Feasibility and Impact Assessment for a CDM reforestation project in the region of Parque Nacional Santa Fe, Veraguas

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McGill School of Environment (MSE) Downtown Campus 3534 University Street Montreal, Quebec H3A 2A7 Tel.: Fax: Feasibility and Impact Assessment for a CDM reforestation project
McGill School of Environment (MSE) Downtown Campus 3534 University Street Montreal, Quebec H3A 2A7 Tel.: Fax: Feasibility and Impact Assessment for a CDM reforestation project in the region of Parque Nacional Santa Fe, Veraguas Evaluación de la factibilidad y de los impactos de un Proyecto MDL de Reforestación en la región del Parque Nacional Santa Fe, Veraguas Final Report Student Researchers Caroline Belair Geri Blinick Supervisors Dr. Roberto Ibáñez Dr. Rafael Samudio Host Institution Autoridad Nacional del Ambiente (ANAM) Programa Nacional de Cambio Climático (PNCC) Dirección Principal: Albrook, Edificio 804 Apdo. Postal: ANAM, apartado C, zona 0843 Balboa, Ancón (507) (Tel) (507) (Fax) Hosting Supervisors René López Edgar Salinas Acknowledgements We would like to thank ANAM and the PNCC. In particular, we thank Señor René López and Señor Edgar Salinas for this opportunity and for their guidance. We would also like to thank the ANAM office in Veraguas for welcoming us in Alto Guarumo, the people of the Santa Fe region for their hospitality during interviews and the mayor of Santa Fe, Sra. Albertina de Castrellón, for her kind welcome and time. Finally, we would like to thank Señor Eric Flores for his help with the funding section, the staff of the Cartografia unit of the Contraloria in Panama and the staff of SIG at ANAM for their invaluable maps. Acronyms ANAM CDM CER GHG PDD PNCC MIDA UNDP UNEP UNFCCC UNPF Autoridad Nacional del Ambiente Clean Development Mechanism Certified Emission Reduction Greenhouse Gas Project Design Document Programa Nacional de Cambio Climático Ministerio de Desarrollo Agropecuario United Nations Development Program United Nations Environment Program United Nations Framework Convention on Climate Change United Nations Population Fund Time Investments The research presented in this document was principally achieved in the City of Panamá. We additionally spent over a week in the region of Santa Fe to conduct interviews with landholders in the area. Number of full days spent on the project in Panamá: 280 hours = 35 days of 8 hours Number of full days spent in the Field (Santa Fé, El Pantano, Vueltas Largas, Bajo San Juan, Las Quebradas): 40 hours = 5 days of 8 hours 1 Feasibility and Impact Assessment for a CDM reforestation project in the region of Parque Nacional Santa Fe, Veraguas Geri Blinick and Caroline Belair Host: ANAM (Programa Nacional de Cambio Climático) Executive Summary General context Article 12 of the Kyoto Protocol provides for the clean development mechanism (CDM), in which Annex-1 countries can meet their carbon emissions reduction quotas by purchasing emission reductions from developing countries. Such purchases can serve to support sustainable development projects in developing countries, such as reforestation initiatives that sequester carbon. The Autoridad Nacional del Ambiente (ANAM), specifically its climate change sector, has for some time envisioned a CDM reforestation project in the region of the Parque Nacional Santa Fe, which is situated in the upper region of the Santa Maria Watershed, in the province of Veraguas. A CDM reforestation project would serve to re-establish forest cover in an area marked by increasing levels of deforestation and would generate alternative, sustainable sources of income to improve local livelihoods. Goals This study investigates the feasibility of a CDM reforestation in the region. It seeks to outline the major obstacles to such an initiative. The ability of such a project to contribute to sustainable development in the region will be discussed. Future steps for ANAM to undertake and suggestions will be addressed. Methods and approaches Forty-one personal interviews were conducted in the region from March 10 th 2005 to March 18 th The interviews assessed general knowledge of the benefits of reforestation, knowledge of the possibility of CDM and interest of landholders in reforesting their land. For those interested, current land use tendencies, amount of land available for reforestation, as well as the suitability of their land for CDM reforestation was recorded. Organizations and cooperatives in the area were investigated as sources of administrative and financial resources in the development of such a project. Additionally, research was conducted from Panama City in the form of reading material and interviews with experts concerning the intricacies of the CDM process and possible sources of funding for a CDM initiative. Results It was clear from the interviews that the sampled population was well aware of the environmental benefits of reforestation, particularly in respect to global warming and protection of the Santa Maria River. It appeared that a reforestation project would be received positively. Additionally, amongst the landholders willing to reforest their own lands, enough land was suitable for a CDM reforestation project, that is, land that held an official land title and has been deforested since The presence of multiple cooperatives in the area indicated experience with community projects. Additionally, organizations in the area such as MIDA and Fundación Hector Gallego were identified as potential organizations to help coordinate such a project. While the above creates a suitable environment for CDM reforestation, obstacles to successful CDM reforestation success include obtaining initial funding, lack of an umbrella organization 2 with the time and money to coordinate the project, and the inability of CDM to favour smaller landholders, which are less cost-efficient, in a competitive carbon market and to better promote sustainable development objectives. Conclusions It appears that a CDM reforestation project could be possible in the region but that considerations must be taken to overcome the obstacles. Suggestions include a CDM presentation for ANAM in region to introduce the idea and the creation of a tree nursery to provide trees for those interested in reforesting in the region, employment, and education for children. 3 Evaluación de la factibilidad y de los impactos de un Proyecto MDL de Reforestación en la región del Parque Nacional Santa Fe, Veraguas Geri Blinick and Caroline Belair Anfitrión: ANAM (Programa Nacional de Cambio Climático) Contexto General Resumen Ejecutivo El Mecanismo de Desarrollo Limpio (MDL) esta establecido en el Protocolo de Kyoto. El MDL permite a los gobiernos o entidades privadas de países industrializados a suportar proyectos sostenibles de reducción de emisiones en países en desarrollo, y a recibir créditos en la forma de reducciones certificadas de las emisiones , o CERs, las cuáles pueden ser contabilizadas dentro de sus objetivos nacionales de reducción. La Autoridad Nacional del Ambiente (ANAM) y su sector cambio climático, identifica la región dentro y alrededor del Parque Nacional Santa Fe, en la provincia de Veraguas, como una posibilidad para un proyecto MDL de reforestación. Objetivos Este estudio establece si un proyecto de reforestación MDL hace sentido para la región de Santa Fe y identifica los obstáculos mayores a ese tipo de desarrollo en la región. Sugiere opciones para el desarrollo de ese tipo de proyecto en la región. También, examina la capacidad de MDL a entregar beneficios de desarrollo sostenible en la región. Metodología A través de entrevistas en los pueblos de El Pantano, Santa Fe, Vueltas Largas, Bajo San Juan, y Las Quebradas, del 10 de Marzo al 18 de Marzo 2005, establecimos el sentimiento de una parte de la población sobre reforestación. También, investigamos si hay tierra para reforestación y si esa tierra esta apropiada para MDL. Buscamos organizaciones en la región que podrían ayudar al proyecto. De la ciudad de Panamá, conducimos un estudio sobre MDL, lo que es importante para su desarrollo, y lo que se necesita en la región. También, compilamos las posibilidades para financiamiento de ese tipo de proyecto. Resultados Las entrevistas indicaron que a los dueños de la tierra les importa mucho la reforestación y la mitad de los dueños con quien hablamos querrían reforestar sus tierras. También, había bastante tierra que se podría usar por un proyecto MDL, que era deforestada desde 1989 y con titulo oficial de propiedad. Había organizaciones en la región que podrían a ayudar con el proyecto. Obstáculos del proyecto incluyen financiamiento para iniciar el proyecto, falta de organizaciones en la región que tienen los recursos para coordinar ese tipo de proyecto, y hacer que el proyecto sea sostenible y disminuye ilegalidad. Conclusiones y sugerencias Un proyecto de reforestación de MDL seria posible en la región pero hay obstáculos que se deben resolver. También es difícil de desarrollar el proyecto de una manera sostenible porque los que tienen mucha tierra están preferidos. Sugerencias incluyen una presentación para las comunidades sobre la opción de MDL. También se podría creer un vivero de árboles para creer empleos, educar niños y apropiar árboles para los que quieren reforestar sin MDL. 4 Table of Contents Acknowledgements i Acronyms i Time Investments i Executive Summary ii Resumen Ejecutivo iv Table of Contents vi A. Introduction and Context of Study 1 The National Response and our Host Institution 2 B. Objectives of Study 4 C. Methodology 5 D. Results 6 a. Factors from the literature upon which the success of a CDM reforestation project is contingent 6 b. Results from field study in Santa Fe 10 E. Discussion 16 a. Is the Implementation of a CDM reforestation project in the Santa Fe region possible? 16 b. Is Santa Fe a suitable location for a CDM reforestation project? 16 c. Would a CDM reforestation project beneficial to the people and environment of Santa Fe? 18 F. Conclusion 22 G. Overall Suggestions 22 Appendix 1 - # Reforested hectares to overcome transaction costs 24 Appendix 2 - Funding for CDM reforestation initiatives 25 Appendix 3 - Information of landholders with interest 28 Works Cited 30 5 A. INTRODUCTION AND CONTEXT OF STUDY GLOBAL WARMING AND CARBON DIOXIDE There has been a marked, anthropogenic rise in atmospheric carbon dioxide (CO 2 ) levels since the industrial revolution. Climate modeling projections and historical ice core analyses have permitted scientists to infer the effects of this increase (Kump et al., 1998). Rising sea levels, notable differences in precipitation, temperature, and other climatic factors, have been identified and accepted as likely possibilities (Kump et al., 1998). Such changes in climate are projected to have adverse effects on both human and environmental well-being, and the poorest regions have been identified as most vulnerable. Panama, with such a high coastal to inland ratio, is projected to be severely affected by such changes in climate. THE INTERNATIONAL RESPONSE: THE KYOTO PROTOCOL AND THE CLEAN DEVELOPMENT MECHANISM (CDM) In order to tackle the rise in greenhouse gases such as carbon dioxide, the Kyoto Protocol commits industrialized countries to individual, legally-binding targets to limit or reduce their greenhouse gas emissions to a total cut in greenhouse-gas emissions of at least 5% from 1990 levels in the commitment period (UNFCC, 2005). Thus every country that has ratified the protocol is committed to decrease total emissions to the targeted level. These reductions can take place either through domestic policies and measures or through emissions trading on the international market. Article 12 of the Kyoto Protocol helps industrialized countries achieve their reduction targets by introducing the Clean Development Mechanism (CDM). Through CDM, developed countries can purchase Certified Emissions Reductions (CERs) from developing countries while financially supporting sustainable development in these countries: The purpose of the clean development mechanism shall be to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention [to decrease GHG emissions], and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments (UNFCC (1998), Article 12). Thus CDM aims to aid developed countries meet their emissions reductions targets while simultaneously helping to finance economically and environmentally sustainable projects that generate CERs in developing countries. Possible CDM project types include energy efficiency, methane recovery, industrial process change, cogeneration, transport, agricultural, and land use projects (Energy & Environment Group, 2003). Land use changes are limited to reforestation and afforestation, as reforested areas sequester carbon through tree growth to generate Certified Emission Reductions. Afforestation differs from reforestation only in that it takes place on land that has not been forested for at least 50 years, while reforestation take place on lands that did not contain forest before 1990 (Smith and Scherr, 2002). Most CDM projects under consideration at the present are large-scale renewable energy or 6 energy efficiency projects (CDM Watch, 2005). As of March 2004, more than 75 CDM were underway, however, none had been officially approved. THE NATIONAL RESPONSE AND OUR HOST, THE PNCC OF ANAM: Autoridad Nacional del Ambiente (ANAM) The Autoridad Nacional del Ambiente was created in 1998 as an autonomous entity affiliated to the Government of Panamá whose mission is to promote the valuation, protection, conservation and recuperation of the environment and the sustainable use of the natural resources. Programa Nacional de Cambio Climático (PNCC) The climate change sector of ANAM, the PNCC, is responsible for elaborating and executing the national policy for climate change. Responsibilities of the PNCC include providing institutional and legal mechanisms to fulfill Panamá s engagements with the Kyoto Protocol. One of the ways is through the elaboration of processes such as the Clean Development Mechanism (CDM). CDM projects fit under the PNCC subprogram of mitigation, which strives to prevent the anticipated climate change by increasing the size of existing carbon dioxide pools. In respect to CDM, the PNCC s tasks include identifying suitability of potential projects, assisting investors in designing their projects, seeking financial support from interested investors to enable CDM projects, and keeping stakeholders informed about CDM. (ANAM, 2005) Programa Nacional de Cambio Climático Compliance Vulnerability and Adaptation Public Concientisation Mitigation Figure 1: ANAM and PNCC institutional configuration CDM IN PANAMA Thus far, only projects in the energy sector have fully developed in Panama. These consist of hydroelectric projects, specifically with the companies Esti, Bayano, and Fortuna (CDM Watch, 2005). The Dutch Government has selected all three projects as suppliers of carbon credits. Panama has concluded a memorandum of Understand with both the Netherlands and Spain on joint efforts aimed at reducing greenhouse gas emissions(cdm Watch, 2005). In the forestry sector, several areas have been identified as potential project areas. It has been calculated that Panama has a total of 826,051 hectares available for reforestation under CDM. These lands 7 qualify for Kyoto in that they have been deforested since 1989 and are biophysically adequate for reforestation. Of these lands, 141,748 hectares could be used for plantations and 684,313 hectares for assisted reforestation. The provinces identified as having the best potential for the development of CDM forestry projects are the Darien, Chiriqui, and Veraguas (Hughes, 2003). POTENTIAL FOR CDM IN THE SANTA FE DISTRICT ANAM has identified the upper region of the Santa Maria Watershed, near the Parque Nacional Santa Fe, as a possible site for the development of a CDM reforestation project. McGill Panama Field Study Semester students from the 2004 program, Maxime Rivet and Veronique Roy-Bouliane, established the first step of the CDM process by creating a baseline, which entails identifying the present land use tendencies in the region and most likely future land uses. They identified cattle ranching as the economic activity most likely to be further explored in the region of Santa Fe. Their study highlighted the likelihood of continued reduction of forest cover in the region, due to the likely expansion of cattle ranching and agriculture as an economic activities and land uses. The residents in Santa Fe were identified as very poor and vulnerable, with little economic opportunity and strong dependence on the land. Very little of the land is under legal land title. 80% of the households are reported to cook using firewood adding to the high pressure on the land and forests. A lack of financial assistance in the area was noted to be severely lacking, hindering large-scale agricultural development away from slash and burn subsistence agriculture. In addition the continual pressures of cattle ranching and subsistence agriculture on the forests of the region, few barriers to deforestation were identified. (Rivet and Roy- Bouliane, 2004) The potential benefits of CDM reforestation or afforestation projects in the region are numerous. Although carbon sequestration is the ultimate goal of CDM reforestation projects, reforestation projects can have other local environmental benefits such as decreased land salinity, decreased erosion, an alleviation of future pressures on native forests, and improved water quality (Herbohna, 2000). These benefits would be ideal in the region of Santa Fe due to the presence of the watershed of the Santa Maria River. The Santa Maria River is the main river in the area and the largest river in Panama. It provides water for the provinces of Veraguas, Cocle, and Herrera(Rivet and Roy- Bouliane, 2004). Of equal importance, CDM reforestation projects have the potential to contribute economically to local livelihoods, by providing an additional, sustainable source of income via compensation for carbon credits. Such a project could potentially help alleviate the widespread poverty in the region. Despite the incredible potential benefits CDM reforestation project can offer communities or individuals, its ability to improve local livelihoods is highly contingent on numerous factors, including characteristics of the region. When we first began communicating with the supervisors at ANAM it became very obvious that CDM projects are highly constrained by limiting economic and social factors. Costly projects such as CDM reforestation initiatives are contingent upon obtaining adequate funding. Small-scale projects are especially problematic because many transaction costs, such as consultant costs, are fixed regardless of project size (Energy & Environment Group, 2003). Availability of enough land to reforest and to generate enough 8 carbon credits to overcome these transaction costs is therefore important. The presence of strong commitment to the project, as well as institutions and organizations in the region to help organize individuals, can also significantly facilitate the process and reduce costs (Smith and Scherr, 2002). Social factors, such as strong local participation, have been identified by experts on the CDM process as key to the success of CDM projects in terms of improving local livelihoods (Smith and Scherr, 2002). There are many factors that must be considered when selecting a location for the project. As Smith and Scherr note: projects are likely to be successful only in well-targeted sites Investors are advised to seek sites where potential risks to local livelihoods are low (37). While it is important to examine the suitability of the region for CDM reforestation, it is also vital to address the ability of CDM reforestation projects to benefit the region and promote sustainable development. Recently, there has been recognition that development projects have a tendency to perpetuate inequality that exists between urban and rural areas
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