Imagine a world where African farmers raise their standard of living by shifting towards sustainable agriculture that mitigates climate change – while cashing in on this shift via ecosystem service payments. If you can’t imagine it, drop in on the real deal: in the Kiambu District of Central Kenya, where a groundbreaking pilot project is testing new financing mechanisms that capture carbon in soil.
Katoomba XV Publications
The above articles were consolidated, along with other material from Ecosystem Marketplace, in two brochures that were distributed at Katoomba XV.
Leading up to the meeting, Ecosystem Marketplace commissioned this series of articles to shed light on issues relevant to these meetings and that part of the world.
Carbon and Land-Use: The Economies of Cocoa, Timber and Agriculture examines the role that carbon payments for Reduced Emissions from Deforestation and Degradation (REDD) can play in promoting sustainable land-use practices West Africa.
Integrated Solutions: Water, Biodiversity, and the Clean Development Mechanism examines the role that PES schemes other than REDD can play in promoting sustainable land- and water-use practices in West Africa.
The following documents offer more detailed and technical treatment of the issues highlighted above:
REDD Opportunities Scoping Exercise (ROSE) for Ghana Identifying Priorities for REDD Activities on the Ground: Preliminary Review of Legal and Institutional Constraints (Report of a Key Informant Workshop, July 2009)
KATOOMBA XV SPONSORS
The Katoomba Group gratefully acknowledges the sponsorship and support of the following organizations for the Katoomba XV Meeting:
USAID; the Global Environment Facility (GEF); Gordon and Betty Moore Foundation; NORAD; Rockefeller Foundation; Rainforest Alliance; and Price Waterhouse Coopers.
First in the Series: The Road to Accra, leading up to the October Katoomba Meeting in Accra, Ghana.
9 September 2009 | Most of the 9,000 members of the Komothai Smallholder Farmers Cooperative earn their livelihood farming just over a half-hectare of land. That’s about the size of a soccer field, and it’s usually split evenly between a coffee-growing part and a subsistence farming part.
Modern farming methods have ratcheted up production of food products around the world – but often at the expense of tomorrow’s fertile fields. Now, however, farmers of the Komothai Smallholder Farmers Cooperative are managing their 7,000 hectares in ways that preserve the land for tomorrow, improve coffee quality, and suck carbon from the atmosphere so it can be stored in the soil. This carbon storage gives them an opportunity to earn the carbon credits that could ultimately make sustainable agriculture more profitable in the short term than current intensive methods.
Supported by international coffee trader ECOM Agroindustrial Corp and the German Technical Cooperation, GTZ, farmers involved in this pilot project produce shade-grown and bird-friendly coffee. The World Bank is helping to turn that stored carbon into carbon assets, and the Bank’s BioCarbon Fund intends to buy the emission-reduction credits generated by this project, which the bank believes will mitigate 3.5 tons of carbon dioxide equivalent (tCO2e) per hectare each year – or roughly 30,000 tCO2e in the entire project area per year. The credits will then be sold in the voluntary carbon market for US$ 3-5 t/Co2e.
It is estimated that the yield per hectare will increase from 1.5 to 5 kilograms without requiring the addition of anorganic fertilizers. Moreover, the new farming techniques will improve soil fertility and water holding capacity, and strengthen the land’s resilience to climate change.
Can It Be Replicated?
Can this example be a model for other farming communities in Africa? Can carbon market revenues help farmers adopt more sustainable agricultural practices? Can a project that works for coffee farmers in Kenya also work for cocoa farmers in Ghana? And can farmers in Africa become more than farmers, like their colleagues in Europe where the EU and national governments pay them not only to produced food but to restore and protect ecosystems that are vital to a societies economy and future?
US Secretary of Agricultural Tom Vilsack certainly thinks so. On a recent trip to Africa, he said countries there can boost global efforts to curb emissions through absorbing greenhouse gases by improving its farming sector.
“With proper techniques and management, Africa can help the world better balance its greenhouse gas emissions.”
Johannes Woelke agrees. He’s the senior economist at the World Bank’s Africa Department and has been working in Kenya to get carbon finance projects up and running.
“Carbon payments can be a catalyst to push for change in Africa,” he says – adding that change is desperately needed.
The African Challenge
Africa has the highest projected growth in agricultural emissions due to population growth and changing diets. Many countries risk heavy losses in agricultural production caused by climate change. Already, 66% of Africa’s crop land is severely degraded. And African forests are disappearing faster than in other tropical regions of the world, mainly because they are being converted into new crop land.
“If you ask African politicians and experts what are the three problems which need to be tackled, they will answer ‘agriculture, agriculture, agriculture’,” says Ralph Aston from the Terrestrial Carbon Group.
Therefore, land use and land-use change in Africa have huge climate-change mitigating potential. Soil carbon projects offer new possibilities for a continent that’s largely been missing on the global carbon market map. This would be welcome news to Africa’s rural people, of whom 229 million belong to the extreme poor.
REDD All Over Again?
Assuming a price of just 10 US$ t/Co2e, the resulting carbon revenues would be twice as high as official development aid flowing to African agriculture every year.
But in order to include African countries’ (or any other regions’) soils in carbon markets, other math needs to be done. And that’s where the difficulties just begin.
It is a bit like a déjí vu. Remember when forests as carbon sinks appeared on the radar screen of emission traders, project developers and NGOs a few years ago? When contentious issues like additionality, leakage, permanence, verifying and monitoring seemed to be hurdles too high to overcome. Not to mention all those ideological questions about whether rich countries should be allowed to offset their emissions by financing forestry projects in developing countries.
Today, almost all agree that forestry should be an integral part of any post-2012 climate framework. The arguments are mainly over who should foot the bill.
If it comes to soil carbon, we are still at the outset.
Soils are assumed to offer the largest potential for carbon storage of the terrestrial carbon cycle, but estimates of their dimension differ widely.
Many experts believe that enriching soil carbon and protecting existing carbon stocks is a good idea. It improves soil quality and retains water and nutrients – so it’s good for food security. Many farming techniques – such as crop rotation, mulching, manure management, reduced tillage, terracing, and agroforestry – are already in-use, time-tested, and can quickly be implemented. Also, enhancing soil nutrients through organic methods means using less fertilizers.
Some experts recommend biochar, which is charcoal made from organic waste, as a possible solution. Advocates of this newly rediscovered traditional way of fertilizing poor soils calculate that if biochar were applied on just 10% of the world’s crop land this could store 29 billion tons of CO2 equivalents offsetting nearly all emissions from fossil fuel burning. This might be a bit of a stretch, and critics, asking where all the additional organic material should come from in Africa, fear that this will lead to chopping down trees for ‘biochar-plantations’ if it were to be produced on in larger quantities. But it’s an ancient practice that had been used by tribes in the Amazon for millennia, and can be applied quickly on a small scale.
Whether African soils are well-suited for soil carbon projects is a different story.
Research done by the Terrestrial Carbon Group found that only two African countries – South Africa and Congo – offer a high potential of soil carbon sequestration. Soil specialist and retired Duke University professor William Schlesinger is now president of the Cary Institute of Ecosystem Studies in New York. He says that peatlands, wetlands and cold regions are, in general, better places for locking up significant amounts of carbon in soils.
“Since soil carbon contents are driven more by decomposition rates than input rates, hot areas and deserts simply do not store as much carbon,” he says, adding that the best road to sequester carbon in soils in Africa would be to focus on incorporating crop residues or their ash into soils, where this has not been done traditionally.
Modeling vs. Measuring
Which brings us to the question of how to measure changes in carbon stocks. Releasing carbon from soils takes much longer than from trees and sequestering is a much longer process as well.
“Measuring and validating an estimate of soil carbon over any considerable area is a non-trivial amount of work due to the high degree of spatial variation in soil characteristics and the relatively small changes in the carbon content that will be seen on an annual basis,” says Schlesinger, adding that modeling cannot replace field surveys because the models are too dependent on the parameter estimates that drive them.
But Woelke believes that a robust, cost-effective method of measuring additional emission reductions and monitoring carbon-stock changes can be developed. In fact, his team has just done that for Kenya. He uses default values for variations in carbon stocks depending on agro-ecological zones and soil types. The method has been submitted for approval to the international Voluntary Carbon Standard, which was designed to give accountability to the voluntary carbon market. If accepted, other projects will be able to use it too.
Woelke admits that implementing these projects is challenging.
“The efforts are huge, and the mitigation potential for single units of land is small,” he says. “For the entire region, however, it’s big.”
That means it’s necessary to cover larger land areas and bundle projects together.
Soil Carbon as Bellwether
Ken Newcombe, CEO of carbon finance firm C-Quest Capital, believes that soil carbon credits could eventually have dual currency as an indicator of environmental health and sustainability.
“This is one of the really intriguing prospects for soil carbon,” he says.
Other businesses, however, are not convinced yet.
Carbon trading companies and project developers remain skeptical of whether it will be possible – and at which cost – to allocate credits for all the different types of soils, climates and land use systems.
Permanence and Other Echoes of REDD
Anna Lehmann from project developer Syndicatum Carbon Capital in London, doesn’t believe soil carbon credits should be recognized on the carbon market – largely because you don’t really know how long and how much of the stuff is being stored. Undisturbed, soil carbon will sit in the ground for millennia. But disturbances are far from rare events.
“This is even more difficult to manage than forestry, and much harder to verify,” she says, adding that a single tilling can again release 60 – 80% of stored carbon.
And then there are the old problems of credit fungibility, accounting and a dual credit system will be back.
“The market doesn’t like this,” says Lehmann.
Schlesinger believes the price for carbon credits would have to climb well above its current levels if soil carbon is to become profitable. Otherwise, he says, it will be more expensive to establish and validate soil carbon stores and their changes than the credits are worth.
The Regulatory Status
As for now, the only place you can sell soil carbon credits is the voluntary market – and then only for very short vintages.
Experts agree that in order to scale up and increase its mitigation effect, land use will have to be incorporated into the international frameworks for climate change. While there is a broad consensus among negotiators that carbon credits form reduced emissions from deforestation and forest degradation (so called REDD mechanism) should be included into any new climate treaty, soil carbon is still a long way to go.
Support, however, is growing.
“We want all terrestrial carbon to be included in either a reformed CDM or new mechanism”, says Aston.
The Holistic View
A wider use of carbon trading could help recession-hit industrialized countries add to pledged 2020 cuts which now total only 10-14% below 1990 levels which is below the 20-40% demanded by the UN climate panel to avoid the worst consequences of climate change.
The case for a holistic view in terms of land use is easily to understand if one looks at the link between forest protection and agriculture: 89% of deforestation in Africa is driven by expanding agriculture. To change this land productivity needs to be significantly increased.
“This won’t be possible without trade-offs”, says Bernard Mercer from the Forests Philanthropy Action Network, which works on priorities for terrestrial carbon options in Africa.
He argues that it’s necessary to intensify agriculture to take pressure off the forests. That means it might be necessary to use climate-harmful fossil-fuel-based fertilizers if we want less deforestation.
“And,” he adds. “Even if most African NGOs are opposed to it, we have to think about genetically-modified crops.”
More Research Needed
Mercer, who admits to be a bit unorthodox, also criticizes that the debate on land use and carbon mitigation zooms too much in on accounting and not enough on science.
“On the road to Copenhagen, people are fixed on the financial side,” he says. “But the topic of soil carbon is extremely under-researched, and we need to know what makes sense in a given context and is effective. The finance is second.”
He makes the analogy to the kick-start of Silicon Valley.
“You have to build the computer first and prove that it’s working. Then banks invest.”
Cocoa and Soil Carbon
So, what might work in West Africa, where the World Bank says no soil-carbon projects in the pipeline?
Probably, the first thing to look at is the important, export-driven and large-scale cocoa production.
Cocoa trees could be mixed with other tropical trees to form agroforestry projects which are already eligible under CDM rules. Agroforestry methodologies have been approved by the UNFCCC for afforestation and reforestation projects.
Another option is to adapt soil enhancing techniques for cocoa plantations that cannot be shifted to an agroforestry system. These large connected and more homogenous areas are, relatively speaking, easier to quantify and monitor. Like the coffee project in Kenya, they are more likely to whet investors appetite once those method problems have been tackled.
It will be much more difficult to attract project developers and private carbon finance outside the forest and cocoa plantation areas.
Lessons of EU’s CAP
Beyond the plantations, we mostly find small-scale subsistence farming, where “soils are plagued with inherent or human induced infertility”, as the FAO states, and are susceptible to severe erosion. Much of the land is not very productive. Many areas face accelerated desertification. But this is the land that could benefits most from improving soil quality. Here, reformed national policies could bring leverage to bear on change.
For Lehmann, the most promising route may be the European Union’s often-criticized Common Agricultural Policy, which nevertheless promotes soil fertility and environmental protection.
“Through subsidies, you can strongly influence farming practices like using fertilizers,” she says.
Mercer also favors agricultural policy interventions.
“We could use money from assigned REDD funds and distribute it to governments to push for land use reforms,” he says. “We have to start with what we can do today.”
If lessons were to be learned from CDM and forestry, which can considered to be a failure given the few projects actually realized, a terrestrial carbon scheme that also includes soils and wants to harness carbon finance faces huge problems with accounting, application and verification costs especially in Africa.
“At the end we need a simple plan”, says. “For me that means national inventories of carbon stocks.”
Michael Streck is a journalist and author who writes about environmental, climate change and carbon market issues. He also works as communications advisor for Business Communications Consulting in Frankfurt, Germany and can be reached at +49 69 90028880 and email@example.com.
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