The Ecosystem Marketplace's Forest Carbon News
Tracking Terrestrial Carbon
Here at the office we are gearing up for March Madness, ready with our brackets, hoping for Cinderella stories to make it to the final four. Over in India, the central government has geared up its own form of a bracket, allocating $6 billion a year in tax revenue for results-based forest conservation within individual states. This announcement comes after the Narendra Modi government realized its pledge to treat states as partners in long-term development, and will transfer 42% of taxes collected by the Central government to states.
The formula for tax allocation to states will, for the first time ever, include forest cover.
India's 14th Finance Commission, which is appointed every five years to define the financial relations between India's central government and states, recommended adding forest cover to the formula because: "In our view, forests, a global public good, should not be seen as a handicap but as a national resource to be preserved and expanded to full potential, including afforestation in degraded forests or forests with low density cover. Maintaining a green cover, and adding to it, would also enable the nation to meet its international obligations on environment-related measures."
Within the tax formula, forest cover has been given a weight of 7.5% within the overall formula, accompanying population in 1971 (17.5%), population in 2011 (10 %), fiscal capacity (50%) and land area (15%). This means that the share of tax revenue that each state receives will depend in part on how much forest they have maintained, as monitored by India's 2013 Forest Survey.
To put the tax transfer in context, $6 billion is "more results-based finance for forest conservation than any other country in the world, including the current biggest spender Norway," notes Jonah Busch, Research Fellow at the Center for Global Development, in a recent analysis. Since 2008, Norway has offered around $3 billion for reducing emissions from deforestation (REDD+) through bilateral agreements with Brazil, Indonesia, Guyana, and others.
India reports that its re-growing forests remove more than 200 million tonnes of carbon dioxide (CO2) from the atmosphere every year, which offsets about 15% of its greenhouse gas emissions. Additionally, the tax transfer works out to about $120 per hectare per year, which is a larger payment than many other payments-for-ecosystem services programs provide. For example, carbon finance from offset sales flowing to REDD projects averaged $5.2 per hectare globally in 2013, according to Ecosystem Markplace data.
More stories from the forest carbon market are summarized below, so keep reading.
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—The Ecosystem Marketplace Team
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