand land-use change trends, a sig-nificant contribution in itself. Toinclude forest and land-use changeprojects, the CDM will requireputting in place monitoring andverification systems that can trackregional and local changes in land-use. These systems could combinethe use of remote sensing technolo-gies with ground truthing, whichwould serve those concerned gener-ally with the loss and degradationof forests and the accompanyinggreenhouse gas emissions. Manyprojects under the AIJ pilot phaseare employing such techniques intheir monitoring and verificationprotocols. If governments or certifi-cation agencies employ and installregional monitoring systems, thencosts are likely to decrease.71 TheU.S. National Aeronautics andSpace Administration (NASA) is

currently testing and developingtechnologies that combine in situmeasurements with current andplanned satellite systems; these willbe able to inventory global landcover and land-use change with thegoal of providing policy-relevantdata that will be applicable at theregional scale.72

Such a system could identifyforest areas threatened with conver-sion and degradation, or candidateareas for restoration. A subset of thethreatened forests could then becomecandidates for CDM projects, providedthat the drivers leading to forestconversion could be replaced withlower-impact, lower-emitting activities.For example, in Costa Rica sustain-able forest management is replacingconversion to relatively low-produc-tivity cattle ranching.

The associated monitoring andverification costs should be consid-ered integral to the project, not asunnecessary transaction costs to beeliminated. To realize the potentialbiodiversity and climate benefits ofthe CDM, it is critical to build itwith appropriate project guidelines,as well as auditing and verificationsystems. These are better approach-es than severely restricting projecteligibility.

Most importantly, if the CDMcouples credible guidelines forverification, accountability, andmonitoring with a broad inclusionof forests and land-use change,including avoided deforestation andforest management, the Protocol'simpact on both biodiversity andclimate will be maximized.

This chapter was adapted fromPaige Brown, Nancy Kete, andRobert Livernash, "Forests and LandUse Projects," in Issues and Options:The Clean Development Mechanism,Jose' Goldemberg, ed. (United NationsDevelopment Programme, 1998).


TECHNICAL CONCERNS ASSOCIATED WITH MEASURING AND VERIFYINGFOREST AND LAND-USE CHANGE EMISSIONS AND REDUCTIONS

T he key scientific and tech-nical issues include con-cerns about the difficulty

of quantifying and verifying green-house gas reductions from the forestsector, especially when comparedwith the energy sector. The mainscientific and technical issues asso-ciated with forest and land-use mit-igation activities includeestablishing a reference case, leak-age, permanence of reductions, andmeasurement accuracy. Except forthe last, these technical concernsremain to be fully resolved for ener-gy-based projects as well. Theseconcerns primarily apply to themarket-based mechanisms, thoughmeasurement accuracy is an issuefor national inventories as well asthe market-based mechanisms.

ESTABLISHING A

REFERENCE CASE

Determining the reference, or busi-ness-as-usual, case requires estimatingwhat would hare happened in theabsence of greenhouse gas reductionefforts. The reference case will be achallenge for both energy and forest-sector projects.

The reference case is the foun-dation for determining net green-house gas reductions andemissions. In many cases, prevail-ing forest and land-use practicesand conversion trends are wellunderstood and can be documented.Some activities, such as thereduced-impact logging project inMalaysia and a more recent AIJ pro-ject in Bolivia (Noel Kempff), estab-lished control areas similar to theproject site, which allow a directcomparison of "with-mitigation"and "without-mitigation" activities.73

Determining the business-as-usual reference case for any kind ofproject requires understanding barriersto improvements in practices over time.Parallel barriers exist between theenergy and the forest and land-usesectors, suggesting that guidelinescould be developed that cover bothsectors. Typical barriers to improvedpractices include high, fixed, up-frontcosts, higher costs over time, or aneed for technical assistance. Forexample, up-front fixed costs maybe a barrier even if the project'scosts over time are lower than underthe conventional scenario. Switchingfrom conventional light bulbs tocompact fluorescents involves higherup-front costs but uses less energyand saves money in the long run.Similarly, adopting reduced-impactlogging results in higher up-frontcosts, but over time economic benefitsmay be realized from increased yieldand improved efficiency.74 Thereare also opportunity costs due toforegone timber production whilewaiting for these benefits to accrue.In these cases, funding from green-house gas mitigation helps overcomethe barriers.

Determining the reference maybe more difficult in other cases. Forexample, under a reforestation project,it may be difficult to prove why thearea would not have regrown undera business-as-usual case. Or, cleardata and evidence of deforestationmay exist, but determining the cause,and therefore the necessary response,may be difficult. For example, iffarmers are converting forest toagriculture, the reference case maybe based on migration fueled bygovernment policies or the need forimproved agricultural practices,among other possible drivers.

Recent and continued improve-ments in the monitoring and inven-torying of regional and localland-use cover and change, whichincorporate on-the-ground mea-surements, will help to develop ref-erence cases. In 1997, the firstglobal maps showing existing landcover were produced using satellitedata.75 Maps such as these canprovide the basis for tracking futureland-use changes.

LEAKAGE

Leakage is the unexpected loss ofanticipated greenhouse gas reduc-tions due to the displacement ofactivities leading to carbon emis-sions. For example, in some cases,a reduced-impact logging projectmay lower timber output in theshort term, temporarily causingincreased harvests in another areato fill unmet demand.76 Because ofthis displacement of the emittingactivity, total greenhouse gas bene-fits will be lower than expected.

Preliminary research and pro-ject implementation experience,such as that of The NatureConservancy, have pointed to someinitial suggestions for project-levelguidelines for avoiding leakage.77

One study argues that leakage canbe anticipated and prevented byproperly designing projects or, ifleakage does occur, net carbon esti-mates can be revised.78 Leakagecan be anticipated primarily basedon whether the project activities dis-place the emitting activity or pro-vide an alternative use or incomesource for the forest. The emittingactivity will be displaced if the pro-ject does not in some way addressthe demands leading to land-usechange, whether they be for agricul-tural land, fuelwood, or logging.These risk assessments should becodified within the market mecha-nism's certification systems so thatleakage-prone projects can be iden-tified and avoided.


PERMANENCE OFREDUCTIONSThe issue of permanence of reduc-tions is unique to forests and land-use change. While replacing coalburning with natural gas results ina permanent emissions reduction,natural ecosystems are inherentlydynamic, so sequestered carbonmay not be held forever. Weather,climate change itself, pests, disease,or fire can all reverse efforts toreduce or sequester greenhouse gasemissions. Or, the contract could bereversed and the trees cut, thus los-ing carbon gains. To guard againstthis, a fixed ratio of greenhouse gasoffset credits sold could be requiredto be held in a contingency poolthat would be used if credits aresomehow lost. This requirementwould create a buffer of credits sothat if one project fails, then theadditional "buffer" reductions willcover any losses. Such an approachcould also generate added funds forsustainable development projects. Asimilar scheme relies on ton-yearequivalents to equate temporarycarbon with perpetual carbon. Theton-year equivalence is based on thedispersion rate of the greenhousegas and the social discount rate,thus equating carbon that may onlybe held for 20 years with that heldin perpetuity.79

Using a portfolio approachunder the market mechanisms maybe a second strategy to reduce therisk of losing greenhouse gasbenefits. In a portfolio approach,greenhouse gas reductions comefrom a pool of projects rather thanindividual ones. For example, CostaRica recently established CertifiableTradable Offsets, in which certifiedcarbon sequestration activities arebundled under one of two nationalumbrellas-the Protected AreasProject and the Private ForestryProject. The portfolio approach tosequestration could mean that thefailure of one project may bemitigated by a buffer if portfoliosare required to hold a greater amountof reductions than are traded or sold.

While the question of perma-nence can not be completely solved,instruments such as discounting andportfolios can help ensure that thereare real benefits to the globalclimate system.

MEASUREMENTACCURACYLastly, some question the ability toestimate accurately carbon lossesand gains from vegetation and soilsdue to land-use and managementstrategies.

At the project level, mountingevidence indicates that measurementuncertainty is overstated.80 TheIntergovernmental Panel on ClimateChange (IPCC) indicates a highconfidence that site-level estimatesof net carbon conserved or sequesteredunder specific management schemesare more certain than large-scaleestimates of carbon fluxes, such asthose at the national level.8' Thus,project-based efforts, if well moni-tored, could yield measurable carbonlosses and gains due to projectactivities. The IPCC defines highconfidence as a high degree ofconsensus among the report's authorsbased on "substantial" evidence.82

The main hurdle facing accu-rate carbon accounting is the costof obtaining the measurements.Any project or effort can be moni-tored and measured closely, butincreasing accuracy raises costs.While there continues to be uncer-tainty regarding forest soil carbon,the majority of pilot offset projectshave not included soil in their netcarbon estimates.

Studies have pointed to bothdata sources and methods for track-ing carbon flows over larger areas,which is required for nationalinventories. One U.S. study, forexample, combined regional forestinventories undertaken by the U.S.Forest Service with ecosystem stud-ies to estimate carbon storage formajor forest types in the UnitedStates.83 These data and methodscould be used to track changes incarbon storage. However, someAnnex I countries may lack theappropriate monitoring systems totrack changes in land use and theirsubsequent greenhouse gas emis-sions and reductions, especially ifthey are not timber producers. Also,further research is required to deter-mine greenhouse gas flows overtime in forests under various man-agement schemes. Measurementaccuracy remains a key issue forimproving national inventories ofemissions and reductions fromforests and land-use change.


& • • • • • •

RECOMMENDATIONS

T wo next steps emerge thatwill help ensure that deci-sions taken by the Conference

of the Parties lead to the best possibleenvironmental outcome. First, theimpact of forest and land-use practiceson climate and biodiversity areoften linked positively and negatively,so policy decisions should take eachinto account. Second, the Protocol'sinstitutions, rules, and guidelinesshould be developed with wideparticipation of stakeholders fromfields such as forestry, ecology, ruraland agricultural development, andconservation. As the IPCC and theSubsidiary Body for Scientific andTechnical Advice (SBSTA) undertakethe research agenda relating to cli-mate, land-use change, and forests,the expertise of the conservationand development communitiesshould be tapped in terms of trends,measurements, and viable climatemitigation projects and policies.

The period for meeting Protocolcommitments begins in ten years(2008), "demonstrable progress''must be shown in seven (2005),and credits from the CleanDevelopment Mechanism maybegin to accrue in two years (2000).The Protocol requires much substan-tive input between each of thesemilestones. We recommend thefollowing actions.

Identify and exploit syner-gies between efforts to haltclimate change and promoteenvironmental stewardship,recognizing that responsibleforest and land-use policiesresult in climate benefits.

Projects and policies should becoordinated among the Conventionon Climate Change, the Conventionon Biological Diversity, and theConvention to Combat Desertification,with international forest processes.Coordinating international environ-mental efforts under the Conventionon Biological Diversity, the Conventionon Climate Change, the Conventionto Combat Desertification, theForest Principles, and theIntergovernmental Forum onForests, among other internationalforest processes, can help capturesocial and environmental benefitswhile slowing global warming.(See Box 4)

The approaches of the threeconventions and global forestprocesses are similar in that theycall for capacity building and creat-ing financing mechanisms to cap-ture and promote nonmarket socialand environmental values. Eachstresses the importance of main-taining the productivity of genetic,agricultural, and forest resourceswhile sustaining human develop-ment. Clearly, the implementationof these agreements should be bettercoordinated, as this will enhancetheir impact.• Lenders and developmentagencies, such as the GlobalEnvironment Facility and the WorldBank, should assign a high priorityto those projects that allow coun-tries to meet both climate and biodi-versity convention objectives.• The technical advisory bodies forthe climate and biodiversity conven-tions should meet to compare researchagendas and identify gaps andopportunities for coordination. Forexample, adopting a common defi-nition for deforestation would be oneavenue for beginning coordination.

Overlapping areas of high valueto climate, biodiversity, or devel-opment should be identified andgiven a high priority. Ecosystemsunder threat offer double dividendsfor climate and biodiversity. Projects,activities, and policies that benefitclimate, biodiversity, and humansociety should be identified and madea high priority, as should improve-ments in management practicesthat accomplish more than onegoal. For example, removing ripari-an areas from agricultural produc-tion and reforesting them offersclimate benefits and improves waterquality and wildlife habitats.

The energy and forest sectorsalso intersect in some cases to offerclimate, biodiversity, and socialbenefits. For example, a low-emis-sion in-situ hydropower project maydepend on forested riparian areas toavoid siltation. Also, introducingimproved cookstoves can reducefuelwood demand, resulting in lessforest degradation. These synergiesshould be sought out and exploited,as they tend to magnify the impactsof individual efforts.• Nongovernmental organizationsand national governments shouldidentify threatened forest areas of highvalue with respect to biodiversity',human culture, or ecosystemservices that may become candidateCDM projects or protected areas inAnnex I countries.


• Nongovernmental organizationsand development agencies shouldexplore including carbon sequestra-tion as part of the bundle of envi-ronmental services under integratedfinancing instruments for ecologicalstewardship, such as the biodiversitytrust funds being explored forGuyana and Central America. Suchfunds serve as mechanisms that sup-port the healthy development ofecosystems, often by combiningprotected areas with sustainable use.Incorporating carbon sequestrationamong the values supported by thesefunds could offer them an importantadditional source of income, thusincreasing their effectiveness. Thefunds will be administered andimplemented by groups with multipleobjectives, such as biodiversity andsocial benefits, which will have agreater stake in the project's success.M

Annex I countries should reformnational forest and land-use policiesto ensure that bey da not contradictthe goals of the Kyoto Protocol, butfurther them. The Kyoto Protocolhas given Annex I countries morereason than ever to provide incen-tives for the improved managementof private and public lands. Just asabolishing fossil fuel subsidies is anefficient means of reducing emissions,so is ending subsidies that encouragelogging on marginal timberlandsand forest conversion to low-pro-ductivity agriculture or pasture.

• Annex I policy-makers shouldreverse ill-advised policies that resultin poor management and carbonemissions, such as subsidizedharvest on public lands.• Annex I policy-makers shouldoffer incentives that result in biodi-versity and climate gains, such asencouraging restoration of areas highin ecosystem services and discouragingdeforestation of old growth or primaryforests on public and private lands.

Ensure that accountingmethods, mitigationframeworks, definitions, andimplementation of the KyotoProtocol help meet climate,development, and environ-mental objectives.

Nations should ratify and imple-ment the Kyoto Protocol and theUnited Nations FrameworkConvention on Climate Change toslow human-caused climatechange. Rapid, human-caused cli-mate change is likely to result inbiodiversity loss by altering regionalprecipitation and temperatures thatwill affect the range and speciescomposition of ecosystems, perhapsmore rapidly than they are able toadapt.85 Boreal forests and per-mafrost may be particularly vulner-able to shifting weather patterns.

• Annex I countries should ratifythe Protocol and implement policiesthat will reduce the risk of danger-ous climate change such as thosedescribed in the Protocol: enhanceenergy efficiency, protect and restoreforests, promote and develop renew-able energy, and phase out subsidiesof greenhouse gas emitting sectors.

If the Conference of Partiesdetermines that additional land-use change and forest activitieswarrant inventorying in Annex Icountries, they should be phased inunder a project-based accountingmethod. Some additional activities,among them forest harvest anddegradation, may prove to be animportant source of emissions,especially in countries such asRussia, where new areas are beingopened for logging. This delay willalso allow time for improvingnational-level monitoring of bio-mass changes and exploiting syner-gies with forest certification systemssuch as that of the ForestStewardship Council. A system ofthis nature will require the develop-ment of social and environmentalcriteria, such as disallowingafforestation on biologically uniquelands to avoid perverse environmen-tal outcomes.

• Convention bodies shouldexplore requiring inventories ofemissions from additional activities,then, as appropriate, phasing themin on a project-level basis duringthe first commitment period; this isto avoid upsetting expectations onthe meaning of the greenhouse gastargets. Phasing in activities willcreate incentives to manage moreappropriately forest resources andallow time to develop the necessarymonitoring systems for inventoryingemissions during the second com-mitment period.

Emissions from land-use changeand forests should be included inAnnex A of the Kyoto Protocol,which lists sources that must beinventoried by industrializedcountries. The most comprehensivesolution is to count all carbon diox-ide sources, both energy and non-energy. Deforestation, degradation,and land-use conversion, such asfrom forests or grasslands to agri-culture, should be counted as emis-sions. Human-caused land-useemissions are no different thanthose from driving or electricitygeneration-all release greenhousegases into the atmosphere.• Convention bodies shouldexplore inventorying of a wide arrayof land-use change and forestgreenhouse gas sources, such as thosefrom forest harvest and management.


Deforestation should be definedappropriately, fully counted, andavoided where possible.Deforestation is a major source ofboth carbon emissions and biodi-versity loss. Because of these twofactors, it is critical that theProtocol create incentives to avoiddeforestation in both developingand developed countries.• Parties should review existingand accepted definitions of defor-estation from the scientific commu-nity such as the FAO definitiondescribed earlier in this report.Deforestation should not be narrow-ly defined so as to create a loopholethat allows Annex I countries toavoid inventorying emissions fromforest conversion by contending thatdeforestation has occurred only if astructure, such as a building,replaces the forest.• Parties should not create anincentive to clear land during theinterim period from 1990 to 2008by giving credit for reforestationduring the 2008 to 2012 commit-ment period but not inventoryingdeforestation between 1990 and2008. To avoid this incentive.Parties should stipulate that creditfor reforestation may only be givenfor land that was not forested in the1990 base year86

• If strict monitoring and verifi-cation guidelines and systems aredeveloped, avoided deforestationshould be considered for inclusionunder the CDM.

Build the Clean DevelopmentMechanism from the ground up.with involvement from a fullrange of nations and interestgroups. Though this recommenda-tion appears obvious, it bearsrepeating that Joint Implementationand its pilot phase faced oppositionfrom developing countries in largepart because each was seen solely asa tool of developed countries. Thissame fate could befall the CDM. Theissues and questions relating to theClean Development Mechanism aretoo complex for a comprehensiveset of recommendations to be madein this paper. The CleanDevelopment Mechanism must beconstructed with input from adiverse and representative group ofcountries, nongovernmental orga-nizations, and the private sector.• To ensure that a broad array ofstakeholders and perspectives is rep-resented at decision-making fora,UN agencies, multilateral institu-tions, and development agenciesshould support representation ofNGOs that may lack the resources toparticipate. In particular, theyshould support participation fromdeveloping country government andnongovernmental representativesthat have expertise in forest andland-use change. In addition, suchagencies should sponsor representa-tives at various workshops and deci-sion-making fora concerning theCDM in particular.

Non-Annex I and Annex I countriesshould establish minimum per-formance standards for land-usechange and forest-based domesticreductions and projects under themarket-based mechanisms. Ideally,it would be possible to draw up a setof required national policy reformsin addition to minimum perfor-mance standards. However, such aprocess would be highly contentious.Alternatively, both Annex I and non-Annex I countries could establish aset of minimum performance stan-dards for projects.• Convention bodies shoulddelineate a set of minimum stan-dards and practices for eligible CDMprojects. Only greenhouse gasimprovements over this referencewould be creditable.• Convention bodies should alsodelineate minimum standards andpractices, at least equal to or aboveexisting domestic laws governingland use for project-based effortspursued by Annex I countries. Anyemission reduction credit must gobeyond these performance standards.

Parties should implement projectand policy guidelines that avoidmerely displacing the drivers ofland-use change and carbonemissions, referred to as leakage.Leakage, described earlier, is theloss of estimated carbon benefits,typically due to the displacing ofcarbon emitting activities, ratherthan substituting for carbon emit-ting activities.• If climate mitigation policiesor projects result in a reduction intimber output, Annex I countriesshould find alternative fiber sourcesthrough increased recycling, refor-esting of abandoned land, orincreasing wood-use efficiency. Ifreductions in output result inunmet demand for wood fiber, itwill only displace demand ontoother wood fiber sources, leading tohigher emissions elsewhere.• The project activities shouldseek to address and counter thethreats leading to land-use changeby providing alternative incomesources, or substitutes for the alter-native use of the forest land.


Research remaining issuesconcerning measurement,patterns of land-use change,and their underlying driversto understand more fully thedifficulties of including land-use change and forests andthe implications of notcounting them.

Evaluate the Activities ImplementedJointly (AIJ) Pilot Phase. Currentlyimplemented mitigation projectsshould be reviewed for their climateimpacts, uncertainties, issues, andbenefits. Lessons from the AIJ pilotphase should inform the creation ofthe Clean Development Mechanism.The pilot phase will yield lessonsregarding transaction costs, institu-tional structures and barriers, andstandard setting.• The Convention bodies shouldarrange for an independent projectand institutional evaluation of theAIJ pilot phase before finalizingwork on the CDM.• Countries with established jointimplementation pilot programs,such as the Netherlands, Costa Rica,and the United States, should alsoformally evaluate them. For exam-ple, the U.S. Initiative on JointImplementation, one of the mostactive programs, stipulated that theprogram would be evaluated andassessed "within two years of itsinception," which was 1993, orwithin six months of adoption ofinternational criteria for JointImplementation by the partiesunder the Climate Convention.87

The evaluation has yet to occur. Giventhe developments under the KyotoProtocol, an evaluation of the U.S.Initiative on Joint Implementationwould be a useful input to theprocess of building the CDM.

Wose with knowledge of andtechnical expertise in land-usechange and forest trends shouldparticipate more widely in climatechange fora. The IPCC SpecialReport on key forest and land-usechange issues is to be completed inmid-2000. The IPCC Special Reportwill investigate the implications ofdefining terms, explore includinginventories of additional land-useactivities, and assess project eligibilityunder the market mechanisms.The upcoming Conference of theParties and string of advisory meetings (see Box 8) offer opportunitiesfor input from additional expertsand interested parties. Additionaladvisory' meetings, workshops, andconferences will be convened.88

Wider participation and a higherprofile can only help further thegoals of the climate convention.

• Nongovernmental organizationsand governmental agencies workingon climate change should highlightthe issues and opportunities in otherfora, such as the Convention onBiodiversity and international forestmeetings, thus increasing the numberof individuals and institutionsengaged in climate change policy.• Lenders and developmentagencies should support greaterinvolvement from developing countrygovernmental and nongovernmentalgroups in decision-making meetingsto the FCCC.• National governments shouldensure their delegations to theConference of the Parties includeparticipants with relevant forest-related expertise.

I I MAJOR DECISION POINTSAND

19901998

2000

2000

2001

2005

2008-2012

COMMITMENT DATESBaseline year for calculating emissions.November-Fourth Conference of the Parties for theFCCC meets in Buenos Aires, Argentina.Certified emissions reductions in non-Annex Icountries may be credited under the CleanDevelopment Mechanism.IPCC scheduled to complete a Special Report on Land Use,Land-Use Change, and Forestry and Carbon Emissions.Third Assessment Report due from the IPCC.The Report will describe the state of scientificunderstanding on the impacts and status of climatechange and address the role of land-use change andthe forest sector in mitigating, slowing, or contributingto climate change.Annex I countries should have made "demonstrableprogress" in meeting commitments.Compliance period during which reduction targetsmust be reached.

Establish a monitoring andinventory system that identifieschanges in land cover and inten-sity of use. A monitoring systemthat combines remote sensing withground truthing is essential both toproperly inventor}' carbon fluxesfrom Annex I country forest andland-use change sectors and tomonitor and verify projects underthe Clean Development Mechanism,if such projects are deemed eligible.Such a system will also be invalu-able to governments, nongovern-mental organizations, the privatesector, and local communities asthey seek to make informed decisionsabout the highest and best use offorest resources.• National governments andinternational agencies, with estab-lished data gathering agencies,should begin to channel data intothe greenhouse gas reporting systemsand make it widely available. Oneexample would be the Food andAgriculture Organization, whichpublishes eveiy two years the Stateof the Worlds Forests report, givingan overview of the status of theworld's forests.• International and national-levelpolicy makers should put increasedresources into monitoring forestand land-use trends.• Nongovernmental organizationstracking trends in forest conversionand intensity of use should channelthat information into the climateprocesses.

ABOUT THE AUTHORPaige Brown is a research analystin the Climate, Energy, and PollutionProgram of the World ResourcesInstitute. Her work focuses on therole of forests in climate changemitigation.


GLOSSARY

ACTIVITIES IMPLEMENTEDJOINTLY (AIJ): The pilot phaseof Joint Implementation, establishedat the first Conference of the Parties,ending in 1999-

ANNEX I COUNTRIES: The 39

industrialized countries that agreedto binding limitations on greenhousegas emissions. The Annex I groupincludes developed economies suchas those in the European community,Canada, and New Zealand as well ascountries in transition to a marketeconomy such as the RussianFederation, the Czech Republic,Hungary, and Poland.

CLEAN DEVELOPMENT

MECHANISM (ARTICLE 12):

The CDM mechanism will allowcertified emission reductions fromproject activities that assist non-AnnexI countries in achieving sustainabledevelopment, and Annex I countriesin complying with greenhouse gasreduction limitations. Participationis voluntary by each part}'.

GREENHOUSE GASES:

Those gases that comprise theatmosphere, both natural andanthropogenic, that absorb andre-emit infrared radiation.

JOINT IMPLEMENTATION:

Activities undertaken voluntarilyand cooperatively between at leasttwo parties in two or more countriesthat reduce, avoid, or sequestergreenhouse gas emissions.

NON-ANNEX I COUNTRIES:

The group of developing countriesthat do not have binding commit-ments on greenhouse gas emissions.

PROJECT-BASED CREDITTRADING (ARTICLE 6): Annex IParties may trade "emission reductionunits" resulting from projects thatdiminish greenhouse gas emissionsor enhance removals.

SINK: Any process, activity, ormechanism that removes a green-house gas, an aerosol, or a precursorof a greenhouse gas from theatmosphere.

SOURCE: Any process or activitythat releases a greenhouse gas, anaerosol, or a precursor of a green-house gas into the atmosphere.


NOTES

1 Duncan Austin, Jose Goldemberg, andGwen Parker. Contributions to ClimateChange: Are Conventional MetricsMisleading the Debate? (Washington DC:World Resources Institute, 1998).

2 Alan D. Hecht and Dennis Tirpak."Framework Agreement on Climate Change:A Scientific and Policy History." ClimaticChange 2% no. 4 (April 1995): 371.

3 Intergovernmental Panel on ClimateChange. Working Group 1. Climate Change,

'lie IPCC Scientific Assessment. WorldMeteorological Organization and UnitedNations Environment Programme. J.T.Houghton, G.J.Jenkins, andJ.J. Ephraums.eds. (New York: Cambridge University Press,1990): xxxii.

4 United Nations. United NationsFramework Convention on ClimateChange (New York: 1992). Available online(http://www.unfccc.de/fccc/conv/conv.htm).

5 Framework Convention on ClimateChange. .Article 4(l)d.

6 Intergovernmental Panel on ClimateChange (IPCC). Greenhouse Gas InventoryReporting Instructions. IPCC Guidelinesfor National Greenhouse Gas Inventories.United Nations Development Programme,Organization for Economic Co-operation andDevelopment, International Energy Agency,and International Panel on Climate Change.Volumes 1 and 2 (United Kingdom: 1995).

7 Hecht and Tirpak, "FrameworkAgreement on Climate Change."

8 Sierra Club and Sierra Club of Canada.Risky Business: Why pint ImplementationIs the Wrong Approach to Global WarmingPolicy (Washington DC: Sierra Club, 1995).A. Agarwal and S. Narain. Global Warmingin an Unequal World. A Case ofEnvironmental Colonialism (New Delhi:Centre for Science and Environment, 1991)'Climate Network Europe. JointImplementation from a European NGOPerspective (Brussels: July 1994).

9 Intergovernmental Panel on ClimateChange. Climate Change 1995: The Scienceof Climate Change. Contribution of WorkingGroup I to the Second Assessment Report ofthe Intergovernmental Panel on ClimateChange. World Meteorological Organizationand United Nations Environment Programme.J.T. Houghton, L.G. Meira Filho, BA CallandeiN. Harris, A. Kattenberg, and K. Maskell. eds.(Cambridge: Cambridge University Press,1996): 4.

10 For almost all industrialized countries,1990 is the base year from which theycalculate emissions limitations. However,some countries are allowed to use other baseyears that result in higher emissions. Forexample, Bulgaria may use 1989 as its baseyear, and Poland 1988. As stated earlier, thehigher the base year emissions, the lessonerous the reduction commitment duringthe commitment period.

11 The division of Annex I and non-AnnexI countries was based on level of economicdevelopment and historical responsibility forthe buildup of greenhouse gases in theatmosphere. Annex I countries are largelyresponsible for the current buildup of gases,and as such are the first group of nations toact towards reducing emissions. IPCC. ClimateChange 1995: The Science of ClimateChange, Summary for Policy Makers. BertBolin. John Houghton, and L. Gylvan MeiraFilho, eds. (Rome: December 1995).

12 These gases are carbon dioxide (C02),nitrous oxide (N9O), methane (CH4),hydrofluorocarbons (HFCs), perfluorocarbons(PFCs), and sulfur hexafluoride (SFg).

13 Michael A. Cairns and Richard A.Meganck. "Carbon Sequestration, BiologicalDiversity, and Sustainable Development:Integrated Forest Management."Environmental Management 18, no.1(1994): 13-22. IPCC Working Group II.technologies, Policies and Measures forMitigating Climate Change. R.T. Watson,M.C. Zinyowera, and R.H. Moss, eds.Technical Paper (November 1996).

14 Nigel Dudley, Jean Jeanrenaud, andFrancis Sullivan. Bad Harvest? 'the TimberTrade and the Degradation of the World'sForests. World Wildlife Fund (London:Earthscan Publications, Ltd, 1995).

15 Robert Dixon et al. "Carbon Pools andFlux of Global Forest Ecosystems." Science263 (1994):185-90.

16 Dirk Bryant et al. The Last FrontierForests: Ecosystems & Economies on theEdge (Washington DC: World ResourcesInstitute, 1997).

17 Bryant et al., 'The Last Frontier Forests.Frontier forests are defined as large tracts ofrelatively intact forests that are large enoughto support their biodiversity even in the eventof a natural disaster. The plant biodiversityindex was estimated by multiplying thecountry's total number of higher plantspecies per unit area by the country's totalfrontier forest area.

18 Mark Trexler and Christine Haugen.Keeping It Green: Tropical ForestryOpportunities for Mitigating ClimateChange (Washington DC: World ResourcesInstitute, 1995). The ranking is based onestimates of the highest net change in storedcarbon through slowed deforestation and newbiomass interventions between 1990 and 2050.

19 The three Conventions and ForestPrinciples that emerged from the 1992 RioEarth Summit are:United Nations Environment Programme(UNEP). United Nations Convention toCombat Decertification. Text with Annexes.(Geneva: UNEP, 1995).United Nations. United Nations FrameworkConvention on Climate Change (UnitedNations Conference on Environment andDevelopment, Rio de Janeiro. Brazil, June1992).United Nations. United Nations Conventionon Biological Diversity (United NationsConference on Environment andDevelopment, Rio de Janeiro, Brazil, June1992)."Non-Legally Binding AuthoritativeStatement of Principles on the Management,Conservation and Sustainable Developmentof All Types of Forests" (United NationsConference on Environment andDevelopment, Rio de Janeiro, Brazil, June1992).United Nations Commission on SustainableDevelopment. Report of the Ad HocIntergovernmental Panel on Forests on ItsFourth Session (United Nations, New York,11-21 February 1997). While there are manyforest agreements, most recently theIntergovernmental Forum on Forests wasformed to pursue a consensus and formulateoptions consistent with the Forest Principles.

20 Sandra Brown et al. "Management ofForests for Mitigation of Greenhouse GasEmissions," in Climate Change 1995.Impacts, Adaptations and Mitigation ofClimate Change: Scientific-TechnicalAnalyses. Contribution of Working Group IIto the Second .Assessment Report of theIntergovernmental Panel on ClimateChange. R.T. Watson, M.C. Zinyowera, andR.H. Moss, eds. (Cambridge: CambridgeUniversity Press, 1996): 773-97.

W O R t D R E S O U R C E S I N S T I T U T E 31 FOREST F R O N T I E R S I N I T I A T I V E

21 Using data extrapolated from graphs onpage 57, Working Group II, 1996,"Technologies, Policies and Measures," weestimated that between 2008 and 2012.approximately 80.4 million tons of carboncan be sequestered or conserved within theUnited States. Then, using projections fromInternational Energy Outlook 1998 for theyears 2008-2012. we estimated that to reachthe 7 percent reduction from reference caseprojections, the United States must reduce itscarbon emissions by 477.69 million tons. Infact, this figure may be an underestimate, asthe emissions only estimate carbon, thusomitting releases from the other five green-house gases. Department of Energy.International Energy Outlook 1998. WithProjections Through 2020. EnergyInformation Administration. DOF7EA-0484(98)(Washington DC: April 1998): 142. Table A9.

22 R.A. Houghton et al. "Changes in theCarbon Content of Terrestrial Biota and SoilsBetween I860 and 1980: A Net Release of CO2

to the Atmosphere." Ecological Monographs.53 (1983): 235-62.

23 D. Schimel et al. "Radiative Forcing ofClimate Change," in Climate Change 1995:The Science of Climate Change. The figurerepresents the share of deforestation of theaverage annual carbon budget between 1980and 1989.

24 Schimel et al., "Radiative Forcing." inClimate Change 1995.

25 Nigel Dudley, Don Gilmour and Jean-Paul Jeanrenaud. Forests for Life. TheWWF/IUCN Forest Policy Book. WorldWildlife Fund and IUCN/The World ConservationUnion (Switzerland: February 1996).

26 U.S. House of Representatives. HouseResolution 151. Regarding Management ofNational Forests to Reduce GreenhouseGases. October 21.1997.

27 Mark E. Harmon, William K. Ferrell,and Jerry F. Franklin. "Effects on CarbonStorage of Conversion of Old-Growth Foreststo Young Forests." Science 247 (1990): 699.

28 John Grace et al. "Carbon DioxideUptake by an Undisturbed Tropical RainForest in Southwest .Amazonia 1992 to 1993."Science 270 (November 3.1995): 778-80.

29 Paige Brown, Brace Cabarle, and RobertLivernash. Carbon Counts: EstimatingClimate Change Mitigation in ForestryProjects (Washington DC, World ResourcesInstitute, 1997).

30 GJ. Nabuurs and G.M.J. Mohren.Carbon Fixation through ForestationActivities. Commissioned by the FoundationRACK. IBM Research Report 93/4 (TheNetherlands: 1993).

31 Theodore Panayotou and Peter S. Ashton.Not by Timber Alone. The Economics andEcology for Sustaining Tropical Forests(Washington DC: Island Press, 1992): 199,

32 Dudley et al. Forests For Life.

33 These three bodies, the IntergovernmentalPanel on Climate Change, the SubsidiaryBody for Scientific and Technical Advice(SBSTA), and the Subsidiary Body forImplementation, provide advice and supportto the Conference of the Parties on a range ofissues. While these are not the only advisorybodies, they are the primary ones.Throughout the remainder of the paper, theywill be collectively referred to as "advisorybodies" unless one is specifically referenced.

34 Daniel Lashof, Natural Resources DefenseCouncil, to Charles Rawls, United StatesDepartment of Agriculture (February 12,1998).

35 IPCC, Greenhouse Gas InventoryReporting.

36 United Nations Framework Conventionon Climate Change. Methodological IssuesSynthesis of Information from NationalCommunications of Annex I Parties onSources and Sinks in the Land-Use Changeand Forestry Sector. Technical Paper.November 20,1997. Available online(http://wwvv.unfccc.de/fccc/tp/1997/5).

37 IPCC, Greenhouse Gas InventoryReporting.

38 Food and Agriculture Organization ofthe United Nations (FAO). The State of theWorld's Forests (Rome: 1997): 174.

39 World Bank. The Forest Sector. A WorldBank Policy Paper (Washington DC: WorldBank. 1991): 93.

40 Jack K. Winjum, Sandra Brown, andBernhard Schlamadinger. "Forest Harvestsand Wood Products: Sources and Sinks ofAtmospheric Carbon Dioxide." Forest Science44. no. 2 (May 1998): 281.

41 Harmon et al., "Effects on CarbonStorage of Conversion," 701.

42 Michelle A. Pinard and Francis E. Putz."Retaining Forest Biomass by ReducingLogging Damage." Biotropica 28, no 3(1996): 5.

43 While there are some low-density, old-growth forests where this may not be thecase, older dense forests such as those of thePacific Northwest have been shown to holdmore carbon than younger forests. This isbecause older forests store large amounts ofcarbon in the soil and in older tree stems,which is lost when these areas are logged.Harmon et al., "Effects on Carbon Storage ofConversion," 699.

44 See for example, Sandra Brown, AndrewJ. Gillespie. and Ariel Lugo. "BiomassEstimation Methods for Tropical Forests withApplications to Forest Inventor;' Data." ForestScience 35, no. 4 (1989): 881-902.

45 German Advisory Council on GlobalChange. The Accounting of Biological Sinksand Sources Under the Kyoto Protocol-AStep Forwards or Backwards for GlobalEnvironmental Protection? Special Report1998 (Bremenhaven: 1998). Available online(http://www.awi-bremerhaven.de/WBGU).

46 HAO, The Slate of the World's Forests, 21.

47 Winjum et al., "Forest Harvests andWood Products." 272-84.Clark Row and Robert B. Phelps. "WoodCarbon Flows and Storage After TimberHarvest," in Forests and Global ChangeVolume 2: Forest ManagementOpportunities for Mitigating CarbonEmissions. R. Neil Sampson and DwiglitHair, eds. (Washington DC: American Forests,1996): 27-58. This study estimated that inthe United States 35 million tons of carbonaccumulate in wood products each year.

48 U.S. House of Representatives.Resolution 151.

49 T. P.KolchuginaandT S.Vinson. "Roleof Russian Forests in the Global CarbonBalance." Ambio 24, no. 5 (1995): 258.

50 Kolchugina and Vinson, "Role ofRussian Forests."

51 German Advisory Council on GlobalChange, The Accounting of Biological Sinks,14.

52 International Geosphere-BiosphereProgramme Terrestrial Working Group,Royal Swedish Academy of Sciences. "TheTerrestrial Carbon Cycle: Implications for theKyoto Protocol." Science 280 (May 29,1998):1393-94.

53 Brown et al., Carbon Counts.

54 United Nations Conference on Tradeand Development. A Pilot Greenhouse GasTrading System: The Legal Issues. L'NC-TAD/GDS/GFSB/Misc. 2 (Geneva: UnitedNations, I996).

55 Paul Faeth. An Analysis of thePotential for Water Quality Trading inMichigan: The Case ofSaginaw Bay. InPress (Washington DC: World ResourcesInstitute, 1997).

56 Framework Convention on ClimateChange, Article 3(1).

57 Bryant et al., The Last Frontier Forests.

58 Pinard and Putz, "Retaining ForestBiomass."

59 Pinard and Putz, "Retaining ForestBiomass."

60 Forest Stewardship Council. Manualfor Evaluation and Accreditation ofCertification Bodies (Oaxaca, Mexico:Forest Stewardship Council, 1995).

61 FUKDECOR. C.AEFIX Project Proposalfor the Edison Electric Institute (Costa Rica:FUNDF.COR, 1995).

62 World Resources Institute. Forestry asa Response to Global Warming. AWorkshop Report (Washington D.C.: WorldResources Institute, 1994).

W O R t D R E S O U R C E S I N S T I T U T E 32 F O R E S T F R O N T I E R S I N I T I A T I V E

63 D. Noack. "Making Better Use ofTropical Timber Resources." Tropical ForestUpdated, no. 2 (June, 1995):12-13. Anewsletter from the International TropicalTimber Organization.

64 Noack, "Making Better Use of TropicalTimber Resources." 13.

65 Trexler and Haugen, Keeping II Green.Brown et al., Carbon Counts. Cairns andMeganck, "Carbon Sequestration, BiologicalDiversity, and Sustainable Development."Robert N. Stavins. The Costs of CarbonSequestration: A Revealed PreferenceApproach. CSIA Discussion Paper 95-06(Kennedy School of Government, HarvardUniversity, 1995). Harmon et al., "Effects onCarbon Storage of Conversion," 699.

66 Brown et al., Carbon Counts.Paul Faeth, Cheryl Cort. and RobertLivernash, Evaluating the CarbonSequestration Benefits of Forestry Projectsin Developing Countries (Washington DC:World Resources Institute, 1994).

67 United Nations EnvironmentProgramme. Global BiodiversityAssessment (Cambridge: CambridgeUniversity Press, 1995): 891.

68 IPCC Working Group II, Technologies,Policies and Measures.

69 Youba Sokona, Stephen Humphreys,and Jean-Philippe Thomas. "What Prospectsfor Africa?" in Issues & Options: The CleanDevelopment Mechanism. Jose Goldemberg,ed. (New York: L'nited Nations DevelopmentProgramme, 1998): 111.

70 Brown et al.. Carbon Counts, 8. Faethet al., Evaluating the Carbon SequestrationBenefits, 66.

71 For example, the Rio Bravo CarbonSequestration pilot project is using air pho-tography, control sites, and satellite imagery.Similarly, F.COLAKD, a forest preservationproject in Costa Rica, is using satellite andphotographic imaging in conjunction withcontracting a local eco-tourist group toundertake on-the-ground monitoring.CARFIX project implementors will undertaketriennial remote sensing, and annual forestgrowth measurements with LANDSATimagery. United States Initiative on JointImplementation. Activities Implemented

Jointly: Second Report to the Secretariat ofthe United Nations FrameworkConvention on Climate Change.Accomplishments and Descriptions ofProjects Accepted Under the U.S. Initiative onJoint Implementation. Volume 2. EPA 236-R-97-003 (Washington DC: U.S.Environmental Protection Agency, 1998).

72 Mission to Planet Earth ScienceResearch Plan. Land-Cover and Land-UseChange Strategy. NASA Website(http:/Aww.hq.nasa.gov/office/mtpe/draftsciplan/mtpe-srp.htm).

73 Pinard and Putz, "Retaining ForestBiomass," 5.

74 Markku Simula. "Economics ofCertification," in Certification of ForestProducts: Issues and Perspectives. VirgilioM. Viana, Jamison Ervin, Richard Z.Donovan, Chris Elliott, and Henry Gholz, eds.(Washington DC: Island Press, 1996): 134.

75 Mission to Planet Earth. Remarks byWilliam Townsend. Acting AssociateAdministrator, September 17,1997. EarthScience Enterprise Website(http://wvw.hq.nasa.gov/office/mtpe/\vhat_news/97accomps.htm).

76 R.A. Sedge. "Local Logging: GlobalEffects." Journal of Forestry 39, no. 7 (April1995): 25-28.

77 Brown et al. Carbon Counts. UnitedStates Initiative on Joint Implementation,Activities Implemented Jointly. This reportdescribes the measures taken by AIJ projectimplementors to avoid and guard againstleakage of greenhouse gas benefits.

78 Brown et al., Carbon Counts.

79 Kenneth Chomitz. Baselines forGreenhouse Gas Reductions: Problems,Precedents, Solutions, prepared for theCarbon Offsets Unit, Development ResearchGroup, World Bank (July 16,1998): 37-38.

80 IPCC Working Group II, Technologies,Policies and Measures.

81 Brown et al., "Management of Forestsfor Mitigation," in Climate Change 1995.Impacts, 775.

82 IPCC, Climate Change 1995, x.

83 Richard A. Birdsey. "Carbon Storage forMajor Forest Types and Regions in theCoterminous United States," in Forests andGlobal Change. Volume 2: ForestManagement Opportunities for MitigatingCarbon Emissions. R. Neil Sampson andDwight Hair, eds. (Washington DC: AmericanForests, 1996).

84 Center for Sustainable Development inthe Americas. FOCADES, Tlx CentralAmerican Environmental Fund. A pam-phlet (Washington DC: Center forSustainable Development in the Americas,1998). Doreen Crompton. "The ProposedGuyana Rain Forest Foundation." A conceptpaper prepared for the Carter Center (1997).

85 IPCC, Climate Change 1995, 26.

86 Daniel Lashof, Natural ResourcesDefense Council, memo to Charles Rawls,United States Department of Agriculture.

87 United States Climate Action Plan(Washington DC: October, 1993): 105.

88 For information on additional meetingsand fora, see the Framework Convention onClimate Change website, which maintains aschedule (www.unfccc.de).


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