Sierra Gorda Taps Voluntary Markets for Carbon and Environmental Offsets - Again

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By Jim Whitestone

The Grupo Ecologico, which has co-management responsibilities with the Mexican government for the Sierra Gorda Biosphere Reserve in central Mexico, is looking to help finance its ambitious biodiversity conservation program for the reserve by selling carbon and environmental offsets. Bosque Sustentable A.C., which GESG created to implement its strategy of combining resource protection with sustainable use, will be the actual provider of these offsets.

Voluntary markets offered Grupo Ecologico and Bosque Sustentable advantages associated with innovation, vibrancy and accessibility, and they seized the opportunity. Bosque Sustentable completed its first sale in the voluntary market in 2006 to the United Nations Foundation, which wanted to offset its carbon footprint as well as support a UN-sponsored project that also helped alleviate poverty. Bosque Sustentable is now in the final stages of concluding a second sale with the United Nations Foundation as well as a sale to the World Land Trust, based in the U.K. The World Land Trust will be selling Sierra Gorda Carbon and Environmental Offsets to a range of voluntary European buyers who are interested in biodiversity and poverty reduction benefits in addition to carbon sequestration.

Sierra Gorda Gourmet Carbon/Integrated Offsets

 

These sales highlight a principal advantage of voluntary markets in relation to regulatory markets in allowing Bosque Sustentable to access buyers that are interested in more than just carbon sequestration, an advantage that it is well positioned to exploit. Martha "Pati" Ruiz Corzo, the director of the Sierra Gorda Biosphere Reserve, has described the voluntary credit as "not just a carbon credit, but a green jewel protected by its inhabitants."

 

In addition to carbon sequestration, their activities in the areas of reforestation, avoided deforestation and the inducement of natural forest regeneration can help to safeguard biodiversity while preserving hydrological functioning, avoiding erosion and providing other ecosystem services. Specifically, Bosque Sustentable's work in forest restoration helps sequester carbon while planting on steep slopes maximizes benefits associated with protection of important hydrological recharge areas, reduced soil erosion and accumulation of large forested areas for biodiversity enhancement. Payments and training to small landholders to establish tree plantations encourage sustainable harvesting while also reducing poverty.

 

Grupo Ecologico and Bosque Sustentable are not about to downplay the fact that trees in the Sierra Gorda absorb CO2 as they grow since carbon sequestration continues to be the driver of these markets. However, they seem to be tapping into a niche of buyers who are interested in other benefits as well as addressing climate change. In addition to offsetting their carbon footprint, individuals, businesses and organizations are increasingly interested in safeguarding biodiversity as well as providing sustainable livelihoods to avoid the root causes of deforestation. In the Sierra Gorda, the projects are designed taking into account local forest values and the needs of the forest owners and are implemented by local organizations with knowledge of the local physical and social conditions.

 

High-Quality Verified Offsets

 

While GESG and Bosque Sustentable decided to pursue voluntary markets viable for areas of poverty instead of formal regulated markets due to the very costly and complex process for certifying CDM credits, sales in the voluntary carbon market have not come at the expense of quality and verifiable credits. This has been a very important consideration in the sales of Sierra Gorda offsets concluded so far. The two organizations have directed significant attention and resources at documenting the effectiveness of Sierra Gorda Offsets in terms of carbon sequestration, biodiversity preservation, hydrological services and improving the livelihoods of people in the local communities.

 

These are being verified through ongoing scientific assessments and social return on investment analyses. The University of Monterrey is measuring the amount of carbon being stored in the various species and ecosystems of the Sierra Gorda while inventories are also underway of the various flora and fauna including jaguar in the reserve. Scientists at the University of Queretaro are using data, in combination with information concerning land cover and soil type, to model improvements to hydrological processes throughout the Reserve resulting from reforestation and soil conservation measures. Grupo Ecologico Sierra Gorda has also undertaken a Social Return on Investment Analysis to assess the range of impacts of their programs on the communities in the Sierra Gorda.

 

Pursuing verification of offsets is especially important at this time when there has been rapid growth in the global market in carbon trading which tripled last year to $30bn. At the same time, the World Bank has raised concerns about the effectiveness of unregulated carbon offset projects. If the carbon market loses credibility, carbon offsets would no longer be available to provide a useful tool for reducing emissions and as a cost control mechanism for companies in countries with carbon caps.

 

The Road Ahead

 

In addition to the recent agreements with the United Nations Foundation and the World Land Trust, Grupo Ecologico and Bosque Sustentable will be pursuing other marketing channels for their integrated offsets including directly through their own website:

www.sierragorda.net/carbon/index~.htm

. They anticipate that Sierra Gorda Carbon and Environmental Offsets will be increasingly in demand as: more and more individuals, businesses and organizations come to understand the business case for sustainable development; as consumers increasingly demand more environment friendly products; governments need to respond (through new regulations if needed) to pressing environmental problems like climate change, water shortages, pollution and loss of biodiversity; the financial community seeks greater assurances from companies in demonstrating their ability to manage environmental risks; and companies compete to attract and retain skilled workers who want to identity with corporate values.

 

Sierra Gorda Offsets can offer an important tool to individuals, businesses and organizations globally as well as locally in Mexico in meeting these higher business standards for sustainability. This is especially true at this time when there is an effort to get Mexico as well as Brazil, China, India and South Africa to join with the G8 countries ("G8 plus five"), which combined account for 75 per cent of the world's greenhouse-gas emissions, to craft a climate-change plan to succeed the Kyoto Accord.

 

In many cases, voluntary markets at the very least can play a complementary role to regulated markets if not to serve as forerunners in the transition to regulated markets such as in the case of formal cap and trade systems for carbon markets. In engaging in voluntary markets, conservation organizations can play an essential role in reducing transactions costs and driving innovation, something that Martha "Pati" Ruiz Corzo, the Grupo Ecologico Sierra Gorda and Bosque Sustentable have never shied away from.



Jim Whitestone is an Agricultural and Resource Economist with the Ontario Provincial Government who is on a professional exchange with Grupo Ecologico Sierra Gorda sponsored by the Inter-American Institute for Cooperation on Agriculture (IICA) - Canada, a specialized agency of the Organization of American States (OAS).

First published: October 16, 2007

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