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"You have two options for avoiding deforestation," said Paul Ramirez. "One is to put fences and rangers to keep people out – this option in the long-term is not sustainable. The other, which is actually the good one, is to work with people to change their practices."
Ramirez is a project manager at the Peruvian NGO Asociación para la Investigación y Desarrollo Integral (AIDER) that is working in the buffer zone of a national reserve in Madre de Dios, known as the "Biodiversity Capital" of Peru. There, the Tambopata National Reserve and the Buhuaja-Sonene National Park provide habitat for threatened species such as the black caiman, harpy eagle, and giant otter.
But, despite its protected status, the forest itself is threatened by migratory agriculture and illegal logging, both of which accelerated when construction of a new highway through the region began in 2006. An estimated 1,189 hectares are being chipped out of the 570,000-hectare protected area every year.
AIDER aims to change this by pairing carbon finance with sustainable cocoa production. Fueled by a $7 million investment by Althelia Climate Fund, the organization helped found a farmer's cooperative focused on harvesting, processing and commercializing fine aromatic cocoa. This year, the cooperative is starting with 300 planted hectares, with plans to scale up to 4,000 hectares by the end of the decade. The cooperative aims to produce 3,200 tonnes of cocoa each year – enough to create annual revenues of nearly $10 million, if cocoa prices hold at 2014 levels.
Until then, the Tambopata REDD (Reducing Emissions from Deforestation and Degradation of forests) project will lean on revenues from carbon offset sales. Four Dutch companies – development bank FMO, carpet maker Desso, and energy competitors Eneco and Essent – have provided early carbon finance, as has the Peruvian insurance company Pacífico Seguros.
Farmers receive financing "on the condition that they won't deforest anymore and that a share of revenues will go to investors," Ramirez explained.
The REDD offsets are used as collateral against Althelia's loan. Rather than rely on carbon finance long term, the Tambopata project is designed to use offset sales as the start-up capital to set up the sustainable cocoa production – which over time will become the main revenue stream for farmers.
Althelia's Latin America Director Juan Carlos Gonzalez Aybar also sees carbon finance as a gateway for companies to begin thinking more holistically about the impact of their supply chains.
"For example, Desso today makes carpets and tomorrow probably they will be sourcing – I hope – some materials, for example latex, from reforestation projects," he said. "For companies to start buying offsets is important for the offset itself, but also for the contacts with the projects and the business opportunity it brings."
The Tambopata REDD project has issued 108,335 offsets to date under the Verified Carbon Standard (VCS) and is expected to avoid the emission of 4.5 million tonnes of carbon dioxide into the atmosphere over its lifetime.
The full story in Ecosystem Marketplace is here. And more news from the forest carbon marketplace is summarized below, so keep reading!
—The Ecosystem Marketplace Team
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